DIRECTORS’ REPORT ON OPERATIONS FOR THE YEAR ENDED 31 DECEMBER 2015 .......................................................... 7 1. MANAGEMENT AND SUPERVISORY BODIES ..................................................................................................................... 9 2. MISSION AND KEY ASPECTS OF STRATEGY ..................................................................................................................... 12 6. CAPITAL EXPENDITURE AND FINANCIAL INVESTMENTS ............................................................................................ 73 11. FINANCIAL REVIEW FOR POSTE ITALIANE SPA ............................................................................................................. 88 12. BANCOPOSTA RFC MANAGEMENT REVIEW .................................................................................................................. 95 13. PROPOSED SHAREHOLDER RESOLUTIONS................................................................................................................... 107
APPENDIX - KEY PERFORMANCE INDICATORS FOR PRINCIPAL POSTE ITALIANE GROUP COMPANIES ..................... 108
POSTE ITALIANE: FINANCIAL STATEMENTS 2015……………………………………………………………………………………........................ 113 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES……………………………………………………………………..117 3. POSTE ITALIANE GROUP FOR THE YEAR ENDED 31 DECEMBER 2015……………………..…………………………………….………147 4. POSTE ITALIANE SPA FOR THE YEAR ENDED 31 DECEMBER 2015…………………………………………………………………………. 231 5. RISK MANAGEMENT……………………………………………………………………………………………………………..……………………………………………311 6. PENDING LEGAL ACTIONS AND RELATIONS WITH THE AUTHORITIES……………………………………………………………………342 7. BANCOPOSTA RFC SEPARATE REPORT FOR THE YEAR ENDED 31 DECEMBER 2015………………………….……………351 8. REPORTS AND ATTESTATIONS…………………………………………………………………………………………………………………………………………451
Total permanent and flexible workforce expressed in full time equivalent terms 143,700 144,635
Current accounts (average for the period in €m) 3 45,169 43,953
* Includes €210.5 million relating to the acquisition of a 10.32% interest in Anima Holding SpA.
“MTA”) operated by Borsa Italiana SpA since 27 October 2015. Until this date, the Company was wholly owned by the Ministry of the Economy and Finance (the “MEF”).
Poste Italiane has adopted a "traditional" governance model, separating the roles of the Board of Directors and the Board of Statutory Auditors. The Company’s accounts are audited by an independent firm of auditors.
The Board of Directors and Board of Statutory Auditors and their respective chairpersons are elected and dismissed by General Meeting of shareholders, which is also responsible for determining the related remuneration and for appointing independent auditors. The General Meeting also approves the annual financial statements, amendments to the Company’s By-laws and transactions of a non-recurring nature, such as rights issues, mergers and demergers.
The Board of Directors consists of 7 members and normally meets once a month to examine and vote on resolutions regarding the operating performance, the results of operations, proposals relating to the organisational structure and transactions of strategic importance. The Board met 18 times in 2015.
The Chief Executive Officer and Chairwoman have completely separate roles and both have the authority to represent the Company; the Chief Executive Officer represents the Company with regard to matters falling within the scope of his authority.
The Chief Executive Officer and General Manager, to whom all key departments report, has, again on the basis of the Board of Directors’ resolution of 7 May 2014, full powers for the administration of the Company across the organisational structure, unless otherwise provided for by law and the Company’s By-laws and with the exception of the powers reserved to the Board of Directors.
The Board of Statutory Auditors in office has 3 standing members and 2 alternates elected by General
Meeting of shareholders. The Board verifies compliance with the law, the Company’s By-laws and with correct corporate governance principles, also verifying the adequacy of the organisational structure and 10 Poste Italiane – Directors’ Report on Operations 2015
administrative and accounting systems adopted by the Company and their functionality. The Board has also been designated to serve as the Supervisory Board pursuant to Legislative Decree 231/01.
The Board of Statutory Auditors met 20 times during the year, including in its role as Supervisory Board. It held a further 2 meetings exclusively in its role as Supervisory Board.
The audit firm, PricewaterhouseCoopers SpA, has been appointed to audit the Company's accounts for the period 2011-2019. The appointment was made in conformity with Legislative Decree 39/2010
Regulations approved by the Extraordinary General Meeting of 14 April 2011 and amended by the
As a result of the new Supervisory Standards applicable to BancoPosta RFC, issued by the Bank of Italy on 27
Corporate Governance and the Ownership Structure”, approved by the Board of Directors and published in the “Governance” section of the Company’s website.
Poste Italiane aims to be a driving force for inclusive development in Italy, helping citizens, businesses and the
Public Administration through the transition to a digital economy by offering high-quality, simple, transparent and reliable services.
Poste Italiane Group was heavily engaged in implementing its Business Plan for the period 2015-2019. The
During 2015, the Postal Services segment focused on transformation of the delivery model and the letters offering and on initiatives designed to support growth in the parcels market. This included: • the start-up of work on re-engineering network logistics, with the aim of revisiting the delivery model and trialling the new setup; • the introduction of new technologies enabling the automation of letter tracking and sorting processes.
As noted above, these actions were accompanied by staff development initiatives. This involved a specific training programme, including the launch of the new Corporate University, using a multi-channel approach and technology platforms. The aim is to improve the customer experience in both physical and digital sales channels, introducing new technologies in post offices (e.g., free Wi-Fi and a new queue management system) and rethinking the way that the Group’s customers interact with digital platforms (e.g., the launch of the new website, the Post Office app and the BancoPosta app).
Corporate functions responsible for policy, governance, controls and the provision of services supporting business processes.
The organisational model, which ensures the development of synergies within the Group as part of an integrated approach to operations, is applied via governance and operating models, characterised by: • coherent and integrated management of the Group, ensuring a uniform and coordinated approach to the market, whilst taking into account the central importance of customers and exploiting potential synergies, assigning responsibility for coordinating subsidiaries to the relevant functions within the Parent Company according to business sector; • an organisational structure focused on the core businesses: postal logistics, finance and insurance; • Corporate functions capable of ensuring, through coordination and integration of their respective areas of expertise, coherent fulfilment of their assigned roles at Group level and the provision of shared services closely aligned with business needs, thus guaranteeing efficiency, economies of scale, quality and effective support for the different businesses.
Postal and Business Services include the letter post, express delivery, logistics, parcels and philately activities carried out by Poste Italiane SpA and certain subsidiaries, in addition to the activities conducted by various units of the Parent Company for BancoPosta RFC and the other segments in which the Group operates.
The Express Delivery and Parcels business relates to express delivery products offered on the deregulated market by Poste Italiane SpA to retail and SME customers, and by SDA Express Courier SpA to business customers. SDA also provides its customers with integrated solutions for distribution, logistics and catalogue sales. The provision of standard parcel services falls under the Universal Service obligation (USO).
Consorzio Logistica Pacchi ScpA supplements and oversees the activities of consortium members (Poste
Italiane SpA, SDA Express Courier SpA, Postel SpA and Mistral Srl) relating to: the collection, sorting, transport, processing and delivery of parcels; integrated logistics and storage activities; handling and transport (by land and/or air) of postal items; printing and enveloping; Electronic Document Management; e-procurement.
With the aim of creating a single document management hub, as well as consolidating all integrated logistics activities at SDA, with the creation of a technical courier expertise centre that takes advantage of synergies between Italia Logistica's technical expertise and SDA’s transport network, the following initiatives were implemented: • on 18 February 2015, PostelPrint SpA acquired 20% of Consorzio Logistica Pacchi ScpA from SDA Express
December 2015. For tax and accounting purposes, this operation will be effective from 1 May 2016.
Postecom SpA develops and manages information systems, primarily for Group companies, for the purposes of implementing the digital transformation. The main areas of specialisation relate to digital communication and certification services, payments and e-commerce, and e-Government projects, especially regarding healthcare and local taxation.
1 Italia Logistica Srl provides integrated logistics, document management and technical courier services (logistics management and the installation and maintenance of electronic equipment, primarily for work stations) for Group companies and external customers.
As noted previously, there are a number of Group companies that provide support services for letter post, express delivery, logistics, parcels and philately: Mistral Air Srl provides air mail services to Poste Italiane SpA (in conjunction with Consorzio Logistica Pacchi
Europa Gestioni Immobiliari SpA (EGI) operates in the real estate sector, managing and developing properties through urban and property redevelopment, with a view to their commercialisation (leases and sales). Due to the nature of the properties, the service is mainly provided to large customers, often public entities. The company also offers property management services to Group companies and external customers.
PatentiViaPoste ScpA is a not-for-profit, joint-stock consortium that serves as a jointly owned vehicle for its shareholders (Poste Italiane SpA, Postecom SpA, Dedem Automatica Srl and Muhlbauer ID Services GmbH) in managing and fulfilling the contract regarding the centralised printing, distribution and delivery of European driving licences and vehicle registration certificates.
Italiane, Postecom, KPMG Advisory SpA and Integrazioni & Sistemi) in managing and fulfilling the contract regarding management and remittance services for payments, by road users, for the services provided by the
The Financial Services segment primarily regards the BancoPosta RFC offering, which is regulated by
Presidential Decree 144 of 14 March 2001, as amended. These activities include: management of private and
Public Administration customer deposits and the related investment, postal savings deposits issued by Cassa
Depositi e Prestiti (Savings Books and Interest-bearing Postal Certificates), collection and payment services, the sale and distribution of financial products issued by banks and other finance companies authorised to provide investment services, and electronic money services via the issue of debit and prepaid cards.
The Bancoposta function, partly by coordinating the operations of a number of Group companies and without affecting the operational autonomy of these companies, in compliance with the relevant legal and regulatory requirements, is responsible for creating, designing and managing the Group’s financial product and service offerings, as well as checking the compliance of insurance products. In addition, the function is
The activities of the segment also include the management of public funds carried out by Banca del
SpA SGR, and the distribution of asset management products by Anima Holding SpA, an independent asset manager. Poste Italiane acquired a 10.32% interest in Anima Holding SpA from Monte Paschi Siena SpA
This is broadly in line with the average market price of the investee’s shares on the Milan Stock Exchange during the month prior to the agreement, executed on 14 April 2015. The agreement will also result in Poste
The transaction is highly significant and confirms Poste Italiane's commitment to the asset management sector, which is one of the strategic pillars underpinning the Group's Business Plan.
given the strategic objective of broadening the group’s offering of health insurance for individuals and groups of people, on 4 November 2015 Poste Vita SpA completed the acquisition of a 100% interest in S.D.S.
The Other Services segment includes Poste Mobile SpA and Consorzio per i Servizi di Telefonia Mobile ScpA.
Consorzio per i Servizi di Telefonia Mobile ScpA is responsible for providing Poste Italiane with electronic communications networks and the related platforms, systems and terminals, by coordinating, organising and managing the resources, equipment and people made available by consortium members. The consortium is also responsible for supplying the related mobile, fixed-line, integrated and value added services.
On 16 April 2015, with the aim of promoting and developing a systematic presence, at national and local level, in support of social inclusion and solidarity initiatives, the not-for-profit organisation, Fondazione Poste
The Foundation will also benefit from operating funds of €1 million per year to carry out projects relating to health and social services, charity, education, amateur sport and the protection of the civil rights of the disadvantaged and needy, with particular reference to children and young people, equal opportunities, families, the disabled and the elderly.
In July, once the board of directors was in place and the organisation had received legal recognition from the competent prefecture, the Foundation presented its first two initiatives, comprising the setting up of the first safe house for mothers in prison with children in Rome, and a prevention programme to combat irregular school attendance and drop-out rates.
The organisation of the commercial network and related operational support processes breaks down into three levels: • Multi-regional Area Offices (referred to as Private Customer Area Offices); • Branch Offices; • post offices, classified with respect to their business operations, into central, reporting, standard and basic.
The main initiatives regarded: • implementation of the “new retail service model" at 900 post offices, which provides for a more focused approach to customers with the introduction of consultants specialised in terms of target customers, and a new staff role dedicated to welcoming and guiding customers inside post offices. At central level, commercial coordination of post offices affected by the new service model and also of the financial promoters' network, was established; • continuation of the initiative launched in previous years with a view to strengthening the network of
In addition, in compliance with Bank of Italy regulations, a specialist role focusing on BancoPosta products was established for door-to-door selling.
Finally, in order to make business customer management more effective and maximise commercial efficiency, customer segmentation was revised, resulting in a new distribution of customers among the Private Customer and the Business Sales and Public Administration functions. This reconfiguration specifically focused on two aspects: • Local Government customers were brought under the umbrella of a single unit within the Business and
Public Administration function; • business customers were subdivided and allocated to the two functions based on the customer’s size.
The Business Sales and Public Administration function is responsible for commercial operations and sales of
The business model is based on approaches that differ in terms of the characteristics of the sectors in which customers operate, and the actual and potential value of the various identified customer targets.
Specifically, the model provides for: • central and local management specialised by sector, aimed at maximising the effectiveness of marketing via specialisation of the sales force and the provision of pre- and post-sales processes in line with this customer type; • development of relations with prospective customers through activation of an indirect sales channel in addition to the direct network; • central management dedicated to the identification and implementation of commercial partnerships, aimed at customer development; • five Area Offices (Lombardy and Northwest, Northeast, North-Central, Central, South), each responsible for commercial operations in their own area, via management of the local sales force and the implementation of marketing initiatives designed to target the different customer segments.
The Mail, Logistics and Communication function aims to bring all areas of business relating to the postal, logistics and communications services provided by the Group under one roof. This function is responsible for end-to-end management of operating processes, development and management of the offering and the activities involved in its supply.
The logistics network4 is locally organised on two levels: the first deals with coordination and is represented by Area Logistics Offices with responsibility for one or more regions; the second is operational and includes sorting centres (mechanical and manual) and distribution centres (Delivery Offices).
4 The logistics process covers receipt, collection, transport, sorting and delivery.
(*)The geographical distribution of Offices at 31 December 2015 is as follows: Piedmont, Valle d'Aosta and Liguria; Lombardy; Veneto, Trentino Alto Adige and Friuli Venezia Giulia; Emilia Romagna and Marche; Tuscany and Umbria; Lazio, Abruzzo, Molise and Sardinia; Campania and Calabria; Puglia and Basilicata; Sicily.
(**) Delivery staff include 33,523 postmen and women and delivery supervisors (34,876 at 31 December 2014).
Bologna sorting centre, using existing sorting equipment together with latest generation equipment.
Regarding the Parcel Logistics Integration Plan, the insourcing of activities was completed in relation to the delivery of Poste Italiane branded parcels (ordinary parcels and Paccocelere 3 parcels weighing up to 5 kg) by postmen and women. To this end, the corporate fleet of vehicles was expanded, with a total of 335 fourwheeled vehicles, and the trial of automated parcel sorting at sorting centres, using special semi-automatic equipment (2,650 Promopacco trolleys and 608 wheeled containers) was completed.
The process of reorganising the Logistics Network in accordance with the National Agreement of 28 February 2013, with regard to the former Postal services, entailing conversion of the Brescia and Venice sorting centres into Priority Centres, was finally completed. At the same time, the process of transferring sorting machinery
The numerous contact points include: Counters, Consulting Rooms, the Business Sales Force channel, financial promoters, PosteMobile corners and insurance corners, Contact Centres, electronic postmen, the website www.poste.it, and the more innovative social networks.
Sales and contact channels for retail customers and Small and Medium Enterprises (SMEs) are supervised by the Private Customer function, which coordinates the network of post offices and contact centre services.
The Business Sales and Public Administration function is responsible for managing and developing business with Large Accounts and Central and Local Government customers.
In the retail customer and SME segments, activities aimed at making organisational and commercial management more effective continued. To this end, as explained in the section, “Distribution channels”, the
“new retail service model” was implemented and the network of Specialist Commercial Financial Promoters strengthened (206 promoters at 31 December 2015, compared with 129 at 31 December 2014).
Regarding the post office network, 6,318 Consulting Rooms were in operation at 31 December 2015, including 900 with staff dedicated to affluent customers, 159 with staff specialising in financial products and 47 with staff with expertise in insurance products.
The “New Commercial Front-End” application was upgraded with new functions. In operation across the entire post office network at 31 December 2015, this application provides tools for appropriate customer 22 Poste Italiane – Directors’ Report on Operations 2015
BancoPosta account holders, savings book card holders and business customers may book services at a post office by inserting their personal electronic card into the queue manager.
The network of PosteMobile corners was also further expanded (339 at 31 December 2015, against 319 at 31
In 2015, the “Poste Risponde” Contact Centre handled more than 22 million contacts (21.9 million in 2014), of which over 91% for the captive market.
The main services provided in support of internal Group activities relate to: retail customer relationship management for financial, insurance and postal products and internet-related matters, and business customer relationship management regarding financial, letter post and parcel products and internet-related matters; assistance to the post office network and the Business sales force with enquiries regarding regulations, operations and product and service support; after-sales services and assistance to post offices regarding Poste Vita and Poste Assicura and PosteMobile products; and customer care regarding PosteShop products.
With regard to financial services, the number of dedicated advisors was increased and new contact methods
(via the BancoPosta app and private messaging on the Postepay fan page) were introduced. In addition, with the aim of improving the quality of service provided, automated customer satisfaction surveys were launched in September.
5 Service provided for by Law 147 of 27 December 2013.
The web distribution channel, run by Postecom via the website www.poste.it and other dedicated web portals, provides access to online services for around 10.7 million6 retail and business customers (9.3 million at 31 December 2014), operating as a direct end-to-end sales channel and as a support provider for other channels.
6 The figure refers to registered and active users. 7 Responsive web design (RWD) refers to web design technology for building websites with graphics that automatically adapt to the device on which they are being viewed (computers with different resolutions, tablets, smartphones, mobile phones, web TV), thus reducing the need for users to resize and scroll through content.
Initiatives were implemented in 2015 to complete the development of the Group's organisational and operating model, in line with the strategy and the targets set out in the Business Plan. This model has created the right conditions for the Group to act as an integrated whole, thus enabling synergies to be obtained through industrial integration. This has resulted in a greater focus on core businesses, whilst, at the same time, ensuring efficiency and quality.
Other initiatives regarded improvements to the operating model for the main corporate functions, including: • the definition and structuring of the Mail, Logistics and Communication Services function, taking an integrated approach to planning and management of the logistics process overseen by the function and the related companies, while also strengthening the focus on ongoing improvements to service quality and the commitment to product and service development in line with customer and market requirements; • review of the organisational structure of the BancoPosta function, in accordance with the supervisory regulations issued by the Bank of Italy and applicable to BancoPosta RFC, and in line with business needs, resulting in the establishment of marketing strategies defined on the basis of both product and customer segment; • revisitation of the organisational structure of the Private Customer and Business Sales and Public
Administration distribution channels. In the latter case, the new business model provides for the establishment of central and local teams specialising in the various industrial sectors and, in the case of affluent customers, dedicated, specially trained account teams, including sales staff, as well as pre- and post-sales specialists. During the year, in order to ensure more effective management of business customers, the areas of responsibility of the two channels were reconfigured, based on the customer segments managed, with particular reference to Local Government and small businesses, entailing the reallocation of sales staff in line with the new areas of responsibility defined; • the restructuring of the Chief Financial Office, in order to step up oversight of the various aspects involved in financial management and financial reporting, as well as to establish a reference point for relations with the financial community and implement transactions aimed at improving the Group's operating performance, partly in the light of the privatisation process completed during the year; • redefinition of the Internal Auditing function to strengthen relations with other entities forming part of the internal control system at Group level, thus providing a single interface with corporate bodies and greater specialisation among auditing functions on a process-by-process basis.
The global economy continued to grow in 2015, despite a slowdown compared with the previous year on the back of a decline in international trade. In particular, the slowing Chinese economy put a brake on trade, above all for energy and commodity producing countries. There continues to be considerable uncertainty over the timing and strength of the future recovery, resulting in a high degree of volatility on international financial and currency markets.
Among the advanced economies, the USA and UK recorded their seventh consecutive year of growth in 2015 and, in December, the Federal Reserve raised interest rates, albeit by a minimal amount, for the first time in nine years. Japan’s performance, on the other hand, came in below expectations, despite the central bank’s attempts at monetary stimulus.
Programme has proved effective in supporting economic activity overall, with the impact so far meeting initial expectations. However, ongoing deflationary factors led the ECB, in December, to strengthen its expansionary measures, prolonging its Quantitative Easing programme and cutting its deposit facility rate. These measures were reinforced in early 2016, with March seeing further cuts in the ECB’s interest rates (the main refinancing operations and deposit facility rates), an increase in monthly purchasing under the Quantitative Easing programme and new long-term refinancing operations for banks.
This freedom of access has yet to result in a significant restoration of trust in financial institutions.
This document has been prepared in compliance with the requirements of art. 154-ter, paragraph 5 of
Legislative Decree 58 of 24 February 1998 (the Consolidated Law on Finance). The recognition, measurement and classification criteria used are those established by the International Financial Reporting Standards (IFRS)
The following alternative performance indicators have been used: EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortisation) – this is an indicator of a company’s operating profitability before non-operating financial expenses and taxation, and depreciation, amortisation and impairments of non-current assets and investment property.
Gross ROE (Return On Equity) – the ratio of pre-tax profit to the average value of equity at the beginning and end of the reporting period. The performance of this indicator reflects, among other things, the change in the fair value reserves for financial assets classified as available-for-sale. In order to facilitate comparison of the
Group’s profitability, pre-tax profit has been used in calculating this indicator, rather than net profit for the period, given the different forms of taxation to which the Group’s operating segments are subject and changes in the related tax regulations in recent years.
NET INVESTED CAPITAL – the sum of non-current assets and working capital, deferred tax assets, provisions for risks and charges, provisions for employee termination benefits and pension plans and deferred tax liabilities.
INDUSTRIAL NET (DEBT)/FUNDS, IN ACCORDANCE WITH ESMA GUIDELINES, for the Postal and Business
The Group saw a significant improvement in its operating performance in 2015, with operating profit of €880 million up 27% on 2014 (€691 million in 2014) and profit for the year of €552 million (€212 million in 2014).
Poste Vita registering premium revenue of €18.2 billion (€15.5 billion in premium revenue in the previous year).
Other income from financial and insurance activities 3,657 3,772 (115) -3.0%
Profit/(loss) on investments accounted for using the equity method 3 (1) 4 n/s
on 2014. This reflects the strong performance of the insurance segment, where total revenue is €21,415 million (€18,840 million in 2014).
The Postal and Business Services segment where, as the reader will be aware, the growing popularity of digital media and communication has led to a progressive reduction in demand for traditional products and services, the operating performance has, for the first time in many years, seen a slowdown in the pace of decline in total revenue, which is down from the €4,074 million of 2014 to €3,893 million in 2015 (a reduction in revenue of €181 million compared with 2014, whilst the reduction in 2014, compared with the previous year, was €378 million).
Total revenue from Financial Services amounts to €5,188 million, marking a reduction of 3.2%. This reflects the reduction in average interest rates on deposits invested in securities and on deposits with the Ministry of the
As noted above, the Insurance Services segment delivered excellent results during the period, with Group companies (represented by Poste Vita and its subsidiary, Poste Assicura) recording premium revenue of €18.2 billion (premium revenue of €15.5 billion in 2014). This primarily reflects the performances of traditional Class I
8 This change was introduced by the 2015 Stability Law (Law 190 of 23 December 2014).
The net change in technical provisions for the insurance business and other claims expenses, which is closely linked to the above growth in premium revenue recorded by Poste Vita, amounts to €19,683 million, marking an increase of 10.1% compared with the previous year.
The above figure also reflects provisions for restructuring charges of €316 million (€256 million in 2014), made to cover the estimated costs to be incurred by the Parent Company for early retirement incentives, under the current redundancy scheme for employees leaving the Company by 31 December 2017.
Finally, the change in personnel expenses also reflects income of €11 million recognised by the Parent
Company in 2015, following the agreements concluded with the labour unions in July, regarding the reemployment by court order of staff previously employed on fixed-term contracts.
Totale revenue 8,658 5,762 18,841 325 (5,074) 28,512 Costs 9,063 435 18,030 293 - 27,821 Intersegment Costs 99 4,561 396 18 (5,074) -
Segment profit or loss – Postal and Business Services for the year ended 31 December (€m) 2015 2014
The main European incumbents continued to register falling letter volumes in 2015. The pace of decline varies from one operator to another depending on the level of internet penetration, the degree to which public and private organisations have shifted to electronic invoicing and billing, the level of market competition and deregulation, the degree of demand elasticity to price changes and other macroeconomic factors.
In the Postal and Business Services segment, the process of rationalising and optimising the various product and services offerings continued in 2015, aimed – partly through development of new technologies – at providing a more efficient and comprehensive response to customer requirements, especially those of business customers. The main marketing initiatives in the Letters segment regarded unrecorded mail, recorded mail and integrated services. Unrecorded mail saw the launch of the Posta Contest modular offering, a non-universal product for contract tenders and SMEs, offering additional premium services (for example, updates on the speed of delivery, fewer weight and format restrictions, etc.). A recorded mail offering called
opportunities in the e-commerce sector. In this regard, the Crono 1 service was launched. This marks a stepchange in Poste Italiane's express delivery services, by, among other things: bringing the entire express delivery offering for the B2C segment under a single brand (Crono), with the standardisation of service models, customer care, the number of days items may be stored free of charge in post offices, and second delivery attempts. The service provides for a single offering comprising four products for the domestic segment (Crono Express, Crono, Crono Economy, Crono Reverse), and one for the international segment
A number of innovations were introduced for Promopacco, another product specifically designed for business customers using e-commerce, which provides a "non-express" delivery service for small items under 3 kg throughout Italy. These innovations include: • a reduction in delivery times from the current 4/5 days to 2/4 days depending on the destination postcode; • a reduction in the minimum quantity per pick-up; • the possibility of transporting lithium batteries in accordance with the relevant regulations9; • improvement of the tracking system, with the introduction of new functions; • the introduction of an ancillary cash-on-delivery service.
Free for overseas shipment and delivery (to the United States and within the European Union) of signed items, packed by customers using special pre-franked packages that may be purchased at post offices.
Operations at the subsidiary, SDA Express Courier SpA, were affected by a major labour dispute that led to a 4-week stoppage at the most important automated sorting centre, located in Bologna. Indeed, strike action by the Confederazione dei Comitati di Base (Cobas), a rank and file labour union, had been growing in pace since early 2014, affecting not only SDA, but all the companies in the sector and entailing wildcat strikes at peak periods, thus forcing the biggest groups to enter into direct negotiations with Cobas. At the end of lengthy negotiations mediated by the Prefect of Bologna, agreement was reached in May.
Throughout the crisis period, SDA continued to guarantee the service provided to its customers, resorting to alternative solutions, such as the use of branch offices, in order to be able to find replacements for and limit the impact arising from closure of the Bologna hub. This obviously led to specific repercussions, in terms of shipments and the related daily turnover, as well as of operating costs, which rose substantially as a direct result of the emergency.
With regard to Contact Centre activities carried out within the Group, for both the internal and external markets, calls for tenders were launched to find a suitable provider to manage the entire service. On completion of the tender process, the companies to which SDA Express Courier had outsourced the services until the end of 2015 – Uptime SpA (28.57% owned by SDA) and Gepin Contact SpA (which owns 71.43% of
This termination, which takes effect on 1 July 2016, could have repercussions for jobs at both Uptime and
Strictly in terms of employment law – even though no court document or formal letter of notice has been received so far – the possibility of disputes arising with staff employed by the two companies cannot be ruled out. Any claims will be assessed on merit in view of the effective situation.
Public Administration service with a single PIN and seek certification of their identity only once from one of the digital identity managers.
In the light of these considerations, the performances of the Group's Letter and Philately services in 2015 registered reductions in volumes of 9.0% (387 million fewer items) and 5.4% (169 million fewer items), respectively, compared with 2014. Indeed, the decline in demand for Unrecorded Mail, which generated revenue of €1,020 million in 2015 (€1,091 million in 2014) and which, as already mentioned, is affected by esubstitution and the development of technological innovation, was only partly mitigated by the tariff increases introduced by AGCom on 1 December 2014 (with Resolution 728/13/CONS) and on 1 October 2015 (with Resolution 396/15/CONS). The new Ordinary Mail product, with a target delivery time of J+4, generated 107 million items and revenue of €121 million.
The compensation partially covering the cost of the Universal Service for 2015 was set at €262 million, awarded within the limits of the amount earmarked in the government's budget, as per the 2015 Stability
Law. Total compensation, amounting to €279 million, includes €17 million in revenue, deferred in previous years, paid from additional funding allocated by the Ministry of the Economy and Finance to cover prior contractual commitments.
(1) The 2015 Stability Law, which came into effect from 1 January 2015, has set the quality standard for the universal postal service, with the exception of the priority mail service, as four days after postage in the public postal network (j+4).
Ministry for Economic Development ordered the Company to pay the penalty by 24 March 2016.
The approval process for the Contratto di programma (Service Contract) for 2015-2019 was completed in 2015. On 6 October 2015, it was formally submitted to the European Commission for the usual assessments relating to European regulations regarding state aid.
Subsequently, the Contratto di Programma (Service Contract) for 2015-2019 was signed by the parties on 15
December 2015 and is effective from 1 January 2016 to 31 December 2019.
Comunicazioni (AGCom) for the years 2012, 2013 and 2014, regarding the contribution that all postal service operators are obliged to pay to AGCom to fund the regulator’s activities, in accordance with the provisions of
Legislative Decree 261/99, art. 2, paragraph 14, letter b). Poste Italiane paid the contributions for 2012 and 2013 to the regulator on 30 March 2015. The contribution for 2014 was paid on 11 December 2015, subject to the right to request a recalculation depending on the outcome of the appeal lodged by the Italian
Association of International Air Couriers (AICAI) and other postal operators, requesting cancellation of the relevant Decree, application of which was suspended following a ruling by the Lazio Regional Administrative
Highway Code. To date, the parliamentary procedure has yet to be completed, so the rights are still attributed to Poste Italiane.
Following implementation of the 2015 Stability Law, which sets out principles aimed at ensuring the sustainability of service provision, partly in anticipation of a future decline in volumes and in the light of the amount of resources available to fund it, the Company sent two proposals to the regulator that AGCom subsequently submitted for public consultation, via Resolution 163/15/CONS and Resolution 164/15/CONS, on 27 March 2015. On completion of the consultations, on 20 July 2015, AGCom adopted the following resolutions: • Resolution 395/15/CONS “Authorisation of an alternate delivery model for mail within the scope of the universal service”; • Resolution 396/15/CONS “New statistical quality targets and new tariffs regarding universal service mail pursuant to art. 1, paragraph 280, of Law 190 of 23 December 2014”.
Veneto regions, whilst the second phase will launch in April 2016 and the third in February 2017.
On completion of the gradual implementation of the new delivery model, from February 2018, the regulator will assess whether grounds exist for extending its authorisation of the model, taking into account any problems arising during the model's overall implementation period and the correspondence between the results achieved with the targets set out in Poste Italiane’s Business Plan. As notified on 25 September 2015,
Discussion of the request for suspensive relief is awaited. Subsequently, on 16 October 2015, the Italian
Federation of Newspaper Publishers (FIEG) and Avvenire Nuova Editoriale SpA lodged an appeal with the
Lazio Regional Administrative Court against the same resolution, as did the Piedmont branch of the National
Confederation of Local Authorities (ANCI), together with some municipalities in Monferrato, in a separate appeal. Discussion of the case was adjourned until 23 March 2016 to give the parties time to reach agreement.
In October 2015, Poste Italiane launched the first phase of the new alternate day delivery model in 256 municipalities in the Lombardy, Piedmont, Friuli Venezia Giulia and Veneto regions and, on 3 February 2016,
Regarding ordinary mail, the resolution transferred the safeguard cap mechanism previously applied to priority mail to this product, bringing forward to 1 October 2015 the option to apply the maximum rate of €0.95 (domestic retail rate for the first attempt at delivery). The mechanisms that strictly linked changes regarding the first attempt at delivery for domestic retail products to those to be applied to subsequent attempts at delivery and international and online products have been replaced by more flexible criteria relating to accessibility, fairness, reasonableness and non-discrimination. Future developments in the ordinary mail rate envisage allowing Poste Italiane to revise rates from 1 January 2017 until expiry of the Service
Contract, with adjustments applied at least once a year, in inverse proportion to the performance of volumes.
In light of the above, rate changes were applied from 1 October 2015, primarily regarding: • the introduction of Ordinary Mail, with rates starting from €0.95 for retail products, from €0.85 for business (and online) products, and from €1.00 for international products; • the restructuring of priority mail, which has been enhanced with a reporting service, with rates starting from €2.80 for retail products, from €2.10 for business (and online) products, and from €3.50 for international products; • setting the acknowledgement of receipt rate (ordinary mail only) at €0.95 for single mail items, €0.70 for multiple items and €1 for international items.
For all other regulated products (ordinary, bulk, registered and insured mail) the rapidity target is set at J+4 for 90% of mail items, and the reliability target at J+6 for 98% of items. Ordinary parcels are only required to meet the set quality target (90% of parcels at J+4).
Lazio Regional Administrative Court in relation to the part that provides for the tracking of Priority Mail, which would enable replacement of this universal service by couriers and might therefore entail an obligation for the latter to contribute to the universal service compensation fund.
Regarding the same matter, on 6 November 2015, the Antitrust Authority sent AGCOM a report, requesting the regulator to review the decision to include Priority Mail in the universal service, which according to the
Antitrust Authority, especially in the format offered to business customers, was likely to distort competition in the parcels/courier market. On 9 December 2015, AGCOM confirmed its decision to include the service in question in the universal service (with Resolution 662/15/CONS).
Registered Mail products (with rates starting at €4.50), International Registered Mail, physical and online (with rates starting at €5.95), Acknowledgement of Deposit (€5.45) and Acknowledgement of Notification (€4.50).
These new rates, set in accordance with the above-mentioned Resolution 728/13/CONS, were notified to the regulator and the general public beforehand, with 90 days' and 30 days' notice, respectively.
Following the above-mentioned Resolution 396/15/CONS, in which, among other things, the regulator had deemed that a review of Poste Italiane's network access obligations was necessary, Poste Italiane requested the launch of a procedure to review the regulatory framework relating to postal network access in November
Pursuant to the above-mentioned resolution, on 29 July 2015, the Ministry for Economic Development published terms and conditions containing procedures relating to the issue of the licence to provide postal services to the public.
other than Poste Italiane, and returned via the latter's network11. Exclusively regarding items handled by the operator GPS – which did not sign the Terms and Conditions of Service and brought a dispute before the
Authority – as a precautionary measure, the Resolution also sets out Poste Italiane's obligation to return items to the operator, without requesting any payment for the time being, pending the outcome of the dispute. The launch of the investigation is justified by the large number of such items, and certain difficulties involved in negotiating the related agreements for their return. Subsequently, on 12 May 2015, AGCom issued Resolution 287/15/CONS, launching a public consultation on the matter. Poste Italiane submitted its contribution on 6
November 2015), AGcom approved the final ruling on the matter, providing for revision by Poste Italiane, within 60 days of the publication of the above resolution, of its “Contract terms and conditions regarding the return of mail items entrusted by senders and other postal operators via Poste Italiane’s network”. The revised version will include three return procedures12 on the basis of which the rates will be reformulated, taking into account, among other things, the principle of cost orientation (avoidable cost) and applying discounts for certain volumes.
Poste Italiane has amended its Contract Terms and Conditions and informed all contracted operators, as well as GPS, about the changes made. Given the financial and operational impacts this ruling may have on Poste
On 11 March 2015, AGCom issued Resolution 121/15/CONS, launching a procedure aimed at measuring and reducing administrative costs arising from reporting requirements relating to matters for which the regulator13 is responsible. On 15 May 2015, Poste Italiane submitted an initial contribution to the regulator, prepared at the regulator's express request. On 1 December 2015, AGCom issued Resolution 65715/CONS, thereby completing the first initiative to measure administrative costs via a mapping and financial assessment procedure, partly based on contributions received from stakeholders. The assessment includes preliminary recommendations regarding possible rationalisation and simplification measures to be introduced as part of a long-term programme aimed at cutting administrative costs.
On 17 July 2014, AGCom published Resolution 364/14/CONS, launching a survey entitled “Universal Service: the needs of end users and potential future developments”, with the aim of assessing the adequacy of postal services, above all those classed as universal, in relation to the needs and expectations of end users. On 13
January 2015, AGCom issued Resolution 22/15/CONS, extending the deadline for completion of the survey by 180 days.
11 Article 18 of the General Terms and Conditions of Service relating to provision of the universal postal service (Resolution 385/13/CONS) only regulates the return of such items, referring the definition of conditions regarding the return of items to an agreement between operators, and only provides for the regulator's intervention in the event of a failure of such negotiations. 12 1) Pick up at sorting centres to which items are returned and/or referred; 2) pick up at one or more collection centres; 3) delivery by Poste Italiane to an address specified by other operators. 13 Reducing companies' administrative costs is one of the cornerstones of European better regulation policies (simplification and improvement of the quality of regulation), and is aimed at increasing their competitiveness.
Resolution 517/15/CONS of 25 September 2015, notified to the Company on 26 October 2015, the regulator filed the penalty procedure regarding 29 of the 42 violations initially claimed, while for the remaining 13 it extended the deadline for the procedure until 24 November 2015 in order to carry out further investigations.
In response to these alleged violations, Poste Italiane decided to pay the fine relating to 3 post offices, amounting to a total of €141,000, whilst opting to contest the other claims. On 18 February 2016, Poste
Italiane submitted an application for re-examination of the ruling to AGCom, arguing its case and requesting cancellation of the ruling. Moreover, on 19 February 2016 the Company lodged an appeal before the Lazio
On 29 September 2014 and 8 April 2015, the Company submitted to AGCom its plan for the rationalisation of post offices and delivery offices that are not financially viable, for 2014 and 2015. In response to the plan, a number of municipalities filed administrative challenges in 2015, contesting the Company’s proposals based on differing interpretations of the demographic criteria contained in AGCom 342/14/CONS. The related hearings on the merits are pending.
On 31 July 2015, the regulator notified Poste Italiane of Resolution 356/15/CONS, whereby the penalty procedure launched against the Company on 21 January 2015, regarding its failure to raise online registered mail rates together with the increase in retail registered mail rates, was filed. The specific matter in dispute was the alleged violation of the provisions of art. 9 of AGCom Resolution 728/13/CONS, which links the rates for the two products in question.
examine the legal implications of the disputed violations. On 26 February 2016, AGCom extended the deadline for the procedure by another 30 days, in order to further examine the legal implications.
On 6 November 2015, AGCom, issued Directives 08/15/DISP, 09/15/DISP, 10/15/DISP and 11/15/DISP, claiming that Poste Italiane had failed to meet certain obligations regarding provision of the Universal Service: continuity of service provision; communication with customers; and the legal process service. The Company submitted its defence against these claims to the regulator on 7 December 2015.
With Directive 1/16/DISP, the regulator claimed that Poste Italiane had failed to meet its obligations relating to legal process requirements, following inspections carried out at the Rome Tiburtino Main Distribution
Segment profit or loss – Financial Services for the year ended 31 December (€m) 2015 2014
Profits/(Losses) on trading, on disposals or repurchases and fair value adjustments in hedge accounting
Operating profit generated by the Financial Services segment in 2015 amounts to €930 million, marking an increase of 21.4% on the previous year (€766 million in 2014). This was essentially generated by BancoPosta
Italiane functions. Going into greater detail, net interest income of €1,543 million is down 2.6% (€1,584 million in 2014), essentially due to a reduction in returns on BancoPosta RFC’s investments, following a reduction in average interest rates on deposits invested in securities and on deposits with the Ministry of the
Italiane functions, in accordance with the “General Guidelines governing the process of contracting out
BancoPosta’s corporate functions to Poste Italiane” and in application of specific operating guidelines. The reduction is explained by the new method of calculating the charge, which is now based broadly on a
(further details are provided in the specific BancoPosta RFC Management Review).
(BTPs) and 10-year German Bunds remained below 130 basis points throughout the second half of the year, falling to 110 basis points at the end of the year.
Italian stock market outperformed leading international exchanges, chalking up a rise of approximately 13%.
EUR/USD exchange rate in December 2015 was 1.088 versus 1.233 in December 2014).
The ongoing crisis and its lingering effects mean that lending in Italy remains highly risky, with the banking system reporting an increase in gross doubtful loans over the year. In November 2015, such loans totalling approximately €201 billion, up around €20 billion on the previous year, whilst the percentage of total loans represented by doubtful loans stood at approximately 10.4% in the same month (9.5% in 2014; 2.8% in 2007).
The average interest rate applied to consumer and corporate loans continued to fall in 2015, with the rate standing at 3.26% in December 2015, compared with 3.38% in July 2015 and 3.6% in December 2014.
Italiane Group products. In the private current account segment, this strategy resulted in expansion of the
Depositi e Prestiti SpA, proceeded with a review of its offering, with a view to responding to changes in the market and in customer needs. The issue of certain Interest-bearing Postal Certificates (BFPs) was halted
Poste Italiane; BFP4x4RisparmiNuovi, aimed exclusively at savers desiring to top up their investments; and
Libretto Smart accounts. This product, which resembles a term account, enables holders to deposit money in their account in return for a fixed rate of return that is higher than the “base” rate, and varies depending on the chosen term. The only restriction imposed is that the amount deposited must be held in the account for the full duration of the contract.
Digital Italy (AgiD), the payment slip used to pay for public services can now be printed directly by the Public
In the electronic money sector, in which the Group is present with its Postamat card (7.1 million cards at 31
December 2015 and 6.9 million cards at 31 December 2014) and Postepay card (13.5 million cards at 31
Postepay and Bancoposta Click cardholders also now have the option of choosing to use the “Dynamic 3D
Secure” security solution (used by the MasterCard SecureCode and Verified by Visa services). Under this system, when making an online purchase from a 3D secure merchant, the cardholder has to enter a one-time password (“OTP”), which is valid for just one transaction and expires once used.
In addition to participation in the offering of shares in Poste Italiane, the sale and distribution of financial products included the placement, using the Group’s online trading platform, of six certificates issued by Banca
The offering of loan products for private customers has been repositioned through targeted price, product and process-related initiatives aimed at better meeting the needs of individual customer segments. The range of personal loans has been expanded, with the introduction of products designed to fulfil specific purposes
(debt consolidation, home improvements and energy efficiency) and offering a series of flexible options
The bank’s management of public funds and subsidies, and above all of the Fondo di Garanzia per le PMI (a guarantee fund for SMEs), continued to expand: applications, numbering over 105 thousand, are up 17% on 2014, with 103 thousand approved loans (up 19% on 2014), totalling more than €15 billion (up 17%
The bank reports net income of €32.4 million in 2015 (€37.6 million in 2014). Despite the fact that operating profit held up well (€101 million in 2015, compared with €100 million in 2014), the performance reflects previously mentioned provisions for doubtful debts, with particular regard to non-performing loans and extraordinary contributions to the Fondo Nazionale di Risoluzione (Italy’s National Resolution Fund) during the year.
Anima Holding signed a partnership agreement. This was followed, in the period from 24 September to 24
Finally, from 1 January 2016, the company has appointed Anima SGR to manage the assets of 3 existing mutual investment funds, in accordance with art. 33, paragraph 4 of Legislative Decree 58 of 24 February 1998 (Mix1, Mix2 and Azionario Internazionale). Management of the funds was, until 31 December 2015, carried out by Pioneer Investment Management SGRpA, again in accordance with art. 33, paragraph 4 of the above decree.
Total assets under management in relation to the company's lines of business amount to €70.29 billion at 31
December 2015 (up 13% on the €62.2 billion of the end of 2014). Of this amount, €64.4 billion (€57.2 billion at 31 December 2014) regards the investment portfolio management service provided to the Poste Vita insurance group and €5.7 billion (€5.0 billion at the end of December 2014) pertains to collective investment services. Given that there were no redemptions, the net inflow into the investment portfolio management service coincides with the gross inflow of €4.2 billion.
With regards to collective investment services, the gross inflow for the year amounts to €2.0 billion, up 18%
on the previous year (€1.7 billion in 2014). Redemptions amounted to €1.3 billion (€1.4 billion in 2014). The performance of gross inflows and redemptions has thus resulted in a net inflow of €676 million (€292 million
(2) Includes fees for the acceptance of payment slips, delegated services, fund transfers and other revenues from bank accounts
SpA ( tied to the achievement of targets in terms of net savings inflows and average deposits), contributed €1,610 million to revenue (€1,640 million in 2014).
As mentioned above, revenue from collection and payment services is down 8.3% compared with the previous year, declining from €1,154 million in 2014 to €1,058 million in 2015. In greater detail: • fees from the processing of payment slips and tax payments using forms F23/F24 are down 10.4% from €688 million in 2014 to €616 million in 2015, primarily reflecting revision of the fees received in return for processing F24 tax payments in accordance with the agreement reached with the Agenzia delle Entrate
(tax authorities) that came into effect in mid-July 2014; moreover, the figure for 2014 benefitted from transactions involving the payment of local taxes that were no longer payable in 2015; 14 Average deposits were up from €43.9 billion in 2014 to €45.2 billion in 2015.
Revenue from the placement and distribution of financial products issued by third-party entities is up 5.2%, benefitting, among other things, from increased revenue from the sale of loan products (€123 million in 2015, compared with €108 million in 2014). This reflects the following: • a €146 million increase in the value of loans disbursed (€1,284 million in 2015, compared with €1,138 million in 2014), resulting in an increase in revenue of €9 million (€95 million in 2015, compared with €86 million in 2014); • despite growth of €131 million in the amount disbursed (€302 million in 2015, compared with €171 million in 2014), a reduction of €0.7 million in fees from the sale of mortgages (€5.8 million in 2015, compared with €6.5 million in 2014), reflecting the revised fees paid by commercial partners; • an increase of €72 million in the volume of salary loans disbursed (€307 million in 2015, compared with €235 million in 2014), resulting in revenue growth of €7 million (€22 million in 2015, compared with €15 million in 2014).
Revenue from the provision of electronic money services is up from €229 million in 2014 to €241 million in 2015, essentially due to the positive performance of the Postepay product (generating revenue of €131 million, compared with the €119 million of the previous year). This benefitted particularly from an increase in income linked to the issue and use of Postepay Evolution cards.
Net financial income from assets related to traditional products 2,352 2,793 (441) -15.8%
Change in technical provisions where investment risk is transferred to policyholders
The Insurance Services segment reports operating profit of €487 million, marking an increase of €72 million compared with 2014. This significant result is primarily due to the positive operating performance of the Poste
Vita insurance group, whose sales of primarily Class I and V investment and savings products has resulted in total premium revenue of €18.2 billion, after the portion ceded to reinsurers (€15.5 billion in premium revenue in 2014).
Investment management expenses of €27 million at the end of 2015 compare with the €22 million of 2014.
These include portfolio management fees of €24.6 million and fees for the custody of securities, totalling €2.4 million. These increases are due to growth in the portfolio.
Infra-group commissions for distribution and collection amount to €414 million (€359 million in 2014), accounting for 2.3% of premium revenue.
Operating expenses of €115 million are up 21.1% compared with 2014, reflecting increases in the quality and size of the company’s workforce and its investments. However, operating expenses continue to account for around 0.6% of premium revenue and 0.1% of provisions, broadly in line with the figures for 31 December 2014 and well below the market average.
compared with 2014), which more than offset a reduction in Class I premiums (down 6% compared with
In terms of new business for individual and collective policies sold by Italian and non-EU-registered insurers
In terms of distribution channel, post offices and banks account for approximately 70% of sales (up around 5%
Finally, sales of pure risk insurance and individual pension plans, whilst making a marginal contribution of just 1.7% to revenue, account for almost 30% of new business or premiums written during the year. Clearly, the value of these inflows, made up of regular premiums collected over the very long term, is not to be found in the amount of the premiums collected in the year of issue, which given the nature of the policies is obviously low. Their value is rather to be found in the intrinsic financial and commercial nature of the products, which
In the non-life market, insurance companies as a whole (Italian, EU and non-EU-registered companies)
In terms of distribution channels, agents account for 79.5% of non-life sales. The number of policies sold through other direct channels (in-house agents, telephone and online sales) accounted for 8.4% of total sales at the end of September 2015 (in the case of products other than car insurance, the figure is approximately 7.8%), whilst 4.8% of policies are sold through banks and post offices.
Thanks partly to a constant focus on products, stepping up support to the distribution network and growing customer loyalty, the efforts of the parent company, Poste Vita, concentrated almost exclusively on the offer of
While the contribution of the non-life business to the Group’s results is still limited, the segment recorded a positive performance, with gross premium revenue for the period of €93.3 million (on sales of approximately 287 thousand new policies), up 18% compared with 2014.
In terms of investments during the year, against a backdrop of falling interest rates and declining yields on government securities, the insurance group continued to pursue a strategy for separately managed accounts designed to increasingly match investments to insurance obligations and, at the same time, run a portfolio that can provide stable returns.
products (€68.4 billion at the end of 2014). Provisions for products where the investment risk is borne by policyholders amount to €7.2 billion (€8.5 billion at 31 December 2014). Deferred Policyholder Liability (DPL)
With regard to organisational aspects, during 2015 the Company continued to expand and develop the quality of its workforce, in step with its growing size and the increase in business. This has enabled it to follow up on the large number of projects in pursuit of growth and achieve continuing functional/infrastructural improvements in key business support systems. In particular, all the activities designed to ensure compliance with the prudential Solvency II regulations, which came into effect from 1 January 2016, continued. This included adaptation of the Company’s governance model and organisational and operating structure, with a view to strengthening decision-making processes and optimising risk management procedures, in order to increase and safeguard value creation. The following were carried out within the framework of the transitional measures drawn up by the EIOPA (the European Insurance and Occupational Pensions Authority)
The two regimes are based on structurally different approaches. Solvency II quantifies the capital needed by an insurance company based on its effective risks. In contrast, under Solvency I, capital requirements are computed on a simplified basis, primarily based on the size of the technical provisions. The transition from one regime to the other thus results in a reduction in capital requirements from €3,567 million to €1,687 million.
Solvency II regulations have also introduced major changes in the calculation of the available margin which, under the new regime, is based on the difference between the market value of assets and liabilities, the latter increased by a risk margin. Under Solvency I, available capital is, instead, calculated on the basis of statutory accounting policies. This has resulted in an increase in available capital for solvency purposes from €4,044 million to €6,841 million as a result of the transition between the two regimes. This increase is largely
explained by the present value of future gains on the existing portfolio, quantification of which, at the reporting date, is of particularly significance for Poste Vita SpA.
Data Software Srl, which in turn owns a 100% interest in S.D.S. Nuova Sanità Srl, for a total consideration of €20.9 million. The transaction forms part of the wider strategy of broadening the Group’s offering of health insurance for individuals and groups of people. Both companies operate in the IT sector, providing services and managing claims on behalf of, among others, private health funds that offer integrated healthcare
Overall, total revenue is up 2.8% to €334 million, benefitting from the increase in voice revenue and the flatrate offering. Whilst volumes have increased, costs have fallen, declining from €311 million in 2014 to €303 million in 2015. In particular, personnel expenses are down 12% to €21 million (€24 million in 2014), due to a reduction in the average workforce. Depreciation, amortisation and impairment losses are also down 19% to €39 million (€48 million in 2014), following termination, in 2014, of the finance lease for the MVNE
Authority (AGCom) in its Quarterly Bulletin revealed that the slowdown in customer acquisitions, affecting all
In the business market, operators aim to play a leading role in the digital transformation of Italian companies across all sectors, including the Public Administration.
Operations during the year saw innovation of the commercial offering, which was enhanced by various initiatives, and the Company's further expansion in the mobile payment services market, in which PosteMobile consolidated its position, registering total transactions of €460 million (up 36% on 2014). The steady growth of the app which, with more than 1.2 million downloads, is one of the leading mobile wallet services in the
Italian mobile market, was further strengthened with the introduction of a process that enables customers to link their Conto BancoPosta and Postepay accounts to their SIM card, directly via the internet or using a smartphone, without having to visit a post office. In 2015, more than 160,000 customers linked their Conto
service, strengthening its competitive positioning with respect to traditional mobile phone operators and becoming Italy's first MVNO to offer its customers a fast 4G service, delivering data speeds up to 150 Mbps.
Investments accounted for using the equity method 214 1 213 n/s
Working capital : Trade receivables and other receivables and assets 5,546 7,247 (1,701) -23.5%
The Poste Italiane Group’s net invested capital at 31 December 2015 amounts to €999 million, amply financed by equity. A comparison with the end of the previous year, when the figure was €3,677 million, shows a significant reduction due to movements in working capital, following the collection of significant receivables, as described in greater detail below.
Non-current assets of €3,010 million are up €117 million compared with the end of 2014. The movement in this indicator in 2015 reflects the Parent Company’s acquisition of a 10.32% interest in Anima Holding SpA
from Monte Paschi Siena SpA (BMPS) on 25 June 2015 for a consideration of €210.5 million. Further movements in non-current assets reflect capital expenditure of €488 million, primarily relating to investment in
Working capital amounts to €1,301 million at 31 December 2015, marking a decline of €2,640 million compared with the end of 2014. This primarily reflects recognition of the main items receivable from central and local government entities after discussions with the MEF. On 7 August 2015, the MEF committed “the
Ministry to complete all the procedures necessary in order to pay the amounts due in accordance with procedures and timing consistent with the current privatisation process (…) including provision of the necessary funding” and, to this end, sent the Parent Company a letter signed by the Director General of the
Treasury Department and General Accounting Office. As a result of this commitment, the Company received amounts accruing in 2015 and in previous years as Universal Service compensation and other items, making a total of €1,628 million.
Equity amounts to €9,658 million at 31 December 2015, marking an increase of €1,240 million compared with 31 December 2014. The increase primarily reflects profit for the year of €552 million and movements in the fair value reserves net of tax (€926 million), as a result of positive and/or negative movements in the value of investments in securities held by BancoPosta RFC and Poste Vita SpA.
Reductions in equity, in 2015, include the Parent Company’s payment of dividends to the then sole shareholder ,the MEF, totalling €250 million.
Technical provis ions for insurance business - - (100,314) - - (100,314)
Technical provis ions for c laims attributable to reinsurers - - 58 - - 58
Cash and deposi ts attributable to BancoPosta - 2,873 - - - 2,873
An analysis of the industrial net funds/(debt) of the Postal and Business Services and Other Services segments at 31 December 2015, in accordance with ESMA guidelines, computed on the basis of paragraph 127 of the recommendations contained in ESMA document 319 of 2013, is provided below: B. Other cash equivalents 1,330 317
of which: - Postal and Business Services 264 (1,481) - Other 38 30
Operating activities generated a cash inflow of €2,563 million as a result of, among other things, profit for the year (€552 million) and the positive movement in working capital (up €2,040 million). As noted above with regard to movements in working capital, this reflects the collection of Universal Service compensation and other receivables.
The cash generated was used to fund the acquisition of a 10.32% interest (€210.5 million) in Anima Holding
SpA, to finance capital expenditure which, after disposals, resulted in an outflow of €484 million, and to pay off short-term borrowings of approximately €800 million.
In this context, activities during the year were primarily aimed at supporting change management and implementation of new organisational models, as well as compliance with regulatory requirements, partly through a radical reorientation of management training.
A total of 3 million training hours were provided, corresponding to around 1.2 million participations and approximately 432,000 person days of training.
Business Sales and Public Administration 1,844 8,067 858 10,769 1,605 8,401 188 10,194
Classroom hours converted to person days 256,746 60,187 1,403 318,336 238,435 56,436 1,134 296,005
Classroom training accounted for 74% of the total number of hours and online training the remaining 26%.
Classroom training represented 32% of total participation and online training 68%.
Management training predominated in 2015, in terms of both initiatives and the number of staff involved, resulting in 71,000 training hours, provided to approximately 2,000 staff (senior managers and middle managers responsible for organisational roles) and corresponding to more than 8,000 participations.
In particular, for top management and executives, three series of meetings dubbed "fireside chats" were held to explore the following themes: governance and leadership; the ability to analyse and make decisions in complex situations; and ideas about leadership through the examination of literary texts, focusing on future challenges and innovation.
With regard to workplace safety training, a total of approximately 779,000 hours were provided, with more than 109,000 participations. Approximately 74% of the training was carried out in the classroom and 26%
In 2015 the Ente Bilaterale per la Formazione e Riqualificazione del Personale (Bilateral Agency for Staff
Recruitment and selection activities in 2015 primarily focused on the quest for new business and finance graduates to work as customer sales specialists in the Private Customer function, with a view to strengthening frontline commercial activities and rolling out the network of financial promoters.
Technology, the Chief Financial Office and Strategic Marketing were all strengthened with the external recruitment of skilled staff.
Ahead of the “2020 Plan”, an architecture was defined for the development process, including the segmentation of key roles and talent pools, in line with strategic and business requirements, and the managerial skills model was also revised.
For middle managers, the talent assessment tool was redefined and enhanced with a subsequent coaching phase. During the year, the relevant assessment process (called “MLab” – Managerial Lab) involved 102 people.
With a view to upgrading and developing core business skills, mapping and assessment processes regarding
"professional" skills (the SkillUp project) were planned, involving approximately 2,500 people during the year, including sales staff, Distribution Centre managers and ICT staff.
In May 2015, the "Your opinion makes an impression" survey, a listening initiative aimed at all Group employees, was launched. The opinion gathering and data analysis phases have been completed, and will be followed in 2016 by interventions in the identified areas for improvement.
In accordance with the usual timing, performance appraisals for middle managers and white-collar staff were conducted in January, with completion of the feedback phase in March. Approximately 93,000 appraisals were carried out (3,000 more than in 2014) by around 8,400 appraisers. In addition, a special session was held in September relating to the first half of 2015, focusing on the role performed by postmen and women.
The project's main objective was to make further adjustments to the instruments used, with a view to including postmen and women in the appraisal process. The Delivery Centres identified were selected on the basis of statistical significance, and the project involved approximately 5,000 staff.
Industrial relations at Poste Italiane primarily entailed negotiations during 2015 with labour unions on the following matters.
Various meetings were held regarding the “Poste 2020” Business Plan, which was presented to the labour unions on 16 December 2014. The primary purpose of these meetings was to manage the consequences of the repercussions on staff working conditions arising from implementation of corporate restructuring processes.
After these exploratory meetings, on 12 June 2015 the Parties signed an agreement that defines local redeployment and rebalancing processes relating to staff involved in the organisational changes.
The Plan's impact on the Mail, Logistics and Communication function were explained at a series of labour union meetings beginning on 5 March 2015. The agreement relating to reorganisation of the function was signed by all the labour unions on 25 September 2015. In addition, the agreement deals with the impact on employment resulting from implementation of the processes involved in adoption of a new operating model, which identifies the initiatives needed in order to boost effectiveness and efficiency and to optimise organisational strategies, partly with a view to enhancing quality and innovation.
On 30 July 2015, agreement was reached with the labour unions regarding the performance-related bonus for Poste Italiane SpA and the following Group companies: Poste Vita SpA, Poste Assicura SpA, Postetutela
The agreement will last for one year and enables measurement of the contribution of staff to achievement of the company’s objectives for 2015. The agreements also postponed definition of the structure of the bonus for the following three-year period until early 2016.
On 30 July 2015, two agreements were signed with the labour unions dealing with the issue of offering permanent employment to staff formerly employed on fixed-term contracts and temporary and agency staff.
The agreements offered stable employment to people working for the Company following to a provisional court decision in their favour. These people had not benefitted from similar previous arrangements.
Riqualificazione del Personale (the Bilateral Agency for Staff Training and Retraining), the work of the
Organismo Paritetico Nazionale (Joint National Body) for health and safety in the workplace also continued, with efforts focused on standardised and correct application of health and safety guidelines, as well as dealing with any problems as they arise. In particular, the Company presented the new organisational structure and the reorganisation of “Employers” and the accompanying changes to the way responsibilities relating to health and safety in the workplace are assigned.
The development of teleworking is continuing to have a positive effect on work-life balance, with an average of around 180 teleworking employees operating during the year. These are predominantly persons with specific social needs. As part of initiatives aimed at encouraging active parenthood, the “maam U” project for 500 employees on maternity leave was launched, involving the participation of 150 colleagues in the first phase of the project. At the same time, the Company's provision of crèche services was stepped up, with activation of new places for the children of employees in Milan, in addition to those already available in Rome and Bologna.
Compared with the previous year, the number of labour disputes is slightly down by around 6%; the number of actions brought amounted to 1,379, compared with 1,460 in 2014.
Safety and/or Internal Auditing functions, namely on the basis of specific reports received from the competent local departments.
Finally, the department that deals with Labour Disputes handled specific pre-dispute processes regarding matters other than fixed-term employment contracts, with the aim of reducing the total number of disputes.
This was carried out via careful analysis of approximately 800 challenges and/or claims arising during the year and assessment of the actions to be taken.
for the year ended 31 December (€m) 2015 2014 2013 of which Poste Italiane SpA 176 152 191
Total capital expenditure 488 436 504 of which Poste Ital iane SpA 383 332 419 of which Poste Italiane SpA - 1 -
Information Technology. Indeed, IT continues to be an important enabling factor in pursuing the goals set out in the Group's Business Plan. Therefore, in continuation of the strategy of focusing on the Company's product and service offering and boosting the industrialisation of processes, infrastructure and business support, an initiative was launched in 2015 that led to the identification of 38 project platforms, rationalising and grouping together initiatives into categories. In addition to supporting the Business Plan, this process entailed reshaping the strategic roadmap in order to transform Poste Italiane's IT, encompassing initiatives launched in previous years and incorporating them into a single context. In line with this approach, work on consolidating and developing hardware, storage and backup systems continued, whilst other initiatives were aimed at rationalising the Group's Data Centre infrastructure. Over the years, these activities have led to the original 35 data rooms distributed nationwide being reduced to the current 6 Data Centres15, which will be joined by the new Data Centre in Viale Europa in Rome. In addition, a high-level design project was also launched during the year to further optimise the Data Centres by restructuring and redesigning all the server farms, with a view to standardising services. This project will be developed over the coming years. The Group also invested in storage and disaster recovery infrastructure, linked to the upgrade of equipment and normal expansion.
Business Plan, will involve Poste Italiane in an overall redesign of its customers' user experience (retail and 15 The 6 Data Centres in operation are: Roma Arte Antica, Roma Congressi, Pomezia, Bari, Rozzano and Turin.
business) across all the key digital touch points (for example, websites, ecosystem app, home banking, etc.). In tandem with the drawing up of an overall transformation strategy, the first tactical steps were taken, laying the foundations for the subsequent development path (for example, website restyling, the simplification of browsing apps, etc.).
Work on ensuring the security of the IT infrastructure that supports the provision of counter services (the
On the customer data front, assessment activities were continued, with the aim of rationalising fragmented data into systems and bringing them together with the creation of a single Customer Database, closely linked to the Customer Relationship Management (CRM) and Enterprise Data Warehouse (EDWH) systems, which had already been optimised and enhanced during the year.
The overall strategy for the re-engineering of support systems for postal and logistics processes was also revisited in 2015. Substantial investment will be made in this area over the course of the Business Plan, with the aim of innovating, strengthening and consolidating application and infrastructure architecture as a whole.
Finally, a sufficient level of investment in application systems was maintained with a view to supporting the services provided by Poste Italiane. Activities relating to computerisation and the upgrade of IT equipment continued with the upgrade of post office, administrative office and delivery facilities, which substantially reduced the amount of obsolete equipment in operation. Approximately 900 free Wi-Fi points were also activated in an equal number of post offices. The rollout of this upgrade and installation process will continue during 2016, in confirmation of the key role Poste Italiane wishes to play in Italy’s digital transformation.
On the IT security front, Poste Italiane paid special attention to data security, with the launch of an information security risk assessment, which was followed by preparation of a Permanent Security Plan to be implemented in two phases, the first in 2015 and the second to be completed by the end of 2017, in order to further strengthen this important area. The security of work stations was also boosted and the procedure for managing ICT incidents in accordance with current supervisory requirements was updated.
Finally, as part of ongoing efforts on the cybersecurity front, special attention was paid to services provided to customers via digital channels, with the oversight and initiatives implemented by CERT, the internationally accredited Computer Emergency Response Team, which is a focal point for joint coordination of incident prevention and response activities.
In terms of Group companies, the investment activities of PosteMobile SpA primarily related to the development of landline services, with the aim of supporting the evolution of Group business processes, and activation of the “Poste Wi-Fi” service inside post offices.
Activities regarding application platforms continued, aimed at developing the integrated Group-level system for tracking items of mail.
Investments in associates in 2015 total €210.5 million and relate to the acquisition of a 10.32% interest in
Implementation of the monitoring process for the principal risks began, as did use of the related risk treatment plans, utilising appropriate indicators in order to analyse performance and the state of implementation of the corrective actions put in place.
Model allows the identified risks to be classified in uniform categories applied throughout the Group, in line with the relevant best practices and, where applicable, specific regulatory requirements. The Risk Model provides a continuous point of reference for the management, control and integrated reporting of risks. As a result, it is periodically revised to reflect the Group’s operations and in response to the results of assessment activities. The Risk Model has established five categories of risk: strategic, regulatory and compliance, insurance, operational and financial, as described below.
This category of risk regards technical risks resulting from insurance operations (non-life technical, health technical and life technical) and is dealt with in Poste Italiane’s financial statements for the year ended 31
Operational risk refers to the risk of losses resulting from inadequate or failed internal processes, people and systems, or from external events. This category of risk includes the risk of workplace accidents or injuries to employees, the risk of criminal acts or attacks resulting in damage to operating assets or activities, fraud, including online fraud (e.g., phishing), and unauthorised transactions, including errors resulting from the failure of IT or telecommunications systems.
Private Customer and Business Sales and Public Administration), and 1 that includes the remaining staff functions. There are evident similarities in the operating processes within each function, which can thus be dealt with as a uniform whole by the Security and Safety function from the point of view of safety at work.
Group. The model sets out the related roles, responsibilities and activities in order to provide strategic guidance for the monitoring of the Group’s data security infrastructure. Security was, in fact, given significant attention in 2015, through the conduct of specific Information Security risk analysis and assessments, resulting in the definition of the security requirements needed to ensure an adequate degree of protection for the data handled by the Group’s information systems. These activities regarded the development of solutions to protect technology infrastructure, the implementation of solutions designed to protect the Group’s data network, an increase in the operational efficiency and level of security of the processes and systems used to control users’ access to the information system and the implementation of security measures designed to protect applications.
(Computer Emergency Response Team), bringing together and coordinating the Group’s prevention and emergency response activities.
These types of risk are dealt with in Poste Italiane’s financial statements for the year ended 31 December 2015
Events after the end of the reporting period are described in other sections of the Annual Report for 2015, and there are no other significant events occurring after 31 December 2015.
In the Insurance and Financial Services segment, the Group’s aims to strengthen its position in the market for capital guarantee funds, where further growth in deposits is expected. It will also continue with its strategy of offering an innovative and effective response to growing demand for supplementary pension products and personal protection insurance, by combining investment and protection products in order to offer simple, but highly professional, solutions. This will enable the Group to consolidate its position in the life sector and improve its position in the welfare market.
In terms of traditional mail products, the Group will continue with the restructuring process embarked on in 2015, taking advantage, on the one hand, of the new regulatory framework and, on the other, the efficiency improvements achieved thanks to implementation of the new delivery model, in agreement with the unions.
The current transformation process will continue in 2016 in order to permit, again this year, payment of a dividend equal to at least 80% of consolidated net profit.
In 2012, the Authority launched an investigation (A/441) regarding Poste Italiane SpA to establish whether the Company had abused its dominant position in the deregulated postal services market by not charging
On 10 September 2015, the Company finally notified the Authority and the other parties in the proceedings of its decision to waive its appeal (R.G. no. 2679/2014) submitted to the Council of State with a request for the expenses to be apportioned among the parties. With ruling 1160/15, filed on 13 October 2015, the Council of
Italiane responded to the Authority’s requests for information, and gave the commitments provided for in art.
27, paragraph 7 of the Consumer Code, with the aim of avoiding a fine. The commitments were then further added to and submitted to the Authority, which responded positively. Having extended the proceedings until 10 August 2014 in order to obtain a prior opinion from the Bank of Italy on the commitments put forward by
Poste Italiane, on 1 August 2014 the Authority closed the investigation without imposing a fine.
sent a request for further information, to which a response was made on 21 November 2014. At the same time, the Company submitted revised commitments.
On 9 March 2015, the Authority launched an investigation (PS/10009) into alleged violation of articles 20, 21 and 22 of the Consumer Code, regarding the “Libretto Smart” product. Specifically, the Authority claimed that, in advertising campaigns in February 2015, emphasis was placed on returns offered by Libretto Smart without providing details of the offer the advertised returns were associated with. On 3 April 2015, replies to the requests for information received at the start of investigation were sent to the Authority and, on 23 April 2015, the first set of commitments was submitted, followed by a second set on 12 May 2015. After rejecting the Company's set of commitments, on 3 July 2015 the AGCM notified its intention to extend the investigation to include Cassa Depositi e Prestiti SpA, and asked the parties to provide information and documentation regarding relations between the two parties during preparation of the advertising materials.
On 21 December 2015, AGCM notified Poste Italiane of its final ruling in which, pursuant to articles 20, 21 and 22 of the Consumer Code, it deemed the Company's conduct unfair and imposed a fine of €540,000, limited to a tenth of the maximum applicable amount taking into account the mitigating circumstance that
Italiane lodged an appeal against this ruling before the Lazio Regional Administrative Court (RG 2288/16) on
December 2015, the Authority deemed that Poste Italiane – at variance with the provisions of art. 8, paragraph 2 quater of Law 287/90 – failed, when requested, to offer a competitor of its subsidiary,
PosteMobile, equal access to goods and services that are exclusively available from Poste Italiane, as they form part of the activities carried out within the scope of the Universal Postal Service. In the same ruling, the
Court (RG 2325/16) on 25 February 2016. At the hearing convened to hear the application for interim relief, a hearing on the merits was scheduled for 9 March 2016. PosteMobile also lodged an appeal against the final ruling before the Lazio Regional Administrative Court (RG 2381/16) on 19 February 2016.
Italiane and PosteMobile and requesting that the latter be ordered to pay compensation for damages incurred arising from the violations referred to in the above ruling, as well as court fees. The preliminary hearing has been scheduled for 7 April 2016.
Prior to this hearing, Poste Italiane, which deems its actions to have been in full compliance with current regulations and has already appointed a counsel for the defence, will file documents at the Registry to be submitted to the judge and prepare an appropriate response, based on a sound defence of its conduct.
Infrastructure and Transport submitted a cross appeal. The hearing on the merits was held on 17 November 2015. On 28 January 2016, the Council of State handed down a final ruling on the appeal, accepting the cross appeals and declaring the main appeal barred to proceed further, thereby confirming the contested judgment.
On 28 September 2015, the Italian National Anti-Corruption Authority (ANAC) notified Poste Italiane that it was launching an investigation to verify the administrative procedures carried out regarding upgrade and restyling work at the Sesto Fiorentino sorting centre (FI). The Authority asked Poste Italiane to submit an explanatory report on the contract, together with the related documentation. On 17 November 2015, the person responsible for the procedure sent the documented report to ANAC and asked to testify before the regulator.
(procedures launched in implementation of supervisory powers in accordance with art. 6 of the Public
The Court of the European Union’s sentence of 13 September 2013 upheld Poste Italiane SpA's appeal against the European Commission's decision of 16 July 2008 regarding state aid (Decision C42/2006), ordering the latter to pay the related costs. In compliance with the Decision, and as requested by the Ministry of the 82 Poste Italiane – Directors’ Report on Operations 2015
Budget Law”) were in line with the market. To date, the expert has submitted to the Commission a preliminary revised version of the assessment originally carried out by the Commission. Poste Italiane intends to actively collaborate with the national authorities to demonstrate the fairness of the returns it received during the relevant period.
On 6 February 2015, the European Commission notified that it had completed its preliminary investigation without finding evidence of state aid as regards Poste Italiane’s investment in Alitalia; Poste Italiane has invested in the airline under the same terms and conditions that would apply to two private operators (a socalled pari passu transaction).
Moreover, during 2015, four violations of anti-money laundering legislation were notified to Poste Italiane
structure and procedures as part of a specific project implemented by BancoPosta. A detailed note was sent to
CONSOB in June 2015, with a view to illustrating the expected development of the investment services segment and the state of progress of the plan. On completion of this consultation phase, on 7 August 2015 the CONSOB sent a note containing a number of observations, which will be duly taken into account in the planning of future actions, as well as requests for additional clarification of certain aspects. Replies were sent to the Authority on 30 September 2015. The Company will periodically inform the relevant offices on the state of progress of the various activities.
As part of this inspection, the CONSOB also launched a penalty procedure that was completed on 26 August 2015, with notification of the Company, as jointly and severally liable party, of the ruling that has fined certain representatives of the Company a total amount of €60 thousand for violation of art. 21 of the Consolidated
Poste Italiane replied to the Authority before the specified deadline, noting that it had launched a special internal audit in order to be able to provide comprehensive replies to the requests made, as well as updates on subsequent outcomes and the final audit.
So far 246 reprimands have been notified, entailing 15 dismissals and 156 disciplinary measures without dismissal relating to managerial and non-managerial staff.
From 29 September to 1 October 2015, the Nucleo Polizia Tributaria Roma (Tax Police), in implementation of
Data Protection Authority order 21876/97157, as per the Data Protection Code, inspected PosteMobile's premises.
In this regard, participation in international greenhouse gas reduction programmes, such as the IPC’s
As over two-thirds of Poste Italiane's polluting emissions are attributable to the energy used to supply buildings, once again in 2015 many energy efficiency initiatives were concentrated on property assets. The plan to optimise energy use by encouraging staff to adopt a virtuous approach to energy continued. This has also involved training courses on energy saving, and the introduction of technical initiatives designed to reduce waste, including the installation of timers, the monitoring of consumption on Saturday and Sunday, measurement at the sites where energy consumption is highest and the correct setting of temperatures and time-settings for cooling and heating systems. Advanced energy consumption monitoring and control systems are operating in 10,000 post offices, and human presence sensors have been installed in more than 18,000 post offices, with estimated savings amounting to more than 3 GWh of electricity in 2015.
Attention continues to be paid to renewable energy. In 2015, thanks to more than 1,500 kW of power from photovoltaic plants installed on buildings, almost 1,600 MWh of electricity was derived from renewables. In addition, 95% of the electricity purchased from the grid comes from renewable sources.
Internal related parties include subsidiaries and associates directly or indirectly managed by Poste Italiane SpA.
External related parties include the majority shareholder, the Ministry of the Economy and Finance, entities controlled, also jointly, by the Ministry of the Economy and Finance, and companies associated with them.
The Group’s key management personnel are also related parties. The state and public bodies, other than the
Details of all the Poste Italiane Group’s and the Parent Company’s related party transactions are provided in
Poste Italiane’s financial statements for the year ended 31 December 2015 (3.5 and 4.4 – Related party transactions).
Profit for the year 451 57 394 n/s n/s: not significant
Other income from financial activities is up from €389 million in 2014 to €433 million in 2015, essentially reflecting gains on the sale of BancoPosta RFC’s available-for-sale financial assets.
Total costs are down 3.3% from €8,207 million in 2014 to €7,938 million in 2015. A closer look shows a decrease of €102 million in the cost of goods and services (down 5.3%), primarily reflecting a reduction in interest expense (down €70 million on 2014) paid to BancoPosta’s private customers.
Sunday, the reduction reflects a decrease in the average workforce employed during the year (more than 900 fewer Full-Time Equivalent staff employed on average in 2015).
Personnel expenses also benefit from net releases of €12 million from provisions for disputes (net releases of €6 million in 2014). This reflects updated estimates of the liabilities and related legal expenses, based on both the overall level of claims actually paid and application of the so-called Collegato lavoro legislation, which has introduced a cap on compensation payable on current and future claims brought by workers on fixed-term contracts, who have been re-employed on permanent contracts by court order.
Decree 368/0117 – the so-called “causale finanziaria” – amounted to 2, equal to 2 FTEs; the number of people on fixed-term contracts as defined by art. 1, paragraph 1 of Legislative Decree 368/01, as amended by Law
The figure for depreciation, amortisation and impairments is down 16.1% from €578 million in 2014 to €485 million in 2015. This includes €12 million in net reversals of impairments to reflect updated estimates of the value of industrial buildings owned by the Company (buildings used in operations) and commercial buildings leased by the Company (leasehold improvements). The Company regularly assesses the potential impact on the value in use of such properties, should the future use of such assets in operations be reduced or halted.
Net finance costs total €18 million, compared with net financial costs of €108 million in 2014. The figure for the previous year reflected, among other things, the impairment loss recognised on the investment in Alitalia-
In terms of the composition of the tax rate, the effective rates for IRAP and IRES in 2015 are 0.111% and 24.24%, respectively; the difference in the effective tax rate for IRES, compared with the statutory rate of 27.5%, primarily reflects the deductibility (95%) of dividends received from certain subsidiaries.
Poste Italiane SpA’s net invested capital amounts to €1,896 million, amply financed by equity. A comparison with the end of the previous year, when the figure was €4,612 million, shows a significant reduction due to movements in working capital, following the collection of significant receivables, as described in greater detail below.
Further movements in non-current assets reflect capital expenditure of €383 million, as described in the section “Capital expenditure and financial investments”, and depreciation, amortisation and impairments
(after reversals of impairments) of property, plant and equipment, intangible assets and investment property, amounting to €485 million.
Working capital amounts to €277 million at 31 December 2015, marking a decline of €2,649 million compared with the end of 2014. As described in the analysis of the Group’s working capital, this primarily reflects collection of the following: Universal Service compensation,; refundable direct taxes; the amount due
from the majority shareholder, the MEF, as a result of the transfer of funds to the MEF pursuant to European
Commission Decision C42/2006; fees receivable in return for the distribution of postal savings products.
Equity amounts to €7,646 million at 31 December 2015, marking an increase of €1,141 million compared with 31 December 2014. The increase primarily reflects profit for the year of €451 million and movements in the fair value reserves net of tax (€931 million), as a result of positive and/or negative movements in the value of investments in securities held by BancoPosta RFC. These increases in equity were partially offset by the payment of dividends to the then sole shareholder, the MEF, totalling €250 million.
Financ ial l iabi l i t ies (55,083) (54,004) (1,079) 2.0%
document 319 of 2013, is provided below: B. Other cash equivalents 1,197 196
Operating activities generated a cash inflow of €2,303 million as a result of, among other things, profit for the year (€451 million) and the positive movement in working capital (up €2,223 million), reflecting the collection of Universal Service compensation and other receivables.
SpA, to finance capital expenditure which, after disposals, resulted in an outflow of €380 million, and to pay off short-term borrowings of approximately €1,600 million.
Net funds amount to €5,750 million at 31 December 2015, marking a significant improvement on the figure for 31 December 2014 (when net funds totalled €1,893 million). This reflects, among other things, the component linked to fair value measurement of BancoPosta RFC’s investments in securities, amounting to 94 Poste Italiane – Directors’ Report on Operations 2015
Directors and published in the “Governance” section of the Company’s website.
The system of internal controls consists of a body of rules, procedures and organisational structures, which aim to prevent or limit the consequences of unexpected events, enable the achievement of strategic and operating objectives and compliance with the relevant laws and regulations, and ensure the fairness and transparency of internal and external reporting.
The most important aspect of the system is the control environment in which employees work. This environment is based on integrity and other ethical values, the organisational structure, the allocation and exercise of authorities and responsibilities, the separation of duties, staff management and incentive policies, staff expertise and, more in general, the corporate culture. BancoPosta's control environment is evidenced by: • the Group Code of Ethics; • implementation of the Organisational Model required by Legislative Decree 231/01 and the related corporate procedures; • the organisational structure of BancoPosta, as reflected in organisational charts, service orders, organisational notices and procedures determining the roles and responsibilities of the various functions; • the “General Guidelines governing the process of contracting out BancoPosta’s corporate functions to
Regulation requires, among other things: • an interface between staff units (e.g., BancoPosta’s Accountancy and Control; HR Business Partner
BancoPosta) and the matching corporate functions at Poste Italiane; Poste Italiane – Directors’ Report on Operations 2015 95
Internal Auditing function prepared its Annual Report for 2015, the purpose of which is to provide information to the various corporate bodies on the completeness, adequacy, functionality and reliability of the overall system of controls, with specific regard to information systems and the control processes, procedures and mechanisms applied in the oversight of BancoPosta’s activities. The Report was prepared on the basis of the findings of the audit activities carried out by the function and set out in the Audit Plan for 2015.
The audits were in part performed with reference to the findings of Poste Italiane’s Internal Auditing function, which is responsible, in accordance with the specific operating guidelines in the “General Guidelines governing the process of contracting out BancoPosta’s corporate functions to Poste Italiane”, for the IT audit and the audit of the local units and distribution channels within Poste Italiane’s network that are responsible for BancoPosta’s processes and services.
Internal Auditing has also drawn up the Annual (2016) and Multi-year (2016 - 2018) Audit Plan, based on a risk assessment process designed to ensure adequate coverage of BancoPosta’s Business Process Model, including operational and financial risks, changing aspects of the business, regulatory issues and BancoPosta
BancoPosta RFC and in collaboration with the Group Risk Management function, an integrated, retrospective and prospective view of the risk environment and of BancoPosta RFC’s capital and organisational adequacy.
In terms of the evolution of significant risks, 2015 primarily witnessed a reduction in the yields on Italian government securities, resulting in a further increase in fair value gains - partly recognised in profit or loss –
Net interest income / Net interest and other banking income (3) 28% 28%
(2) Represents the ratio of profit for the period and equity after deducting profit for the period and the valuation reserves.
(*) The key income ratios normally used reflect the unique nature of BancoPosta RFC and the fact that payments to Poste Italiane in reimbursement of costs are classified as "administrative expenses". The absolute amounts of the ratios are, consequently, irrelevant and should not be used for market comparisons but for analyses over time.
and a reduction in administrative expenses (down 5% compared with 2014), which more than offset reductions in interest income (down 7% compared with 2014) and fee and commission income (down 1%
Taking a closer look, net interest income of €1,490 million (€1,539 million in the previous year) is the difference between: • interest earned primarily on investments in government securities and deposits at the MEF, amounting to €1,545 million (€1,662 million in 2014); • interest expense of €55 million (€123 million in the previous year), including €34 million paid to current and term deposit account holders (€94 million in 2014) and €21 million (€29 million in 2014) payable to major financial institutions acting as counterparties in repurchase agreements.
The decrease in net interest income is primarily due to the reduction in returns on the investment of customer deposits (interest-bearing deposits with the MEF and securities), in line with market rates.
Net fee and commission income amounts to €3,483 million (€3,512 million in 2014) and includes: • fee and commission income of €3,538 million (€3,561 million in 2014), including €1,610 million generated by operations covered by the agreement with Cassa Depositi e Prestiti (€1,640 million in 2014) and €1,928 million from the processing of bills paid by payment slip, sundry payments and from other services offered to customers (e.g. insurance broking); • fees and commissions paid, amounting to €55 million (€49 million in 2014), primarily relating to debit/credit card clearing services.
Net operating expenses are down 5% from €4,712 million in 2014 to €4,480 million in 2015 . As noted above, this reflects a decrease in other administrative expenses, which are down from €4,602 million in 2014 to €4,348 million in 2015. These expenses include €4,251 million (€4,500 million in the previous year) in transfer payments to other Poste Italiane functions in accordance with the “General Guidelines governing the process of contracting out BancoPosta’s corporate functions to Poste Italiane” and the related operating guidelines for 2015. The above figures also include the cost to BancoPosta of using the commercial network, amounting to €3,898 million, which is down €185 million compared with 2014 (€4,083 million in 2014). The reduction reflects the new method of pricing in the operating guidelines, based on the real contribution of the various functions to BancoPosta RFC’s results. In this regard, the transfer prices paid are determined on the basis of market prices and tariffs for the same or similar services, identified, where possible, following a benchmarking process. When the specifics and/or the particular nature of a service provided by a Poste Italiane function do not allow the use of a comparable market price, a cost-based method is used, again with the support of benchmarking to ensure that the price charged is adequate for the service provided.
Net other operating expenses of €37 million (€19 million in 2014) primarily relate to operating losses resulting from withdrawals that customers claim not to have made.
Income before tax from continuing operations of €858 million (€691 million in 2014) includes net provisions for risks and charges, totalling €60 million (€31 million in 2014) and net losses on loans and advances of approximately €11 million.
Information on the principal commercial initiatives undertaken by BancoPosta RFC is provided in the “Group financial review – Financial Services”.
Available-for-sale financial assets amount to €32,597 million (€28,807 million at 31 December 2014) and consist of investments in Italian government securities, securities guaranteed by the Italian government and equity instruments (primarily shares in Mastercard Incorporated, Visa Incorporated and Visa Europe). The
Europe Ltd, previously allocated to Poste Italiane SpA at the time of the company’s incorporation and, at that time, accounted for at a nominal value of €10.00. At 31 December 2015, the fair value of the investment has been adjusted to take into account the likely impact of the acquisition and merger of Visa Europe Ltd with the
US-registered company, Visa Incorporated. As announced on 21 December 2015, Visa Europe has informed its Principal Members that each of them will be paid a consideration and, at that date, the amount due to
Poste Italiane at transaction closing, expected by the end of June 2016 – subject to clearance from the relevant authorities – was estimated by the investee to be €111 million, including €83 million in cash and €28 million in Visa Inc. stock (Convertible Participating Preferred Stock) convertible into class A shares within 12 years of the closing.
Held-to-maturity financial assets, consisting of fixed payment or fixed maturity debt securities, amount to €12,886 million, marking a reduction on the previous year (€14,100 million at 31 December 2014), primarily due to the redemption of matured securities, totalling €1,196 million.
Amounts due to customers are up from the €8,494 million of 31 December 2014 to €8,931 million at 31
Other assets are up from €1,495 million at 31 December 2014 to €1,626 million at the end of 2015 and essentially regard the payment of tax withholdings and items in progress that will be settled after the end of the reporting period.
December 2014), other forms of deposit of €1,978 million (€1,433 million at 31 December 2014), primarily including Postepay accounts, totalling €1,438 million (€922 million at 31 December 2014), and other amounts of €398 million (€1,122 million at 31 December 2014), above all term deposits of €384 million (€645 million at 102 Poste Italiane – Directors’ Report on Operations 2015
BancoPosta RFC's equity at 31 December 2015 amounts to €5,042 million (€3,857 million at the end of 2014).
The process of ensuring compliance with the Supervisory Standards issued by the Bank of Italy ( Circular 285 of 17 December 2013) continued during 2015. The Circular has extended the prudential requirements already applicable to banks, with certain specific adjustments, to BancoPosta RFC, including those regarding capital adequacy, risk containment, corporate governance and internal controls.
The main activities undertaken, a number of which in preparation and necessary for the stock market listing, resulted in an overall strengthening of BancoPosta RFC’s structure, reflecting approval, by the decision-making bodies, of the necessary governance and organisational documents – including revised forms of the
Guidelines for managing conflict-of-interest transactions with related and associated parties, Guidelines for
Poste Italiane’s financial management, the Risk Appetite Framework and material transactions, the Fair value policy, the Consolidated Guidelines governing IT Compliance (ICT governance and organisation).
announcement 97996/14 of 22 December 2014. In particular, a new classification of MiFID products has been drawn up, based on their complexity.
Further steps were taken to reinforce the processes and procedures designed to prevent money laundering and the financing of terrorism, as part of a structured compliance programme that will involve the progressive release of IT components and procedures. In particular, work has continued on the process for acquiring the information needed for “adequate checks” and on the implementation of operating procedures to support compliance with the obligation to refuse to carry out transactions and to return funds, in cases where it is 104 Poste Italiane – Directors’ Report on Operations 2015
With regard to insurance broking, on 26 August 2015, IVASS and the Bank of Italy sent a joint communication to banks, financial intermediaries and insurers, requesting enhanced protection for customers when selling
In response, Poste Italiane and Poste Vita drew up a “Compliance plan”, setting out the steps necessary in order to ensure full compliance with the regulator’s requests in 2016. Among other things, the plan entails: • improving the transparency of the information provided and the preventive checks carried out (including computerised checks) at the distribution stage; • improvements to “post-sales” procedures, automating and simplifying the process for withdrawal from or early termination of a loan agreement; • updates to internal procedures and the training of the relevant staff.
Events after the end of the reporting period are described in other sections of the document and there are no further material events occurring after 31 December 2015 to report.
Plan, with particular attention to fully exploiting its customer base. This will involve targeted offerings of products and services capable of consolidating customer relations and boosting deposits, extension of the range of offerings and the repositioning of BancoPosta as a provider of digital services as part of Poste
BancoPosta RFC’s operating results for 2016 are expected to be broadly stable.
Intersegment transactions between BancoPosta and Poste Italiane functions outside the ring-fence are set out in Poste Italiane’s financial statements (7. BancoPosta RFC’s Separate Report for the year ended 31 December 2015, Part A of the notes).
The Board of Directors proposes that the Annual General Meeting approve Poste Italiane SpA’s financial statements for the year ended 31 December 2015 (including BancoPosta RFC’s Separate Report), accompanied by the Directors’ Report on Operations.
from 22 June 2016, with an ex dividend date of 20 June 2016 and a record date (defined in accordance with art. 83-terdecies of Legislative Decree 58 of 24 February 1998 and art. 2.6.6, paragraph 2 of the Regulations for the Markets organised and managed by Borsa Italiana SpA), of
The figures shown in the tables below reflect the financial and operational indicators (as deduced from the related reporting packages) of the principal Group companies, prepared in accordance with International
(*) SDA Express Courier SpA incorporated Italia Logistica Srl, effective from an accounting and tax viewpoint from 1 June 2015. (**) Equity includes the recapitalisation of €40 million completed by the Parent Company during the year.
Profit/(loss) for the year 16,496 14,092 2,404 17.1% Financial assets (liquidity and securities) 65,851 67,891 (2,040) -3.0%
(*) The company paid dividends totalling €20 million during the year.
(*) Europa Gestioni Immobiliari SpA incorporated Poste Energia SpA , effective from an accounting and tax viewpoint from 31 December 2015.
Net fee and commission income 44,055 41,070 2,985 7.3% Profit/(loss) for the year 32,427 37,562 (5,135) -13.7%
(*) The company paid dividends totalling €25 million during the year.
Full Time Equivalent (FTE): this figure indicates the size of the workforce based on the number of hours worked by individual employees as a proportion of the total available working hours, meaning that a parttime member of staff working 50% of the normal working hours is equal to 0.5 FTE. The figure serves solely to convert part-time staff into full time equivalents regardless of the type of contract.
Long Term Evolution (LTE): this is a fourth generation mobile system with respect to GSM/UMTS/HSDPA, designed to provide high-speed, low latency data transmission. LTE is the latest development of 4G, capable of enabling highly interactive services, such as games and video conferencing.
PosteID: a digital security system created by Poste Italiane in order to access information and carry out transactions on websites and e mobile phones.
Quantitative easing: an unconventional form of expansionary monetary policy, which involves central banks in increasing the money supply by purchasing financial assets, for the most part government securities, from commercial banks. The effect is comparable to the “creation of money”.
Storage: this is the process of saving information for long periods of time using IT systems capable of guaranteeing coherence and consistency, regardless of the manner in which the individual systems operate.
Administration entity, “Poste Italiane”, under Resolution 244 of 18 December 1997. Its registered office is at
On 8 October 2015, Borsa Italiana admitted Poste Italiane’s shares to trading on its Mercato Telematico
The shares began trading on the MTA on 27 October 2015. At 31 December 2015, the Company is 64.7%
The Poste Italiane Group (the “Group”) provides a universal postal service in Italy as well as integrated communication, logistics, financial and insurance products and services throughout the country via its national network of approximately 13,000 post offices. The Group manages its business in terms of four operating segments: Postal and Business Services, Financial Services, Insurance Services, and Other Services.
Presidential Decree 144 of 14 March 2001), which are managed as a segregated portfolio within Poste
Italiane SpA; these include the collection of all forms of savings deposits from the public, the provision of payment services, foreign currency exchange, the promotion and arrangement of loans issued by banks and other authorised financial institutions, and the provision of investment services. Insurance Services are provided by the subsidiary, Poste Vita SpA, which operates in ministerial life assurance Classes I, III and V, and the subsidiary, Poste Assicura, which operates in non-life insurance. Other Services include the activities carried out by PosteMobile SpA and Consorzio per i servizi di telefonia Mobile ScpA.
This section of the Annual Report for the year ended 31 December 2015 includes the consolidated financial statements of the Poste Italiane Group and the separate financial statements of Poste Italiane SpA, to which
Poste Italiane SpA (also, the annual accounts) refer to the year ended 31 December 2015 and have been prepared in euros, the currency of the economy in which the Group operates.
The separate financial statements of Poste Italiane SpA consist of the statement of financial position, the statement of profit or loss, the statement of comprehensive income, the statement of changes in equity, the statement of cash flows and the notes. Amounts in the financial statements are shown in euros, whilst those in the notes are shown in millions of euros, unless otherwise stated.
issued by the International Accounting Standards Board (“IASB”), and endorsed by the European Union (“EU”)
The term IFRS includes all the International Financial Reporting Standards, International Accounting Standards
21 As defined by IAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors, a change in accounting estimate “is an adjustment of the carrying amount of an asset or a liability (…) that results from the assessment of the present status of, and expected future benefits and obligations associated with, assets and liabilities. Changes in
for previous years and are no longer classified as “Other operating income” or “Other operating costs”. The introduction of new IFRSs did not have any effect on these financial statements (note 2.6).
The statement of financial position has been prepared on the basis of the current/non-current distinction the statement of profit or loss, expenses are classified according to their nature. The indirect method has been applied in preparation of the statement of cash flows.
Given the diverse nature and frequency of transactions conducted by Group companies, numerous income and expense items of a non-regular nature may occur with considerable frequency. These items of income and expense are only presented separately when they are both of an exceptional nature and were generated by a materially significant transaction.
In order to allow comparison on a like-for-like basis with amounts for the year ended 31 December 2014, certain notes have been reclassified.
Pursuant to article 2447-septies of the Italian Civil Code, following the creation of BancoPosta's ring-fenced capital in 2011, the assets and contractual rights included therein (hereafter: “BancoPosta RFC”) are shown separately in Poste Italiane SpA’s statement of financial position, in a specific supplementary statement, and in the notes to the financial statements.
At the date of approval of these financial statements, there is no established practice on which to base interpretation and application of newly published, or revised, international accounting standards. In addition, guidance regarding certain aspects of taxation and interpretations based on examples of best practice or case-law cannot yet be regarded as exhaustive. These financial statements have, therefore, been prepared on the basis of information currently available and taking account of best practice. Any future changes or updated interpretations will be reflected in subsequent reporting periods, in accordance with the specific procedures provided for by the related standards.
Current assets include assets (such as inventories and trade receivables) that are sold, consumed or realised as part of the normal operating cycle even when they are not expected to be realised within twelve months after the reporting period (IAS 1 (Revised), paragraph 68).
The tax authorities have issued regular official interpretations only in respect of certain of the tax-related effects of the measures contained in Legislative Decree 38 of 28 February 2005, Law 244 of 24 December 2007 (the 2008 Budget Law) and the Ministerial Decree of 1 April 2009, implementing the 2008 Budget Law, which introduced numerous changes to IRES and IRAP. The MEF Decree issued on 8 June 2011 contains instructions regarding the coordinated application of EU-endorsed international accounting standards coming into effect between 1 January 2009 and 31 December 2010, in addition to regulations governing determination of the tax bases for IRES and IRAP.
(*) Or the useful life of the improvement if shorter than the estimated lease term
Investment property relates to land or buildings held with a view to earn rental or lease income or for capital appreciation or both; in both cases such property generates cash flows that are largely independent of other assets. The same accounting treatment is applied to investment property as to property, plant and equipment.
This test is performed with reference to the cash generating unit (“CGU”) to which the goodwill is attributable.
An impairment loss is recognised in profit or loss for the amount by which the net carrying amount of the asset exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use
, calculated as the present value of the future cash flows expected to be derived from the cash generating unit and from its disposal at the end of its useful life. Impairment losses on goodwill cannot be subsequently reversed.
Costs associated with developing or maintaining software programmes are recognised in profit or loss in the period in which they are incurred. Costs that are directly associated with the production of identifiable and unique software products controlled by the Group, and that generate economic benefits beyond one year, are recognised as intangible assets. Directly attributable costs, to the extent separately identifiable and measurable, include the cost of staff involved in software development and an appropriate portion of the relevant overheads. Amortisation is calculated on the basis of the estimated useful life of the software, which is usually three years. Research and development costs are not capitalised.
Assets held under finance leases, where the risks and rewards of ownership are substantially transferred to the lessee, are recognised at fair value or, if lower, at the present value of the minimum lease payments. The corresponding obligation toward the lessor, which is equal to the principal amount of future lease payments, is recognised as a financial liability. Depreciation is calculated on a straight-line basis, based on the useful lives of the various categories of asset previously described for property, plant and equipment and intangible assets.
At the end of each reporting period, property, plant, equipment and intangible assets with finite and indefinite lives are analysed to assess whether there is any indication that an asset may be impaired. If any such indication exists, the Group estimates the recoverable amount of the asset in order to determine the impairment loss to be recognised in profit or loss. The recoverable amount is the higher of an asset’s fair value less costs to sell, and its value in use, represented by the present value of the future cash flows expected to be derived from the asset.
In calculating value in use, future cash flow estimates are discounted using a rate that reflects current market assessments of the time value of money, the period of the investment and the risks specific to the asset. The realisable value of assets that do not generate separate cash flows is determined with reference to the cash generating unit (CGU) to which the asset belongs.
An impairment loss is recognised for the amount by which the net carrying amount of the asset, or the CGU
to which it belongs, exceeds its recoverable amount. Except in the case of goodwill, if the impairment indicators no longer exist, the carrying amount of the asset is reinstated and the reversal recognised in profit
or loss. The reversal must not exceed the carrying amount that would have been determined had no impairment loss been recognised and depreciation or amortisation been charged.
Investments in subsidiaries and associates are tested for impairment annually or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Any impairment is recognised in profit or loss as an impairment loss. When an impairment no longer exists, the carrying amount of the asset is reinstated and the reversal recognised in profit or loss. The reversal must not exceed the carrying amount that would have been determined had no impairment loss been recognised.
(trade date or transaction date), or, in the case of the insurance transactions and BancoPosta’s operations, at the settlement date
. For BancoPosta operations, the settlement date almost always coincides with the transaction date. Any changes in fair value between the transaction date and the settlement date are recognised in the financial statements.
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market, and primarily regard amounts due from customers, including trade receivables.
end of the reporting period, which are classified as non-current assets. These assets are carried at amortised cost using the effective interest rate method. If there is objective evidence of impairment, the asset is written down to the present value of the estimated future cash flows, with such impairment loss being recognised in profit or loss. If in subsequent periods the conditions which led to the impairment no longer exist, the carrying amount of the asset is reinstated on the basis of the value that would have resulted from application of the amortised cost method. The estimation procedure adopted in determining provisions for doubtful debts, or operating revenue to be so allocated, primarily reflects the identification and measurement of elements resulting in specific reductions in the value of individually significant assets.
Held-to-maturity financial assets are non-derivative financial assets with fixed or determinable payments and maturities that the Group has a positive intention and ability to hold to maturity. These assets are carried at amortised cost using the effective interest method, adjusted to reflect any impairment loss. The same policies as described in relation to loans and receivables are applied if there is impairment.
The amortised cost of a financial asset or liability means the amount recognised initially, less principal repayments and plus or minus accumulated amortisation, using the effective interest method, of the difference between the initial amount and the maturity amount, after reductions for impairment and insolvency. The effective interest rate is the rate that exactly discounts contractual (or expected) future cash payments or receipts over the expected life of the asset or liability to its initial carrying amount. Calculation of amortised cost must also include external costs and income directly attributable to the asset or liability on initial recognition.
Financial liabilities, including borrowings, trade payables and other payment obligations, are carried at amortised cost using the effective interest method. If there is a change in the expected cash flows and they can be reliably estimated, the value of borrowings is recalculated to reflect the change on the basis of the present value of estimated future cash flows and the internal rate of return initially applied.
Financial liabilities are derecognised when settled or when all the related risks and rewards have been substantially transferred.
Derivatives are initially recognised at fair value on the date the derivative contract is executed and if they do not qualify for hedge accounting treatment, gains and losses arising from changes in fair value are accounted for in profit or loss for the period.
When the hedge is related to recognised assets or liabilities, or an unrecognised firm commitment, the changes in fair value of both the hedging instrument and the hedged item are recognised in profit or loss. When the hedging transaction is not fully effective, resulting in differences between the above changes, the ineffective portion represents a loss or gain recognised separately in profit or loss for the period.
(a so-called macro hedge). Macro hedges cannot be used for net amounts deriving from differences between assets and liabilities. Like micro hedges, macro hedges are deemed highly effective if, at their inception and throughout the term of the hedge, changes in the fair value of the cash amount are offset by changes in the fair value of the hedges, and if the effective results fall within the interval required by
The standards establishing the principles for the recognition and measurement of financial instruments are also applied to derivative contracts to buy or sell non-financial items that are settled net in cash or in another financial instrument, with the exception of contracts entered into, and that continue to be held, for the purpose of the receipt or delivery of a non-financial item in accordance with the entity’s expected purchase, sale or usage requirements (the own use exemption).
Current income tax expense (IRES and IRAP) is based on the best estimate of taxable profit for the period and the related regulations, applying the rates in force. Deferred tax assets and liabilities are calculated on all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts, using tax rates that are expected to apply when the related deferred tax assets are realised or the deferred tax liabilities are settled. Deferred tax assets and liabilities are not recognised if the temporary differences derive from investments in subsidiaries, associates and joint ventures, where the timing of the reversal of the temporary difference is controlled by the Group or it is probable that the temporary difference will not reverse in the foreseeable future (IAS 12.39 and 12.40). In accordance with IAS 12, deferred tax liabilities are not recognised on goodwill deriving from a business combination.
The Group’s tax expense and related accounting treatment reflect the effects of the election to adopt a tax consolidation arrangement, in accordance with relevant legislation, by Poste Italiane SpA, together with the subsidiaries Poste Vita SpA, SDA Express Courier SpA, Mistral Air Srl. and, starting 1 January 2015, PosteShop
Poste Italiane SpA attributes such reductions or increases in tax expense to the companies in question. From 2013, following the adoption of new tax consolidation rules, the economic benefits deriving from the offset of tax losses transferred to the consolidating entity by the companies participating in the tax consolidation arrangement are recognised in full by Poste Italiane SpA.
Inventories are valued at the lower of cost and net realisable value. The cost of interchangeable items and goods for resale is calculated using the weighted average cost method. In the case of non-interchangeable items, cost is measured on the basis of the specific cost of the item at the time of purchase.
The value of the inventories is adjusted, if necessary, by provisions for obsolete or slow moving stock. When the circumstances that previously led to recognition of the above provisions no longer exist, or when there is a clear indication of an increase in the net realisable value, the provisions are fully or partly reversed, so that the new carrying amount is the lower of cost and net realisable value at the end of the reporting period.
, Green Certificates (or Emission Allowances) are a means of reducing greenhouse gas emissions, introduced into Italian and European legislation by the Kyoto
Protocol with the aim of improving the technologies used in the production of energy and in industrial processes.
The European Emissions Trading Scheme, which works on the basis of the cap and trade principle, has capped annual greenhouse gas emissions at European level. This corresponds to the issue, free of charge, of a set number of emission allowances by the competent national authorities. During the year, depending on the effective volume of greenhouse gas emissions produced with respect to the above cap, each company has the option of selling or purchasing emission allowances on the market.
Cash and securities held at post offices, and bank deposits attributable to the operations of BancoPosta, are accounted for separately from cash and cash equivalents as they derive from deposits subject to investment restrictions, or from advances from the Italian Treasury to ensure that post offices can operate. This cash cannot be used for purposes other than those relating to the aforementioned operations.
December 2015 the Parent Company has temporarily deposited with the MEF and other highly liquid shortterm investments with original maturities of ninety days or less. Current account overdrafts are accounted for in current liabilities.
Share capital is represented by Poste Italiane SpA’s subscribed and paid-up capital. Incremental costs directly attributable to the issue of new shares are recognised as a reduction of the share capital, net of any deferred tax effect.
(hereafter “BancoPosta RFC”), representing the dedicated assets attributed to Bancoposta BancoPosta RFC, the Parent Company’s legal reserve, the fair value reserve, relating to items recognised at fair value through equity, and the cash flow hedge reserve, reflecting the effective portion of hedging instruments outstanding at the end of the reporting period.
This relates to the portion of profit for the period and for previous periods which has not been distributed or taken to reserves or used to cover losses and actuarial gains and losses deriving from the calculation of the liability for employee termination benefits, and, in accordance with IFRS 2 – Share-Based Payments, the effects of the award of bonus shares to employees in connection with the Parent Company’s Initial Public Offering in 2015. This item also includes transfers from other equity reserves, when they have been released from the restrictions to which they were subjected.
Insurance products include Class I and V life assurance policies, in addition to index-linked policies that qualify as insurance contracts. These products are accounted for as follows:  insurance premiums are accounted for when the policies are written, recognised as income and classified in revenue; they include annual or single premiums accruing during the period and deriving from insurance contracts outstanding at the end of the reporting period, net of cancellations;  technical provisions are made in respect of earned premiums to cover obligations to policyholders; such provisions are calculated on an analytical basis for each contract using the prospective method, based on actuarial assumptions appropriate to cover all outstanding obligations. Changes in technical provisions and the cost of claims are recognised as expenses in profit or loss.
Although classified as financial contracts, contracts for separately managed accounts with discretionary participation features are accounted for in compliance with the requirements of IFRS 4, in accordance with the rules for insurance contracts. As a result:  premiums, changes in technical provisions and the cost of claims are recognised in the same way as the insurance contracts described above;  unrealised gains and losses attributable to policyholders are assigned to them and recognised in technical provisions (deferred liabilities payable to policyholders) under the shadow accounting method (IFRS 4.30).
Investment contracts (a type of contract not currently present) which are not related to separately managed accounts, and which include a portion of “linked” contracts, are accounted for in accordance with IAS 39, as follows:  technical provisions are recognised as financial liabilities and are measured at fair value, whilst the related financial instruments are accounted for as assets; A contractual right of investors to receive returns on the assets under management.
Provisions are measured on the basis of management’s best estimate of the use of resources required to settle the obligation. The value of the liability is discounted at a rate that reflects current market values and takes into account the risks specific to the liability.
Defined benefit plans include employee termination benefits payable to employees in accordance with article 2120 of the Italian Civil Code: - For all companies with at least 50 employees, covered by the reform of supplementary pension provision, from 1 January 2007 vesting employee termination benefits must be paid into a supplementary pension fund or into a Treasury Fund set up by INPS. Accordingly the company’s defined benefit liability is applicable only to the provisions made up to 31 December 2006
Where, following entry into effect of the new legislation, the employee has not exercised any option regarding the investment of vested employee termination benefits, the Group has remained liable to pay the benefits until 30 June 2007, or until the date, between 1 January 2007 and 30 June 2007, on which the employee exercised a specific option.
- In the case of companies with less than 50 employees, to which the reform of supplementary pension provision does not apply, vested employee termination benefits continue to represent a defined benefit liability for the company.
The termination of employment (TFR) liability to be paid on cessation of employment is calculated using the projected unit credit method and then discounted to recognise the time value of money prior to the liability being settled. The liability recognised in the financial statements is based on calculations performed by independent actuaries.
The calculation takes account of termination benefits accrued for the period of service to date and is based on actuarial assumptions. These primarily regard: demographic assumptions (such as employee turnover and mortality) and financial assumptions (such as rate of inflation and a discount rate consistent with that of the liability). In the case of companies with at least 50 employees, as the company is not liable for employee termination benefits accruing after 31 December 2006, the actuarial calculation of employee termination benefits no longer takes account of future salary increases. Actuarial gains and losses are recognised directly in other comprehensive income at the end of each reporting period, based on the difference between the carrying amount of the liability and the present value of the Group’s obligations at the end of the period, due to changes in the actuarial assumptions.
Employee termination benefits payable pursuant to art. 2120, Italian Civil Code fall within the scope of defined contribution plans provided they vested subsequent to 1 January 2007 and were paid into a
Termination benefits payable to employees are recognised as a liability when the entity decides to terminate the employment of an employee, or group of employees, prior to the normal retirement date or, alternatively, an employee or group of employees accepts an offer of benefits in consideration of a termination of employment. Termination benefits payable to employees are immediately recognised as personnel expenses.
Other long-term employee benefits consist of benefits not payable within twelve months of the end of the reporting period during which the employees provided their services. Generally, there is not the same degree of uncertainty regarding the measurement of other long-term employee benefits as there is in relation to post-
Where no option was exercised, from 1 July 2007 vested employee termination benefits have been paid into a supplementary pension fund.
In connection with the Initial Public Offering 2015, the Parent Company allotted two lots of 50 shares each to all Group employees. Buyers of those two lots who hold the shares for twelve months starting from the payment date (27 October 2015) will receive at the end of said period, whether they are still employed or not at the end of the period, a bonus share for every ten held (i.e. one share more than that which will be given to non-employees who hold their shares for twelve months). The bonus share will be assigned directly by the
Transactions in currencies other than the euro are translated to euro using the exchange rates prevailing at the date of the transaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at closing exchange rates of monetary assets and liabilities denominated in currencies other than the euro are recognised in profit or loss.
Government grants are recognised once they have been formally allocated to the Group by the public entity concerned and only if, based on the information available at the end of the year, there is reasonable assurance that the project to which the grant relates will be effectively carried out and completed in accordance with the conditions attached to the grant. Government grants are recognised in profit or loss as
Finance income and costs are recognised on an accruals basis based on the effective interest method, i.e.
Related parties external to the Group include the MEF and those entities, including joint ventures, controlled by the MEF, and associates of such entities. The Group’s key management personnel are also classified as related parties. The state and Public Administration entities other than the MEF are not classified as related parties. Related party transactions do not include those deriving from financial assets and liabilities represented by instruments traded on organised markets.
Preparation of the annual accounts requires the application of accounting standards and methods that are at times based on complex subjective judgments and estimates based on historical experience, and assumptions that are considered reasonable and realistic under the circumstances. Use of such estimates and assumptions affects the amounts reported in the financial statements and related disclosures. The actual amounts of items
Diluted earnings per share are calculated by taking into account the potentially dilutive effect of all instruments which can be converted into ordinary shares issued by the Parent Company. The calculation is based on the ratio of profit attributable to the Parent Company, adjusted to take account of any costs or income deriving from the conversion, net of any tax effect, and the weighted average number of shares outstanding, assuming conversion of all convertible securities.
This section provides a description of accounting treatments that require the use of subjective estimates and for which a change in the conditions underlying the assumptions used could have a material impact on the
The Group has substantial receivables due from the State, though the amount is much lower than in the past.
The legal framework of reference is still subject to change and, as has at times been the case in the past, also in the second half of 2015 circumstances were such that estimates made in relation to previous financial statements, with effects on the statement of profit and loss, had to be changed. The complex process associated with the determination of receivables, which has not been completed yet, may result in changes in the results for the years after that ended 31 December 2015 to reflect variations in estimates, due to future regulatory enactments or following the finalisation of expired agreements to be renewed.
At 31 December 2015, Poste Italiane Group’s receivables outstanding with central and local authorities amounted to approximately €1.3 billion (€3.4 billion at 31 December 2014), gross of provisions for doubtful debts. The significant decrease reflects the effects of the review of the main exposures conducted by a joint working group with the MEF – Treasury and General Accounting Department, which ended in August 2015.
On 7 August 2015, the MEF committed “the Ministry to complete all the procedures necessary in order to pay the amounts due in accordance with procedures and timing consistent with the current privatisation process
(…), including provision of the necessary funding” and sent the Parent Company a letter signed by the
Transactions with shareholders: Amount due from MEF following cancellation of EC Decision of 16 July 2008 (iv) 45 42
(ii) Receivables related to electoral tariff subsidies, totalling €83 million, a sum that was provided for in the 2016 and in previous state budgets, are being reviewed by the European Commission; (iii) Receivables in the amount of €6 million, for the distribution of Euroconverters and addressed in the MEF
(v) Regarding receivables outstanding with central and local government entities, totalling €681 million, certain items are still overdue, mainly because no provision was made in the relevant budgets or in connection with contracts or agreements. To this end, steps continued to be taken to renew the expired agreements and to make the necessary provisions. In particular, an opinion from the State Attorney’s
Office is pending with regard to a settlement with the Ministry for Economic Development, totalling €50 million, in relation to a receivable of approximately €72 million.
(vi) In the second half of 2015, overdue receivables in the amount of €546 million were collected, as indicated also in the previously mentioned MEF letter. In addition, interest income for the year in the amount of €4 million was received and additional provisions for doubtful debts were made for €9 million, following recalculations made as a result of payments received from the competent Government departments. No mention was made of the payment of the balance due and, in the absence of further information from the tax authorities, the Parent Company took all the actions necessary to collect such amount. Any elements of uncertainty or risk requiring the Parent Company’s recalculation of these items will be reflected in future financial statements.
At 31 December 2015 provisions for doubtful debts reflect receivables for which no provision had been made in the state budget, receivables for which provision has been made only in the state budget forecast for 2017 and other past due sums. The final versions of regulatory provisions, contracts and procedures authorising payment of these items may result in the release of a portion of the provisions made to profit or loss, whilst new provisions and estimates may be rendered necessary.
The Group makes provisions for probable liabilities deriving from disputes with staff, suppliers, and third parties and, in general, for liabilities deriving from present obligations. These provisions cover the liabilities that could result from legal action of varying nature, the impact on profit or loss of seizures incurred and not yet definitively assigned, and amounts expected to be refundable to customers where the final amount payable has yet to be determined.
discounted using the Discounted Cash Flow (DCF) method. For the determination of value in use, NOPLAT
December 2015, the Parent Company’s Postal and Business Services segment was tested again for impairment. In this respect, reference was made, among other things, to the transfer prices that BancoPosta
RFC is expected to pay for the services provided by Poste Italiane’s network, as determined in the 2015-2019 business plan approved by the Parent Company’s Board of Director on 15 May 2015. The impairment test determined that the related carrying amounts are fair.
The cost of these assets is depreciated or amortised on a straight-line basis over the estimated useful life of the asset. The useful life is determined at the time of acquisition and is based on historical experience of similar investments, market conditions and expectations regarding future events that may have an impact, such as technological developments. The actual useful life may, therefore, differ from the estimated useful life. Each year, changes in technology and within the industry and the costs of dismantling tangible assets and their recoverable amounts are reviewed in order to update the residual useful lives of such assets. This periodic update may lead to changes in the depreciation or amortisation period and thus in charges for depreciation or amortisation in the current and in future years.
The recognition of deferred tax assets is based on the expectation of taxable income in future years.
Assessments of expected taxable income depend on factors which may change over time, impacting on the valuation of the deferred tax assets in the statement of financial position.
The provision for doubtful debts reflects the estimated losses on receivables, which, in the case of receivables due from Public Administration entities, considers the legislation restricting public spending. Provisions for expected losses reflect the estimated credit risk associated with historical experience of similar receivables, an analysis of past-due items (current and historical), losses and collections and the monitoring of the current and future economic conditions in the related markets. Net provisions for doubtful debts are accounted for in profit or loss under other operating costs, or, if relating to receivables accrued during the year, by deferring the related revenue.
The measurement of technical provisions for the insurance business is based on the calculations performed by actuaries employed by Poste Vita SpA; such calculations are then regularly verified by independent external actuaries. In order to verify the adequacy of the provisions, liability adequacy tests (LATs), (which measure the ability of future cash flows from the insurance contracts to cover liabilities towards the policyholders), are periodically performed. The LAT is conducted on the basis of the present value of future cash flows, obtained by projecting expected future cash flows from the existing portfolio to the end of the reporting period, based on appropriate assumptions regarding the cause of termination (death, surrender, redemption, reduction)
and the performance of claims expenses. If necessary, technical provisions are topped up and the related cost charged to profit or loss.
regulators and the relevant accounting standards, ensuring consistent application of the valuation techniques adopted at Group level
Quoted investment funds: measurement is based on the daily closing market price as provided by Bloomberg or the fund manager.
Level 2: this level is comprised of fair values based on inputs other than Level 1 quoted market prices that are either directly or indirectly observable for the asset or liability. Given the nature of Poste Italiane Group’s operations, the observable data used as input to determine the fair value of the various instruments include yield curves and projected inflation rates, ranges of rate volatility, inflation option premiums, asset swap spreads or credit default spreads which represent the creditworthiness of specific counterparties and any liquidity adjustments quoted by primary market counterparties.
For the Poste Italiane Group these include the following types of financial instruments: Bonds either quoted on inactive markets or not at all:  Straight Italian and international government and non-government bonds: valued using discounted cash flow techniques involving the computation of the present value of future cash flows, inputting rates from yield curves incorporating spreads reflecting credit risk that are based on spreads determined with reference to quoted and liquid benchmark securities issued by the issuer, or by other companies with similar characteristics to the issuer. Yield curves may be slightly adjusted to reflect liquidity risk relating to the absence of an active market.
Unquoted investment funds: measurement is based on the latest available NAV (Net Asset Value) as provided by Bloomberg or as determined by the fund manager.
Buy & Sell Backs used for the short-term investment of liquidity: valuation is based on discounted cash flow techniques involving the computation of the present value of future cash flows. Buy and Sell Back agreements may be pledged as collateral and the fair value, consequently, need not be adjusted for counterparty risk.
Fixed rate and variable rate instruments: measurement is based on the discounted cash flow approach. The counterparty’s credit spread is considered through:  use of the Italian government yield curve or the credit default swap (CDS) of the Italian Republic, in the case of Italian government agencies;  use of quoted CDS yield curves or, if not available, the adoption of “synthetic” CDS yield curves represented by the counterparty’s rating, as constructed starting from the input data observable on the market.
Financial liabilities either quoted on inactive markets or not at all:
 Straight bonds: these are measured by discounting their future cash flows using as input a yield curve reflecting the spread applicable to the issuer’s credit risk;  Structured bonds: measurement is based on a building blocks approach, where the structured product is broken down into its basic components: the bond component and the option component. The bond component is measured by discounting cash flows to present value in line with the approach applicable to straight bonds, as defined above. The option component - which considering the features of the bonds included in the portfolio of the Poste Italiane Group relates to interest rate risk - is measured in accordance with a standard closed form expression as with classical option valuation models with underlyings exposed to such risks.
Unlisted closed-end funds: these include funds that invest mainly in unlisted instruments. Their fair value is determined by considering the latest NAV (Net Asset Value), available at least every six months, reported by the fund manager. This NAV is adjusted according to the capital calls and reimbursements announced by the managers which occurred between the latest NAV date and the valuation date.
Unlisted equity instruments: this category includes shares for which no price is observable directly or indirectly in the market.
The following are applicable from 1 January 2015: IFRIC 21 – Levies, adopted with (EU) Regulation 634/2014, will apply as of 1 January 2015. The interpretation provides guidance on how to account for a liability for a levy imposed by a government, when the liability is to be accounted for in accordance with IAS 37.
Annual Improvement Cycle to IFRSs 2011 - 2013 adopted with Regulation (EU) no. 1361/2014 in connection with the annual projects to improve and revise international accounting standards.
IAS 19 - Employee benefits – Defined Benefit Plans: Employee Contributions adopted with Regulation (EU) no.
IAS 16 – Property, Plant and Equipment and IAS 38 – Intangible Assets amended by Regulation (EU) no.
Annual improvement cycle in relation to IFRS 2012 – 2014 adopted with Regulation (EU) no. 2343/2015 in
IAS 27 – Separate Financial Statements amended by Regulation (EU) no. 2441/2015. Regarding entities that prepare separate financial statements, the amendment permits such entities to adopt the equity method to account for investments in subsidiaries, associates and joint ventures. This option is in addition to those permitted by the pre-existing version of IAS 27 (cost method and in accordance with IAS 39).
3. GRUPPO POSTE ITALIANE AL 31 DICEMBRE 2015 3. Poste Italiane Group for the year ended 31 December 2015
3.3 NOTES TO THE FINANCIAL STATEMENTS ............................................................................................ 160 ASSETS ............................................................................................................................................................................................. 160
A10 – CASH AND CASH EQUIVALENTS ............................................................................................................................. 182 EQUITY ............................................................................................................................................................................................ 183
B10 – OTHER LIABILITIES .............................................................................................................................................................. 195 STATEMENT OF PROFIT OR LOSS .......................................................................................................................................... 198
C7 – OTHER EXPENSES FROM FINANCIAL AND INSURANCE ACTIVITIES ........................................................ 205
Operating profit/(loss) 880 691 of which, non-recurring costs - - 75 of which, non-recurring income 4 11
Increase/(decrease) in fair value during the year [tab. B4] 1,591 1,966
Increase/(decrease) in fair value during the year [tab. B4] 13 144
Actuarial gains/(losses) on provisions for employee termination benefits and pension plans
TOTAL COMPREHENSIVE INCOME FOR THE YEAR 1,490 1,292 of which, attributable to owners of the Parent 1,490 1,292 of which, attributable to non-controlling interests - -
Total comprehensive income for the year - - - 1,143 66 - 83 1,292 - 1,292
Attribution of profit to reserves - - - - - - - - - -
Total comprehensive income for the year - - - 926 (39) - 603 (*) 1,490 - 1,490
Changes due to share-based payments - - - - - - 1 1 - 1
Cash flow generated by operating activities before movements in working capital [a] 1,192 1,098
Movements in working capital: (Increase)/decrease in Inventories [tab. A6] 5 7
Cash flow generated by /(used in) movements in working capital [b] 2,040 (420)
Net cash generated by/(used for) available-for-sale financial assets attributable to financial activities (2,484) (1,100)
(Increase)/decrease in cash and deposits attributable to BancoPosta [tab. A9] (288) 207
Payment of liabilities linked to financial contracts attributable to insurance activities [tab. B8] - -
Net cash generated by/(used for) financial assets at fair value through profit or loss attributable to insurance (6,236) (1,151)
Net cash generated by/(used for) available-for-sale financial assets attributable to insurance activities [tab. A5.5] (4,907) (9,835)
Cash generated by/(used for) assets and liabilities attributable to insurance activities [d] 173 (375)
Net cash f low from /(for ) operating activities [e]=[a+b+c+d] 2,563 (79)
Disposals: Property, plant and equipment, investment property, intangible assets and assets held for sale 4 9
Net cash f low from /(for ) investing activities [f] (689) (346)
Net cash f low from/(for ) f inancing activities and shareholder transactions [g] (436) 684 - of which related party transactions (139) (506)
Amounts that cannot be drawn on due to court rulings (18) (16)
Unrestr icted net cash and cash equivalents at end of year 1,783 747
The Poste Italiane Group’s consolidated financial statements include the financial statements of Poste Italiane
SpA and of the companies over which the Parent Company directly or indirectly exercises control from the date on which control is obtained until the date on which control is no longer held by the Group. The Group controls an entity when it simultaneously:  has power over the investee;  is exposed, or has rights to, variable returns from its involvement with the investee;  has the ability to influence those returns through its power over the investee.
The consolidated financial statements have been specifically prepared at 31 December 2015, after appropriate adjustment, where necessary, to align accounting policies with those of the Parent Company.
Subsidiaries that, in terms of their size or operations, are, either individually or taken together, irrelevant to a true and fair view of the Group’s results of operations and financial position have not been included within the scope of consolidation. The criteria used for line-by-line consolidation are as follows:  the assets, liabilities, costs and revenue of consolidated entities are accounted for on a line-by-line basis, separating where applicable the equity and profit/(loss) amounts attributable to non-controlling interests in consolidated equity and consolidated profit or loss;  business combinations, in which control over an entity is acquired, are accounting for using the acquisition method. The cost of acquisition is based on the fair values of the assets given, the liabilities incurred and the equity instruments issued by the acquirer, plus any directly attributable acquisition costs incurred. Any difference between the cost of acquisition and the fair values of the assets and liabilities acquired, following review of their fair value, is recognised as goodwill arising from consolidation (if positive), or recognised in profit or loss (if negative);  acquisitions of non-controlling interests in entities already controlled by the Group are not accounted for as acquisitions, but as equity transactions; in the absence of a relevant accounting standard, the Group recognises any difference between the cost of acquisition and the related share of net assets of the subsidiary in equity;  any significant gains and losses (and the related tax effects) on transactions between companies consolidated on a line-by-line basis, to the extent not yet realised with respect to third parties, are eliminated, as are intercompany payables and receivables, costs and revenue, and finance costs and income;  gains and losses deriving from the disposal of investments in consolidated companies are recognised in profit or loss based on the difference between the sale price and the corresponding share of consolidated equity disposed of.
Investments in subsidiaries that are not significant and are not consolidated, and those in companies over which the Group exerts significant influence (assumed when the Group holds an interest of between 20%
Amortisation of such goodwill is not permitted; b) any excess of the entity’s interest in the net fair value of investee’s identifiable assets and liabilities over cost is recognised as income in determining the acquirer’s interest in the profit (loss) for the period of the associate or joint venture in the period in which the interest is acquired.
The equity method is as follows:  the Group’s share of an entity’s post-acquisition profits or losses is recognised in profit or loss from the date on which significant influence or control is obtained until the date on which significant influence or control is no longer exerted by the Group; provisions are made to cover a company’s losses that exceed the carrying amount of the investment, to the extent that the Group has legal or constructive obligations to cover such losses; changes in the equity of companies accounted for using the equity method not related to the profit/(loss) for the year are recognised directly in equity;  unrealised gains and losses on transactions between the Parent Company/subsidiaries and the company accounted for using the equity method are eliminated to the extent of the Group’s interest in the associate; unrealised losses, unless relating to impairment, are eliminated.
April 2015 and entered in the Companies Register on 28 April 2015. The merger was legally effective as of 30 April 2015 and effective for accounting and tax purposes from 1 January 2015.
 The general meetings of the shareholders of SDA Express Courier SpA and Italia Logistica Srl, held on 12
 On 6 August 2015, the plan whereby Poste Energia SpA would be merged with and into Europa Gestioni
Immobiliari SpA was entered in the Rome Companies Register. In keeping with the plan, on 6 October 2015, Poste Italiane SpA transferred its 100% interest in Poste Energia SpA to Europa Gestioni Immobiliari
August 2013, with 76% of share capital subscribed by Poste Italiane SpA and 24% by PosteMobile SpA)
and its subsidiary, Italo-Brasil Holding SA, were completed and both companies were wound up on 25
 Lastly, on 4 November 2015 Poste Vita SpA completed the acquisition of a 100% interest in S.D.S. System
Data Software Srl, which in turn owns a 100% interest in S.D.S. Nuova Sanità Srl. SDS System Data Software operates in the IT sector and, through SDS Nova Sanità, designs, develops, maintains and sells software products to private health funds. At 31 December 2015, both companies were consolidated on a line-byline basis.
Net as s ets purchas ed before the acquis ition (pro rata) 75.9
S DS S ys tem Data S oftware S r l and S DS Nuova S anita S r l (€m)
Net as s ets purchas ed before the acquis ition 1.3
Change in scope of consolidation - - - - - - - -
Change in scope of consolidation (4) - - - - - - - -
At 31 December 2015, property, plant and equipment includes assets belonging to the Parent Company located on land held under concession or sub-concession, which are to be handed over free of charge at the end of the concession term. These assets have a total carrying amount of €84 million.
Capital expenditure of €237 million in 2015, including €7 million in capitalised costs for self-constructed assets, consists of:  €35 million relating to extraordinary maintenance of post offices and local head offices around the country (€25 million) and mail sorting offices (€8 million);
 €36 million thousand relating to plant, with the most significant expenditure made by the Parent
Reversals of impairment losses are due to changes in estimates relating to buildings (property used in operations) and leased commercial buildings (leasehold improvements) held by the Parent Company, and reflect prudent consideration of the effects on the relevant values in use that might arise as a result of reduced utilisation or future removal from the production cycle (note 2.4 – Use of estimates)
The following table shows a breakdown by category of property, plant and equipment held under finance leases, showing the carrying amounts at 31 December 2015: tab. A1.1 - Property,plant and equipment held under finance leases (€m)
December 1993. The following movements in Investment property took place in 2015: tab. A2 - Movements in investment property (€m)
Most of the properties included in this category are subject to lease agreements classifiable as operating leases, given that the Group retains substantially all the risks and rewards of ownership of the properties.
Under the relevant agreements, tenants usually have the right to break off the lease with six months’ notice.
In terms of fair value hierarchy, which reflects the relevance of the sources used to measure assets, service accommodation qualifies for level 3, while the other investment property qualifies for level 2.
Investment in “Intangible assets” during 2015 amounts to €251 million, of which €26 million relates to internally developed software. Development costs, other than those incurred directly to produce identifiable software used, or intended for use, within the Group, are not capitalised.
Industrial patents and intellectual property rights, concessions, licences, trademarks and similar rights
BancoPosta services (€19 million), for the postal products platform (€10 million) and for use in providing support to the sales network (€5 million).The balance includes PosteMobile SpA’s software developments not yet in operation and purchase of software licences for its fixed and mobile networks (€10 million).
During the year the Group effected reclassifications from intangible assets under construction to industrial patents, intellectual property, rights, concessions, licences, trademarks and similar rights, amounting to €63 million, reflecting the completion and commissioning of software and the upgrade of existing software.
As of 31 December 2015 goodwill consisted of: tab. A3.2 - Goodwill (€m)
Goodwill has been tested for impairment in accordance with the relevant accounting standards. Based on the information available and the impairment tests conducted, it was necessary to recognise impairment losses in the amount of €12 million for Postel SpA’s goodwill
Furthermore, on 14 December 2015 Poste Italiane SpA exercised the exit option provided for by article 9 of the Articles of Association of Telma-Sapienza Scarl. Therefore, effective 15 December 2015, this consortium is no longer an associate and the relevant carrying amount of €0.49 million has been reclassified among available-for-sale assets.
Conio Inc.’s irrevocable offer to sell 20% of its share capital to Postecom SpA, which was executed on 16
A list of subsidiaries, joint ventures and associates accounted for using the equity method is provided in note 3.8, together with key data.
Financial assets at fair value through profit or loss 16,233 1,899 18,132 10,749 1,406 12,155
Fondi SpA SGR and BdM-MCC SpA;  Insurance Services, includes the financial assets of Poste Vita SpA and its subsidiary, Poste Assicura SpA;  Postal and Business Services, representing all the other financial assets of the Group.
At 31 December 2015, loans amounting to €1,906 million, relate to €1,489 million in loans and financing provided to companies and, to a lesser extent, to individuals by BdM-MCC SpA and €417 million (a notional amount of €400 million) in buy & sell back transactions involving government securities entered into by
BancoPosta RFC relating to the short-term investment of liquidity. The fair value of the loans provided by
BdM-MCC SpA is €1,659 million. The carrying amount of the remaining loans and receivables approximates to their fair value.
The loans provided by BdM-MCC SpA have been posted as collateral for a total amount of €686 million. In particular:  €614 million, together with part of the available-for-sale portfolio (tab A.5.2.1), were given as collateral for a short-term loan by the Bank of Italy within the scope of the open-market operations launched by the
;  The balance of the Parent Company’s MEF account, held at the Treasury, amounting to €1,331 million, consisting of: tab. A5.1.1 - MEF account, held at the Treasury (€m)
Balance of cash flows from management of postal savings - (170) (170) - (49) (49)
The balance of cash flows for advances, amounting to €1,693 million, represents the net amount receivable as a result of transfers of deposits and excess liquidity, less advances from the MEF to meet the cash requirements of BancoPosta. These break down as follows: tab. A5.1.1 a) - Balance of cash flows for advances (€m)
Amounts payable for thefts during the period [tab. C11] 6 6
During 2015, Poste Italiane SpA made repayments to the Italian Treasury for thefts that took place up to 31 December 2014, amounting to €3 million, and in the first half of 2015, totalling €3 million, as well as following rulings by the Court of Auditors on thefts suffered until 31 December 1993, amounting to €1 million.
Secu r it ies Nominal valu e Carrying amou nt Nominal valu e
Changes in fair value through profit or loss - 1,328 - 1,328
Sales, redemptions and settlement of accrued income (1,435) (6,964) (543) (8,942)
Changes in fair value through profit or loss - (432) - (432)
Sales, redemptions and settlement of accrued income (1,404) (8,753) (5,863) (16,020)
Securities with a nominal value of €4,993 million are encumbered as follows:  €4,072 million used as collateral for repurchase agreements;  €345 million used as collateral for asset swaps;  €576 million delivered to the Bank of Italy as collateral for intraday credit extended to the Parent
The fair value of the available-for-sale portfolio is €33,235 million (including €304 million in accrued interest).
On 31 December 2015, the Parent Company subscribed to two fixed-rate bonds, in the amount of €750 million each, with six-monthly interest payments and maturing in 4 and 5 years, issued by Cassa Depositi e
Securities with a nominal value of €1,064 million are encumbered as follows:  €497 million was provided by BancoPosta RFC in relation to repurchase agreements;  €563 million was provided as collateral in relation to refinancing operations by BdM-MCC with the ECB;  €2 million was provided as collateral for commitments related to the BdM-MCC SpA’s internal pension fund.
 €2 million was provided for the participation of BdM-MCC SpA in tenders in the area of low-interest loans.
not ional fa ir valu e not ional fa ir valu e not ional fa ir valu e not ional fa ir valu e not ional fa ir valu e not ional fa ir valu e
Gains/(Losses) through profit or loss ** - - - - - (1) - - - - - (1)
Of which: Der ivat ive liab ilit ies - - 1,325 (73) 8,120 (1,474) - - - - 9,445 (1,547)
Tot al Forward pu rchases Asset swaps Asset swaps Forward pu rchases Forward sales * Increases / (decreases) refer to the nominal value of new transactions and changes in the fair value of the overall portfolio during the period.
** Gains and losses through profit or loss refer to any ineffective components of hedges, recognised in other income and other expenses from financial and insurance activities.
*** Transactions settled include forward transactions settled, accrued differentials and the settlement of asset swaps linked to securities sold.
securities (tab. A5.2.1) recorded a fair value loss of €432 million, with the difference of €28 million due to paid or accruing differentials.
Gains/(Losses) through profit or loss - - - - - - - -
Of which: Year end ed 31 Decemb er 2015 Year end ed 31 Decemb er 2014
Sales, redemptions and settlement of accrued income (20,046) (49) (12) (20,107)
Fixed-income instruments relate primarily to investments held by Poste Vita SpA, totalling €82,107 million
(nominal value of €74,042 million) issued by European governments and European blue-chip companies.
These instruments are mainly intended to cover separately managed accounts where, under the shadow method of accounting applied. These fixed income instruments comprise bonds issued by CDP SpA, with a fair value of €1,431 million (a nominal value of €1,247 million).
The remaining balance is represented by the fair value of fixed income instruments, totalling €140 million, held by Poste Assicura SpA.
Equity instruments relate to the investments held by Poste Vita SpA, totalling €8 million, associated with Class I
Nominal valu e Fair valu e Nominal valu e Fair valu e Fair valu e Fair valu e
Effects of sales on profit or loss (6) 21 - 15
BTPs acquired to cover the contractual obligations arising on Class III insurance policies, while the balance of €1,894 million is primarily made up of corporate bonds issued by blue-chip companies and primarily linked to separately managed accounts.
index-linked policies; such financial instruments include bonds issued by CDP SpA with a fair value of €569 million (nominal amount of €500 million) associated with Class I policies.
 other investments, amounting to €9,227 million and relating to units of mutual investment funds. These instruments include €4,733 million invested in the Blackrock Diversified Distribution Fund, a UCITS, and €3,873 million invested (in 2015) in Multiflex - Global Fund – PIMCO Multiasset with the aim of diversifying the insurance business’s exposure to government bonds and, in the meantime, to secure consistent returns for policyholders (see also note 3.7 on “Unconsolidated structured entities”).
At 31 December 2015, outstanding instruments primarily regard warrants executed by Poste Vita SpA to cover contractual obligations deriving from Class III policies with a fair value of €245 million and a notional amount of €5,558 million.
Policy Nominal valu e Fair valu e Nominal valu e Fair valu e
These amount to €141 million and consist of loans of €78 million and receivables of €63 million.
December 2014 by Poste Italiane SpA, in connection with the strategic transaction that resulted in Etihad
This is a loan convertible, on the fulfilment of certain negative pledge conditions, into an equity instrument pursuant to art. 2346 of the Italian Civil Code, carrying the same rights associated with the loan.
The amount due from the MEF, expressed at the amortised cost
Nominal valu e Fair valu e Fair valu e Fair valu e
Fair value gains and losses through profit or loss 26 - - 26
Fixed-income instruments regard BTPs with a total nominal value of €500 million (fair value of €570 million).
Gains/(Losses) through profit or loss (**) - - - - - - - -
At 31 December 2015, the derivative financial instruments held by the Parent Company, with fair value losses of €52 million, included:  nine asset swaps used as fair value hedges in 2010 to protect the value of BTPs with a nominal value of €375 million against movements in interest rates. These instruments have enabled the Parent Company to sell the fixed rate on the BTPs of 3.75% and purchase a variable rate;  a swap contract entered into in 2013 to hedge the cash flows of a €50 million bond issued on 25
Work in progress, semi-finished and finished goods and goods for resale 14 (2) 12
This item refers mainly to properties held for sale, which include the portion of EGI SpA’s real estate portfolio to be sold, whose fair value at 31 December 2015 amounts to approximately €310 million.
Trade receivables break down as follows: tab. A7 - Trade receivables (€m)
Unfranked mail delivered and other value added services 27 322 349 21 350 371
Parcel express courier and express parcel services - 227 227 - 193 193
Amounts due for other BancoPosta services - 109 109 - 79 79
– Unfranked mail services provided on credit, totalling €81 million, to Ministries and local offices (€38 million), Agencies and other central government entities (€24 million) as well as local government authorities (€19 million).
– Reimbursement of the costs associated with the management of property, vehicles and security incurred on behalf of the Ministero dello Sviluppo Economico (Ministry for Economic Development), totalling €70 million, of which €3 million for services rendered during the year.
– Presidenza del Consiglio dei Ministri - Dipartimento dell’Editoria (Cabinet Office – Publishing department), totalling €52 million, relating to publisher tariff subsidies for the financial years from
 Amounts due from Cassa Depositi e Prestiti refer to fees and commissions for BancoPosta’s deposit-taking activities during the year. This amount, which fell from the comparable sum at 31 December 2014, reflects the new terms and conditions laid down in the Agreement dated 4 December 2014 whereby billing takes place quarterly instead of every six months.
 Receivables arising from unfranked mail delivered and other value added services refer to bulk mail services and other added value services.
 Receivables from overseas counterparties relate to postal services carried out by the Parent Company for overseas postal operators.
 Other trade receivables include mainly: €71 million related to PosteMobile Spa for sales of terminals, services rendered to other operators and for the sale of top-ups through other channels; €29 million related to Posta Target services; €27 million for Posta Time services; €23 million for Advice and Billing Mail services; €22 million for air transportation services provided by Mistral Air Srl; €19 million related to
Notification of Legal Process service and €17 million for telegraphic services.
Provisions for doubtful debts relating to Public Administration entities regard amounts that may be partially unrecoverable as a result of legislation restricting government spending, delays in payment and problems at debtor entities. During 2015, part of these provisions was released to income following collection of originally doubtful receivables.
Provisions for doubtful debts relating to private customers include the amount set aside attributable to
BancoPosta’s operations, mainly to cover numerous individually immaterial amounts due from overdrawn current account holders.
As described in note 2.4 above, receivables relating to Universal Service compensation at 31 December 2015 were determined in keeping with the existing subsidy cap mechanism foreseen by the Contratto di
 Receivables arising from electoral subsidies refer to compensation for previous years.
Receivables relating to fixed-term contract settlements 144 95 239 161 98 259
Technical provisions attributable to reinsurers 58 - 58 54 - 54
Ot her receivab les and asset s 2,361 850 3,211 2,011 924 2,935
; – €775 million charged to holders of Interest-bearing Postal Certificates and Class III and V insurance policies for stamp duty at 31 December 2015
“Other taxes payable” until expiration or early settlement of the Interest-bearing Postal Certificates or the insurance policies, i.e. the date on which the tax is payable to the tax authorities (tab. B10.3); – €290 million relating to advances paid in relation to stamp duty to be paid in virtual form in 2016 and charged to customers; – €163 million relating to stamp duty charged to Postal Savings Books, which Poste Italiane SpA pays in virtual form as required by law; – €23 million to advances paid in relation to withholding tax on interest earned by current account holders for 2015, which is to be recovered from customers.
 Amounts due from staff under fixed-term contract settlements consist of salaries to be recovered following the agreements of 13 January 2006, 10 July 2008, 27 July 2010, 18 May 2012, 21 March 2013 and 30 July 2015 between Poste Italiane SpA and the trade unions, regarding the re-employment by court order of staff previously employed on fixed-term contracts. This item refers to receivables with a present value of €239 million from staff, from INPS and pension funds recoverable in the form of variable instalments, the last of which is due in 2040.
 Amounts that cannot be drawn on due to court rulings include €55 million in amounts seized and not assigned to creditors, in the process of recovery, and €13 million in amounts stolen from the Parent
Movements in the related provisions for doubtful debts are as follows: tab. A8.1 - Movements in Provisions for doubtful debts due from others (€m)
Public Administration entities for sundry services 13 - - 13 - - 13
Stability Law (Law 190/2014), implementing the decision of the General Court of the European Union of 13
Of the total amount, €385 million, assessed on the basis of provisions at 31 December 2015, has yet to be paid and is accounted for in “Other taxes payable” (tab. B10.3).
Introduced by article 19 of Law Decree 201/2011, converted as amended by Law 214/2011, in accordance with the
Cash at post offices, relating exclusively to BancoPosta RFC, regards cash deposits on postal current accounts, postal savings products (Interest-bearing Postal Certificates and Postal Savings Books) or advances obtained from the Italian Treasury to fund post office operations. This cash may only be used in settlement of these obligations. Cash and cash equivalents in hand are held at post offices (€866 million) and companies that provide cash transportation services whilst awaiting transfer to the Italian Treasury (€2,077 million). Bank deposits relate to BancoPosta RFC’s operations and include amounts deposited in an account with the Bank of Italy to be used in interbank settlements, totalling €216 million.
Bank deposits and amounts held at the Italian Treasury 2,741 760
The following table shows a reconciliation of the Parent Company’s equity and profit/(loss) for the year with the consolidated amounts: tab. B1 - Reconciliation of equity (€m)
Financial s tatements of Poste Ital iane SpA 7,646 690 451 6,505 1,018 57 5,430 - - - Undistributed profit (loss) of consolidated companies 2,311 - 424 1,887 - 377 1,510 - - - Investments accounted for using the equity method 3 - 3 - - (1) 1 - - - Balance of FV and CFH reserves of investee companies 198 (4) - 202 76 - 126 - -
Equity attributable to owners of the Parent 9,658 688 552 8,418 1,090 212 7,116 -
Non-control l ing interests in equity - - - - - - -
Considering that the payment of the the sums determined by the Decision of 2008 was made out of the Company’s retained earnings - which “ideally” included the interest paid on Poste Italiane SpA’s deposits with the MEF, regarded as inappropriate by the European Commission given that it was, in essence, a capital contribution by the State to a Stateowned company – the sums returned by the MEF were credited to retained earnings, to the extent provided for in the 2015 Stability Law.
The calculation of basic and diluted earnings per share (EPS) is based on the Group’s profit for the year. The denominator used in the calculation of both basic and diluted EPS is represented by the number of the Parent
Reserve for invest ees accou nt ed for u sing equ it y met hod
Group’s Insurance Services segment; – €4 million regarding the net fair value gain on available-for-sale financial assets attributable to the
More specifically, with reference to the difference of €45 million between the amount claimed by the Parent Company and the amount recognised by law, at 31 December 2014 (i) retained earnings were increased up to the limit provided for by the 2015 Stability Law; (ii) the remaining €33 million in interest accrued until 31 December 2013 was written off; and (iii) an adjusment of €9 million was made in relation to interest for the year. In 2015, an adjustment was made in relation to the €3 million accrued until the day the sum was collected.
 The cash flow hedge reserve reflects changes in the fair value of the effective portion of cash flow hedges outstanding. In 2015 net fair value gains of €13 million were attributable to the value of BancoPosta
SpA, in respect of their policyholders, inclusive of deferred liabilities resulting from application of the shadow accounting method, as follows: tab. B5 - Technical provisions for insurance business (€m)
The provisions for deferred liabilities due to policyholders includes portions of gains and losses attributable to policyholders under the shadow accounting method. In particular, the value of the provisions reflects the attribution to policyholders, in accordance with the relevant accounting standards (to which reference is made for more details), of unrealised profits and losses on available-for-sale financial assets at 31 December 2015 and, to a lesser extent, on financial instruments at fair value through profit or loss.
Movements in provisions for risks and charges are as follows: tab. B6 - Movements in provisions for risks and charges for the year ended 31 December 2015 (€m)
Provisions for disputes with staff (1) 184 16 - (22) (36) 142
Provisions for disputes with third parties 348 80 1 (34) (12) 383
Provisions for taxation/social security contributions 16 12 - (1) (3) 24
Other provisions for risks and charges 66 22 - (4) (4) 80
Specifically:  Provisions for non-recurring charges relate primarily to Bancoposta’s operational risks, reflecting items deriving from the reconstruction of the chart of accounts as of the date of incorporation of Poste Italiane
SpA, liabilities deriving from the provision of delegated services on behalof of delegating social security institutions, frauds, violation of an administrative nature, compensation and adjustments to income for previous years, risks related to customers’ complaints regarding investment products unsuited to their profiles and with performances not in line with expectations, as well as estimated risks for costs and charges to be incurred in relation to seizures of accounts held with BancoPosta. Provisions for the year primarily reflect liabilities deriving from the wrong application of statute-of-limitation terms, administrative violations and risks related to delegated services. Uses, amounting to €29 million, relate to settlement of disputes and payment of other liabilities during the period. Releases to profit or loss, amounting to €4 million, relate to liabilities recognised in the past that have failed to materialise.
 Provisions for disputes with staff regard liabilities that may arise following labour litigation and disputes of various type. Net releases of €6 million relate to 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, and the application of Law 183 of 4 November 2010 (“Collegato lavoro”), which has introduced a cap on current and future compensation payable to an employee in the event of "court-imposed conversion" of a fixed-term contract. Uses of €36 million regard amounts used to cover the cost of settling disputes.
 Provisions for personnel expenses are made to cover expected liabilities arising in relation to the cost of labour, with are certain or likely to occur but whose estimated amount is subject to change. They have increased by the estimated amount of new liabilities (€80 million) and decreased as a result of past liabilities that failed to materialise (€25 million) and settled disputes (€39 million).
 Other provisions cover probable liabilities of various type, including: estimated liabilities deriving from the risk that specific legal actions undertaken in order to reverse seizures of the Parent Company’s assets may be unable to recover the related amounts, claims for rent arrears on properties used free of charge by the
Parent Company, and claims for payment of accrued interest expense due to certain suppliers.
The following movements in employee termination benefits took place in 2015: tab. B7 - Movements in provisions for employee termination benefits and pension plans (€m)
tab. B7.1 - Economic and financial assumptions 1.60% for 2019 2.00% from 2019 on 2.00% from 2019 on 2.00% from 2020 on 2.70% for 2019 3.00% from 2019 on 3.00% from 2019 on 3.00% from 2020 on
Pension plan at 31 Decemb er tab. B7.5 - Other information
Payables deriving from postal current accounts represent BancoPosta’s direct deposits, and include interest accrued at 31 December 2015, which was settled with customers in January 2016.
Bonds consist of the following:  Two issues by Poste Italiane SpA, recognised at an amortised cost of €811 million under the EMTN – Euro
In terms of fair value hierarchy, which reflects the relevance of the sources used to measure assets, this amount qualifies for level 1.
 Four bonds with a value of €479 million issued by BdM-MCC SpA between 1998 and 1999 and maturing between 2018 and 2028, listed on the MOT. These bonds carry variable rates or simulate variable rate bonds through the use of fair value hedges, call for a total repayment on maturity of €530 million
(nominal value plus interest) and have an amortised cost at the reporting date of €387 million. As a result of the above fair value hedges, at 31 December 2015 the carrying amount of the bonds reflects a fair value adjustment of €92 million. The total fair value of the bonds at 31 December 2015 is €481 million.
EIB variable rate loan maturing in 2017 - 1 1 1 1 2
Borrowings from financial institutions are subject to standard negative pledge clauses
Outstanding liabilities for repurchase agreements at 31 December 2015 amount to €5,405 million and relate to contracts with a total nominal value of €5,019 million, entered into by the Parent Company with major financial institutions. These liabilities consist of:  €4,111 million (€9 million of which accrued interest) relating to Long Term Repos entered into with primary counterparties, with the resulting resources invested in Italian fixed income government securities of a matching nominal amount;  €784 million relating to BancoPosta’s ordinary borrowing operations via repurchase agreement transactions with primary financial institutions, in order to optimise the match between investments and short-term movements in current account deposits by private customers; The bondholders rank below customers holding the company’s insurance policies.
The short-term ECB loan of €830 million obtained by BdM-MCC SpA, within the scope of the ECB’s open market operations channelled through national central banks. The carrying amount approximates to the relevant fair value at 31 December 2015.
Cassa Depositi e Prestiti SpA;  short-term loans obtained by BdM-MCC SpA, totalling €175 million, of which €23 million provided by
Industrial patents, intellectual property, rights, concessions, licences, trademarks and similar rights
I t em wit h in 1 year from 1 t o 5 years over 5 years Tot al
Movements in derivative financial instruments during 2015 are described in section A5.
Other financial liabilities have a fair value that approximates to their carrying amount and refer mainly to
Amounts due to BdM-MCC SpA customers - 88 88 - - -
 Amounts to be credited to customers relate to amounts received from the Ministry for Economic
Development to fund the payment of “fuel bonuses” to qualifying customers, payments of bills by payment slip in the process of being credited to beneficiaries’ accounts, payments to be made on behalf of Poste Vita SpA, amounts to be paid for Bancoposta promotions, etc..
Amounts due to suppliers tab. B9.1 - Amounts due to suppliers (€m)
Prepayments and advances from customers relate to amounts received from customers as prepayment for the following services to be rendered: tab. B9.2 -Prepayments and advances from customers (€m)
Details of these items are as follows: tab. B10 - Other liabilities (€m)
Accrued liabilities and deferred income 16 56 72 14 45 59
Specifically:  Amounts due to the Istituto Nazionale per la Previdenza Sociale (INPS, the National Institute of Social
Security) primarily relate to amounts due on salaries paid and accrued at 31 December 2015. This item also includes provisions for employee termination benefits still to be paid.
National Occupational Injury Compensation Authority) relate to injury compensation paid to employees of the Parent Company for injuries occurring up to 31 December 1998.