In line with the commitment adopted by the Company to support the socio-economic inclusion of foreign citizens, two additional multi-ethnic Post Offices were activated in December 2019. More than 3.4 million customers were served in the 27 multi-ethnic Post Offices that are currently active during the year. In addition, in line with previous years, more than 5.5 million transactions were carried out in 2019.
Specifically, the programme aims improving the knowledge of financial and digital tools in a specific segment of the population, that of Seniors. The training of silver customers and citizens is conducted by financial and digital experts of Poste Italiane. This way, the Group continues to offer its contribution of expertise within the strategies developed by the National Committee on Financial Education, with the promotion of initiatives to increase, also among the Italian senior population, financial, insurance and social security knowledge and skills.
Il Risparmio che fa Scuola (Savings Education Project) The Ministry of Education, University and Research aims to strengthen the economic and financial knowledge of students of all levels of school, in order to educate them to active and aware citizenship. The project Il Risparmio che fa Scuola, promoted by Poste Italiane and Cassa Depositi e Prestiti, responds to this need by proposing a unique and original educational path, and completely free of charge. The aim is to train the citizens of the future, leading them to reflect on their saving behaviour (economic, environmental, energy, food) and on how much it can affect the life of everyone and their community. The new edition of “Il Risparmio che fa scuola” promotes Economic Citizenship by focusing on the issue of multidimensional savings as a key value and tool to promote progress and support individual development and of the entire community as well.
Develop the service model by assigning a dedicated consultant to customers
By 2019 Number of customers and number of employees involved with web platforms for customer experience 30,000 customers and 6,000 employees involved in the
Customer experience means for Poste Italiane to guarantee the excellence of products and services to provide a simple and safe user experience, fully recognised by its customers
To confirm the centrality of the issue, it is important to remember that the Board of Directors of Poste Italiane expresses the propensity to risk associated with the lack of satisfaction of customer needs also on the basis of indicators relating to Customer experience, including complaint rates and the Poste Italiane Group Customer experience.
The year 2019 was characterised by important organisational changes in terms of customer centricity.
The Customer experience Transformation function was created with the aim of putting the customer’s needs at the centre of the company’s strategies and to focus more and more on innovation and the opportunities offered by new technologies to strengthen the company’s competitive position, responding promptly and effectively to changes in the scenario and new needs of current and potential customers, reducing time to market in an increasingly incisive manner.
The new function is articulated so as to ensure on the physical channel, front line and digital that all new initiatives are launched in a Customer Centric perspective and that all existing products/services are continuously improved.
In line with the Deliver 2022 Plan and the industrial transformation process undertaken by Poste Italiane, the Chief Operating Office function also continues on its path of change undertaken in 2018. The recent reorganisation of the Back Office Services function aims to guarantee continuous improvement in the quality of the services provided to customers, the effectiveness and efficiency of the processes managed, the optimisation of the distribution of work and skills and the raising and redefinition of productivity standards in territorial operating centres, in compliance with sector regulations. The transformation process takes into account the organisational complexity and the different needs related to the business and provides, in particular: the involvement of people throughout the country, the organisational simplification and streamlining of the decision-making chain, the strengthening of governance and control activities, the creation of specialised structures for supply/service lines, the concentration of standardised activities common to different products and services in dedicated structures.
Indicative of the Company’s willingness to meet the needs of its customers is the employment of more than a thousand employees in the Mail, Parcels and Distribution function at territorial and central level and dedicated to quality and that carry out targeted measurement, prevention and improvement activities. During 2019, in order to guarantee the accuracy, integrity, reliability and consistency of the data necessary to define the KPIs present in the Postal Product Quality Monitoring Model, was the certification of the Model and the data collection processes feeding the monitoring system.
Improvement of approximately 83% in customer satisfaction results for 2019 (+2% compared to 2018)
In 2019, the “Poste Italiane Digital Assistant” tool was developed with the aim of improving and simplifying the interaction between customer and company thanks to the use of artificial intelligence technologies to enhance the role of customer service also through an evolution of trades. The aim of the assistant, a completely digital roBOT, is to help all customers by supporting and guiding them through the entire Poste Italiane offer by providing necessary information and assistance in case of difficulties in using it. At the same time, the bot also acts as the contact center’s right-hand man, anticipating customer needs and being proactive in finding practical and effective solutions.
The Poste Italiane Group deems it fundamental to base its relations with its customers on striving for maximum transparency and fairness, with a constant commitment to meeting their expectations. Therefore, the Group’s Integrated Policy regarding quality requires Group companies - within the scope of their autonomy and independence - to implement this Policy, adapting it to their own size and organisational and operational context, and related to specific regulations (for example, in the Financial and Insurance services segments).
In this context, fundamental importance is given to complaints and other requests through which customers express their dissatisfaction, as their correct and timely assessment and management is a useful indicator of service levels. This element contributes to the assessment and management of operational and reputational risks, especially non-compliance and conduct risks. Top management are notified about the progress of complaints on a weekly and monthly basis through specific reporting systems. In this regard, all Group companies have implemented specific procedures that set out principles and rules for handling complaints, which are approved and periodically reviewed by the respective boards of directors.
In 2019, with the aim of disseminating the issues addressed at the table and the initiatives promoted within the Site, the work of the Editorial Committee, the newsletter “Dialoguing with consumers”, the information tool aimed at the territorial representatives of consumer associations, was implemented. The activity reports, the materials presented during the meetings and any other useful information, are the subject of this information tool that is sent periodically to all the representatives of the Associations in the territory and is available in the appropriate section of the Company’s website. The newsletter, sent to 1,200 local offices in 2019, aims to inform about the main news in the world of Poste Italiane and to be a vehicle for new ideas and reports, to further strengthen the bond of knowledge and collaboration that has always characterised the relationship between the two realities.
Finally, the Company participates in the “Consumers’ Forum”, a unique association on the Italian and European scene, founded in 1999 by a number of important Italian companies and representative consumer associations at national level.
Ensuring adequate levels of confidentiality, integrity and availability of data, information and services provided to customers requires increasingly advanced protection systems to safeguard personal data, tangible and intangible assets and intellectual property.
In order to achieve its objectives, the Group considers it necessary to adapt not only the technological measures, but also the internal provisions and operational security processes, guaranteeing an adequate level of performance of the security monitoring, an adequate resilience of the business services, and feeding the information flows to the internal control bodies and/or to the reference Authorities. All cybersecurity and IT Security activities are part of the company’s more general objective of fulfilling
In consideration of the importance assumed by the risks connected to cybersecurity at national and international level, during the year, an experimental project of Cyber Risk Quantification was conducted, using the Factor Analysis of Information Risk (FAIR) methodology, aimed at measuring cyber risk in economic terms and with risk based indicators, on some relevant business systems and for some predefined scenarios, based on a statistical methodology.
The IT Security Policy and the objectives it aims to achieve have been the basis for the development by Poste Italiane of a specific IT security framework. The framework foresees specific methodologies for IT risk, transversal interventions and technological projects with the aim of ensuring the proper functioning of security platforms.
Domains overseen by the IT security function (Sicurezza Informatica - SI)
The CERT of Poste Italiane has organised its services in such a way as to create stratified levels of protection for the Group’s business: � external perimeter, which prevents attacks by collecting and exchanging information on threats and vulnerabilities that may affect the Group’s services; � internal perimeter, which protects the infrastructure and responds to potential malicious events.
EARLY WARNING Collection of information on the vulnerabilities that may affect Poste services from external sources
CYBER THREAT Collection through external sources of malware against Poste’s services
Cybersecurity: the new space on the Intranet dedicated to IT security
In order to develop and nourish dialogue that is always beneficial on the cyber theme, there is a Blog section featuring in-depth articles on various topics. Each post is open to the public wishing to make contributions or request further information, or simply express doubts.
Every month a cyber-video game is also proposed to stimulate the verification of the learning of IT security concepts.
Another tool available to employees is the Altair portal, which is also a reference point for raising awareness on cybersecurity issues, which is addressed not only to sector experts, but above all for a wider public, by using language and content designed to meet the needs of both types of user. Altair ranges from more specific topics, such as new malware, spam or cyber-espionage campaign reports, to daily cyber and hi-tech news. The portal provides updates on scheduled training events, in-depth educational content on cybersecurity issues, guides and useful links to raise users’ IT awareness while they are surfing the web.
The Business Control Center represents the “technological heart” of the Company’s business process control. One of the main tasks of the structure is to monitor in real time, 24 hours a day, the services provided by Poste Italiane, to protect the security of customers in Post Offices and employees in all workplaces, to combat fraud and cybercrime, and to test the services offered by the Company.
Personal data protection With a view to achieving uniform management of personal data and compliance with recent regulatory requirements in this regard, the Group continued the development of its corporate regulatory system consisting of the Privacy Guidelines, to ensure that management complies with legal provisions, and the Personal Data Protection Management System Guidelines, designed to ensure a uniform management system at Group level, which complies with the provisions of the European General Data Protection Regulation (GDPR) and current Italian legislation. In detail, the Guidelines illustrate the Company’s privacy model, the principles of Privacy by Design and Privacy by Default, which respectively establish the incorporation of privacy from the design stage and the guarantee by default, as well as the main processes adopted by the Poste Italiane Group and the related responsibilities regarding the effective management of personal data protection risk.
• 4.4 million digital e-wallet portfolios • Enhancement of the technological capital • +700 Start-ups analysed • Opening of the largest sorting centre in the Country • Over 57 million Digital - Consumer transactions
Develop the digital services offered through the adoption of blockchain technology
For Poste Italiane, innovation and digitisation represent the beating heart for the promotion of change and the key tool to accompany its customers in the process of digital transformation. As part of this path, the Company is committed to adopting a highly inclusive approach, aimed at promoting accessibility by all its customers.
In line with its values and the Group’s mission to support development and inclusion, Poste Italiane is committed to leading the country system towards progress and modernisation by defining processes that enable the development of increasingly innovative products and services
Innovation and digitisation of processes In a complex and challenging scenario, the Group’s strategic evolution requires leveraging the development of innovation and the enhancement of technological assets to ensure both the capitalisation of what has already been achieved and the development of innovative solutions, as a support and source for business evolution. Over the years, Poste Italiane has shown its ability to transform its operational structures and services by adapting to market needs in constant evolution, through continuous investments in technology and know-how.
The Company therefore intends to better manage the needs of its customers, through strategic investments in physical and digital infrastructures, all in line with the Deliver 2022 Strategic Plan. The Plan has, in fact, innovation as its main pillar, requiring a profound transformation of the business and therefore of the company’s IT systems and processes to support the achievement of its objectives.
To support the Digital Transformation process undertaken, the Company has planned a paradigm shift to evolve from a product-driven model towards a platform company logic, based on a generative, inclusive and transversal culture, and from a producer profile towards an aggregator and needs orchestrator profile. At business level, this involves a fluid and interchangeable ecosystem where the role of experiential player and customer-centric focuses not only on profit but also on the customer, ethics and sustainability.
The distinguishing features of this process include the presence of a dedicated business area (Digital and User Experience within the Customer experience Transformation function), which serves as a competence centre to support the implementation of the Group’s digital strategy, and Postepay, the largest Electronic Money Institution (EMI) in Italy, which has integrated the telecommunications services previously provided by PosteMobile with its card payments and payment services business. Postepay aims to enhance Poste Italiane’s distribution channels through a “hybrid” model, which combines the largest and most widespread physical network in Italy and the digital world, and to create new channels, products and integrated services, especially regarding acquiring, e-commerce and mobile and digital payments.
In addition, during the year, 1,300 users of 24 requesting facilities were enabled and over 45,000 purchase requests (RDA) were dematerialised and managed through BPM. The application is also accessible with webApp, which can be used from mobile devices. The project, in addition to obvious benefits on sustainability issues (about 350,000 pages/year unprinted), helps to strengthen monitoring and compliance throughout the process and significantly reduce the time it takes to pass through (by about 30% for tenders above the threshold).
Disused data centers with reduction from 12 to 8 local data centers
As part of the Open Innovation activities aimed at identifying innovative solutions consistent and functional to achieve the objectives set out in the Plan, over 700 start-ups were analysed, 80% of which came from Venture Capital Funds or national and international Open Innovation Programmes with which Poste Italiane has signed collaboration agreements. Among the start-ups analysed, over 100 were considered of potential interest for the functions and currently about 30 are shared for potential synergies and/or collaborations. As announced at the Innovation Workshop with investors held in London in January 2020, with four start-ups, with which the Company has found a clear and current opportunity to capitalise on its credibility and proven expertise in delivering innovations to the entire population, active collaboration is underway in the areas of logistics, last-mile delivery, financial services and payments.
The Group has also partnered with sennder, a digital carrier that uses technology to maximise saturation and flexibility in long-haul road transport. The joint venture has been intensifying to apply to the Group’s entire Full Truck Load business, with a specific focus on reducing the annual costs of the current total transport volume.
At the same time, the Company has made significant investments in the automation of sorting, shipping and tracking processes.
In particular, in 2019, Poste Italiane opened the largest sorting centre in the country in Bologna.
The structure, built on an area of 75 thousand square meters and capable of sorting 34,000 parcels every hour, is an emblem of the Company’s ability to combine innovation and tradition, remaining an integral part of the social fabric of the country and becoming an engine of development.
The Hub represents an example of the strategic design implemented by the Company that aims at growth in logistics related to online purchasing. Operating in synergy with the most widespread distribution network in Italy and, at the same time, exploiting the opportunities offered by the digital world, the Bologna centre makes it possible to implement the development and innovation path outlined in the Deliver 2022 Business Plan, making a decisive contribution to the spread of e-commerce and digitisation in Italy.
It is the most modern and largest logistics facility in the country and one of the most environmentally advanced. In fact, photovoltaic panels covering an area of 5,500 square meters have been installed on the roof of the system and generate more electricity than its daytime energy needs
The objective for the coming years is to continue to invest in the development of offers that favour the inclusion and availability of tariffs for navigation even in territories with less choice of digital services and internet navigation.
In addition, PostePay, in line with the acceleration that the Company is having in terms of contribution to innovation for the country, has planned for 2020 the confirmation of the online channel as a strategic lever to increase the number of interested customers and always in synergy with the Post Office network.
In support of the digital transformation, during 2019, the TuttoInCloudMulte initiative was created, an innovative service launched by Postel that allows local administrations to digitise the sanctioning procedure regarding traffic violations, from the fine to the notification, without any investment and purchase of software licenses. The tool makes it possible to adapt the Body’s procedures to the Digital Administration Code, to reduce the percentage of appeals and to cancel software maintenance and adaptation costs.
Postepay Code is the solution that can break down the barriers to the spread of traditional acquiring services. In particular, it is positioned in a competitive way with respect to the solutions on the market thanks to some of its specific characteristics: � it is an all-digital app-based service that targets both payers and cashiers, and does not require an additional POS installation by the retailer; � it also optimizes and facilitates the entry of small merchants as there is no need to open a new account; � it has a competitive and in any case free pricing for all transactions below €10, just to encourage the use of electronic payment instruments in micro-transactions, which are those that favour the use of cash; � autonomous management of discounts and promotions with the Sconti Poste loyalty programme, encouraging growth in the number of participating merchants (to date around 4,100); � possibility, also for small merchants and therefore, with value also as a contribution to inclusion, to reach a wider customer base to which it can provide its services in a simple and transparent way.
Postepay’s fund transfer service also promotes the reduction of the use of cash, the traceability of transactions and movements of money abroad, the dematerialisation of documents relating to the sending of money, making it easier and more convenient for foreigners present in Italy (new Italians) to provide financial help to relatives and friends living in their countries of origin.
By 2022 Number of company vehicles with reduced environmental impact introduced
By 2022 GWh total electricity consumed by buildings -32.8 GWh -12.3 GWh
By 2022 tCO2e emitted by direct energy consumed by properties -1,000 tCO2e -78 tCO2e from LPG
Poste Italiane attributes primary importance to the issue of environmental protection within its Code of Ethics, with the aim of promoting innovative solutions capable of protecting the natural capital, by minimising the environmental impacts produced.
In this context, in 2019, the Group pursued the objective of renewing utilities contracts (gas and EE), making consumption more efficient, reducing emissions and implementing management support systems.
In order to raise awareness of the impact that the daily actions of the people who work permanently or temporarily at Group companies have on the environment, in early 2019 the Company adopted a Group policy on environmental sustainability with a view to sharing with customers, civil society and stakeholders in general, the commitments it has undertaken - in addition to the principles - to respect the rules and instruments it intends to adopt to ensure compliance with international regulations and standards.
Therefore, the Policy’s objective is to prevent, manage and, where possible, reduce the environmental impacts generated by the Company’s operational activities, in particular, from the use of buildings and logistics and transport activities, whether carried out directly or through suppliers and partners.
The Group seeks to raise awareness among its employees to adopt more sustainable conduct in their daily activities. In fact, as part of the “Your opinion counts” employee listening process, the #QuantoSeiGreen? survey has recently been online to find out their level of environmental sustainability.
The survey is aimed at encouraging all those who have obtained a low score to adopt a more respectful attitude towards nature, thanks to the Company’s suggestions, starting with a few simple measures that help to save CO2 while preserving the environment in which they live.
<40% of total points Sustainable living is not your style. The impact of your consumption on the environment is the last of your concerns, before sustainability you have a very long list of other priorities. Bringing a little green into your life will not hurt you and be confident, it is not that hard. Sometimes it is enough to just be less lazy and a little more careful.
Green lover >61% of total points 100% sustainable? Impossible, but you are really close. Every aspect of your life is designed with environmental sustainability in mind and you are concerned about the legacy you are going to leave to the younger generations. Keep it up! You are an example to those around you.
In line with the attention paid to the involvement of employees in sports initiatives, in 2019, the Company took part in the tenth edition of the Re Boat National Race, the Recycled Regatta, participating with 4 green teams. The Re Boat National Contest gives shape to ideas and solutions based on the themes of waste recovery and recycling, the use of alternative, clean and renewable energy sources, rewarding the most innovative proposals, with a view to sustainable development and environmental respect.
� SDA SpA’s Quality, Environment and Occupational Health and Safety Policy contains the principles that govern and guarantee a correct management of environmental issues: direct and permanent engagement of senior managers in the management of the Integrated System; protection and prevention, in terms of optimising the use of resources and minimising environmental impacts; a constant quest for a sustainable procurement system.
With stakeholder engagement activities and a monitoring system - which involves various tools, including monthly checks on the state of progress of consumption and benchmark analyses carried out for homogeneous groups of buildings - the Group identifies and analyses the range of risks associated with the most significant environmental aspects and sets objectives for monitoring, limiting and optimising its performance.
In 2019, Poste Italiane undertook to launch multi-year projects aimed at reducing the environmental impact of properties and the use of non-renewable sources.
In this context, from an environmental responsibility perspective, the Group considers energy efficiency to be one of the main elements for combining economic growth and sustainable development, and it has reduced its environmental strategy to two main areas of intervention: � Renewable energy sources. In order to promote renewable energy sources, Poste Italiane has focused on the distribution of integrated photovoltaic systems in buildings, thereby creating infrastructure aimed at reducing dependence on fossil fuels. With a view to reducing the withdrawal of electricity from the national grid, as well as the overall costs of supply and payment for the expected tariff increases, the Group has planned to increase its own self-production facilities by installing photovoltaic panels on its buildings. In particular, as part of the Poste Group’s photovoltaic project, the first pilot plants were started up and tests were carried out for the subsequent implementation of the remaining plants. As far as the supply of electricity is concerned, more than 95% of the Group’s requirements are acquired by the reference market through the Group company Europa Gestioni Immobiliari (with a percentage equal to 100% from renewable sources certified Guarantees of Origin) and a small percentage acquired through other non-renewable channels (national grid). A residual share of the requirements is self-produced by proprietary photovoltaic systems. In this regard, in order to increase self-production of energy, at the end of 2019, a significant tender procedure of €32.2 million was launched for the implementation of 600 new installations of photovoltaic systems.
� Smart building. Minimise the environmental impacts of the Group’s buildings with regard to energy use, water consumption, waste and consumption of raw materials, through implementation of specific measures that strictly depend on preventive analysis and constant monitoring systems. More specifically, the major property efficiency actions carried out by the Group in 2019 concern some plants decommissioned and/or converted to more advanced energy efficiency standards.
� Increase the production and energy efficiency of delivery. The Mail, Parcels and Distribution segment has implemented several actions aimed at affecting production and energy efficiency. The company SDA has opened 3 new offices equipped with photovoltaic and solar thermal systems, for sanitary use, and LED lighting. While for the new Bologna Hub site, the analysis and verification of the sizing of the photovoltaic plant was started and the BREEAM (Building Research Establishment Environmental Assessment Method) and LEED GOLD sustainability certifications were obtained.
� LED lighting. Also in 2019, Poste Italiane invested particularly in the area of smart technologies, focusing on the gradual installation of LED (Light Emitting Diode) lighting. In 2019, 106,000 LED lights were installed in almost 1,000 buildings and LED relamping was carried out at 5 of the most energy-intensive sites. The overall project aims to significantly reduce electricity consumption, emissions and maintenance costs. The estimated figures based on initial forecast investment of approximately €14 million, add up to expected savings of more than 32 GWh per year, thanks to the replacement of over 250,000 old lighting fixtures, and a reduction in CO2 emissions of 11,000 tonnes per year.
The Poste Italiane Group, which is deployed nationwide, recognises its responsibility to play a distinctive role in creating sustainable value for the communities in which it operates, where the environmental dimension is of primary importance.
In order to guarantee a clear and uniform managerial approach to environmental issues, the Poste Italiane Group has adopted a policy that sets out the Company’s commitment to mitigating the environmental impact of its key business processes, and encourages the development of green transport solutions for logistics activities and staff mobility, partly by providing staff with a corporate fleet of hybrid
In 2019, Poste Italiane inaugurated in Bologna the largest Hub in the country covered by photovoltaic panels
In line with the provisions of the Policy, the Company is committed to raising employees’ awareness of environmental responsibility, promoting numerous events in the field of Mobility Management with the aim of improving the home-work travel of staff, promoting the use of public transport, car-pooling, alternative and collective mobility with low environmental impact and in relation to the optimisation of the entrance and parking areas of corporate offices.
In a nutshell, this new operating model, characterised by a change in delivery frequency, leads to a reduction in the number of kilometres travelled for traditional delivery activities and less need for vehicles.
By the end of the first half of 2020, the supply of 850 three-wheeled vehicles with electric power supply will be completed, which will bring benefits both in terms of load capacity (increased volume) and in terms of safety (thanks to the greater stability of the three-wheeled vehicle compared to current two-wheel mopeds).
At the beginning of 2020, at the Vallelunga circuit, Poste Italiane letter carriers and drivers were engaged in a day of test drives and training to assess the performance of thermal, hybrid and electric three- and four-wheeled vehicles. On the Roman circuit, a group of twenty experienced colleagues from the Mail, Logistics and Communication sector took part in a test on the qualities and characteristics of vehicles to improve their everyday operation.
In 2019, Poste Italiane participated in the “Green Postal Day”, the initiative organised by the International Post Corporation, a cooperation of innovative technological services that includes 25 postal operators operating worldwide, including Poste Italiane, to raise awareness and highlight the contribution of the postal industry to the reduction of CO2 emissions and the global fight against climate change.
In line with the leading European operators, in order to employ the network of letter carriers in the parcel deliveries market generated by online sales, in relation to the aforementioned reconfiguration of the mix of the last-mile fleet, in 2018, Poste Italiane planned a new mix of the fleet through the introduction of 3-wheeled vehicles to replace 2-wheeled vehicles. These vehicles have several advantages in terms of greater load capacity compared to mopeds, greater safety for letter carriers and less environmental impact than electrically powered models. Also in terms of properties, the path of expansion and adaptation to standards and transformation of the logistics network continues. In 2019, in addition to the activation of the Bologna e-commerce hub, 32 new distribution centres were activated, the last of which opened in the municipality of Cucciago. The processes for the TAPA FSR (Facility Security Requirement) certification of the main sorting and delivery centres were also launched.
New distribution centres opened in 2019 to expand the logistics network
Monitor the ESG ratings of the issuers present in directly managed portfolios by 2019 % of issuers under ESG monitoring
Monitor the ESG ratings of the issuers present in directly managed portfolios by 2020 % of issuers under ESG monitoring 100% New
Request thirdparty managers to adopt Poste Vita’s Responsible Investment Policy by 2020 % of third-party managers involved 100% New
By 2022 % of the total AUM of the Funds in placement with: • Benchmarks made up of ESG Indices for Benchmark Funds; • Investment policies that provide for specific criteria for selecting financial instruments linked to ESG factors for Funds without Benchmarks.
One of the main aspects of sustainability policies is the integration of environmental, social and governance (ESG) criteria into traditional investment processes. By implementing effective investment processes, the financial segment can help protect society, promote innovation and support economic growth, making an important contribution to the country’s sustainable development. As part of the strategy consolidated by the Poste Italiane Group over time, in order to pursue its sustainability objectives, the incorporation of ESG principles into the investment processes used by Poste Vita and BancoPosta Fondi SGR is of particular significance.
As early as 2018, Poste Vita and BancoPosta Fondi SGR chose to adhere to the United Nations Principles for Responsible Investments (PRI), thus formally undertaking to integrate ESG issues into the analysis and decision-making processes regarding investments and to incorporate these issues into their relations with counterparties, as they are convinced that integrating environmental, social and governance factors in investment processes is a necessary element to pursue sustainable performance over time, reduce the risk profile of portfolios and act in line with the principles of Integrity and transparency, as evidenced by the growing trend that has developed in Italy and Europe in recent years in relation to sustainable investments.
Responsible investment principles, goals and management criteria have been formalised within the Responsible Investment Policies adopted by the Poste Vita Group and BancoPosta Fondi SGR, approved by the Board of Directors of the respective Companies
With the aim of adopting specific measures enabling the Group to monitor the exposure of the investment portfolios to non-financial risks, the Poste Vita Group and BancoPosta Fondi SGR appointed VigeoEiris, an international social and environmental rating agency to conduct and assessment of the ESG aspects of their portfolio in relation to both direct and indirect investments in order to evaluate the level social responsibility.
In addition, during 2019, the Poste Vita Group and Banco Posta Fondi SGR adopted the Guidelines on the exercise of voting rights and engagement activities. The document defines the measures and procedures to ensure that voting rights are exercised in accordance with the objectives set and the corporate regulatory system, with particular reference to the Responsible Investment Policy adopted. The Guidelines also define the provisions adopted in relation to the prevention or management of any conflict of interest resulting from the exercise of voting rights. Through the adoption of the Guidelines, the companies are committed to ongoing dialogue with the issuers in their portfolios with the aim of promoting the proper management of ESG issues.
Finally, with the objective of monitoring investment activities in risk sectors, the Poste Vita Group and BancoPosta Fondi SGR have adopted the Guidelines for investment in sensitive sectors, defining measures to identify, assess and monitor exposure to activities that present a significant intrinsic risk from an ESG perspective and allowing environmental, social and governance aspects to be incorporated into the investment process.
ESG investment products Both Group companies that carry out investment activities - Poste Vita and Banco Posta Fondi SGR - have continued to implement responsible investment policies with specific investment products.
Poste Vita’s Real Estate fund, Diamond Eurozone Office (DEO), has obtained the highest rating in terms of sustainability from GRESB, an international organisation that analyses and compares Real Estate investments from an environmental, social and governance (ESG) perspective worldwide. The DEO Fund achieved a five-star rating, winning the title of Green Fund and an overall score of 86/100, placing 12th among the 64 unlisted funds in the Eurozone in the Office sector.
With the aim of formalising this commitment and aligning its business model with the Sustainable Development Goals, Poste Vita adopted a Responsible Insurance Policy, a document that describes the approach the Company intends to take in managing the risks and opportunities connected with environmental, social and governance factors within traditional insurance processes
Insurance products with social and environmental value In developing its offering of insurance services, Poste Vita targets, whenever sustainable, more vulnerable social categories, such as the young, the elderly and people with particular diseases.
In this context, the Company provides a non-vehicle offer that is characterised by low average premium amounts (the average premium is around €165 per year for coverage related to the property line, i.e., housing, pets, civil liability, and €260 for accident and health coverage). This prerogative allows the different types of customers, even with reduced spending possibilities, to access insurance coverage aimed at protecting their specific needs. Customers are also offered the possibility of splitting the premium (annual, semi-annual or monthly payment). In addition, two additional investment lines have been added in line with the development of the supplementary pension range implemented in 2019. Specifically, in July 2019, the Postaprevidenza Valore Individual Pension Plan was expanded with two new investment profiles - Dynamic and Guided - in addition to the Guaranteed, with different allocation of contributions paid between the Posta Pensione Separate Management and the Poste Vita Previdenza Flessibile Internal Insurance Fund. The commercial proposition has also been modified through the use of a new dedicated platform that provides an indication of the lines to which the customer can adhere, identifying a hierarchy from the most suitable to the one not recommended.
** Coverage represents the overall percentage of operations audited. The index was calculated as the ratio between the relevant audits and the number of audits by activity.
Number of cases of bribery and corruption and corrective actions u.m. 2017 2018 2019
Percentage of suppliers selected on the basis of environmental criteria 40.4 34.1 49.1 * The assessment regards tender processes for amounts above the EU thresholds and is functional to identify tenders that include specific environmental criteria in the subject, in the technical specifications or in the participation and/or assessment criteria (e.g. ISO 14001, ISO 50001, hybrid/electric vehicles, low-environmental impact vehicles, Minimum Environmental Criteria, the use of recycled materials in supplies, etc.).
** For 2019, the scope of the figure includes Poste Italiane and Group companies. The strengthening of the control aimed at increasing the degree of sustainability of the supply chain has led to a significant increase in environmental performance. The 2019 index increased by 15 percentage points compared to 2018 (+44%).
** For 2019, the scope of the figure includes Poste Italiane and Group companies. The strengthening of the control aimed at increasing the degree of sustainability of the supply chain has led to a significant increase in social performance. The 2019 index increased by 12 percentage points compared to 2018 (+27%).
Of which: Of which: * The figures are shown in Full Time Equivalent (FTE) terms. ** Includes permanent staff and apprenticeships. *** Includes fixed-term and agency staff.
Of which: Of which: * The figures refer to the headcount.
Percentage of positions filled through internal hiring (%)* 72 39 * The percentage of positions filled through internal hiring refers to the Parent Company. For the year 2019, it should be noted that the figure was compared to the total entries (internal and external).
[GRI 401-2] Benefits provided to full-time employees that are not provided to temporary or part-time employees
Average cost of FTEs hired (€)** - 34,900 36,300 * The turnover rate was calculated on the basis of the number of FTEs leaving the Group as a proportion of the total workforce for year n-1. The voluntary turnover rate is FTEs leaving the Group voluntarily as a proportion of the total workforce for year n-1.
Disputes with employees 1,167 956 489 * Periodic trends show a significant decrease in disputes in 2019 and, in fact, in the period of reference, the decrease is about 48%, compared to the same period of the previous year. With regard to the contractual matters, there are 26 new disputes (24 of which relate to Poste Italiane), while in 2018, there were 26 disputes (22 of which relate to Poste Italiane); therefore, the figure is unchanged. Regarding workplace issues, there are 357 new implemented disputes (of which 344 related to Poste Italiane), while in 2018, there were 788 (of which 785 related to Poste Italiane), with a specific percentage decrease of 54%. Finally, with regard to “termination of employment”, there were 106 new disputes (of which 100 related to Poste Italiane), while in 2018, there were 142 disputes (of which 129 related to Poste Italiane); the decrease in this type was approximately 29%.
[GRI 403-2] Type of injury, injury rate, lost day rate, occupational disease rate, absentee rate and work-related fatalities at the Group
Fall and/or awkward movement 847 1,338 2,185 1,047 1,394 2,441 841 1,338 2,179
ATMs equipped with touchpads for the visually impaired and the blind 7,257 7,279 7,728
Percentage of young current account holders (under 35) 25.4 24.9 24.2
Percentage of senior current account holders (over 65) 24.4 23.8 25.9
Percentage of young current account holders (under 35) 38 35.7 28.8
Percentage of current account holders who are “new Italians” 20.6 22.1 20.1 * For Postepay Standard and Evolution cards, renewals during the year are excluded.
Average response time (days) 6 10 3 * The figures on complaints relate to open cases requiring back-office intervention. ** For 2019, complaints relate to the entire logistics network (Poste Italiane, SDA and CLP). Until 2018, the Parcels complaints received were only those of the
(SMEs and Large Customers); Poste Vita (Consumer). The sales and customer care channels involved regard the Post Office channel and the Contact Centre. The target set for 2019 is +1.2 percentage points compared with 2018.
Scores of 9-10 in the NPS/CES surveys reflect customers who are “promotors” (NPS) and “enthusiasts” (CES).
Breaches, data theft and leaks of customer data identified - 205 321
Total amount of fines /penalties paid in relation to IT security breaches or other IT security incidents (€) 24,000 - - * The percentage of customers whose data have been used for secondary purposes is equal to 1% of the total number of customers.
Of which: Municipal water supplies or other public or private water utilities (m3) 1,938,726 1,757,111 1,770,724 * The target set for 2019 is 1,792,000 cubic metres.
Of which: Direct emissions – Scope 3 (tCO2e)*** 156,712 126,440 156,202
* The emission factors used to convert fuels into CO2e are as follows: LPG for 2017 1.50 kg CO2 e/l (source DEFRA 2017), for 2018 1.51 kg CO2 e/l (source DEFRA 2018) and for 2019 1.52 kg CO2 e/l (source DEFRA 2019). Diesel for 2017 2.60 kg CO2 e/l (source DEFRA 2017), for 2018 2.63 kg CO2 e/l (source DEFRA 2018) and for 2019 2.69 kg CO2 e/l (source DEFRA 2019). Natural gas for 2017 2.09 kg CO2 e/m3 (source DEFRA 2017), for 2018 2.04 kg CO2 e/m3 (source DEFRA 2018) and for 2019 2.03 kg CO2e/m3 (source DEFRA 2019). Petrol for 2017 2.19 kg CO2 e/l (source DEFRA 2017), for 2018 2.2 kg CO2 e/l (source DEFRA 2018) and for 2019 2.21 kg CO2 e/l (source DEFRA 2019). The target set for 2019 is 137,900 tCO2 eq.
The location-based method, on the other hand, is based on average emission factors for regional, sub-national or national power generation. Applying the location-based method, the Group’s total Scope 2 emissions in 2017 amount to 191,678 tonnes, in 2018, 183,486 tCO2 e and in 2019 177,855 tCO2 e. The same emission factors were used as were used for the market-based method. The target set for 2019 is 8,500 tCO2 eq.
Other types of disposal (t) 418.0 524.6 121.16 * The figures for the quantity of waste produced are provided by the companies that provide waste management services. ** The target set for 2019 in relation to waste sent to landfill, incinerated or subject to other types of disposal is 1,000 tonnes.
[GRI 302-2; GRI 305-3] External energy consumption and CO2e emissions relating to real estate facilities
Weight of electricity consumption relating to real estate facilities by type of business
[GRI 302-2; GRI 305-3] Energy consumption and emissions by mail and charter transport
Total Fuel emissions from non-renewable sources – Scope 1 (tSO2)* 39.05
Jet Fuel 38.58 * The emission factors used to convert fuels into SO2 are as follows: diesel 0.0004 t SO2/TJ. Petrol 0.0003 t SO2/TJ. Source: ISPRA, database of average emission factors of road transport in Italy. Jet fuel 96 gSOx/GJ. Source: ISPRA, Emission factors for stationary combustion sources in Italy.
Jet Fuel 1.21 * The emission factors used to convert fuels into VOC are as follows: natural gas 0.0558 t VOC/TJ. LPG 0.0439 t VOC/TJ. Diesel for cars 0.0037 t VOC/TJ, for light commercial vehicles 0.0131 t VOC/TJ, for heavy trucks 0.0211 t VOC/TJ. Petrol for cars 0.1945 t VOC/TJ, for light commercial vehicles 0.1245 t VOC/ TJ, for motorcycles 0.8961 t VOC/TJ. Source: ISPRA, database of average emission factors of road transport in Italy. Jet fuel 3 g NMVOC/GJ. Source: ISPRA, Emission factors for stationary combustion sources in Italy.
Total Fuel emissions from non-renewable sources – Scope 3 (VOC) 33.22
** The value indicated refers to the estimate of the polluting emissions generated by the home-work travel of Poste Italiane employees applied in the offices of more than 300 resources which, at present, amount to 36 located in 19 cities in Italy, for a sample of 25,558 total resources.
The Mail, Parcels and Distribution Strategic Business Unit will continue to optimise its operational efficiency, including by strengthening the integration of the logistics networks which deliver parcels and mail. In addition, as part of the process of modernising its vehicle fleet, the Group will continue with the introduction of alternative electric delivery vehicles (3-wheeled vehicles). This will improve occupational safety and extend the process, launched in recent years, of adopting eco-friendly forms of transport, involving the introduction of a fleet of 4-wheeled electric vehicles.
The aim of this investment is to maximise synergies in the logistics and operations network and leverage all the Group’s available assets, enabling us to improve our competitive position in the parcels market by taking advantage of the opportunities arising from the growth of e-commerce.
The Payments, Mobile and Digital Strategic Business Unit aims to deliver on the strategic objective of becoming Italy’s leading payments ecosystem, ensuring convergence between payments and mobile technology, and between physical and digital channels. In this regard, the Group intends to lead changes in the habits of consumers, businesses and the Public Administration, creating new integrated products and services.
In the Payments area, the Postepay card top-up service will be expanded, giving customers the option to make automatic top-ups based on time as well as value.
In line with the Deliver 2022 Plan, the Financial Services SBU will continue with initiatives designed to take advantage of the opportunities resulting from the recent regulatory changes brought about by MiFID II and IDD, by leveraging the customer base, the distribution network and the brand.
Within the scope of Postal Savings, as set forth in the agreement with CDP, development will continue on the “Postal Savings Relaunch Programme”, with the introduction of new products.
In the Business and Public Administration current accounts area, to improve relationships with customers, operational and process simplification initiatives will continue in both the opening and management of current accounts.
With regard to the Public Administration segment, 2020 will see the extension of the Treasury service to targets in addition to Municipalities with fewer than 5 thousand inhabitants.
In loan products, promotion and placement activities subject to agreements with partners for property mortgages and personal loans will continue. For the latter, there will be a focus on expanding the product range through the introduction of online solutions.
Lastly, the Group’s technological platforms will continue to evolve towards cloud solutions.
At present it is not possible to make a reasonable estimate of the possible medium-term impacts of the spread in Italy of the COVID-19 coronavirus. However, it is important to note that in its response to this situation Poste Italiane will be able to bring to bear various specific strengths relating to its multi-channel structure and the growth of its digital business, which ensure that service is also available outside traditional post office channels. The majority of the Group’s overall revenue will not be linked to short-term commercial activities and the business model of BancoPosta is capital light, not assuming credit risk. In addition, its cash flow generation is solid and it continues to hold net cash. The Group is actively involved in daily monitoring of the evolution of the virus, for the proactive management of the relative effects.
Company organisational and management model [Art. 3, paragraph 1, letter a]
� Sustainability topics relevant to Poste Italiane Incorporating sustainability within Poste Italiane’s strategy � Poste Italiane’s business model � Poste Italiane’s integrated internal control and risk management system
� Integrity and transparency � Legality and incorporation of ESG criteria within the procurement processes � Integration of ESG factors into insurance policies � Integration of ESG factors into investment policies
� Legality and incorporation of ESG criteria within the procurement processes � Environmental impacts of real estate facilities � Environmental impacts of logistics � Integration of ESG factors into investment policies � Integration of ESG factors into insurance policies
� The economic value generated and distributed by the Poste Italiane Group � Legality and incorporation of ESG criteria within the procurement processes � Support for the socio-economic development of local communities � Dialogue and transparency in relations with the authorities � Financial inclusion � Quality and customer experience � Innovation and digitisation of products, services and processes � Cybersecurity, IT security and privacy � Integration of ESG factors into investment policies � Integration of ESG factors into insurance policies
All the GRI indicators published are listed below in the “GRI Standards Content Index”, in which eventual limitations with respect to the relevant requirements are noted (see paragraph “GRI Standards Content Index”).
Table showing the link with the scope of the Decree, Poste Italiane’s material topics and the GRI Standards.
Staff welfare and wellbeing � GRI 401 Employment Poste Italiane Group -
Protection of human rights � GRI 405 Diversity and Equal Opportunity � GRI 412 Human Rights Assessment
Report on Corporate Governance and the Ownership Structure: Section I: Governance and ownership structures 102-8 Information on employees and other workers Chapter 5, Indicators tables – Protection of human rights 102-9 Supply chain Legality and incorporation of ESG criteria within the procurement processes 102-10 Significant changes to the organization and its supply chain
Strategy 102-14 Statement from senior decision-maker Report on Operations: Statement from the Chairwoman and the Chief Executive Officer 102-15 Key impacts, risks and opportunities Report on Operations: Sustainability topics relevant to Poste Italiane; Poste Italiane's integrated internal control and risk management system
Report on Corporate Governance and the Ownership Structure: 7.2 Audit, Risk and Sustainability Committee
102-19 Process for delegating authority for economic, environmental, and social topics from the highest governance body to senior executives and other employees
Report on Operations: Risk management and risk assessment 102-20 Report whether the organisation has appointed an executive-level position or positions with responsibility for economic, environmental, and social topics 102-21 Processes for consultation between stakeholders and the highest governance body on economic, environmental, and social topics 102-22 Composition of the highest governance body and its committees
Report on Operations: Management and supervisory bodies; Chapter 5 Indicators tables – People development; Link: consiglio-di-amministrazione.html Report on Corporate Governance and the Ownership Structure: 7.2 Audit, Risk and Sustainability Committee 102-23 Chair of the highest governance body Report on Corporate Governance and the Ownership Structure: 6.6 Chief Executive Officer 102-24 Criteria used for nominating and selecting the highest governance body
Report on Corporate Governance and the Ownership Structure: 6. Board of Directors; 6.1 current composition and term of office (pursuant to art. 123-bis, para. 2.d), Consolidated Law on Finance); 6.8 Independent Directors, 6.10 Assessment of workings of the Board of Directors and Board Committees, 6.11 Diversity policies (pursuant to art. 123-bis, paragraph 2.d-bis), Consolidated Law on Finance)
102-26 Role of highest governance body in the development of strategies, policies and goals related to economic, environmental, and social topics
Report on Corporate Governance and the Ownership Structure: 6.3 Role and functions (pursuant to art. 123-bis, paragraph 2.d), Consolidated Law on Finance)
102-30 Effectiveness of the organisation’s risk management processes for economic, environmental, and social topics
Report on Corporate Governance and the Ownership Structure: 5.5 Equity participation by employees: rights mechanisms (pursuant to art. 123bis, paragraph 1.e), Consolidated Law on Finance); 7.2 Audit, Risk and Sustainability Committee.
Reporting practice 102-45 List of entities included in the consolidated financial statements and those not included in the sustainability report
Report on Operations: 7. Consolidated non-financial statement 102-46 Defining report content and topic Boundaries Report on Operations: Sustainability topics relevant to Poste Italiane; 7. Consolidated non-financial statement 102-47 List of material topics Report on Operations: Sustainability topicss relevant to Poste Italiane 102-48 Restatements of information provided in previous reports and reasons for doing so
Report on Operations: 7. Consolidated non-financial statement 102-55 GRI content index Report on Operations: GRI Standards Content Index 102-56 External assurance Report on Operations: 7. Consolidated non-financial statement
GRI 203: Indirect economic impacts 203-1 Investment in communities Chapter 5. Indicators tables
Materiality matrix Poste Italiane’s sustainability strategy Integrity and transparency 103-2 The management approach and its components 103-3 Evaluation of the management approach
Chapter 5. Indicators tables 302-2 Energy consumption outside of the organisation
GRI 303: Water 303-1 Water withdrawals by source Chapter 5. Indicators tables
Materiality matrix Poste Italiane’s sustainability strategy Environmental impacts of real estate facilities Environmental impacts of logistics 103-2 The management approach and its components 103-3 Evaluation of the management approach
GRI 305: Emissions 305-1 Direct (Scope 1) GHG emissions Chapter 5. Indicators tables
Chapter 5. Indicators tables 305-4 Emission intensity GHG Chapter 5. Indicators tables
GRI 306: Effluents and waste 306-2 Waste by type and disposal method
Materiality matrix Poste Italiane’s sustainability strategy Legality and incorporation of ESG criteria within the procurement processes Chapter 5. Indicators tables 103-2 The management approach and its components 103-3 Evaluation of the management approach
Materiality matrix Poste Italiane’s sustainability strategy Staff welfare and wellbeing 103-2 The management approach and its components 103-3 Evaluation of the management approach
Materiality matrix Poste Italiane’s sustainability strategy Relations with social partners 103-2 The management approach and its components 103-3 Evaluation of the management approach
Report on Operations at 31 December 2019 7. Consolidated non-financial statement
GRI 403: Health and safety 403-2 Types of injury and rates of injury, occupational diseases, lost days, and absenteeism, and number of workrelated fatalities
Materiality matrix Poste Italiane’s sustainability strategy Staff training and development Equal career development opportunities 103-2 The management approach and its components 103-3 Evaluation of the management approach
Materiality matrix Poste Italiane’s sustainability strategy Legality and incorporation of ESG criteria within the procurement processes 103-2 The management approach and its components 103-3 Evaluation of the management approach
Materiality matrix Poste Italiane’s sustainability strategy Integration of ESG factors into investment policies Integration of ESG factors into insurance policies 103-2 The management approach and its components 103-3 Evaluation of the management approach
In 2019, Poste Vita and BancoPosta Fondi SGR – the Poste Italiane Group companies operating in the investment sector – subjected their portfolios to social and environmental screening by an external body. The process regarded 97% of Poste Vita’s total AuM and 96.7% of BancoPosta Fondi SGR’s total AuM.
FS14 Initiatives to improve access to financial services for disadvantaged people
Table showing links between “Toward common metrics and consistent reporting of sustainable value creation” of the world economic forum and GRI indicators in the Integrated Report
In line with the main trends for greater uniformity and consistency in the disclosure of non-financial information, the document includes a correlation table relating to the alignment of GRI indicators to the non-financial “material ESG metrics” defined during the World Economic Forum and specified in the document “Toward Common Metrics and Consistent Reporting of Sustainable Value Creation”.
The document also includes a correlation table between the SASB indicators and the non-financial indicators used. Finally, the Integrated Financial Statements also took as a reference the indications of the Official Journal C209 of the European Union of 20 June 2019 on “Guidelines on the disclosure of non-financial information: Integration concerning the provision of climate-related information”.
In January 2020, the document “Toward Common Metrics and Consistent Reporting of Sustainable Value Creation” was presented at the World Economic Forum in Davos, which defines a set of universal indicators (core set of material ESG metrics) that can be applied by all companies, regardless of the characteristics of the company and with a view to comparability of disclosures. The indicators are organised in four pillars that are linked to the ESG dimensions (Governance, Planet, People and Prosperity).
Quality of Governing Body Composition of the Board GRI 102-22, GRI 405-1a
GRI (Global Reporting Initiative) and SASB (Sustainability Accounting Standards Board) are the most internationally recognised standards for the definition of sustainability reporting strategies and systems. In view of the growing importance of SASB reporting for investors, the following table shows the correspondence with the indicators used in the 2019 Integrated Report.
� Poste Italiane’s sustainability strategy � Diversity and inclusion � Classification of employee by category, gender and age group � Number of personnel by other diversity indicators � Number of personnel by type of employment and gender, by Strategic Business Unit � Number of personnel by type of contract and gender, by Strategic Business Unit
� Poste Italiane’s sustainability strategy �Work with transparency and integrity � Poste Italiane’s commitment to managing human rights risks � Companies assessed for risks related to corruption and percentage of operations audited for risks related to corruption � Reports managed by the Whistleblowing Committee � Anti-competitive practices � Specific training on procedures and policies of anti-corruption � Cases of bribery and corruption and corrective actions
� Poste Italiane’s sustainability strategy � Decarbonisation of real estate facilities and logistics � Total direct GHG emissions (Scope 1) � Total indirect GHG emissions (Scope 2) � Intensity of GHG emissions related to real estate facilities � Internal Group energy consumption � External Group energy consumption
� Poste Italiane’s sustainability strategy � Financial inclusion � New customers in the categories most at risk of financial exclusion as a percentage of total new acquisitions � ATMs for inclusion � Post offices for cultural integration
� Poste Italiane’s sustainability strategy �Work with transparency and integrity � Companies assessed for risks related to corruption and percentage of operations audited for risks related to corruption � Reports managed by the Whistleblowing Committee � Anti-competitive practices � Specific training on procedures and policies of anti-corruption � Cases of bribery and corruption and corrective actions
The ordinary Shareholders’ Meeting of Poste Italiane SpA held in Rome in single call on 15 May 2020 at the premises of the Company located in viale Europa n. 175, adopted the following resolutions: 1. approved the financial statements of Poste Italiane SpA for the year ended 31 December 2019; and took note of the results of the consolidated financial statements of the Poste Italiane Group, also for the year ended 31 December 2019, which closed with net income for the year of euro 1,342.5 million; 2. resolved: i. to allocate the net income of BancoPosta’s Ring-fenced Capital, amounting to 610,685,913 euro, as follows: – to the reserve named “Retained Earnings” for 85,000,000 euro; – to the disposal of the Company for the possible distribution for 525,685,913 euro; ii. to allocate Poste Italiane SpA’s net income for 2019, amounting to 660,531,453 euro, as follows: – to the aforementioned reserve named “Retained Earnings” of BancoPosta’s Ring-fenced Capital for 85,000,000 euro; – to the not available reserve for 23,626,168 euro35; – to the distribution to the Shareholders for the remaining amount of 551,905,285 euro; iii. in light of the above, to distribute a total dividend of 0.463 euro per share, using (i) Poste Italiane SpA’s net income for 2019, available for distribution, equal to 551,905,285 euro, and (ii) for the remaining part, whose exact amount will be determined at the time of the payment of the balance of the dividend on the base of the shares in circulation on the ex-dividend date, an amount deriving from the partial distribution of the available reserves (amounting to 1,065,059,585 euro as of 31 December 2019); iv. to distribute the aforementioned dividend of 0.463 euro per share as follows: – the amount of 0.154 euro for each ordinary shares in circulation on the ex-dividend date, excluding treasury shares on that date to cover the interim dividend payable from 20 November 2019, with the ex-dividend date of coupon no. 5 having fallen on 18 November 2019 and the “record date” (i.e. the date of the title to the payment of the dividend, pursuant to Article 83-terdecies of the Legislative Decree no. 58 of February 24, 1998 and to Article 2.6.6, paragraph 2, of the Rules of the Markets organized and managed by Borsa Italiana SpA) falling on 19 November 2019, for an overall amount of 200,331,213 euro; – the amount of 0.309 euro for each ordinary shares in circulation on 22 June 2020, the day scheduled as the ex-dividend date, excluding treasury shares on that date, as the balance of the dividend; v. to pay the aforesaid balance of the dividend for 2019 of 0.309 euro per ordinary share – before withholding tax, if any – from 24 June 2020, with the “ex-dividend” date of coupon n. 6 falling on 22 June 2020 and the record date (i.e., the date of entitlement to the payment of the aforesaid dividend pursuant to article 83-terdecies of Legislative Decree n. 58 of 24 February 1998 and article 2.6.6, paragraph 2, of the Regulations of the markets organized and managed by Borsa Italiana SpA) falling on 23 June 2020; Report on Operations at 31 December 2019 8. Summary of the resolutions of the ordinary Shareholders’ Meeting
Events after the end of the reporting period to which the 2019 Annual Report refers are described in other sections of this document. Further information is provided in Poste Italiane Financial Statements for the year ended 31 December 2019.
Related party transactions Details of the impact of related party transactions on the financial position and profit or loss are provided in Poste Italiane Financial Statements for the year ended 31 December 2019.
Transactions of greater importance Within the scope of the transactions with Monte dei Paschi di Siena Capital Services Banca per le Imprese SpA authorised by the Board of Directors on 20 September 2017 and 27 June 2019, having obtained the consent of the Related and Connected Parties Committee, 12 repurchase agreements and 4 Interest Rate Swaps for hedging purposes, as well as 39 trades in government securities were carried out at 31 December 2019.
Exceptional and/or unusual transactions Under the definition provided by the CONSOB ruling of 28 July 2006, the Poste Italiane Group did not conduct any exceptional and/or unusual transactions36 in 2019.
In keeping with the guidelines published by the European Securities and Markets Authority on 5 October 2015 (ESMA/2015/1415), in addition to the financial disclosures required by the International Financial Reporting Standards (IFRS), Poste Italiane has included a number of indicators in this Report that have been derived from them. These provide management with a further tool for measuring the Group’s performance. The following alternative performance indicators are used: NET WORKING CAPITAL - this indicator represents the sum of inventories, trade receivables and other receivables and assets, current tax assets, trade payables and other liabilities, and current tax liabilities.
NET INVESTED CAPITAL - this indicator represents the sum of non-current assets and net working capital, deferred tax assets, deferred tax liabilities, provisions for risks and charges and provisions for employee termination benefits and pension plans and non-current assets and disposal groups held for sale and liabilities related to assets held for sale. This indicator is also shown separately for each Strategic Business Unit.
COMBINED RATIO - it is a measure of profitability, calculated by taking total claim-related losses and general business costs and dividing them by the value of gross earned premiums and gross premium revenue. It is the sum of the Loss Ratio and the Expense Ratio.
EBIT (Earning before interest and taxes) - this is an indicator of operating profit before financial expenses and taxation.
EBIT margin - this is an indicator of the operating performance and is calculated as the ratio of operating profit (EBIT) to total revenue. This indicator is also shown separately for each Strategic Business Unit.
LEVERAGE RATIO - this is the ratio of CET1 Capital to total assets, the latter after adjustments for derivative financial instruments and off-balance sheet exposures.
GROUP NET CASH POSITION - the sum of financial assets, cash and deposits attributable to BancoPosta, cash and cash equivalents, technical provisions for the insurance business (shown net of technical provisions attributable to reinsurers) and financial liabilities. This indicator is also shown separately for each Strategic Business Unit.
NET CASH POSITION OF THE MAIL, PARCELS AND DISTRIBUTION STRATEGIC BUSINESS UNIT - this is the sum of the following items, shown according to the format recommended by ESMA, the European Securities and Markets Authority (document 319 of 2013): financial liabilities after adjusting for intersegment transactions, current financial assets after adjusting for intersegment transactions and cash and cash equivalents.
TOTAL ASSETS - total assets in the Balance Sheet of BancoPosta RFC.
RWA (Risk Weighted Assets) - this indicator measures the risk exposure of assets in accordance with Basel III regulations. Risk-Weighted Assets, or RWA, are calculated by applying a weighting to assets that takes into account the level of exposure to credit, counterparty, market and operational risk.
TSR (Total Shareholder Return) - measures the total annual return for an investor and is calculated by adding the increase in the share price over a determinate period of time to the impact of dividends per share paid in the same period.
Capital gain on sale of shares in Anima SGR to Anima Holding 120 0
Reversal of Visa revenue (Fair value measurement pursuant to IFRS 9) 9 0
ADJ over Financial management (net of the tax effect) 57 (53)
Reclassified Consolidated statement of profit or loss of which: Mail, Parcels and Distribution Services 3,492 3,580 (88) -2.5% 937 991 (54) -5.4%
Payments, Mobile and Digital Services 664 592 71 12.1% 187 158 29 18.2%
of which disputes and other extraordinary items (6) (5) (1) 14.5% (5) (5) 0 -3.7%
Statement of profit or loss for the Mail, Parcels and Distribution Strategic Business Unit of which: of which ordinary personnel expenses 5,448 5,386 62 1.1% 1,423 1,377 47 3.4%
Provisions for risks and charges (857) (10) 330) (21) - (1,218)
Prepaid/deferred tax assets//(liabilities) 389 15 135 127 1 666 of which profit for the period (372) 153 617 1,001 (0) 1,399 of which fair value reserve 4 - (71) (1) - (69)
Trade payables and Other liabilities 211 104 (161) (148) 15 20
of which profit for the period 66 118 23 (264) 0 (57)
At 31 December 2019, the company declared dividends totalling €30 million. n/s: not significant
* The figures shown have been prepared in accordance with IFRS and therefore may not coincide with those in the Interim Report prepared in accordance with the Italian Civil Code and under Italian GAAP.
The Mail, Parcels and Distribution segment includes letter post, express delivery, logistics, parcels and philately, in addition to the activities conducted by various units of Poste Italiane SpA for other segments in which the Group operates. The Payments, Mobile and Digital segment includes revenue from payment services, card payments and mobile telecommunications services. Financial Services regard the activities of BancoPosta, which include the collection of all forms of savings deposits, the provision of payment services (of which some are outsourced to the Payments, Mobile and Digital segment), foreign currency exchange, the promotion and arrangement of loans issued by banks and other authorised financial institutions, the provision of investment services and the activities of BancoPosta Fondi SpA SGR. Insurance Services regard the activities of Poste Vita SpA, which operates in ministerial life assurance Classes I, III and V, and of its direct subsidiaries, Poste Assicura SpA, which operates in P&C insurance, and Poste Welfare Servizi Srl, which provides services to the segment in question.
� the basis of presentation used and accounting standards adopted; � disclosure of the sources and the procedures used in determining fair value; � financial risk disclosures; � a summary of the principal proceedings pending and relations with the authorities at 31 December 2019; � and, in general, certain additional disclosures required by accounting standards, whose presentation in a single section is designed to provide the reader with better information (e.g. the analysis of net debt, key performance indicators for investee companies, etc.).
37. 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 annual accounts are prepared in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB), and endorsed by the European Union (EU) in EC Regulation 1606/2002 of 19 July 2002, and in accordance with Legislative Decree 38 of 28 February 2005, which introduced regulations governing the adoption of IFRS in Italian law.
The term IFRS includes all the International Financial Reporting Standards, International Accounting Standards (IAS) and interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC, previously known as the Standing Interpretations Committee or SIC), adopted by the European Union and contained in the EU regulations published as of 5 March 2020, the date on which the Board of Directors of Poste Italiane SpA approved the annual accounts.
The accounting standards and the recognition, measurement and classification criteria adopted in these annual accounts are consistent with those used to prepare the annual accounts at 31 December 2018, without prejudice to the changes introduced to the body of accounting standards, applied from the year under review; please refer to note 2.6 - New Accounting standards and interpretations and those soon to be effective and, with regard to the new accounting rules on lease contracts (IFRS 16), to note 3 - Changes to accounting policies.
With regard to the interpretation and application of newly published, or revised, international accounting standards, and to certain aspects of taxation39 where the related interpretations are based on examples of best practice or case-law that cannot yet be regarded as exhaustive, the financial statements have been prepared on the basis of the relevant best practices. 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.
Other assets 3-5 * Or the useful life of the improvement if shorter than the estimated lease term.
An impairment loss is recognised in profit or loss for the amount by which the net carrying amount of the asset, or the CGU to which it belongs, exceeds its recoverable amount. In particular, if the impairment loss regards goodwill and is higher than the related carrying amount, the remaining amount is allocated to the assets included in the CGU to which the goodwill has been allocated, in proportion to their carrying amount40. Except in the case of goodwill, if the impairment indicators no longer exist, the carrying amount of the asset or CGU 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.
Financial instruments In accordance with IFRS 9 - Financial instruments, the classification of financial assets and liabilities is determined at the time of initial recognition and at the relative fair value, according to the purpose for which they were acquired. The purchase and sale of financial instruments is recognised by category, either on the date on which the Group commits to purchase or sell the asset (the transaction date), or, in the case of insurance transactions and BancoPosta’s operations, at the settlement date41. Any changes in fair value between the transaction date and the settlement date are recognised in the financial statements.
� Financial assets measured at fair value through other comprehensive income (FVTOCI) This category includes financial assets held both to collect the relevant contractual cash flows and for sale (the held to collect and sell or HTC&S business model), with the contractual cash flows representing solely payments of principal and interest. These financial assets are measured at fair value and, until they are derecognised or reclassified, gains or losses from valuation are recognised in other comprehensive income. Exceptions to this are gains and losses due to impairment and foreign exchange gains and losses recognised in the profit and loss in the year in question. If the financial asset is derecognised, the accumulated gains/(losses) recognised in OCI are recycled to profit or loss. This category also includes equity instruments that would otherwise be recognised through profit or loss, for which the irrevocable election was made to recognise changes in fair value through OCI (the FVTOCI option). This option entails the recognition of dividends alone through profit or loss.
In the very rare circumstance in which the entity decides to modify its business model, previously recognised financial assets are reclassified to the new accounting category; the effects of the reclassification are recognised only prospectively, and therefore, the previously recognised gains/losses and interest must not be restated. The effects of the reclassification are as follows: � if the financial asset is reclassified from amortised cost to fair value through profit or loss, the fair value of the asset is determined on the reclassification date. Gains and losses resulting from the difference between the previous amortised cost and fair value are recognised through profit or loss; � if the financial asset is reclassified from fair value through profit or loss to amortised cost, the fair value on the reclassification date becomes the new gross carrying amount; � if the financial asset is reclassified from amortised cost to fair value through other comprehensive income, the fair value of the asset is determined on the reclassification date. Gains and losses resulting from the difference between the previous amortised cost and fair value are recognised through other comprehensive income. The effective interest rate and the expected credit loss are not adjusted following reclassification; � if the financial asset is reclassified from fair value through other comprehensive income to amortised cost, the cumulative gain (loss) recognised previously through other comprehensive income is derecognised from equity through an adjustment to the fair value of the financial asset on the reclassification date. Consequently, the financial asset is reported as though it had always been reported at amortised cost, by not changing the effective interest rate and the expected credit loss; � if the financial asset is reclassified from fair value through profit or loss to fair value through other comprehensive income, the financial asset continues to be measured at fair value; � if the financial asset is reclassified from fair value through other comprehensive income to fair value through profit or loss, the financial asset continues to be measured at fair value. The cumulative gain (loss) recognised previously through other comprehensive income is recycled to profit or loss on the reclassification date.
Financial assets are derecognised when there is no longer a contractual right to receive cash flows from the investment or when all the related risks and rewards and control have been substantially transferred. If it is not possible to ascertain the substantial transfer of risks and benefits, financial assets are derecognised if no control is maintained over them. Finally, assets sold are derecognised if the contractual right to receive their cash flows is maintained. However, at the same time a contractual obligation is assumed to pay said flows to a third party, without delay and only to the extent of those received.
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 classified as current liabilities, unless there is an unconditional right to defer settlement of the liability for at least twelve months after the end of the reporting period.
Financial liabilities are derecognised when they are extinguished or when the obligation specified in the contract expires, is cancelled or discharged.
For hedge accounting transactions, the Poste Italiane Group has elected to use the option made available by IFRS 9 and has retained the accounting treatments provided for by IAS 39. In accordance with this standard, 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.
If, on the other hand, derivative financial instruments qualify for hedge accounting, gains and losses arising from changes in fair value after initial recognition are accounted for in accordance with IAS 39 – Financial Instruments: Recognition and Measurement, as described below.
The relationship between each hedging instrument and the hedged item is documented, as well as the risk management objective, the strategy for undertaking the hedge transaction and the methods used to assess effectiveness. Assessment of whether the hedging derivative is effective takes place both at designation of each derivative instrument as hedging instrument, and during its life.
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges after initial recognition is recognised in a specific equity reserve, with movements in the reserve accounted for in “Other comprehensive income” (the “Cash flow hedge reserve”). A hedging transaction is generally considered highly effective if, both at inception of the hedge and on an ongoing basis, changes in the expected future cash flows of the hedged item are substantially offset by changes in the fair value of the hedging instrument. If the hedging transaction is not fully effective, the gain or loss arising from a change in fair value relating to the ineffective portion is recognised in profit or loss for the period. Amounts accumulated in equity are recycled to profit or loss in the period in which the hedged item affects profit or loss. In particular, in the case of hedges associated with a highly probable forecast transaction (such as the purchase of fixed 42. A hedge of the exposure to a change in fair value of a recognised asset or liability or of an unrecognised firm commitment attributable to a particular risk, and that could have an impact on profit or loss.
Financial statements of Poste Italiane at 31 December 2019 2. Basis of preparation and significant accounting policies
The Group’s taxation and accounting standards take account of the effects of Poste Italiane SpA’s participation in the national tax consolidation scheme, for which the option has been exercised in accordance with the law, together with the following subsidiaries: Poste Vita SpA, SDA Express Courier SpA, Poste Air Cargo Srl, Postel SpA, Risparmio Holding SpA (liquidated in the first half of 2019), Europa Gestioni Immobiliari SpA, Poste Welfare Servizi Srl, Poste Assicura SpA, BancoPostaFondi SpA SGR and PostePay SpA. The tax consolidation arrangement is governed by Group regulations based on the principles
of neutrality and equality of treatment, which are intended to ensure that the companies included in the tax consolidation are in no way penalised as a result. Following adoption of the tax consolidation arrangement, the Parent Company’s tax expense is determined at consolidated level on the basis of the tax expense or tax losses for the period for each company included in the consolidation, taking account of any withholding tax or advances paid. Poste Italiane SpA posts its IRES tax expense to income taxes for the period, after adjustments to take account of the positive or negative impact of tax consolidation adjustments. Should the reductions or increases in tax expense deriving from such adjustments be attributable to the companies included in the tax consolidation, Poste Italiane SpA attributes such reductions or increases in tax expense to the companies in question. 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. Other taxes not related to income are included in “Other operating costs”.
In the case of properties held for sale44, if present, cost is represented by the fair value of each asset at the date of acquisition, plus any directly attributable transaction costs, whilst the net realisable value is based on the estimated sale price under normal market conditions, less direct costs to sell.
Long-term contract work is measured using the percentage of completion method, using cost to cost accounting45.
Green Certificates (Emission Allowances) With reference to Group companies subject to these rules46, 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 issue, free of charge, of emission allowances involves a commitment to produce, in the relevant year, a quantity of greenhouse gas emissions in proportion to the emission allowances received: this commitment, commensurate with the market value of the emission allowances at the time of allocation, is disclosed in the notes to the financial statements. At the end of the year, the commitment is reduced or derecognised in proportion to the greenhouse gas emissions effectively produced and any residual value is reported in the section, “Additional information”, in the Annual Report. The purchase and sale of emission allowances are accounted for in profit or loss in the year in which the transaction occurs. At the end of the year, any surplus emission allowances deriving from purchases are accounted for in closing inventory at the lower of cost and net realisable value. Any surplus emission allowances allocated free of charge are not accounted for in closing inventory. In the event of a shortfall in emission allowances the resulting charge and related liability are accounted for at the end of the year at fair value.
44. These are properties held by EGI SpA and not accounted for in “Investment property” as they were purchased for sale or subsequently reclassified as held for sale. 45. This method is based on the ratio of costs incurred as of a given date divided by the estimated total project cost. The resulting percentage is then applied to estimated total revenue, obtaining the value to be attributed to the contract work completed and accrued revenue at the given date. 46. The subsidiary Poste Air Cargo Srl.
Cash and cash equivalents Cash and cash equivalents refer to cash in hand, deposits held at call with banks, amounts that at 31 December 2019 the Parent Company has temporarily deposited with the MEF and other highly liquid short-term investments with original maturities of ninety days or less. Current account overdrafts are accounted for in current liabilities.
If, after the date of preparation of the financial statements, an asset (or disposal group) no longer meets the conditions for classification as held for sale, it must be reclassified following measurement at the lower of: � the carrying amount before the asset (or disposal group) was classified as held for sale, adjusted for any depreciation, amortisation, impairments or reversals of impairments that would have been recognised if the asset (or disposal group) had not been classified as held for sale; � the recoverable amount, calculated at the date on which the decision not to sell was made.
Retained earnings/(Accumulated losses) 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. This item also includes transfers from other equity reserves, when they have been released from the restrictions to which they were subjected.
Insurance contracts are classified and measured as insurance contracts or finance contracts, based on their prevalent features. Contracts issued by Poste Vita SpA primarily relate to life assurance. In 2010 Poste Assicura SpA began operating in the P&C sector.
Contracts classified as insurance contracts in accordance with IFRS 4: include Class I and Class V life insurance policies, Class III policies that qualify as insurance contracts and P&C 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. The changes in the technical provisions and the charges relating to claims are as follows and recorded with the relevant sign as positive income components.
There are two types of post-employment benefit: � Defined benefit plans Defined benefit plans include employee termination benefits payable to employees in accordance with article 2120 of the Italian Civil Code. As a result of the supplementary pension reform, for all companies with at least 50 employees, from 1 January 2007 vesting employee termination benefits (TFR) 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 200648. In the case of companies with less than 50 employees, vested employee termination benefits continue to fully increase the accumulated liability for the company. Under these plans, given that the amount of the benefit to be paid is only quantifiable following the termination of employment, the related effects on profit or loss or the financial position are recognised on the basis of actuarial calculations in compliance with IAS 19. In particular, the 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 into account the employee termination benefits accrued for work already performed and is based on actuarial assumptions that mainly concern: 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 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, are recognised directly in Other comprehensive income.
� Defined contribution plans TFR falls within the scope of defined contribution plans provided the benefits vested subsequent to 1 January 2007 and were paid into a Supplementary Pension Fund or a Treasury Fund at INPS. Contributions to defined contribution plans are recognised in profit or loss when incurred, based on their nominal value.
The incremental costs of obtaining a contract are capitalised and amortised over the useful life of the contract, if longer than 12 months, while any non-incremental costs of obtaining a contract are expensed as incurred. Costs incurred to fulfil performance obligations related to a contract that do not qualify for treatment under other standards (IAS 2 – Inventories, IAS 16 – Property, Plant and Equipment and IAS 38 – Intangible Assets) are capitalised only if the following conditions are met: � the costs related directly to a contract (general and administrative costs are not capitalised); � the costs generate or enhance resources; � the costs are expected to be recovered.
The Group recognises the obligation to transfer to the customer goods or services for which payment has already been obtained (or for which the customer’s consideration is due before the goods and services are provided) classified as liability deriving from the contract.
Dividends are recognised as finance income when the right to receive payment is established, which generally corresponds with approval of the distribution by the Shareholders Meeting of the investee company. Otherwise, dividends from subsidiaries are accounted for as “Other operating income”.
Diluted: At the date of preparation of these financial statements no financial instruments have been issued which have potentially dilutive characteristics49.
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 accounted for using the acquisition method. The cost of a business combination is represented by the current value (fair value) at the date of acquisition of the assets sold, the liabilities assumed, the equity instruments issued and any other directly attributable accessory charges; 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 lineby -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% and 50%), hereinafter “associates”, and joint ventures are accounted for using the equity method. At the time of acquisition, the investment is accounted for using the equity method. Any difference between the cost of acquisition of the investment and the net fair value of the investee’s identifiable assets and liabilities is accounted for as follows: a. goodwill related to an associate or a joint venture is included in the carrying amount of the investment. Amortisation of such goodwill is not permitted; b. in determining the initial value of the entity’s investment, 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.
After acquisition, appropriate adjustments are made to the entity’s share of the profits or losses of the associate or joint venture to account, for example, for additional depreciation or amortisation of the investee’s depreciable or amortisable assets, based on the excess of their fair values over their carrying amounts at the time the investment was acquired, and of any impairment losses on goodwill or property, plant and equipment. 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.
The following table shows the number of subsidiaries by method of consolidation and measurement: Subsidiaries and joint ventures 31/12/2019 31/12/2018
Preparation of the annual accounts requires the application of accounting standards and methods that are at times based on complex subjective judgements 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 final amounts reported in the financial statements and related disclosures. Estimates and assumptions are periodically reviewed and the impact of any changes is reflected in the financial statements for the period in which the estimate is revised if the revision only influences the current period, or also in future periods if the revision influences both current and future periods.
Revenue and receivables due from the State Revenue from activities carried out in favour of or on behalf of the State and Public Administration entities is recognised on the basis of the amount effectively accrued, with reference to the laws and agreements in force, taking account, in any event, of the instructions contained in legislation regarding the public finance. The legal framework of reference is still subject to change and, as has at times been the case, circumstances were such that estimates made in relations 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 accounting periods after the period ended 31 December 2019 to reflect variations in estimates, due to future regulatory enactments or following the finalisation of expired agreements to be renewed.
At 31 December 2019, Poste Italiane Group’s receivables outstanding with central and local authorities amounted to €693 million (€881 million at 31 December 2018), gross of provisions for doubtful debts.
Receivables due from Ministries and Public Administration entities: Ministry for Econ. Dev. 80 78
At 31 December 2019, provisions for doubtful debts reflect receivables for which no provision had been made in the state budget and uncertainty regarding past due amounts due from the Public Administration. For further details, see notes A8 - Trade receivables and A9 - Other receivables and assets.
Revenue from contracts with customers The main factors in the recognition of revenue from contracts with customers include elements of variable consideration, particularly penalties (other than those related to compensation for damages). Elements of variable consideration are identified at the inception of the contract and estimated as of every close of the accounts for the entire contract term, to take into account new circumstances and changes in the circumstances already considered for the previous estimations. Elements of variable consideration include refund liabilities.
Impairment tests of goodwill, cash generating units and equity investments Goodwill and other non-current assets are tested for impairment in accordance with IAS 36 – Impairment of Assets. Impairment testing involves the use of estimates based on variable factors over time, potentially resulting in effects that may be significantly different from prior year estimates.
For the Parent Company, the impairment test was carried out on the cash flow generating unit represented by the Mail, Parcels and Distribution segment to which Goodwill is not allocated. Each of the other Group companies is considered a separate CGU.
Depreciation and amortisation of property, plant and equipment and intangible assets 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.
In order to verify the adequacy of the technical provisions, the Liability Adequacy Test (LAT) is performed periodically. It measures the ability of future cash flows from insurance contracts to cover liabilities to the policyholder. 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.
� Annual improvements to IFRS: Cycle 2015 - 2017, adopted by Regulation (EU) no. 2019/412. The amendments concerned: – IFRS 3 - Business Combinations: an entity remeasures its previous interest in a Joint Operation when it obtains control of the business.
� Amendments to IAS 19: Amendment, curtailment or settlement of the plan, adopted by Regulation (EU) no. 2019/402. After an amendment, curtailment or settlement of a defined benefit plan, the entity shall update its assumptions and remeasure its defined benefit liability or asset. The company shall use the updated assumptions to measure the current service cost and net interest for the remainder of the reporting period after the event.
� Amendments to IAS 28: Long-term interests in associates and joint ventures, adopted by Regulation (EU) no. 2019/237. An entity applies IFRS 9 to those interests in associates and joint ventures for which it does not apply the equity method, including long-term interests and which are essentially part of the net investment in those associates and joint ventures.
� IFRIC 23 - Uncertainty of Income Tax Treatment, adopted by Regulation (EU) no. 2018/1595. An entity should consider whether the competent authority is likely to accept any tax treatment, or group of tax treatments, that it has used or plans to use in its tax return. If the entity considers it likely that a particular tax treatment will be accepted, the entity shall determine taxable profit (tax loss), tax bases, unused tax losses, unused tax credits or tax rates consistent with the tax treatment included in its tax records. If the entity concludes that it is not probable that a particular tax treatment will be accepted, the entity shall use the most probable amount or expected value of the tax treatment in determining taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates. The decision should be based on which method provides better predictions of uncertainty resolution.
� Amendments to IAS 1 - Presentation of Financial Statements and IAS 8 - Accounting Policies, Changes in Accounting Estimates and Errors aimed at clarifying the definition of “material” in order to make it easier for companies to make judgements about materiality and to improve the relevance of information in the notes to the financial statements.
The potential impact on the Poste Italiane Group’s financial reporting of the accounting standards, amendments and interpretations due to come into effect is currently being assessed.
On 1 January 2019, the new accounting standard for the regulation of lease contracts, IFRS 16 - Leases, issued by Regulation (EU) no. 2017/1986, came into force. The main amendments introduced relate to the rules governing lease contracts, with regard to which the new general criteria for accounting and presentation in the financial statements, the impact of initial application on the statement of financial position, in accordance with the simplified retrospective method, and the amounts recognised in the financial statements at 31 December 2019 of both the Poste Italiane Group and Poste Italiane SpA are described below.
The Group remeasures the lease liability (and accordingly adjusts the related right-of-use asset) when there is a change in: � the lease term (for example, in the case of early termination of the contract or an extension of the lease); � the assessment of a purchase option for the underlying asset; in these cases, lease payments due are reviewed on the basis of the revised lease term and to take account of the change in the amounts payable in view of the purchase option; � future lease payments deriving from a change in the index or rate used to determine the payments (e.g. ISTAT), or as a result of a renegotiation of the financial conditions.
Only in the case of a significant change in the lease term or in future lease payments does the Group remeasure the remaining lease liability with reference to the incremental borrowing rate at the date of the modification; in all other cases, the lease liability is remeasured using the initial discount rate.
Lease liabilities are presented in Financial liabilities in the statement of financial position.
Incremental borrowing rate For the purpose of discounting back unpaid lease instalments at the date the contract commences, the Group avails itself of the option granted by the standard to use the marginal borrowing rate, instead of the interest rate implicit in the lease, since the latter cannot be reliably determined. The incremental borrowing rate or IBR is determined in line with a hypothetical loan obtained in the current economic environment, and applied to groups of contracts with similar remaining terms and to similar companies. In particular, each IBR takes account of the risk-free rate identified on the basis of factors such as the economic environment, currency, contract term and credit spread reflecting the companies’ organisation and financial structure.
Contract duration IFRS 16 For property lease agreements, on the commencement date or on a later date (in the case of substantial and significant changes to the contract conditions), the Group determines the duration of IFRS 16 by resorting to a valuation approach based primarily on the expected duration of the obligation as per the agreement between the parties and/or in the legal framework of reference (Law 392 of 27 July 1978), and it expects an extension of the lease due to an interpretation/forecast of events, circumstances and future intentions, including of a strategic nature, of both the lessor and the lessee. For the purposes of the valuation, leased properties were previously classified in three distinct clusters: properties where the lease is subject to legal restrictions and high commercial-value properties; properties for civilian use, such as the company accommodation for Group employees and executives; and other properties used in operations. The properties leased by municipalities or other public bodies have also been brought back to this structure; although they can be classified within a separate regulatory framework, the measures and specific agreements undertaken between the parties and historical practices and trends allow them to be considered as a lease between private individuals.
A set of rules has therefore been defined for each cluster to determine the lease term, although subject to the occurrence of specific cases (for example, the exercise of the early termination option by one of the parties, disclosed at the valuation date, the existence of significant penalties by one or both parties in the event of early termination of the agreement, the existence of improvements to third-party assets of significant value, historical trends, requests/understandings by the lessor formally disclosed at the valuation date). At 31 December 2019, as a result of the estimated time extension, the financial liability IFRS 16 for property lease agreements of the Parent Company alone (€1,043 million) is almost double the value that would have been recorded considering the regulatory/legal duration of the agreements (€482 million).
The determination of the IFRS 16 duration for all lease agreements other than property leases is instead equal to the duration of the obligation agreed upon between the parties, in keeping with future intent in wanting and being able to complete the term and past experience. The choice derives from the fact that, in such cases, the contract provides for a final expiration date that cannot be extended (or, in any case, can be extended non-automatically and for a limited number of periods, even with monthly validity), beyond which the relationship with the lessor can continue only by virtue of a new agreement.
Practical expedients adopted On first-time adoption of IFRS 16, the Group used some of practical expedients permitted by the standard; in particular: � regarding the identification of contracts in scope, the Group elected not to remeasure contracts outstanding at the date of transition classified previously as leases or as containing a lease component. As a result of this expedient, lease contracts or contracts containing a lease component, which had been accounted for in accordance with IAS 17, now fall within the scope of IFRS 16; � non-lease components were not separated from the lease components in rental contracts for the corporate fleet and vehicles for personal use; � non-application of the new accounting rules to short-term contracts (with a duration of no more than twelve months) and to contracts in which the individual underlying asset is of low value (up to €5,000); for these contracts, the Group continues to adopt IAS 17 (recognition of lease payments in profit and loss as matching entry in short-term trade payables).
Of the methods allowed for the transition to IFRS 16, the Poste Italiane Group opted for the simplified retrospective approach that requires the recognition of: the financial liability of the lease starting from the date of initial application and taking into account future lease payments until contract expiration; the right-of-use asset at an amount equal to the financial liability of the lease as adjusted for any prepayments or accrued liabilities related to the leases reported in the statement of financial position immediately prior to first-time adoption.
Non-current assets and disposal groups held for sale - - -
Exclusion from the scope of contracts for low value leases at 31 December 2018 (5)
Assets (€m) Balance at 31 December 2018 Effects of IFRS 16 Balance at 1 January 2019
Exclusion from the scope of contracts for low value leases at 31 December 2018 (25)
3.4 Impact of the adoption of Ifrs 16 at 31 December 2019
The item Costs relating to the lease of low-value assets mainly refers to agreements for the rental of IT equipment (e.g. letter carrier terminals, multifunction printers, etc.). The residual item Other costs outside the scope of IFRS 16 refers instead to costs for non-deductible VAT on lease agreements under IFRS 16 which, starting from the entry into force of the new accounting standard, have been reclassified by nature under Other operating costs and to service costs related to leased assets which, in line with the provisions of the standard, have been separated from the lease component and recognised in line with the reference accounting standards.
(milioni di euro) Properties used in operations Company fleet Vehicles for mixed use Other assets Total
Investment in FSIA On 14 March 2019, FSIA Investimenti Srl, an investment vehicle 30% owned by Poste Italiane (the remaining 70% is indirectly controlled by CDP Equity via FSI Investimenti), announced its intention to exercise its call option on 7.934% of the shares in SIA SpA held by UniCredit and Intesa SanPaolo. On 28 May 2019, the relevant purchase and sale agreement was signed, which was finalised after FSIA obtained the necessary authorisations from the Antitrust Authority and the Bank of Italy, the latter received on 24 October 2019. Moreover, on 27 May 2019, the shareholders agreements that gave FSIA Investimenti, together with other shareholders, joint control of SIA expired. Following these events, the CDP Group acquired sole control of FSIA Investimenti, which in turn holds 57.4% of the share capital of SIA SpA. Poste Italiane’s indirect investment in SIA SpA (via FSIA Investimenti) rose from 14.85 to 17.23%.
At 31 December 2019, Poste Italiane’s investment in FSIA Investimenti was classified as connecting link, in place of the previous joint control.
Joint venture with sennder GmbH On 7 May 2019, Poste Italiane entered into a partnership with the German digital road-freight-forwarder, sennder GmbH, with the goal of establishing a joint venture in Italy in line with the Deliver 2022 Strategic Plan, to boost the efficiency of long-haul logistics operations (so called Full Track Load).
On 24 September 2019 was the signing of the final agreements governing the arrangements for collaboration in the Full Track Load sector, the joint venture’s operating and governance mechanisms. In addition, an investment by Poste Italiane in the capital of sennder GmbH was completed on 11 November 2019 with the subscription by Poste Italiane to a reserved capital increase following which Poste Italiane holds a 1.63% investment in the share capital of the German company. Finally, on 12 February 2020, Poste Italiane subscribed a capital increase at nominal value in the Italian joint venture, called sennder Italia Srl, acquiring a 75% investment in the share capital.
Partnership with Tink AB (Tink) On 20 December 2019, Poste Italiane signed agreements for the establishment of a strategic partnership with the Swedish company Tink AB, one of the leading Open banking53 platforms in Europe. These agreements provide, in addition to the commercial provision of PSD2 technology solutions, for long-term strategic collaboration as an enabling factor for the expansion of the Poste Group’s digital service offering, including through the sharing of technological developments and the joint development of solutions and services. The agreements also provide for the Poste Italiane Group to join with other investors in an increase in the Company’s capital with an investment of around €20 million, following which the Group will hold a 4.8% stake in Tink. The subscription of the capital increase will be completed by the first quarter of 2020.
The following material events also took place during 2019: � On 12 April 2019, Poste Assicura established Poste Insurance Broker Srl, an insurance brokerage company, to operate as a distributor and insurance and reinsurance broker.
� On 5 June 2019, the company, Risparmio Holding, which was already in liquidation, was struck off the Companies’ Register.
� On 20 June 2019, an Extraordinary General Meeting of SDA Express Courier’s shareholders and, on 27 June 2019, the Board of Directors of Poste Italiane approved the partial demerger of the business unit responsible for commercial and customer care activities relating to SDA’s Express Parcel Delivery services to Poste Italiane. The transaction is part of the plan to create a “Single Offering”, with the aim of boosting the competitiveness and effectiveness of the Group’s positioning in the Express Delivery market by putting in place a single, comprehensive offering for all customers, with the reorganisation of the sales force and customer support. The demerger became effective on 1 November 2019.
53. Open banking is sharing of data between different players in the banking ecosystem. With the entry into force of the European PSD2 Digital Payments Directive, European banks are obliged to open up their API (Application Program Interface) to fintech companies and other companies involved in financial products and services. This will allow external companies (third parties) access to payment data thus increasing competition.
The following material events also occurred in 2019: Poste Italiane SpA: authority to purchase and hold treasury shares On 29 May 2018, the Ordinary and Extraordinary General Meeting of Poste Italiane SpA’s shareholders had authorised the Company to purchase and hold up to 65.3 million of the Company’s ordinary shares, representing approximately 5% of the share capital, at a total cost of up to €500 million. Following the aforementioned authorisation, in the period between 4 February 2019 and 29 March 2019, Poste Italiane SpA began and completed the buyback programme54 through direct purchases on the MTA market. On completion of the programme, Poste Italiane holds 5,257,965 treasury shares with a total value of €40 million (an average price of €7.608), equal to 0.4026% of the share capital.
Financial statements of Poste Italiane at 31 December 2019 4. Material events during the year
Poste Italiane SpA: interim dividend 2019 On 5 November 2019, the Board of Directors of Poste Italiane, in light of the Parent Company’s performance and financial position in the first half of 2019 and in line with prevailing practice, decided to advance part of the ordinary dividend for 2019 as an interim dividend. To this end, the Company has prepared a Report and Financial Statements pursuant to article 2433 bis of the Italian Civil Code, which show that the Company’s financial position, results of operations and cash flows allow such distribution. The opinion of the independent auditors was obtained on these documents.
Poste Italiane SpA and Poste Vita SpA: admission to the Collaborative Compliance regime On 16 January 2020, at the end of the positive assessment carried out by the Revenue Agency on the Tax Control Framework of companies, which includes the system for the recognition, management, control and mitigation of tax risk, Poste Italiane and the subsidiary Poste Vita were admitted the Collaborative Compliance regime with the tax authorities.
Assets (€m) Note 31 December 2019 of which, related party transactions 31 December 2018 of which, related party transactions
Cash and deposits attributable to BancoPosta [A10] 4,303 - 3,318 -
Liabilities and equity (€m) Note 31 December 2019 of which, related party transactions 31 December 2018 of which, related party transactions
Revenue from Payments, Mobile & Digital [C2] 664 59 628 30 of which, non-recurring income - 120
Cost of goods and services [C5] 2,287 169 2,343 206 of which, non-recurring costs/(income) - 33
Impairment loss/(reversal) on financial instruments 46 - 20 of which, non-recurring expense/(income) 46 -
Profit/(Loss) before tax 1,872 1,490 of which, non-recurring expense/(income) - (351)
Actuarial gains/(losses) on provisions for employee termination benefits [tab. B7] (70) 16
Use of provisions for risks and charges [tab. B6] (696) (656)
Losses and impairment losses/(Reversals of impairment losses) on receivables [tab. C11] 62 46
Cash flow generated by operating activities before movements in working capital [a] 1,997 1,528
Increase/(decrease) in liabilities attributable to financial activities, payments, cards and acquiring and insurance 7,980 4,513
Cash generated by/(used for) financial assets/liabilities attributable to financial activities, payments, cards and acquiring and insurance [c] (663) 1,374
Net cash flow from/(for) financing activities and shareholder transactions [f] (1,434) (1,549)
Unrestricted cash and cash equivalents at end of year 1,265 1,639
Capital expenditure of €391 million in 2019 consists largely of: � €45 million relating to extraordinary maintenance of post offices and local head offices around the country (€26 million) and mail sorting offices (€14 million); � €110 million relating to plant, with the most significant expenditure made by the Parent Company, of which €44 million was for plant and equipment related to buildings, €24 million for the purchase of equipment for use in the sorting of letters and processing of parcels, €22 million for the purchase of telecommunications infrastructure and €11 million for the installation of ATMs; � €51 million invested in the upgrade of plant (€28 million) and the structure (€23 million) of properties held under lease; � €75 million relating to “Other assets”, of which €49 million incurred by the Parent Company was for the purchase of new computer hardware for post offices and head offices and the consolidation of storage systems and €11 million incurred by PostePay SpA for the purchase of electronic devices to be used in the provision of electronic postman services (€4 million) and of PosteMobile Casa devices (€7 million); Annual Report 2019 Poste Italiane Group
Investments in progress amount to €91 million, including €61 million incurred by the Parent Company and related for €25 million to restyling work on the post offices, €14 million for the purchase of hardware and other technological equipment not yet included in the production process and €13 million for renovation work on the CPD (Primary Distribution Centres); Reclassifications from assets under construction, totalling €56 million, relate primarily to the acquisition cost of assets that became available and ready for use during the year; in particular, they refer to the Parent Company for the completion of restyling activities on leased and owned buildings and the activation of hardware (€25 million) and to the subsidiary SDA Express Courier SpA for the multi-product sorting plant located in the new Bologna Hub that became operational in the second half of 2019 (€27 million).
A2 – Investment property (€44 million) Investment property relates to service accommodation owned by Poste Italiane SpA in accordance with Law 560 of 24 December 1993 and residential accommodation previously used by post office directors. Movements in provisions for risks and charges are as follows: 55. 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.
The fair value of investment property at 31 December 2019 includes €66 million representing the sale price applicable to the Parent Company’s former service accommodation in accordance with Law 560 of 24 December 1993, while the remaining balance reflects market price estimates computed internally by the Company55.
Most of the properties included in this category are subject to lease agreements classifiable as operating leases, given that the Group retains substantially all of 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-month notice. Given the resulting lack of certainty, the expected revenue flows from these leases are not referred to in these notes.
A3 - Intangible assets (€648 million) The following table shows movements in intangible assets in 2019: tab. A3 - Movements in intangible assets
The increase in industrial patents, intellectual property, rights, concessions, licences, trademarks and similar rights totals €155 million, before amortisation for the period, and relates primarily to the purchase and entry into service of new software programmes and the acquisition of software licences.
Investments in joint ventures - 281 tab. 5.1 - Movements in investments in FY 2019
Balance at 31/12/2019 accounted for using the equity method dividend adjustments in associates in subsidiaries
The item Investments in associates (valued using the equity method) refers to the companies Anima Holding and FSIA Investimenti Srl. The latter, as described in Significant Events (Note 4), at 31 December 2019 is classified as an associate investment, in place of the previous joint control.
During 2018, Poste Italiane SpA proceeded with tax redemption pursuant to art. 15, paragraph 10 ter of Law Decree 185 of 2008, of the higher values resulting from the notes to the consolidated financial statements of Poste Italiane at 31 December 2017, attributed to goodwill and other intangible assets relating to the acquisition of the investment in FSIA Investimenti Srl.
Financial assets at amortised cost 25,260 16,061 41,321 22,965 9,904 32,869
Financial assets at amortised cost 37 25 62 38 52 90
Financial assets at amortised cost - 115 115 - 53 53
Financial assets by operating segment break down as follows: � Financial Services, relate primarily to the financial assets of BancoPosta RFC and the company, BancoPosta Fondi SpA SGR; � Insurance Services, includes the financial assets of Poste Vita SpA and its subsidiary, Poste Assicura SpA; � Mail, Parcels and Distribution, representing all the other financial assets held by the Parent Company (different from those held by BancoPosta) and the other financial assets held by companies that provide postal and business services; � Payment Services and Card Payments, representing the financial assets held by the ring-fenced EMI.
Movements in financial assets measured at amortised cost are shown below: 57. The Central Counterparty is an entity that acts as an intermediary in a transaction between two parties, avoiding the parties’ exposure to the risk that one of the counterparties to the agreement may default and guaranteeing successful completion of the transaction.
Loans refer to outstanding repurchase agreements with a total nominal value of €1,086 million, entered into with Cassa di Compensazione e Garanzia SpA (the Central Counterparty)57.
These are Eurozone fixed income instruments held by BancoPosta RFC, consisting of government securities issued by the Italian government and securities guaranteed by the Italian government with a nominal value of €21,175 million. Their carrying amount of €25,064 million reflects the amortised cost of unhedged fixed income instruments, totalling €10,047 million, the amortised cost of fair-value hedged fixed income bonds, totalling €12,146 million, increased by €2,871 million to take into account the effects of the hedge. Fixed income instruments recognised at amortised cost are adjusted to take into account the related impairments. Accumulated impairments at 31 December 2019 amount to approximately €8 million (€9 million at 31 December 2018).
At 31 December 2019, the fair value60 of these securities was €24,686 million (including €177 million in accrued income).
The change in fair value in profit and loss for the positive amount of €1,902 million refers to changes in the value of the securities subject to fair value hedge during the year.
This category of financial asset includes fixed rate instruments, amounting to €3,750 million, issued by Cassa Depositi e Prestiti SpA and guaranteed by the Italian government (at 31 December 2019, their carrying amount totals €3,946 million).
58. The rate in question is calculated as follows: 50% is based on the return on 6-month BOTs, with the remaining 50% based on the ten-year BTP return. 59. A guarantee fund established with payments from participants in the derivative, equity and bond markets, as a further guarantee for the transactions carried out. The fund can be used to meet the charges arising from any participant default.
Balance at 31 December 2019 36,831 * The item, “Changes in cash flow hedges”, relates to the purchase of forward contracts in relation to cash flow hedge transactions and reflects changes in the fair value of these forward contracts between the date of purchase and the settlement date, with a matching entry in equity, in the cash flow hedge reserve.
Total fair value fluctuation for the year was positive for €3,758 million, with gains of €1,702 million recognised in the relevant equity reserve in relation to the portion of the portfolio not hedged by fair value hedges, and a gain of €2,056 million recognised through profit and loss in relation to the hedged portion.
Fair value gains and losses through profit or loss - 25 25
This item, totalling €71 million, reflects the fair value of 32,059 Visa Incorporated preference shares (Series C Convertible Participating Preferred Stock) received for the sale of the Visa Europe Ltd. share to Visa Incorporated in 2016. These shares are convertible at the rate of 13,88461 ordinary shares for each C share, minus a suitable illiquidity discount, considering the staggered conversion between the fourth and the twelfth year after the closing. Fair value gains in the year under review, amounting to €25 million, have been recognised in profit or loss in “Revenue from financial activities”.
Fair value hedges in the form of interest rate swaps regard instruments classified as at amortised cost, with a nominal value of €11,295 million, and instruments classified as FVTOCI, with a nominal value of €14,395 million.
In the year under review, the Parent Company carried out the following transactions: � forward purchases for a nominal amount of €875 million and settlement for €2,420 million, of which €1,545 million outstanding at 1 January 2019; � forward sales for a nominal amount of €1,670 million and settlement for €1,730 million, of which €1,340 million outstanding at 1 January 2019; � new interest rate swaps designated as cash flow hedges with a nominal value of €505 million; � new interest rate swaps designated as fair value hedges with a nominal value of €2,525 million; � a forward sale agreement for 400,000 ordinary Visa Incorporated shares (described above).
Movements in financial assets measured at amortised cost are shown below: tab. A6.5 - Movements in financial assets at amortised cost
Changes in fair value through profit or loss - - -
Fixed income instruments at amortised cost at 31 December 2019 have a carrying amount of €1,729 million. These instruments exclusively relate to the free capital of Poste Vita SpA and Poste Assicura SpA. At 31 December 2019, the fair value62 of these instruments is €1,955 million.
Fixed income instruments recognised at amortised cost are adjusted to take into account the related impairments. Accumulated impairments at 31 December 2019 amount to approximately €0.6 million (unchanged compared to 31 December 2018).
These financial instruments have recorded a fair value gain of €7,679 million. This includes €7,617 million primarily due to income from the measurement of securities held by Poste Vita SpA and transferred to policyholders, with a contra-entry made in technical provisions in accordance with the shadow accounting method, and a portion of €62 million reflected in a matching positive movement in the related equity reserve.
Accumulated impairments at 31 December 2019 amount to €37 million, almost entirely transferred to policyholders using the shadow accounting method (at 31 December 2018, impairments amounted to €41 million, almost entirely transferred to policyholders using the shadow accounting method).
(€m) Receivables Fixed income instruments Other instruments Equity instruments Other investments Total
Fair value gains and losses through profit or loss - 65 2,016 25 - 2,106
At 31 December 2019, units of mutual investment funds amounting to €35,928 million include €32,648 million to cover Class I separately managed account products and €3,223 million to cover Class III products. The remaining €57 million relates to investment of the company’s free capital (see note 14 – Additional information - Unconsolidated structured entities). Net investment in the funds during the period amounts to €5,923 million and the fair value has increased by approximately €2,016 million, almost entirely transferred to Class I policyholders using the shadow accounting method. At 31 December 2019, the investments primarily regard equity funds, totalling €33,275 million, units in real estate funds, totalling €1,714 million, and funds that primarily invest in bonds, totalling €939 million.
Equity instruments amount to €177 million, and cover the contractual obligations arising on Class I products linked to separately managed accounts and Class III policies. The change over the period reflects the combined effect of net sales of approximately €31 million, the proceeds from sales of approximately €17 million and fair value gains of approximately €25 million.
Other investments of €21 million relate to a Constant Maturity Swap placed by Cassa Depositi e Prestiti (a nominal value of €22 million) and covering products linked to separately managed accounts.
In addition, at 31 December 2019, Poste Vita had forward sales of fair value hedges on BTPs for a notional amount of €120 million. The value of this derivative was negative for €1 million at 31 December 2019.
Financial assets at amortised cost refer solely to financial receivables totalling €62 million. This item breaks down as follows: 63. Of a total consideration of €387 million, €158 million was collected in 2017 and €159 million in early 2018. As regards the remaining amount receivable, on 31 October 2018, Invitalia informed Poste Italiane that the Bank of Italy had requested the buyer not to proceed with the reduction of BdM’s capital scheduled for 2018, and preparatory to payment of a €40 million tranche of the related consideration. On 16 January 2019, in line with the contractual provisions, Poste and Invitalia defined in good faith alternative methods for the payment of the aforementioned fee. Based on the agreement signed, on 27 February 2019, Invitalia paid Poste Italiane €20 million. The remaining €20 million will be paid from the dividends to be paid by BdM in 2018, 2019 and 2020. Payment of the remaining €30 million is expected to take place between 30 June 2021 and 30 June 2022 once certain conditions have been met.
This item entirely regards BTPs with a total nominal value of €500 million. Of these, instruments with a value of €375 million have been hedged using interest rate swaps designated as fair value hedges. Accumulated impairments at 31 December 2019 amount to €0.2 million (unchanged with respect to 31 December 2018).
The item includes: � for €75 million the investment in CAI SpA (formerly Alitalia CAI SpA), acquired in 2013 and written off in 2014; � €16 million for the investment in MFM Investments Ltd acquired on 9 August 2019; � €4.5 million for the historical cost of the 15% investment in Innovazione e Progetti ScpA in liquidation; � €2 million for the investment in sennder GmbH acquired on 11 November 2019.
Cash Flow hedges Fair value hedges Fair value through profit or loss Total
65. In terms of fair value hierarchy, which reflects the relevance of the sources used to measure assets, this amount qualifies for level 2.
Properties held for sale refer entirely to the portion of EGI SpA’s real estate portfolio to be sold, whose fair value65 at 31 December 2019 amounts to approximately €297 million.
Receivables due from subsidiaries, associates and joint ventures - 1 1 - 4 4
Receivables due from customers tab. A8.1 - Receivables due from customers
Ministries and Public Administration entities - 520 520 - 672 672
Unfranked mail delivered and other value added services 17 240 257 18 252 270
Amounts due for other BancoPosta services - 105 105 - 83 83
– The payment of pensions and vouchers on behalf of INPS (the National Institute of Social Security), totalling €12 million. Moreover, in February 2019, having conducted a joint assessment, Poste Italiane and INPS signed an agreement that, among other things, has settled the respective past outstanding trade receivables (note B6). These positions were settled in April 2019.
66. At 31 December 2019, the balance of trade receivables includes €10 million, net of the related provisions for doubtful accounts, relating to rental income falling within the scope of IFRS 15 – Revenue from Contracts with Customers.
� The remuneration of current account deposits refers entirely to amounts accruing in 2019 and almost entirely relates to the deposit of funds deriving from accounts opened by Public Administration entities and attributable to BancoPosta RFC.
� Receivables arising from electoral subsidies refer to compensation for previous years, for which provision has been made in the state budget.
69. Of the total amount, €487 million, assessed on the basis of provisions at 31 December 2019, has yet to be paid and is accounted for in “Other taxes payable” (tab. B10.3).
70. Introduced by article 19 of Law Decree 201/2011 converted with amendments by Law 214/2011 in the manner provided for by the MEF Decree of 24 May 2012: Manner of implementation of paragraphs from 1 to 3 of article 19 of Law Decree 201 of 6 December 2011, on stamp duty on current accounts and financial products (Official Gazette 127 of 1 June 2012).
Receivables relating to fixed-term contract settlements 66 81 147 82 85 167
Accrued income and prepaid expenses from trading transactions - 12 12 - 11 11
Interest accrued on IRES refund - 47 47 - 47 47
Specifically: � Substitute tax paid refers mainly to: – €2,274 million on non-current receivables paid in advance by Poste Vita SpA for the financial years 2014-2019, relating to withholding and substitute tax paid on capital gains on life policies69; – €1,370 million charged to holders of Interest-bearing Postal Certificates and Class III and V insurance policies for stamp duty at 31 December 201970; this amount is balanced by a matching entry in “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); – €312 million relating to advances paid in relation to stamp duty to be paid in virtual form in 2020 and charged to customers and to be recovered from customers by Poste Italiane; – €120 million relating to stamp duty charged to Postal Savings Books, which Poste Italiane SpA pays in virtual form as required by law.
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 (€853 million) and companies that provide cash transportation services whilst awaiting transfer to the Italian Treasury (€2,634 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 €814 million.
B1 – Equity (€9,698 million) The following table shows a reconciliation of the Parent Company’s equity and net profit/(loss) for the year with the consolidated amounts: tab. B1 - Reconciliation of equity Description (€m)
Investments accounted for using the equity method 115 - 112 3
Balance of FV and CFH reserves of investee companies 19 44 - (25)
Fees to be amortised attributable to Poste Vita SpA and Poste Assicura SpA (34) - 5 (39)
Elimination of adjustments to value of consolidated companies 583 - 32 551
Impairments of disposal groups held for sale (40) - - (40)
Equity attributable to owners of the Parent 9,698 251 1,342 8,105
At 31 December 2019, earnings per share is €1.032 (€1.071 at 31 December 2018).
Reserve for investees accounted for using equity method Incentive plans reserve Total
Increases/(decreases) in fair value during the year - - 1,768 95 - - 1,863
Tax effect of changes in fair value - - (505) (27) - - (532)
Transfers to profit or loss - - (244) (59) - - (303)
Tax effect of transfers to profit or loss - - 70 17 - - 87
Gains/(losses) recognised in equity - - 1,087 26 (1) - 1,112
This item breaks down as follows: � the fair value reserve regards changes in the value of financial assets at fair value through other comprehensive income. The increase of €1,768 million during 2019 reflects: – a net increase of €1,702 million in financial assets attributable to the Group’s Financial Services segment; – a net increase of €62 million in financial assets attributable to the Group’s Insurance Services segment; – a net increase of €3 million in financial assets attributable to the Group’s Postal and Business Services segment.
� the cash flow hedge reserve, attributable to the Parent Company, reflects changes in the fair value of the effective portion of cash flow hedges. In 2019, the fair value gain of €95 million was primarily attributable to the value of BancoPosta RFC’s derivative financial instruments.
B5 – Technical provisions for insurance business (€140,261 million) These provisions refer to the contractual obligations of the subsidiaries, Poste Vita SpA and Poste Assicura 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 Description (€m) Balance at 31/12/2019 Balance at 31/12/2018
B6 - Provisions for risks and charges (€1,218 million) Movements in provisions for risks and charges are as follows: tab. B6 - Movements in provisions for risks and charges for FY 2019
Provisions for disputes with staff* 65 8 - (1) (18) 54
Provisions for early retirement incentives 447 370 - - (396) 421
Provisions for taxation/social security contributions 18 6 - (2) - 22
Overall analysis of provisions: * Net provisions for personnel expenses amount to €4 million. Service costs (legal assistance) total €4 million. Releases amount to one million.
Specifically: � The provisions for operational risk, mostly relating to liabilities arising from BancoPosta’s operations, mainly reflects the definition of items arising from the reconstruction of the operating accounts at the date of incorporation of the Parent Company, risks associated with the distribution of postal savings products issued in past years, risks associated with customer requests for investment products whose performance is not in line with expectations, adjustments and settlements of income from previous years and estimated risks for charges and expenses to be incurred as a result of foreclosures suffered by BancoPosta mainly as a third party. Provisions for the year, totalling €35 million, mainly reflect risks associated with the distribution of postal savings products issued in previous years and the adjustment of liabilities due to adjustments and settlements to income from previous years. Utilisations totalling €194 million refer for €100 million to liabilities defined in favour of customers subscribing to the Immobiliare Obelisco (due to expire on 31 December 2018) and Europa Immobiliare I funds, in relation to the voluntary protection initiatives approved by the Board of Directors of Poste Italiane and undertaken during 2019, and for €67 million to liabilities defined in favour of INPS, following the agreement signed between the parties in February 2019.
� Provisions for disputes with third parties regard the present value of expected liabilities deriving from different types of legal and out-of-court disputes with suppliers and third parties, the related legal expenses, and penalties and indemnities payable to customers. Movements during the year primarily regard updated estimates of liabilities and uses to cover liabilities settled.
� Provisions for personnel expenses are made to cover expected liabilities arising in relation to the cost of labour, which are certain or likely to occur but whose estimated amount is subject to change. They have increased by €63 million to reflect the estimated value of new liabilities and decreased as a result of past contingent liabilities that failed to materialise (€71 million) and settled disputes (€49 million).
� Provisions for taxation/social security contributions have been made to cover potential future tax and social security liabilities.
Fair value through profit or loss 15 1 16 - - -
Postal current accounts They represent BancoPosta’s direct deposit. These payables include net amounts accrued at 31 December 2019 and settled with customers in January 2020.
Borrowings from financial institutions 71. In terms of fair value hierarchy, which reflects the relevance of the sources used to measure assets, this amount qualifies for level 2. 72. A commitment given to creditors by which a borrower undertakes not to give senior security to other lenders ranking pari passu with existing creditors, unless the same degree of protection is also offered to them.
73. In terms of fair value hierarchy, which reflects the relevance of the sources used to measure assets, this amount qualifies for level 2 tab. B8.1 - Borrowings from financial institutions
At 31 December 2019, outstanding liabilities of €12,194 million relate to repurchase agreements entered into by the Parent Company with major financial institutions and Central Counterparties, amounting to a total nominal value of €11,150 million. €6,075 million of this amount regards Long Term Repos and €6,119 million to ordinary borrowing operations, the resources from both invested in Italian fixed income government securities and as funding for incremental deposits used as collateral. The fair value73 of the repurchase agreements in question at 31 December 2019 is €12,205 million.
On 3 October 2019, a new loan of €400 million was signed with the EIB. The loan disbursed on 18 October 2019 provides interest at a fixed rate of 0.29% and matures in October 2026. At 31 December 2019, the fair value75 of this loan is €413 million.
At 31 December 2019, the following credit facilities are available: � committed lines of €2,173 million, with €173 million used at 31 December 2019; � uncommitted lines of credit of €1,964 million, including €1,009 million that may be used for short-term loans, €173 million in overdraft facilities and €782 million (including €675 million available to the Parent Company), of which guarantees with a value of €356 million have been used in favour of third parties.
At 31 December 2019, the uncommitted credit lines for short-term loans have not been used. No collateral has been provided to secure the lines of credit obtained.
The uncommitted lines of credit are also available for overnight transactions entered into by BancoPosta RFC.
In addition, from 7 May 2019, BancoPosta’s assets may access a short-term committed facility granted by Cassa Depositi e Prestiti for repurchase agreements up to a maximum of €5 billion and with a duration of 12 months that may be extended.
The existing lines of credit and medium/long-term borrowings are adequate to meet expected financing requirements
MEF account held at the Treasury 74. In terms of fair value hierarchy, which reflects the relevance of the sources used to measure assets, this amount qualifies for level 2. 75. In terms of fair value hierarchy, which reflects the relevance of the sources used to measure assets, this amount qualifies for level 2.
Amounts payable due to theft - 158 158 - 157 157
The balance of cash flows from the management of postal savings, amounting to a positive €47 million, represents the balance of withdrawals less deposits during the last two days of the year and cleared early in the following year. The balance at 31 December 2019 consists of €25 million payable to Cassa Depositi e Prestiti, less €72 million receivable from the MEF for Interest-bearing Postal Certificates issued on its behalf.
Amounts payable due to thefts from post offices of €158 million regard the Company’s liability to the MEF on behalf of the Italian Treasury for losses resulting from theft and fraud. This liability derives from cash withdrawals from the Treasury to make up for the losses resulting from these criminal acts, in order to ensure that post offices can continue to operate.
Tax collection and road tax - 19 19 - 19 19
Amounts to be credited to customers - 147 147 - 220 220
Non-cash flows Balance at 31/12/2019 * The total amount of €5,010 million is included in the cash flow from/(for) operating activities, the balance of which in the statement of cash flows amounts to €1,120 million and regards borrowings and other financial liabilities not attributable to financing activities.
Change due to recognition of revenue for period Other changes Balance at 31 December 2019
Prepayments and advances from customers relate to amounts received from customers as prepayment for the following services to be rendered: tab. B9.2.1 - Prepayments and advances from customers
Tax due on insurance provisions - 487 487 - 518 518
Withholding tax on employees' and consultants' salaries - 92 92 - 106 106
� Tax due on insurance provisions relates to Poste Vita SpA and is described in note A9.
Sundry payables attributable to BancoPosta 74 8 82 75 6 81
Sundry payables attributable to BancoPosta’s operations primarily relate to prior period balances currently being verified.
Revenue from contracts with customers Description (€m) Note FY 2019 FY 2018
of which Revenue from contracts with customers 9 10 recognised at a point in time - recognised over time 9 10
– card payments, relating primarily to the cards issued by Postepay recognised at a point in time when issued and the services linked to them recognised over time as the service is used by the customer. These services include interchange fees recognised by international circuits on payment transactions with debit cards detected over time.
� Revenue from financial services, which breaks down as follows: – revenue from placement and brokerage: these are recognised over time and measured on the basis of the volumes placed, quantified on the basis of commercial agreements with financial institutions. In terms of payment for the collection of postal savings, the agreement entered into with Cassa Depositi e Prestiti envisages payment of a variable consideration on achieving certain levels of inflows, determined annually on the basis of the volume of inflows and expected redemptions; certain commercial agreements, entered into with leading financial partners for the placement of financial products, envisage the return of placement fees in the event of early termination or surrender by the customer; – revenue from current account and related services: these are recognised over time, measured on the basis of the service rendered (including the related services, e.g. bank transfers, securities deposits, etc.) and quantified on the basis of the contract terms and conditions offered to the customer; – revenue from fees on the processing of payment slips: these are recognised at a point in time given the number of transactions handled by post offices and quantified on the basis of the terms and conditions in the contract of sale.
C1 – Revenue from Mail, Parcels and other (€3,492 million) This item breaks down as follows: 76. Law Decree 162 of 30 December 2019 - as converted by Law no. 8 of 28 February 2020 - ordered that reimbursements of publishing tariff subsidies to Poste Italiane continue “for a duration equal to that of the universal postal service” (i.e. until April 2026). The application of the regulation is subject to approval by the European Commission.
External revenue shows a slight decrease due to the decrease in revenue from Mail, largely offset by the increase in revenue from Parcels, mainly due to the increase in e-commerce shipments.
Universal Service compensation relates to amounts paid by the MEF to cover the costs of fulfilling the USO. Annual compensation, amounting to €262 million, is established in the Contratto di Programma (Service Contract) for 2015-2019, which expired 31 December 2019. On 30 December 2019, the new Contract for the years 2020-2024 was signed, which was formally notified to the European Commission for the usual assessments, still in progress, related to the European framework on State aid.
Publisher tariff subsidies76 relate to the amount receivable by Poste Italiane from the Presidenza del Consiglio dei Ministri - Dipartimento dell’Editoria (Cabinet Office - Publishing department) as compensation for the discounts applied to publishers and non-profit organisations when sending mail. The compensation is determined on the basis of the tariffs set in the decree issued by the Ministry for Economic Development, in agreement with the Ministry of the Economy and Finance, on 21 October 2010 and Law Decree 63 of 18 May 2012, as converted into Law 103 of 16 July 2012. In this regard, it should be noted that for the year under review, the amount of subsidies that the Company has granted is partially covered in the 2019 State Budget.
C3 – Revenue from financial services (€5,213 million) This item breaks down as follows: tab. C3 - Revenue from Financial Services
In particular: � Fees for the collection of postal savings deposits relates to remuneration for the provision and redemption of Interestbearing Postal Certificates and payments into and withdrawals from Postal Savings Books. This service is provided by Poste Italiane SpA on behalf of Cassa Depositi e Prestiti under the Agreement of 14 December 2017 to cover the three-year period 2018-2020.
� Income from the investment of postal current account deposits breaks down as follows: tab. C3.1.1 - Income from investment of postal current account deposits
� Revenue from current account services primarily relates to charges on current accounts, fees on amounts collected and on statements of account sent to customers, annual fees on debit cards and related transactions
� Revenue from the distribution of loan products relates to commissions received by the Parent Company on the placement of personal loans and mortgages on behalf of third parties tab. C3.2 - Income from financial activities
Net change in technical provisions for insurance business and other claim expenses (21,463) (17,111)
The increase in income from insurance activities (€1,874 million compared with 2018) primarily reflects an increase in income from financial assets at FVTPL, reflecting the positive performance of the financial markets at 31 December 2019, compared with 31 December 2018. These fair value gains have almost entirely been transferred to policyholders.
A breakdown of the movement in technical provisions and other claims expenses, showing the portion ceded to reinsurers, is as follows: tab. C4.3 - Movement in technical provisions for insurance business and other claims expenses
Movement in technical provisions where investment risk is transferred to policyholders 1,278 (878)
Total movement in technical provisions for insurance business and other claims expenses: Life 21,410 17,098
C6 - Expenses from financial activities (€79 million) This item breaks down as follows: tab. C6 - Expenses from financial activities
Expenses from financial activities increased by €33 million compared to 2018, mainly due to the increase in interest expense (+€27 million) and valuation charges (+€15 million) on forward sales of preference shares of Visa Incorporated (Note A6), partly offset by the decrease in realised losses from financial assets at FVTOCI at 31 December 2019 (-€19 million).
Net provisions (reversals) for disputes with staff [tab. B6] 4 2
The personnel expenses decreased by a total of €241 million compared to 2018, mainly due to lower costs for early retirement incentives and higher recovery of personnel costs due to changes in estimates made in previous years. The ordinary component of the personnel expenses reflects the reduction in the average number of staff employed (more than 5 thousand FTE less than 2018), which almost entirely offset the increase in the cost per capita linked to the effect of the latest contract renewal (2016-2018 National Collective Labour Contract), as well as the recognition of an all-inclusive amount to cover the entire year 2019 established by an agreement with the labour unions signed on 18 February 2020.
The following table shows the Group’s average and year-end headcount: tab. C7.1 - Number of employees
Total employees on permanent contracts * 121,108 126,151 118,523 122,665 * Figures expressed in Full Time Equivalent terms.
C8 - Depreciation, amortisation and impairments (€774 million) This item breaks down as follows: tab. C8 - Depreciation, amortisation and impairments
Industrial patents and intellectual property rights,concessions, licenses, trademarks and similar rights 224 212
Municipal property tax, urban waste tax and other taxes and duties 98 70
C11 – Impairment losses/(reversals of impairment losses) on debt instruments, receivables and other assets (€59 million) tab. C11 - Impairment losses/(Reversals of impairment losses) on debt instruments, receivables and other assets
Net provisions and losses on receivables and other assets (uses of provisions) 62 46
Provisions (reversal of provisions) for receivables due from customers 48 23
Provisions (reversal of provisions) for receivables due from the MEF - (1)
The increase of €12 million compared with 2018 is mainly due to higher impairment of trade receivables (+€16 million), offset in part by lower impairment of other receivables.
C12 – Finance income (€105 million) and costs (€73 million) Income from and costs incurred on financial instruments relate to assets other than those in which deposits collected by BancoPosta and the financial and insurance businesses are invested.
Finance income tab. C12.1 - Finance income Description (€m) FY 2019 FY 2018
Finance costs on provisions for employee termination benefits and pension plans [tab. B7] 17 20
Bond charges decreased by €26 million following the repayment in 2018 of the €750 million nominal bond issued by the Parent Company in 2013, partly offset by the increase in charges on lease payables following the application from 1 January 2019 of IFRS 16 - Leases.
The impairment of the receivable for interest income on IRES repayment is commented on in note A9.
Income taxes increased by €439 million compared with the previous year. It should be noted that 2018 benefited from the positive effect of deferred tax assets recognised by Poste Vita (€351 million in non-recurring income for 2010-2017) on the temporary differences arising from the introduction of the new rule on deferred taxation on changes in insurance technical provisions (paragraph 1-bis of art. 111 of the Consolidated Income Tax Act).
The tax rate for 2019 is 28.31% and consists of: tab. C14.1 - Reconciliation between theoretical and effective IRES rate
Adjustments to equity investments measured using the equity method (26) -1.44% 6 0.39%
Net provisions for risks and charges and bad debts 6 0.30% 4 0.28%
Adjustments to equity investments measured using the equity method (5) -0.27% 1 0.10%
Income/(expense) recognised in profit or loss 1 (2) 1 (3) (76) - 23 9 (47)
Income/(expense) recognised in equity - - (138) - - 16 - - (122)
Movements in deferred tax assets and liabilities recognised directly in equity during the year are as follows: tab. C14.8 - Income/(expense) recognised in equity
The identified operating segments, which are in line with the Group’s new strategic guidelines reflected in the Strategic Plan for the period 2018-2022 and the organisational changes, are as follows: � Mail, Parcels & Distribution
In addition to managing the mail and parcel service, the Mail, Parcels and Distribution segment also includes the activities of the distribution network and the activities of Poste Italiane SpA corporate functions that provide services to BancoPosta RFC and the other segments in which the Group operates. In this regard, separate General Operating Guidelines have been approved by Poste Italiane SpA’s Board of Directors which, in implementation of BancoPosta Regulations for ring-fenced capital, identify the services provided by Poste Italiane SpA functions to BancoPosta and determines the manner in which they are remunerated.
The Financial Services segment includes the activities of BancoPosta RFC, BancoPosta Fondi SpA SGR and Poste Tributi ScpA (in liquidation).
External revenue from contracts with customers 3,439 663 3,033 9 - 7,144
Recognition at a point in time 509 286 412 - - 1,207
Profit/(Loss) on investments accounted for using the equity method - 5 (29) - - (24)
Net profit/(loss) for the year (372) 153 617 1.001 - 1,399
Disclosure about geographical segments, based on the geographical areas in which the various Group companies are based or the location of its customers, is of no material significance. At 31 December 2019, all the entities consolidated on a line-byline basis are based in Italy and customers are mainly located in Italy: revenue from foreign customers does not represent a significant percentage of total revenue.
Impact of related party transactions on the financial position at 31 December 2019
Other related parties external to the Group 49 16 - - 5 18 66
Provision for doubtful debts owing from external related parties (24) (39) - - - - -
At 31 December 2019, total provisions for risks and charges made to cover probable liabilities arising from transactions with related parties external to the Group attributable to trading relations amounted to €70 million (€71 million at 31 December 2018).
Provision for doubtful debts owing from external related parties (25) (39) (1) - - - -
Impact of related party transactions on profit or loss in FY 2019
At 31 December 2019, net provisions for risks and charges used to cover probable liabilities arising from transactions with related parties external to the Group attributable to trading relations amounted to €1 million (€2 million at 31 December 2018).
� Amounts received from CDP SpA primarily relate to payment for the collection of postal savings deposits.
� Purchases from the Leonardo Group primarily relate to the supply, by Leonardo SpA, of equipment, maintenance and technical assistance for mechanised sorting equipment, and systems and IT assistance regarding the creation of document storage facilities, specialist consulting services and software maintenance, and the supply of software licences and of hardware.
� Amounts received from the Monte dei Paschi di Siena group primarily regard payment for mail shipments.
Revenue from Mail, Parcels & other 3,492 498 14.3 3,579 249 7.0
Revenue from Insurance Services after movements in technical provisions and other claims expenses
Cost of goods and services 2,287 169 7.4 2,343 206 8.8
Net cash flow from /(for) operating activities 1,120 248 n.a. 2,597 (1,484) n.a.
Financial statements of Poste Italiane at 31 December 2019 5. Poste Italiane Group Financial statements for the year ended 31 December 2019
POSTE ITALIANE SPA FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019
Liabilities and equity (figures in €) Note of which, related party transactions of which, related party transactions
Other income from financial activities [C2] 383,707,355 - 418,410,968 of which, non-recurring income - 116,400,000 -
Increases/(decreases) in fair value during the year [tab. B3] 95,566,193 191,444,411
Actuarial gains/(losses) on provisions for employee termination benefits [tab. B5] (68,414,816) 16,402,715
* This item includes profit for the period of €661 million and actuarial losses on provisions for employee termination benefits of €68 million, after the related current and deferred taxation.
Cash generated by operating activities before movements in working capital [a] 1,002,831 794,024
Cash flow generated by /(used in) movements in working capital [b] (109,316) 351,296
Disposals: Property, plant and equipment, investment property and assets held for sale 1,771 2,129
Net cash flow from/(for) financing activities and shareholder transactions [f] (234,085) (1,486,765)
Unrestricted net cash and cash equivalents at end of year 1,064,394 1,107,568
Following the receipt of clearance from the Bank of Italy, the General Meeting of Poste Italiane held on 29 May 2018 approved the proposed removal of the assets, liabilities and contractual rights attributable to the card payments and payment services business unit from the ring-fence that applies to BancoPosta RFC. On 1 October 2018, this business unit was transferred to the subsidiary PostePay SpA, in assets earmarked for monetics and payment services, in order to enable the latter to operate as an Electronic Money Institution (EMI)79.
� Allocation of income taxes based on BancoPosta RFC’s separate report after adjusting for deferred taxation.
� Reconciliation of BancoPosta’s separate books to Poste Italiane’s general ledger.
79. The business unit consists of assets and contractual rights linked to: Own products: prepaid cards (card payments), payment services, acquiring services, tax payments using forms F23/F24 and international money transfers (Moneygram) forming part of the operations carried out independently by the EMI. In particular, these products are issued by the EMI, which is responsible for their conception, development and management, whilst BancoPosta RFC acts as distributor of the products through the Group’s physical distribution network. Products handled under service agreements: payment products and services and money transfers carried out exclusively within the scope of BancoPosta RFC’s operations, as they are “reserved to” the ring-fence by Presidential Decree 144/01. In particular, with the aim of leveraging the infrastructure of the hybrid EMI, BancoPosta has outsourced operations relating to payment products and services issued by BancoPosta, and distributed by BancoPosta through Poste Italiane’s physical network, to the EMI under an outsourcing agreement between BancoPosta and the EMI.
81. The rate applied in overnight lending and calculated as the weighted average of overnight rates for transactions on the interbank market reported to ECB by a panel of banks operating in the euro zone (the biggest banks in all the euro zone countries).
Part IV of Chapter 1 of the Supervisory Standards in Bank of Italy Circular 285/2013, addressing specific aspects relating to Poste Italiane in respect of BancoPosta RFC’s operations, govern the process of contracting out BancoPosta’s corporate functions to Poste Italiane, whilst the outsourcing of operations to entities external to Poste Italiane is covered by the regulations applicable to banks.
In compliance with the Circular, the Regulation governing BancoPosta RFC’s contracting out and outsourcing process approved by the Board of Directors82 these services are in turn classified as essential and non-essential control and operating functions.
Postal and logistics services Prices for mail sent to customers and internal mail
Fees by professional role based on market benchmarks + recharge of external costs Group Risk Governance and Security and Safety
The relevant transactions, profit and loss and statement of financial position amounts, generated by these relationships are only recorded in BancoPosta RFC’s Separate Report. In Poste Italiane SpA’s comprehensive accounts intersegment transactions are on the other hand eliminated, and are not presented. The accounting treatment adopted is similar to that provided for by the accounting standards regulating the preparation of the Group’s consolidated financial statements.
Obligations Poste Italiane SpA’s liability, pursuant to art. 2, paragraph 17-nonies of Law Decree 225 of 29 December 2010 converted into Law 10, to creditors of BancoPosta RFC is limited to the ring-fenced capital, represented by the assets and contractual rights originally allocated or arisen after the separation. Poste Italiane’s liability is, however, unlimited with respect to claims arising from actions in tort relating to the management of BancoPosta or for transactions for which no indication was made that the obligation was taken specifically by BancoPosta RFC.
Item in supplementary statement Valuation reserves Reserves Profit for the year
Exclusively for the purposes of the presentation of the Separate Report, the transactions between BancoPosta RFC and the Company’s functions not included therein are reported. In this document they are accurately and completely represented, together with the positive and negative income components that generated them.
83. Actuarial gains and losses on defined benefit plans, which in the Company’ s financial statements are accounted for in retained earnings, are accounted for in the valuation reserves in the Separate Report (Item 110 of Liabilities).
A1 – Property, plant and equipment (€1,887 million) Movements in property, plant and equipment are as follows: tab. A1 - Movements in property, plant and equipment
At 31 December 2019, property, plant and equipment includes assets 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 €40 million.
A2 – Investment property (€44 million) Investment property primarily regards former service accommodation owned by Poste Italiane SpA pursuant to Law 560 of 24 December 1993, and residential accommodation previously used by Post Office directors. None of the above items is attributable to BancoPosta RFC.
The fair value of investment property at 31 December 2019 includes €66 million representing the sale price applicable to the Parent Company’s former accommodation in accordance with Law 560 of 24 December 1993, while the remaining balance reflects market price estimates computed internally by the Company85.
The balance of intangible assets under construction includes activities regarding the development for software relating to the infrastructure platform (€83 million), for BancoPosta services (€52 million), for use in providing support to the sales network (€35 million), for the postal products platform (€24 million) and for the engineering of reporting processes (€17 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 €110 million, reflecting the completion and commissioning of software and the upgrade of existing software.
Cons. per i Servizi di Telefonia Mobile ScpA - - - - - - - - - -
The following movements occurred in 2019: � Payment to SDA Express Courier SpA of a total of €25 million to cover losses incurred through 30 September 2019, reduction and simultaneous replenishment of share capital of €5 million and creation of an available reserve, as approved by the subsidiary’s extraordinary general meeting of 27 November 2019; � Capital contribution in favour of FSIA Investimenti Srl of a total of €15 million made on 4 October 2019. In addition, as described in Note 4 - Significant events during the year, at 31 December 2019, the investment was classified as an associate instead of the previous joint control; � Sale, on 25 June 2019, of the Information & Communication Technology business unit of SDA Express Courier SpA to Poste Italiane with effect from 1 July 2019; � Completion, on 21 October 2019, of the partial de-merger of SDA Express Courier SpA in favour of Poste Italiane, the business unit relating to the commercial and customer service activities of Express Courier and Parcels. The legal, accounting and tax effects of the transaction start on 1 November 2019; � On 5 June 2019, the company Risparmio Holding SpA, already in liquidation, was removed from the register of companies.
The impairment tests required by the related accounting standards have been conducted in order to identify any evidence of impairment. Based on the available information and the results of the impairment tests carried out86, the value of the investment in SDA Express Courier SpA was reduced by €32 million. In particular, in the valuation, shareholders’ equity was taken as the best approximation of the value in use, which, in the circumstances, was considered not lower than the recoverable value of the companies.
86. The method applied and the criteria used in conducting impairment tests at 31 December 2019, are described in note 2.5 – Use of estimates, with regard to the impairment testing of goodwill, cash generating units and investments.
Financial statements of Poste Italiane at 31 December 2019 6. Poste Italiane SpA Financial statements for the year ended 31 December 2019
The following table shows a list of investments in subsidiaries and associates at 31 December 2019: tab. A5.2 - List of investments
Poste Tributi ScpA (in liquidation)** 88.89 2,325 - (1,788) (1,589) - (1,589)
** These amounts have been calculated under IFRS and, therefore, may not be consistent with those included in the investee company’s annual financial statements prepared in accordance with the Civil Code and Italian GAAP and, in the case of Conio Inc., in accordance with US GAAP.
***** Data derived from the accounts for the period ended 31 December 2018, the latest approved by the company. ****** Figures taken from the company’s latest interim financial statements at 30 September 2019, as approved by its board of directors.
Financial assets at amortised cost 23,638 15,815 39,453 21,507 9,890 31,397
The activities in question concern the financial transactions carried out by the Company pursuant to Presidential Decree no. 144 of 14 March 2001, as amended, which, as from 2 May 2011, fall within the scope of RFC (see note 6.2 - Information on BancoPosta RFC).
The item refers to outstanding repurchase agreements entered into with Cassa di Compensazione e Garanzia SpA (the Central Counterparty)87. These transactions are guaranteed by securities for a total notional amount of €1,086 million.
This item breaks down as follows: 88. The rate in question is calculated as follows: 50% is based on the return on 6-month BOTs, with the remaining 50% based on the ten-year BTP return. 89. A guarantee fund established with payments from participants in the derivative, equity and bond markets, as a further guarantee for the transactions carried out. The fund can be used to meet the charges arising from any participant default.
90. In terms of the fair value hierarchy, which reflects the relevance of the sources used to measure assets, €20,613 million of the total amount qualifies for inclusion in level 1 and €4,073 million for inclusion in level 2.
Receivables include: � Amounts deposits with the MEF, including public customers’ current account deposits, which earn a variable rate of return, calculated on a basket of government bonds88. The deposit has been adjusted to reflect accumulated impairments of approximately €3 million, to reflect the risk of counterparty default (unchanged compared to 31 December 2018).
These are Eurozone fixed income instruments, consisting of government securities issued by the Italian government with a nominal value of €31,170 million. Total fair value gains for the year amount to €3,758 million, recognised in the relevant equity reserve in relation to the portion of the portfolio not hedged by fair value hedges (€1,702 million) and recognised through profit and loss in relation to the hedged portion (€2,056 million). These instruments are subject to impairments recognised in profit or loss with a matching entry in the relevant equity reserve. Accumulated impairments at 31 December 2019 amount to €11 million (€13 million at 31 December 2018).
Financial assets measured at fair value through profit or loss Below are the movements in financial assets at fair value through profit or loss (FVTPL): 91. Until the assigned shares are fully converted into ordinary shares, the share exchange ratio may be reduced if Visa Europe Ltd. incurs liabilities that, as of the reporting date, were considered as merely contingent.
This item, totalling €71 million, reflects the fair value of 32,059 Visa Incorporated preference shares (Series C Convertible Participating Preferred Stock) received for the sale of the Visa Europe Ltd. share to Visa Incorporated on 21 June 2016; these shares are convertible at the rate of 13,88491 ordinary shares for each C share, minus a suitable illiquidity discount (considering the staggered conversion between the fourth and the twelfth year after the closing). Fair value gains in the year under review, amounting to €25 million, have been recognised in profit or loss in “Revenue from financial activities”.
In 2019, the Company entered into a forward sale agreement for 400,000 ordinary Visa Incorporated shares at a price of US$153.46 per share and at an exchange rate of 1.2037. The total consideration is €51 million and the settlement date is 1 March 2021. The ordinary shares involved in the forward sale amount to approximately 28,810 Visa Incorporated (series C) preference shares held in portfolio at the applicable conversion rate at 31 December 2019. The fair value of the forward sale has decreased by €15 million in the reporting year, reflecting movements in both the price of the shares in US dollars and the euro/dollar exchange rate (tab. A6.4). This reduction has been recognised in profit or loss in “Expenses from financial activities”.
Finally, in 2019, Poste Italiane sold its previous holding of 11,144 class C Visa Incorporated shares following their prior conversion into class A shares. The transaction in question resulted in a total gain of €1.4 million recognised in profit or loss in “Other income from financial activities”.
Derivative financial instruments Below are movements in derivative financial instruments: tab. A6.4 - Movements in derivative financial instruments
Fair value hedges in interest rate swaps refer to securities classified at amortised cost with a nominal value of €11,295 million and securities classified at FVTOCI with a nominal value of €14,395 million; overall, they underwent a net effective negative fair value change of €3,971 million during the year, taking into account the net positive fair value change of €3,958 million in hedged securities (Table A6.1 and A6.2) net of €13 million for differentials paid.
In the year under review, the Company entered into: � forward purchases for a nominal amount of €875 million and settlement for €2,420 million, of which €1,545 million outstanding at 1 January 2019; � forward sales for a nominal amount of €1,670 million and settlement for €1,730 million, of which €1,340 million outstanding at 1 January 2019; � new interest rate swaps designated as cash flow hedges with a nominal value of €505 million; � new interest rate swaps designated as fair value hedges with a nominal value of €2,525 million; � a forward sale agreement for 400,000 ordinary Visa Incorporated shares (described above).
Financial assets at amortised cost 303 91 394 283 163 446
This item breaks down as follows: tab. A7.1.1 - Borrowings at amortised cost
These loans have been adjusted to reflect accumulated impairments of approximately €0.4 million, to reflect the risk of counterparty default (€0.3 million at 31 December 2018).
Effects of sales on profit or loss - - - -
Sales, redemptions and settlement of accrued income - (5) - (5)
This item regards BTPs with a total nominal value of €500 million. Of these, instruments with a value of €375 million have been hedged using interest rate swaps designated as fair value hedges. Accumulated impairments at 31 December 2019 amount to €0.2 million (unchanged with respect to 31 December 2018).
Derivative financial instruments 93. These are Contingent Convertible Notes with an original value of €75 million, a twenty-year term to maturity and issued by Midco SpA, which in turn owns 51% of the airline Alitalia SAI SpA. The Notes were subscribed for by Poste Italiane SpA on 23 December 2014, in connection with the strategic transaction that resulted in Etihad Airways’ acquisition of an equity interest in Alitalia SAI, without giving rise to any involvement on the part of Poste Italiane in the management of the issuer or its subsidiary. Interest and principal payments were provided for in the relevant terms and conditions if, and to the extent that, there was available liquidity. On the fulfilment of certain negative pledge conditions, in 2017 the loan was converted into equity instruments (as defined by art. 2346, paragraph 6 of the Italian Civil Code), carrying the same rights associated with the Notes.
Gains/(Losses) through profit or loss - - of which: * Transactions settled include forward transactions settled, accrued differentials and the settlement of interest rate swaps linked to securities sold.
At 31 December 2019, derivative financial instruments include: � a cash flow hedging interest rate swap contract entered into in 2013 to protect the cash flows of the €50 million bond issued on 25 October 2013 (Note B.7 - Financial liabilities); with this transaction, the Company assumed the obligation to pay the fixed rate of 4.035% and sold the floating rate of the bond, which at 31 December 2019 was 0.953%; � nine interest rate 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 Company to sell the fixed rate on the BTPs of 3.75% and purchase a variable rate.
Receivables due from Parent company - 45 45 - 68 68 of which attributable to BancoPosta RFC - 860 860 - 891 891
94. At 31 December 2019, the balance of trade receivables includes €17 million, net of the related provisions for doubtful accounts, relating to rental income falling within the scope of IFRS 15 – Revenue from Contracts with Customers.
95. See Revenue and receivables due from the State, showing overall amounts due from the Ministry for Economic Development (€80 million), including amounts due for postal and other services.
Ministries and Public Administration entities - 513 513 - 663 663
– Reimbursement of the costs associated with the management of property, vehicles and security incurred on behalf of the Ministry for Economic Development, totalling €79 million95, including €62 million involved in legal action brought by Poste Italiane in order to claim sundry costs resulting from the use of properties. At the hearing of 13 November 2019, the Judge held the case back in judgement with the allocation of time limits for closing arguments and replies. The judgement is therefore expected to be filed by the first half of 2020.
� Receivables from overseas counterparties primarily relates to postal services carried out by the Company for overseas postal operators.
� Receivables for overdrawn current accounts derive almost exclusively from overruns due to the debiting of BancoPosta’s periodic fees. During the year under review, upon completion of a process of analysis and a series of activities undertaken with regard to these receivables, it was found that it was not possible to recover these amounts, also taking into account the small amount of each receivable, in accordance with the provisions of IFRS 9, a total of €121 million was written off by using the provision for doubtful debts set aside at the time.
� Other trade receivables primarily include €189 million generated by parcel post operations, €45 million for Posta Time services, €24 million for Posta Target services, €22 million for Posta Contest services, €17 million for non-universal postal services, €12 million related to the Notification of Legal Process service and €11 for telegraphic services.
Provisions for doubtful debts relating to customers are described in note 7 – Risk management.
Poste Assicura SpA 8 8 of which attributable to BancoPosta RFC 239 224
These trade receivables include: � Poste Vita SpA: primarily regarding fees deriving from the sale of insurance policies through Post Offices and attributable to BancoPosta RFC (€141 million); � PostePay SpA: primarily for the distribution of products relating to payment services (€54 million) and for the provision of card payment and payment services (€27 million).
� Payments for delegated services, collected in January 2020, to fees accrued solely in 2019 for treasury services performed by BancoPosta on behalf of the state in accordance with a special agreement with the MEF, expired on 31 December 2019 and being renewed.
� Amounts that cannot be drawn on due to court rulings include €66 million in amounts seized and not assigned to creditors in the process of recovery, and €13 million in amounts stolen from the Company in December 2007 as a result of an attempted fraud and that have remained on deposit with an overseas bank. The latter sum may only be recovered once the legal formalities are completed. The risks associated with collection of these items are taken into account in the provisions for doubtful debts due from others.
Provisions for doubtful debts due from others are described in note 7 – Risk management.
A10 – Cash and deposits attributable to BancoPosta (€4,303 million) This item breaks down as follows: 98. They carry out transport and custody of valuables awaiting payment to the State Treasury.
A11 – Cash and cash equivalents (€1,206 million) This item breaks down as follows: tab. A11 - Cash and cash equivalents
Bank deposits and amounts held at the Italian Treasury 698 810
Cash and cash equivalents in hand 14 11 of which attributable to BancoPosta RFC 509 1,318
Bank deposits and amounts held at the Italian Treasury include €20 million whose use is restricted by court orders related to different disputes.
Cash held on deposit with the MEF at 31 December 2019 include approximately €123 million in amounts deposited with the MEF in a so-called buffer account, consisting of customer deposits subject to restrictions on their use and yet to be invested (note – 6.2 – Information on BancoPosta RFC).
At 31 December 2019, the Company holds 5,257,965 treasury shares (equal to 0.4026% of the share capital). All the shares in issue are fully subscribed and paid up. No preference shares have been issued.
reserve Fair value reserve Cash flow hedge reserve Incentive plans reserve Merger surplus Total
Transfers to profit or loss - - (385) 20 - - (365)
Tax effect of transfers to profit or loss - - 110 (5) - - 105
Gains/(losses) recognised in equity - - (1,632) 151 - - (1,481)
This item breaks down as follows: � the fair value reserve regards changes in the value of financial assets at fair value through other comprehensive income. The increase of €1,705 million during 2019 reflects: – a net increase of €1,702 million in financial assets measured at fair value through other comprehensive income and attributable to BancoPosta RFC; – a net increase of €3 million in financial assets measured at fair value through other comprehensive income held outside the ring-fence; � the cash flow hedge reserve represents changes in the fair value of the effective portion of cash flow hedges outstanding. In 2019, the fair value gain of €96 million reflects a net gain of €98 million on derivative financial instruments attributable to BancoPosta RFC and a net loss of €2 million on the value of financial instruments held outside the ring-fence; � the Incentive Plans reserve includes the estimate of the valuations for the period relating to the long-term ILT Performance Share incentive plan, carried out on the basis of the provisions of IFRS 2.
- cash flow hedge reserve 116 - - - merger surplus 15 A B D
Retained earnings / (Accumulated losses) 2,444 retained earnings / (accumulated losses) 85 - retained earnings / (accumulated losses) 1,127 C
Unrealised gains/(losses) on financial assets at FVTPL net of tax effect 43 B C
B4 – Provisions for risks and charges (€1,131 million) Movements in provisions for risks and charges are as follows: tab. B4 - Movements in provisions for risks and charges
Provisions for early retirement incentives 444 369 - - (394) 419
Overall analysis of provisions: * Net provisions for Personnel expenses amount to €4 million. Service costs (legal assistance) total €4 million. Releases come to €1 million.
� Provisions for disputes with staff regard liabilities that may arise following labour litigation and disputes of various types. Net provisions of €7 million regard an update of the estimate of the liabilities and the related legal expenses, taking account of both the overall value of negative outcomes in terms of litigation.
� Provisions for personnel expenses are made to cover expected liabilities arising in relation to the cost of labour, which are certain or likely to occur but whose estimated amount is subject to change. They have increased by €58 million to reflect the estimated value of new liabilities and decreased as a result of past contingent liabilities that failed to materialise (€71 million) and settled disputes (€48 million).
� Provisions for taxation have been made to cover estimated tax liabilities.
Balance at 1 January 1,158 interest component 17 effect of actuarial gains/(losses) 68
The main actuarial assumptions applied in calculating provisions for employee termination benefits, are as follows: tab. B5.1 - Economic and financial assumptions 31/12/2019
Rate of employee turnover Specific table with rates differentiated by length of service.
The average length of service for participants corresponds to an annual rate of 0.11%
MEF account held at the Treasury - 4,542 4,542 - 3,649 3,649
Postal current accounts These payables include net amounts accrued at 31 December 2019 and settled with customers in January 2020. The balance includes amounts due to Poste Italiane Group Companies, totalling €5,494 million, with €5,219 million relating to postal current accounts in the name of PostePay SpA and €227 million deposited in postal current accounts by Poste Vita SpA.
At 31 December 2019, outstanding liabilities of €12,194 million relate to repurchase agreements entered into by the Company with major financial institutions and Central Counterparties, amounting to a total nominal value of securities committed for €11,550 million. €6,075 million of this amount regards Long Term Repos and €6,119 million to ordinary borrowing operations, the resources from both invested in Italian fixed income government securities and as funding for incremental deposits used as collateral.
At 31 December 2019, the fair value99 of the above borrowings amounts to €12,205 million.
Balance of cash flows for advances - 4,397 4,397 - 3,546 3,546
Amounts payable for operational risks for €34 million regard the portion of advances obtained to fund the operations of BancoPosta, in relation to which asset under recovery is certain or probable.
Derivative financial instruments Movements in derivative financial instruments during 2019 are described in note A6.
Domestic and international money transfers - 668 668 - 689 689
Amounts to be credited to customers - 257 257 - 235 235
Payables for items in process - 139 139 - 105 105
Payables for guarantee deposits refer to amounts received from counterparties in repurchase agreements on fixed income instruments (collateral provided by specific Global Master Repurchase Agreements). Payable for items in process regard €3 million in amounts credited to the subsidiary, PostePay SpA, primarily in early 2020.
Bonds with an amortised cost of €50 million, issued by the Company under its €2 billion EMTN – Euro Medium Term Note programme and listed by the Company in 2013 on the Luxembourg Stock Exchange. These bonds were issued through a private placement on 25 October 2013. The term to maturity of the loan is ten years and the interest rate is 3.5% for the first two years and variable thereafter (EUR Constant Maturity Swap rate plus 0.955%, with a cap of 6% and a floor of 0%). The interest rate risk exposure was hedged as described in note A7 – Financial assets. At 31 December 2019, the fair value101 of this liability is €51 million.
EIB fixed rate loan maturing 16/10/2026 400 - 400 - - -
An EIB loan of €200 million reached maturity and was repaid in March 2019, whilst an EIB credit facility granted in 2016, amounting to €173 million, was used in full. The new loan is subject to a fixed rate of interest of 0.879% and matures in March 2026. At 31 December 2019, the fair value102 of this loan is €185 million.
At 31 December 2019, the following credit facilities are available: � committed lines of €2,173 million, with €173 million used at 31 December 2019; � uncommitted lines of credit of €1,857 million, including €1,009 million for short-term loans, €173 million for overdraft and €675 million in the form of personal guarantee facilities.
Lease payables The item is commented on in note 3 – Changes to accounting policies.
Derivative financial instruments Movements in derivative financial instruments during 2019, are described in note A7 – Financial assets.
The increase in amounts due to subsidiaries is primarily attributable to the subsidiary SDA Express Courier SpA, as a result of the new agreement entered into following the de-merger of the business unit on 1 November 2019, relating to the commercial offering of domestic and international express products.
Deferred income from trading transactions 3 - - 3 of which attributable to BancoPosta RFC 33 (27) 20 26
Postage-paid mailing services 6 7 of which attributable to BancoPosta RFC - -
Other amounts due to subsidiaries 5 36 41 6 204 210
Accrued liabilities and deferred income 10 2 12 10 4 14 of which attributable to BancoPosta RFC 1,434 62 1,496 1,274 39 1,313
Other amounts due to staff - 147 147 - 58 58 of which attributable to BancoPosta RFC 3 5 8 1 11 12
Non-current liabilities Current liabilities Total Non-current liabilities Current liabilities Total of which attributable to BancoPosta RFC - 3 3 - 3 3
Withholding tax on postal current accounts - 10 10 - 3 3 of which attributable to BancoPosta RFC 1,357 25 1,382 1,198 19 1,217
Specifically: � Withholding tax on employees’ and consultants’ salaries relates to amounts paid to the tax authorities by Group companies in January and February 2020 as withholding agents.
� Stamp duty represents the amount payable to the tax authorities for stamp duty in virtual form, before the adjustment applied in 2020 pursuant to note 3-bis to art. 13 of the Tariff introduced by Presidential Decree 642/1972. The non-current portion of stamp duty payable primarily regards the amount due at 31 December 2019 on interest-bearing postal certificates in circulation, in compliance with the legislation referred to in note A9 – Other receivables and assets.
Direct subsidiaries of which attributable to BancoPosta RFC - 21 21 - - -
This item partly regards the amount payable to subsidiaries by Poste Italiane SpA, as the consolidating entity in the tax consolidation arrangement (note 2.3 – Summary of significant accounting policies and measurement criteria), to whom the subsidiaries have transferred tax assets in the form of payments on account, withholding taxes and taxes paid overseas, after deducting IRES payable to the Parent Company by the subsidiary BancoPosta Fondi SpA SGR and the benefit connected with the tax loss contributed by SDA Express Courier SpA in 2019.
Sundry payables attributable to BancoPosta 74 8 82 75 6 81 of which attributable to BancoPosta RFC 74 8 82 75 6 81
Postal Services 2,929 2,925 of which Revenue from contracts with customers 2,929 2,925 recognised at a point in time 490 589 recognised over time 2,439 2,336
During the year under review, to allow easier reading of the item Revenue from Postal Services, a different breakdown of this item is provided to allow a more immediate assessment of the economic and financial performance by segment of operations.