During the year, and through to today’s date, the Board has received five complaints pursuant to art. 2408 of the Italian Civil Code, all lodged by the same shareholder: i. Complaint dated 31 March 2017, relating to alleged irregularities in managing the shareholder register, the failure to computerise the register and the resulting shortcomings regarding its update. In this regard, the Board had already conducted a preliminary investigation, involving discussions with the Company’s management and resulting in the conclusion that the Company had acted in accordance with the applicable regulations. Based on a further examination of the evidence, the Board believes that it is in a position to confirm that Company has met its statutory requirements. We have found that: the original shareholder register is held at the Company’s headquarters located in Roma at Viale Europa 175; the
SpA has transferred funds to its subsidiary, Mistral Air Srl, to cover the latter’s losses and, if so, in what amount. The Board has on many occasions looked into the management and performance of the subsidiary, Mistral Air. With regard to the specific complaint in question, discussions with the relevant management have revealed that capital injections over the last 5 years amount to approximately €42 million. The financial support provided over the years by the Company, with the sole aim of ensuring that the airline is able to continue in operation, has been indispensable in enabling the subsidiary to meet the relevant regulatory standards for quality relating to delivery times for certain postal products (next-day), and in safeguarding an asset considered strategic in view of the growth of e-commerce.
iii. Complaint dated 18 September 2017, in which the complainant drew attention to a parliamentary question, dated 14 September 2017, regarding problems with the mail delivery service in certain areas of the Lombardy region. Following an investigation, the Board, which looked at both the Company’s conduct and the actions decided on in order to overcome the reported problems, believes that the disruption that occurred, and referred to in the complaint, were due to operational issues and not to wilful misconduct or gross negligence.
v. Finally, the last complaint dated 15 January 2018, regarding the fine of over €20 million imposed by the AGCM (Autorità Garante della Concorrenza e del
Briefly, in response to the complaints received, the Board of Statutory Auditors has conducted appropriate investigations with the support of the relevant functions, assessing the grounds for the complaints, the adequacy of the actions taken, and monitoring the process of identifying any individual responsibility. As a result of our checks, we have concluded that there are no irregularities to report to the Annual General Meeting.
relevant functions. In five of these cases, following the checks carried out, we did not identify any irregularities to be reported to the Annual General Meeting. In one case regarding a subsidiary, following checks carried out with the aid of the Internal Auditing function, the Board flagged the need to strengthen oversight of subsidiaries’ procurement by the Group’s Purchasing function, including in terms of the procedures applied. This was acted on by the Company through a review of its procurement model, a revision of internal procurement rules and the start-up of a progressive centralisation of the Group’s purchasing, in keeping with the specific nature of the goods and services needed for each of the Group’s areas of business.
The Board of Statutory Auditors has received the Independent Auditor’s annual declaration confirming its, prepared pursuant to art. 6, paragraph 2.a) of Regulation (EU) 537/2014 and paragraph 17 of ISA Italia 260, which confirms compliance with the ethical principles required by articles 9 and 9-bis of Legislative Decree 39/2010, not having identified situations that could compromise the Independent Auditor’s independence in the period from 1 January 2017 until the date of issue of the declaration (20 April 2018).
Board of Statutory Auditors’ recommendations, the Company has, under the Board’s supervision, drawn up new Guidelines for the appointment of independent auditors, in accordance with the new regulations. The “Guidelines for the assignment of appointments to Poste Italiane’s Independent Auditor” were submitted for examination by us and approved by the Board of Directors on 15 March 2017. The new guidelines govern the process of prior evaluation and approval of any non-audit engagements assigned to the
In view of: ✓ the declaration of independence issued by PricewaterhouseCoopers SpA pursuant to art.
Addition to the engagement of PwC for the voluntary audit of the (annual and half-year) reporting packages prepared by Poste Vita SpA solely for the purpose of preparing the Poste Italiane Group’s consolidated financial statements for the years from 2016 to 2019 €160,000 plus expenses capped at 5% of the fees and VAT (annual fee of €40,000)
€55,000 plus €2,750 as reimbursement of out-ofpocket and administrative expenses and VAT
With regard to the annual update of Poste Italiane SpA’s Euro Medium Term Note Programme (Bonds issued in June 2013 and listed on the Luxembourg Stock Exchange): the issue of a Comfort Letter, for the benefit of Poste Italiane and the dealer banks, and a review of the English translation of the consolidated financial statements for the year ended 31 December 2016 and of the interim report for the six months ended 30 June 2017.
€40,000 ( plus expenses capped at 5% of the fees and VAT ) for the Comfort Letter. €30,000 ( plus expenses capped at 5% of the fees and VAT ) for the review of the financial statements in English
€270,000 plus VAT (€70,000 for each of the three years in the three-year period, in addition to €60,000 in the first year of the engagement for the conduct of certain preliminary activities)
Lastly, the Board issued a reasoned opinion for the next general meeting of shareholders on the payment of supplementary fees to the Independent Auditor for carrying out the additional activities required by the new Regulation (EU) 537/2014 and resulting from the application of the new accounting standards, IFRS 9 and IFRS 15.
10. Disclosure of the frequency and number of meetings of the Board of Directors, the
Board met on 40 occasions as the Board of Statutory Auditors (including 9 held jointly with the Audit and Risk Committee), with the meetings having an average duration of approximately 2 hours and 56 minutes. We attended all Board of Directors’ meetings and all those of Board Committees. Specifically, the Board of Statutory Auditors attended 14
Company’s on its organisational arrangements. Given the complexity of the Company’s and the Group’s organisational structure, which is subject to continuous change, the Board of Statutory Auditors judges the organisational structure to be adequate. With regard to art.
With regard to the internal control and risk management system, the Board has noted the information on the system provided in the “Annual Report on Corporate governance and the Ownership Structure”.
With regard to the request, set out in the previous Board of Statutory Auditors’ report, to define a number of cross-organisational roles, in order to ensure a unified approach to management of the Company’s functions and its subsidiaries, the Board of Statutory
In brief, the Board of Statutory Auditors is not aware of critical situations or events that might suggest shortcomings in the internal control system, taken as a whole.
Auditing function and BancoPosta's Internal Auditing function; (vii) by obtaining information and details of inspections and proceedings conducted by Italian government or
European Union bodies and authorities, including those of an independent nature, details of which are provided in the section, “Principal relations with the authorities”, in the notes to the financial statements.
The Board also notes the Attestations, dated 29 March 2018, of the separate and the consolidated financial statements for the year ended 31 December 2017 pursuant to art.154-bis, paragraph 5 of Legislative Decree 58/1998 and art. 81-ter of CONSOB
European Parliament and by the Council on 19 July 2002; ✓ are consistent with the underlying accounting books and records; ✓ give a true and fair view of the financial position and results of operations of the issuer and the companies included in the scope of consolidation.
Company to its subsidiaries pursuant to art. 11, paragraph 2 of Legislative Decree 58/1998
In addition, the Board of Statutory Auditors periodically held meetings with the boards of statutory auditors of the principal Group companies. In particular, the Board has noted the
Company’s issue of attestations regarding its binding commitment to provide financial support, in 2018, for SDA Express Courier SpA, Mistral Air Srl and, throughout its liquidation, a Poste Tributi ScpA (in liquidation). On 20 March 2017, the subsidiary, Poste
Vita, was notified that IVASS (the insurance regulator) was to begin an inspection pursuant to art. 189 of Legislative Decree 209/2005 (the Private Insurance Code - Codice
The Independent Auditor, with whom the Board held meetings on a periodic basis in compliance with art. 150, paragraph 3 of Legislative Decree 58/1998 (the Consolidated
We have not been made aware of information regarding events or circumstances identified during the performance of the audit that might raise significant doubts about the entity’s ability to continue to operate as a going concern, nor regarding any material shortcomings in its internal control system over financial reporting and/or in its accounting system, or any significant doubts over instances of non-compliance, whether effective or presumed, with laws, regulations or statutory requirements identified during the performance of the audit.
Pursuant to art. 149, paragraph 1, letter c-bis of the Consolidated Law on Finance, the
Board oversaw the procedures involved in effective implementation of the rules provided for in the Corporate Governance Code adopted by the Board of Directors.
Board Committee meetings, in addition to general meetings of shareholders, making a total of 91 meetings. Given the large number and the complexity of such meetings, the Board hopes that Board Committee meetings will be scheduled so as to leave a reasonable period of time between them and Board of Directors’ meetings, and shares the Board of Directors’ desire, expressed at the time of their self-appraisal, to improve the prompt provision of information, above all on the occasion of Board
✓ With reference to the recommendation made by the Board in the previous report, regarding the establishment of specific guidelines setting out the adopted procedure for assessing the independence of members of the Board of Directors, defining materiality thresholds for the trading, financial or professional relations that could compromise their status as independent, we note that the process of drawing up such guidelines by the Nominations and Corporate Governance Committee is currently in progress. The aim is also to coordinate definition of the procedure with the provisions of the upcoming ministerial decree regarding fit and proper tests for
✓ In view of the complexity of the relevant transactions and the large number and varied nature of related parties, the Board of Statutory Auditors recommends a general strengthening of the relevant legal and corporate procedures, above all in terms of the recording, assessment and authorisation of related party transactions,
which should take place alongside a revision of the process following implementation of the new IT platform for related parties.
✓ Likewise, we welcome the Board of Directors’ decision, again in January 2018, to give the Audit and Risk Committee, now renamed the Audit, Risk and Sustainability
Italiana SpA’s Market Regulations and in the Consolidated Law on Finance. The
Governance Code, also verified the content of the “Remuneration Report” prepared by the Directors. Section I of this report, which is also submitted for express approval by the Annual General Meeting of shareholders, has also been prepared in accordance with the instructions contained in Borsa Italiana SpA’s Market
Regulations and in the Consolidated Law on Finance. With regard to section II, the
Board of Statutory Auditors advised in favour of providing disclosure on an individual basis, based on the different activities carried out in 2017.
Directors; the annual assessment was also conducted taking into account the Board of Statutory Auditors’ recommendation that independence be assessed, in part, on the basis of information available to the entity on any economic or financial transactions and/or relationships between Poste Italiane Group companies, Directors and their related parties, in accordance with the provisions relating to independence requirements set out in art. 3.C.1, letter c) of the Corporate Governance Code. The
leading consulting firm, reporting on its findings in the “Annual Report on Corporate
Pursuant to the Corporate Governance Code, the Board of Statutory Auditors was also consulted by the Audit and Risk Committee in 2017 regarding the following: - approval of the MBO plan for the head of the Internal Auditing function; - definition of the audit plan; - assessment of the results described in the Independent Auditor’s letter of recommendations and the section of its report on key audit matters in the financial statements for 2016; - assessment of the correct use of accounting standards and their consistency for the purposes of preparation of the consolidated financial statements.
In December, the Board of Directors also approved revised “Financial Management
Finally, in January 2018, the Board of Directors approved the “Group Money Laundering
As noted in the Board of Statutory Auditors’ report for the previous year, in 2017, the Bank of
May 2017, the Bank of Italy issued an inspection report containing findings that were partly critical, but without imposing any sanctions. Based on the inspection report, a number of areas requiring corrective measure have been identified in relation to: i) risk governance, organisational and control structures; ii) risk management and measurement; iii) IT systems and iv) investment services. As of today, certain corrective measures have been rapidly implemented by the Company, whilst others are still in progress as they require more complex procedures that can often only be implemented with specialist external support. In this regard, the control functions are periodically monitoring implementation of the action plans and the
In addition, on 28 September 2017, the Banking Supervision department of the Rome Branch of the Bank of Italy began an inspection related to money laundering prevention at a sample of 14 post offices located around the country, with the aim of assessing the progress made in implementing the compliance initiatives communicated to the Bank by BancoPosta, following the inspection carried out in 2015. The Bank of Italy’s final inspection report is awaited.
April 2011 and amended by the Extraordinary General Meeting of 31 July 2015. As required by the above By-laws, the Board of Statutory Auditors examined the specific issues regarding BancoPosta RFC separately, reporting the results in the minutes of Board meetings; − the Supervisory Standards issued by the Bank of Italy on 27 May 2014 and, more generally, those in Circular 285 of 17 December 2013.
Statutory Auditors believes that the level of control over management of
The Board periodically received information from BancoPosta’s control functions and studied the outcomes of their audit activities, examining the annual reports prepared by the functions, which it oversaw in accordance with CONSOB Resolution 17297 of 2010.
BancoPosta RFC’s internal controls is being progressively strengthened and is under continuous development. The Board of Statutory Auditors agreed with the function’s opinion that priority should be given to completing the corrective measures identified following the Bank of Italy’s inspection of 2017, the CONSOB Plan and the process of ensuring compliance with MiFID2 requirements.
During the year, the Board oversaw, partly with reference to compliance with the
Supervisory Standards contained in Bank of Italy Circular 285/2013, and in close conjunction with the Remuneration Committee, correct application of the regulations governing the remuneration of the heads of the Company’s control functions.
Statutory Auditors, in line with the relevant Supervisory Standards, examined the costs, risks and benefits of the contract.
vulnerability of BancoPosta’s organisational structure and procedures was judged by the function to be of “little significance” and the processes and procedures adopted and reinforced over time have resulted in a low level of “residual risk”. The Board of Statutory
adequate customer checks and profiling, ii) enhanced risk assessment, iii) the reporting of suspect transactions, iv) legal checks, v) the organisational structure, and vi) training. In addition, the Board recommends close monitoring of the reasons for the growing number of reports of suspect transactions (due partly to increases in volumes and the number of customers and to a welcome increase in awareness among post office managers) and the timing of the internal procedures involving in handling such reports.
The Compliance and Risk Management functions have periodically prepared their respective reports on compliance risk and significant risk exposures for BancoPosta, and on the state of progress of the initiatives undertaken as a result of the commitments given to the Bank of Italy (following both the checks carried out in 2015 in relation to the transparency of transactions, the fairness of relations with customers and money laundering, and the inspection conducted in 2016/2017 with the aim of assessing the governance, control and operational and IT risk management systems in relation to
BancoPosta’s operations) and to the CONSOB (regarding the provision of investment services). In this regard, the Board of Statutory Auditors was questioned by the supervisory authority on the occasion of the Bank of Italy’s inspection, which was completed in 2017.
for which specific actions plans have been drawn up. In this regard, the Board recommends implementation of all the corrective measures relating to the investment services covered by MiFID 2, to insurance broking in connection with the IDD Directive, to banking services and postal savings (above all with regard to improved management of complaints), to the payment services regulated by the PSD2 Directive, to action on crossfunctional areas with an indirect impact, above all efforts to strengthen the information system (with particular regard to the definition of Data Governance standards and the management of business continuity and the security of financial services), cash management and occupational health and safety.
The Board recommends continuing to closely monitor the underlying causes of the increased volume of complaints and fraud, so as to give priority to both compliance with
EBA guidance on the security of payments, and consolidation of the databases used in assessing operational risk, including the range of sources (complaints, fraud, etc.). In particular, whilst Business Continuity Management is being progressively improved in compliance with the related supervisory requirements, the Board recommends that implementation of the measures needed to complete the compliance programme in 2018 should be speeded up. This is necessary in order to have a disaster recovery capability in place for all finance-related applications, and to overcome the technological and infrastructure obsolescence reported by the Compliance function.
Based on the above, the Board monitored the progress of preparations for the implementation, from 2018, of the new requirements contained in the new European directives regarding investment services (MiFID2), insurance broking (IDD) and the security of payment services (PSD2).
Operational risk losses recognised in profit or loss for the year were higher than in 2016, primarily due to past events. Despite this, in the Board’s view, these events should be
closely monitored on a periodic basis by the Risk Management function to both analyse the related trends and the effects in terms of provisions and the assessment of reputational risk.
The Board repeats its earlier recommendation to the Board of Directors to periodically monitor financial risk, including on a projected, multi-year basis, checking, through an assessment conducted by the Audit, Risk and Sustainability Committee, the hedging policy. In addition, as in the previous report, in view of the composition of the Group’s securities portfolio, persistently falling interest rates and spread risk, with the resulting effects on capital gains and unrealised gains, the Board recommends that the Board of
In view of the assessment carried out, the ICAAP report for 2017/2018, approved in April 2018, shows that BancoPosta RFC’s capital is adequate with respect to its current and future risk profile and under stress conditions. This reflects its ability to boost its capital by generating own funds, linked to strong earnings and resilience under stress scenarios.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were
addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
As part of our audit activities, also supported by experts within the PwC network, we carried out the following main activities in order to address this key audit matter: • in-depth technical analysis of the principal hypotheses and assumptions of the Business Plan with reference to the “Mail, Parcels and Distribution” business segment, also through discussions with management of Poste Italiane SpA; verification of the events after the end of the reporting period and reading of the minutes of the corporate governance bodies’ meetings; • update of our understanding of the method to identify the CGU “Mail, Parcels and Distribution” at the level of the parent company Poste Italiane SpA and the method to determine the related recoverable amount in compliance with IAS36 “Impairment of assets” and valuation best practices, verifying that the criteria adopted in prior years have continued to be applied; • obtainment and critical analysis of the impairment test prepared by Poste Italiane SpA based on the aforementioned method, as well as verification of the consistency between the cash flows considered in the abovementioned test with the related book values and data in the Business Plan; • verification of the logical and
mathematical correctness of the determination of the cash flows in the context of the impairment test mentioned above, as well as of the overall reasonableness of the calculation of the weighted average cost of capital (“WACC”) and of the consistency of the assumptions related to the “terminal value”, that is the value that represents the ability of the company to generate cash flows, estimated beyond the explicit forecast period 2018 – 2022 in the Business Plan; • verification of the sensitivity analyses prepared by Poste Italiane SpA vis-à-vis any change in key assumptions, comparing the reasonableness of the related results with those deriving from the sensitivity analyses performed by us independently; • verification of disclosures provided in the consolidated financial statements as of 31 December 2017.
Note 2.3 to the consolidated financial statements as of 31 December 2017 “Accounting policies adopted– Insurance contracts”
Note C4 to the consolidated financial statements as of 31 December 2017 “Statement of profit or loss – Revenue from insurance services net of changes in technical provisions for insurance business and cost of claims”
As part of our audit activities, also supported by experts within the PwC network, we carried out the following main activities in order to address this key audit matter: • update of the walkthrough analysis and of our understanding of the insurance “provisioning” process, that is the corporate process aimed at determining the liabilities representing the contractual obligations undertaken at the reporting date and in relation to the issued premiums, on the part of an insurance company towards its policyholders; • update of the analysis of the design and effectiveness, on a sample basis, of the
Note 6 to the consolidated financial statements as of 31 December 2017 “Risk management – Other risks – Insurance risks”
The technical provisions for the insurance business, equal to about Euro 123,650 million, represent about 61% of total liabilities and equity of the Poste Italiane Group as of 31 December 2017. In particular, the mathematical provisions for life insurance amount approximately to Euro 111,014 million, thus constituting almost all of the abovementioned technical provisions for the insurance business recognised in the consolidated financial statements of the Poste Italiane Group as of 31 December 2017.
significant controls performed on said provisioning process, also with reference to the quality of the input data used and the consistency between information in the IT systems used by the Companies and the related supporting documentation obtained; • performance of procedures aimed at verifying the agreement and reconciliation, if any, of the management information with the accounting information used by the Companies, for the purpose of estimating the technical provisions; • critical analysis of the methods, hypotheses and assumptions adopted by the Companies for estimating the insurance technical provisions; • comparison of the methods and assumptions mentioned above with the sector regulations and with valuation best practices, as well as verification of whether the criteria adopted in prior years have continued to be applied; • obtainment and analysis of the documentation prepared by Poste Vita SpA to measure the ability of future cash flows, deriving from the assets in the investment portfolio, to cover obligations towards the policyholders as at 31 December 2017 and, therefore, to verify the adequacy of the measurement of the technical provisions recognised in the consolidated financial statements of the Poste Italiane Group at such date (the socalled: “Liability Adequacy Test”).
Note 2.6 to the consolidated financial statements as of 31 December 2017 “Determination of fair value”
Note B.8 to the consolidated financial statements as of 31 December 2017 “Financial liabilities – Fair value hierarchy”
techniques and methods of financial instruments that are unquoted on regulated markets and measured at fair value in the financial statements as of 31 December 2017. In particular, the use of estimates mainly concerns specific types of structured securities and derivatives classified in levels 2 and 3 of the fair value hierarchy in compliance with IAS39 “Financial instruments: recognition and measurement” and IFRS13 “Fair value measurement”.
Recognition of the acquisition of the stake in FSIA Investimenti Srl
Note 2.5 to the consolidated financial statements as of 31 December 2017 “Use of estimates Goodwill ”
Note A4 to the consolidated financial statements as of 31 December 2017 “Investments accounted for using the equity method”
The analysis of the purchase price allocation (equal to about Euro 279 million) of the 30% stake in FSIA Investimenti Srl, which is jointly controlled by Poste Italiane SpA and CDP Equity SpA, and of the consequent measurement at 31 December 2017 of the goodwill included in the value of such stake (equal to about Euro 254 million), represented one of the main activities of our audit process, considering the complexity of the valuation methods and estimates adopted.
Management is responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the European Union, as well as with the regulations issued to implement article 9 of Legislative Decree No.38/05 and, in the terms prescribed by law, for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Management is responsible for assessing the Group’s ability to continue as a going concern and, in preparing the consolidated financial statements, for the appropriate application of the going concern basis of accounting, and for disclosing matters related to going concern. In preparing the consolidated financial statements, management uses the going concern basis of accounting unless management either intends to liquidate Poste Italiane SpA or to cease operations, or has no realistic alternative but to do so.
As part of an audit conducted in accordance with International Standards on Auditing (ISA Italia), we exercised professional judgement and maintained professional scepticism throughout the audit. Furthermore: • We identified and assessed the risks of material misstatement of the consolidated financial statements, whether due to fraud or error; we designed and performed audit procedures responsive to those risks; we obtained audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control; • We obtained an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of
We have performed the procedures required under auditing standard (SA Italia) No. 720B in order to express an opinion on the consistency of the report on operations and of the specific information included in the report on corporate governance and ownership structure referred to in article 123-bis, paragraph 4, of Legislative Decree No. 58/98, with the consolidated financial statements of the Poste Italiane Group as of 31 December 2017 and on their compliance with the law, as well as to issue a statement on material misstatements, if any.
In our opinion, the financial statements give a true and fair view of the financial position of the Company as of 31 December 2017, and of the result of its operations and cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union, as well as with the regulations issued to implement article 9 of Legislative Decree No. 38/05
Nota C1 to the financial statements as of 31 December 2017 “Statement of profit or loss – Revenue from sales and services – Revenue for postal services”
The persistent decline of the postal market in which Poste Italiane operates makes the ability to forecast future cash flows and the related prospective operating results of the “Mail, Parcels and Distribution” business segment significantly uncertain. Within this context, based on the new Business Plan of the Poste Italiane Group for the period 2018 – 2022 approved by the Board of Directors of Poste Italiane on 26 February 2018 (the “Business Plan”), the Cash Generating Unit (“CGU”) represented by the “Mail, Parcels and Distribution” business segment was subject to an impairment test, in compliance with IAS36 “Impairment of assets”. Such test was aimed at verifying that the book value of the assets allocated to the CGU, which also includes properties used as post offices and sorting centres, can be recovered through their use in operations. In this regard, the “value in use” of the CGU was calculated, which represented the estimate of the future cash flows expected from the use of the assets included in the
As part of our audit activities, also supported by experts within the PwC network, we carried out the following main activities in order to address this key audit matter: • in-depth technical analysis of the principal hypotheses and assumptions of the Business Plan with reference to the “Mail, Parcels and Distribution” business segment, also through discussions with management of Poste Italiane SpA; verification of the events after the end of the reporting period and reading of the minutes of the corporate governance bodies’ meetings; • update of our understanding of the method to identify the CGU “Mail, Parcels and Distribution” and to determine the related recoverable amount in compliance with IAS36 “Impairment of assets” and valuation best practices, verifying that the criteria adopted in prior years have continued to be applied; • obtainment and critical analysis of the impairment test prepared by Poste Italiane SpA based on the aforementioned method, as well as verification of the consistency between the cash flows considered in the abovementioned test with the related book values and data in the Business Plan; • verification of the logical and mathematical correctness of the determination of the cash flows in the context of the impairment test mentioned above, as well as of the overall reasonableness of the calculation of the weighted average cost of capital (“WACC”) and the consistency of the assumptions related to the “terminal value”, that is the value that represents the ability of the
Therefore, as part of our audit for the financial year 2017, we focused on the determination of the recoverable amount of the “Mail, Parcels and Distribution” business segment, as well as of the reasonableness of the most significant underlying assumptions and hypotheses.
company to generate cash flows, estimated beyond the explicit forecast period 2018 – 2022 in the Business Plan; • verification of the sensitivity analyses prepared by Poste Italiane SpA vis-à-vis any change in key assumptions, comparing the reasonableness of the related results with those deriving from the sensitivity analyses performed by us independently; • verification of disclosures provided in the financial statements as of 31 December 2017.
Note 2.5 to the financial statements as of 31 December 2017 “Use of estimates – Fair value of unquoted financial instruments”
Note 2.6 to the financial statements as of 31 December 2017 “Determination of fair value”
Note B.6 to the financial statements as of 31 December 2017 “Financial liabilities attributable to BancoPosta – Derivative financial instruments”
As part of our audit activities, also supported by experts within the PwC network, we carried out the following main activities in order to address this key audit matter: • update of the analyses of the design and the effectiveness of the internal control system and the specific corporate guidelines governing IT systems and applications used by the Company for the calculation of the fair value under levels 2 and 3; • verification, on a sample basis, of the reasonableness of the input assumptions and parameters underlying the valuation techniques used to determine level 2 and level 3 fair value of the financial instruments; • requests for confirmation and for information from external banks and financial counterparties about the financial instrument transactions carried out in 2017; • verification of disclosures provided in the financial statements as of 31 December 2017, in compliance with IFRS7 “Financial instruments: disclosures”.
million respectively in the financial statements as of 31 December 2017; moreover, financial liabilities attributable to BancoPosta, represented by derivative financial instruments, classified in level 2 of the fair value hierarchy were recognised for an amount of approximately Euro 1,638 million.
Management is responsible for the preparation of financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the European Union, as well as with the regulations issued to implement article 9 of Legislative Decree No. 38/05 and, in the terms prescribed by law, for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Management is responsible for assessing the Company’s ability to continue as a going concern and, in preparing the financial statements, for the appropriate application of the going concern basis of accounting, and for disclosing matters related to going concern. In preparing the financial statements, management uses the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
We declare that we did not provide any prohibited non-audit services referred to in article 5, paragraph 1, of Regulation (EU) No.537/2014 and that we remained independent of the Company in conducting the statutory audit.
INDEPENDENT AUDITOR’S REPORT ON THE CONSOLIDATED NON-FINANCIAL STATEMENT PURSUANT TO ARTICLE 3, PARAGRAPH 10, OF LEGISLATIVE DECREE NO. 254/2016 AND ARTICLE 5 OF CONSOB REGULATION NO. 20267
Independent auditor’s report on the Consolidated Non-Financial Statement pursuant to article 3, paragraph 10, of Legislative Decree No. 254/2016 and article 5 of CONSOB Regulation No. 20267
Pursuant to article 3, paragraph 10, of Legislative Decree No. 254 of 30 December 2016 (hereafter, the “Decree”) and article 5 of CONSOB Regulation No. 20267, we have performed a limited assurance engagement on the consolidated non-financial statement of Poste Italiane SpA (hereafter, also the “Parent Company”) and its subsidiaries (hereafter, the “Group”) for the year ended 31 December 2017 prepared in accordance with article 4 of the Decree, presented in the specific section No. 6 of the report on operations to the consolidated financial statements of the Group, and approved by the Board of Directors on 29 March 2018 (hereafter, the “NFS”).
Management is responsible for the preparation of the NFS in accordance with article 3 and 4 of the Decree and with the “Global Reporting Initiative Sustainability Reporting Standards” issued in 2016 by GRI - Global Reporting Initiative (hereafter, the “GRI Standards”), identified by them as the reporting standards.
Management is responsible, in the terms prescribed by law, for such internal control as management determines is necessary to enable the preparation of a NFS that is free from material misstatement, whether due to fraud or error.
Management is responsible for defining the business and organisational model of the Group and, with reference to the matters identified and reported in the NFS, for the policies adopted by the Group and for the identification and management of risks generated and/or faced by the Group.
Those charged with governance are responsible for overseeing, in the terms prescribed by law, compliance with the Decree.
We are responsible for expressing a conclusion, on the basis of the work performed, regarding the compliance of the NFS with the Decree and the GRI Standards. We conducted our engagement in accordance with International Standard on Assurance Engagements 3000 (Revised) – Assurance Engagements Other than Audits or Reviews of Historical Financial Information (hereafter “ISAE 3000 Revised”), issued by the International Auditing and Assurance Standards Board (IAASB) for limited assurance engagements. The standard requires that we plan and apply procedures in order to obtain limited assurance that the NFS is free of material misstatement. The procedures performed in a limited assurance engagement are less in scope than those performed in a reasonable assurance engagement in accordance with ISAE 3000 Revised, and, therefore, do not provide us with a sufficient level of assurance that we have become aware of all significant facts and circumstances that might be identified in a reasonable assurance engagement.
2. Analysis and assessment of the criteria used to identify the consolidation area, in order to assess their compliance with the Decree.
3. Understanding of the following matters: • business and organisational model of the Group with reference to the management of the matters specified by article 3 of the Decree; • policies adopted by the Group with reference to the matters specified in article 3 of the Decree, actual results and related key performance indicators; • main risks generated and/or faced by the Group with reference to the matters specified in article 3 of the Decree.
With reference to those matters, we compared the information obtained with the information presented in the NFS and carried out the procedures described under point 4, a) below.
4. Understanding of the processes underlying the preparation, collection and management of the significant qualitative and quantitative information included in the NFS. In particular, we held meetings and interviews with the management of Poste Italiane SpA and with the personnel of Poste Vita SpA, SDA Express Courier SpA, Postel SpA, Mistral Air SpA and Poste Mobile SpA, and we performed limited analyses of documentary evidence, to gather information about the processes and procedures for the collection, consolidation, processing and submission of the non-financial information to the function responsible for the preparation of the NFS.
Based on the work performed, nothing has come to our attention that causes us to believe that the NFS of Poste Italiane Group for the year ended 31 December 2017 is not prepared, in all material respects, in compliance with articles 3 and 4 of the Decree and with the GRI Standards.