Certificates outstanding and on Class III and V insurance policies pursuant to the new law referred to in section A8.
 Tax due on insurance provisions relates to Poste Vita SpA and is described in section A8.
This item includes:  €12 million, reflecting payables arising from pension payments made by the MEF to former Poste Italiane
Company’s advance collection of the rental on a thirty-year lease of a pneumatic postal structure in Rome.
Revenue from Postal and Business Services breaks down as follows: tab. C1.1 - Revenue from Postal and Business Services (€m)
 Automated franking by third parties or at post offices, relates to revenue from the mailing of correspondence franked by customers or at post offices using a franking machine.
 Revenue from electronic document management and e-procurement services relates to the distribution and supply of stationery, forms and printed documents by the subsidiary, Postel SpA.
USO. Compensation for services rendered in 2015 was recognised in the amount of €262 million, reflecting the provision made in the state budget for the purposes provided for by article 1 paragraph 274 of Law 190/2014 (2015 Stability Law) which were unchanged at the reporting date. To this end, reference is made to note 2.4 – Use of estimates and A7.3 – Due from the MEF. The remaining amount due of €279 million reflects revenue previously written down in provisions for doubtful debts due from the MEF, after the Ministry made new provision to honour previous contractual obligations.
 Electoral tariff subsidies concern the sums payable by the State in relation to the reductions and subsidies to which candidates in election campaigns are entitled (Law 515/93).
Revenue from Financial Services - which relate mainly to services rendered by the Parent Company’s
 Income from the investment of postal current account deposits breaks down as follows:
tab. C1.3 - Income from investment of postal current accounts deposits (€m)
Net remuneration of own liquidity recognised in finance income and costs - -
Remuneration of postal current account deposits represents accrued interest for the year on amounts deposited with the MEF, including net differentials swapped in relation to the forward purchases and spot sales described in section A5 designed to smooth out returns on the deposits with the MEF.
 Income from delegated services primarily regards amounts received by the Parent Company for the payment of pensions and vouchers issued by INPS (€60 million) and for the provision of treasury services on the basis of the agreement between Poste Italiane SpA and the MEF (€57 million).
 Other products and services mainly reflect fees deriving from the processing of tax payment forms (F24)
Decemb er 2014 * Insurance premium revenue is reported net of outward reinsurance premiums
Income from financial assets at fair value through profit or loss 567 705
Other operating income relates to the following: tab. C4 - Other operating income (€m)
National Statistics). Lease terms are generally six years, renewable for a further six. Renewal is assured from the clause stating that the lessor "waives the option of refusing renewal on expiry of the first term", by which the lessor, once the agreement has been signed, cannot refuse to renew the lease, except in cases of force majeure. The Parent Company has the right to withdraw from the contract at any time, giving six months’
Raw, ancillary and consumable materials and goods for resale tab. C5.3 - Raw, ancillary and consumable materials and goods for resale (€m)
Change in inventories of raw, ancillary and consumable materials [tab. A6] 4 (1)
Other interest expense refers to interest paid on the different types of deposits taken by BdM-MCC SpA, including the positive differences arising on fair value hedge transactions undertaken with respect to bonds in issue (note B8).
C6 – NET MOVEMENT IN TECHNICAL PROVISIONS FOR INSURANCE BUSINESS AND OTHER
Claim expenses and movement in other provisions - Non-life 27 22
The table below provides a breakdown of this item: tab. C7 - Other expenses from financial and insurance activities (€m)
Personnel expenses include the cost of staff seconded to other organisations. The recovery of such expenses, determined by the relevant chargebacks, is posted to “Other operating income”. Personnel expenses break down as follows: tab. C8 - Personnel expenses (€m)
Compensation to Directors to discharge their duties amount overall to €2 million (€3.4 million in 2014), of which €0.2 million relates to expenses (€0.1 million in 2014).
Industrial patents and intellectual property rights,concessions, lincenses, trademarks and similar rights 212 248
Tot al employees on permanent cont ract s( * ) 139,730 142,221 137,601 140,040
Capitalised costs and expenses break down as follows: tab. C10 - Increases relating to assets under construction (€m)
Net provisions and losses on doubtful debts (uses of provisions) (42) 90
Net provisions for risks and charges made/(released) 89 93 for disputes with third parties [tab. B6] 41 46 for non-recurring charges [tab. B6] 46 29 for other risks and charges [tab. B6] 2 18
Municipal property tax, urban waste tax and other taxes and duties 68 73
Income from financial assets at fair value through profit or loss (1) - 14
Finance costs on financial liabilities 59 65 on loans from Cassa Depositi e Prestiti - 5 on borrowings from financial institutions 8 13 on derivative financial instruments 1 7
For the purposes of reconciliation with the statement of cash flows, for 2015 finance costs, after foreign exchange losses sundry finance costs on available-for-sale financial assets, amount to €101 million (€111 million in 2014).
This item breaks down as follows: tab. C13 - Income tax expense (€m)
The tax rate for 2015 is 40.77% and consists of: tab. C13.1 - Reconciliation between theoretical and effective IRES rate
Adjustments for change in IRES tax rate introduced by 2016 Stability Law 23 2.49% - 0.00%
Decemb er 2014 tab. C13.2 - Reconciliation between theoretical and effective IRAP rate
Net provisions for risks and charges and bad debts (12) -1.32% 7 0.99%
Realignment of tax bases and carrying amounts and taxation for previous years (1) -0.10% (3) -0.37%
Non-recurring income/(expenses) for deferred taxes recycled to profit or loss (24) -2.54% - 0.00%
Current tax assets and liabilities tab. C13.3 - Movements in current tax assets/(liabilities ) (€m)
In the second half of 2015, direct tax credits of €518 million (plus interest of €28 million) were collected. In addition, adjustments to tax credits previously recognised, amounting to €9 million (included among net nonrecurring expense/(income) were made, following recalculation performed after the payment received from the tax authorities. Interest accrued during the year of €4 million was recognised in “Finance income” (tab.
Deferred tax assets and liabilities tab. C13.4 - Deferred taxes (€m)
Non-recurring income/(expenses) recognised in profit or loss due to adjustment to IRES rate (24) -
Non-recurring income/(expenses) recognised in equity due to adjustment to IRES rate 119 -
Furthermore, article 1 of the 2016 Stability Law (Law 208/2015), has cut the IRES rate to 24% from 1 January 2017 for financial years starting after 31 December 2016. For this reason, the accounts for the year ended 31
December 2015 show net non-recurring income recognised in profit or loss of €24 million and net nonrecurring income for deferred taxation recognised in equity of €119 million, due to the adjustment to the new
The following table shows a breakdown of movements in deferred tax assets and liabilities: tab. C13.6 - Movements in deferred tax assets (€m)
Provisions for impairment s and valu e ad ju st ment s
Act u ar ia l gains and losses on employee t erminat ion b enefit s
Income/(expenses) recognised in profit or loss 1 1 (2) (40) 44 1 - - 5 10
Non-recurring income/(expenses) recognised in profit or loss - - - 24 - - - - - 24
Income/(expenses) recognised in equity - - (73) - - - - - - (73)
Income/(expenses) recognised in profit or loss - (2) 20 (6) - 18 30
Income/(expenses) recognised in profit or loss - - 39 - - (11) 28
Income/(expenses) recognised in profit or loss due to adjustment to IRES rate - - (5) - - (2) (7)
Income/(expenses) recognised in equity - - 230 - - - 230
Income/(expenses) recognised in equity due to adjustment to IRES rate - - (128) - - - (128)
The Postal and Business Services segment also earns revenue from the services provided by the various Poste
Italiane SpA functions to BancoPosta RFC. In this regard, separate General Operating Guidelines have been developed and approved by Poste Italiane SpA’s Board of Directors which, in implementation of BancoPosta
The following results, which are shown separately in accordance with management’s views and with applicable accounting standards, should be read in light of the integration of the services offered by the sales force within the postal, financial and insurance businesses, also considering the obligation to carry out the
Postal and Business Services include also the activities performed by the various departments of the Parent Company in managing Bancoposta’s ring-fenced capital and the other areas in which the Group operates. In addition, this segment includes the operations of Postel SpA, SDA SpA, Poste Tributi Scarl, Mistrail Air Srl and Postecom SpA. Financial Services refer to Bancoposta’s activities provided for by Presidential Decree 144 of 14 March 2001, to which the ring-fenced capital is allocated within the Parent Company. In addition, this segment includes the operations of BdM-MCC SpA and BancoPosta Fondi SpA SGR. Insurance Services concern the operations of Poste Vita Group. Other Services include the mobile telephony operations of PosteMobile SpA. However, it should be borne in mind that, following recent organisational changes, starting from 2016, the allocation of certain companies to the relevant segments will vary. Specifically, BancoPosta Fondi SGR SpA, which is currently part of the Financial Services segment, will be allocated to Asset Management - i.e. the current Insurance Services – whilst Poste Tributi ScpA - currently part of Postal and Busines Services – will be placed in the Financial Services segment.
The impact of related party transactions on the financial position and results of operations is shown below.
tab. 3.5.1 - Impact of related party transactions on the financial position at 31 December 2015 (€m)
Provision for doubtful debts owing from external related parties - (157) (10) - - - -
Ot her income from financia l and insu rance act ivit ies
Other related parties external to the Group 23 4 2 - - - 17 40 4 -
 Amounts received from the MEF relate primarily to payment for carrying out the USO, the management of postal current accounts, as reimbursement, with reference to previous years, for electoral tariff reductions and subsidies, and as payment for delegated services, integrated e-mail services, the franking of mail on credit, for collection of tax returns and for collection and accounting of electronic payments.
 Amounts received from the Equitalia Group primarily relate to payment for the integrated notification service and for unfranked mail. The costs incurred primarily relate to electronic transmission of tax collection data.
 Purchases from the Finmeccanica Group primarily relate to the supply, by Selex ES 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 and software maintenance, and the supply of software licences and of hardware.
The Parent Company and its subsidiaries that apply the National Collective Labour Contract are members of the Fondoposte Pension Fund, the national supplementary pension fund for non-managerial staff. As indicated in article 14, paragraph 1 of Fondoposte’s By-laws, the representation of members among the various officers and boards (the General Meeting of delegates, the Board of Directors, Chairman and Deputy
Chairman, Board of Statutory Auditors) is shared equally between the workers and the companies that are members of the Fund. The Fund’s Board of Directors takes decisions including:  the general criteria for the allocation of risk in terms of investments and investment policies;  the choice of fund manager and custodian bank.
At 31 December 2015, the Poste Italiane Group's net debt/(funds) is as follows: At 31 December 2015, the fair value reserves related to available-for-sale financial assets, not including tax effects, amount to €3,775 million (€2,651 million at 31 December 2014).
Techn ical provisions for insu rance b u siness - - ( 100,314) - - ( 100,314) -
Financial assets at fair value through profit or loss - - 18,132 - - 18,132 569
Cash and d eposit s at t r ib u t ab le t o BancoPost a - 3,161 - - - 3,161 -
Techn ical provisions for insu rance b u siness - - ( 87,220) - - ( 87,220) -
Financial assets at fair value through profit or loss - - 12,155 - - 12,155 551
Net f inancial assets/( l iabi l i t ies) ( 1,786) ( 8) 1,631 15 312 164 -
Cash and d eposit s at t r ib u t ab le t o BancoPost a - 2,873 - - - 2,873 -
Cash and cash equ ivalent s 305 1,040 656 15 ( 312) 1,704 934
I . Cu rrent financia l liab ilit ies ( F+G+H) ( 551) ( 1,388)
Ind u st r ia l net d eb t inclu d ing in t ersegment t ransact ions 302 ( 1,451)
Level 1 Level 2 Level 3 Tot al Level 1 Level 2 Level 3 Tot al
Reclassifications from level 2 to level 1 concerned corporate bonds recognised as available-for-sale financial assets and coupon-stripped Italian government bonds given that the liquidity of the markets where they are traded justified their transition to level 1.
Net transfers from level 1 to level 2 ( 320) 320
Movements during the year relate to purchases and sales of financial instruments held by the Group’s insurance companies and almost entirely consisting of units of closed-end private equity funds and real estate funds. In the case of these instruments, the fair value of the underlying, represented by unlisted equities and investment property, cannot be determined on the basis of observable inputs. Therefore, as measurement of these instruments is analytical, the non-observable inputs that determine significant changes in their fair value depend on the specific valuation methodologies applicable to private equity funds and real estate funds. For example, attention is paid to the economic context in which the funds’ portfolio companies operate, their operating costs and their revenue, while for properties the focus is on the prices at which they are bought and sold in the markets of reference and/or generated and expected cash flows. On the other hand, the net asset value of private equity funds - as reflected in their audited financial statements made available quarterly and adjusted by Poste Vita, partly on the basis of the units outstanding and any dividends paid - shows a positive correlation with key indicators for the industries in which the funds have the largest exposures
(energy, small and medium enterprises, corporate restructuring). Specifically, private equity investments are positively linked to the real performance of the overall economy and equity indices on which the shares of listed companies belonging to the same economic sector are quoted. The net asset value of the real estate funds, which are also subject to adjustments by the Company, depends on the performance of the European property market, especially office buildings, which constitute the bulk of the investments made by the real estate funds in which it has invested.
In particular, the disclosures in question concern the following positions at 31 December 2015:  derivative assets and liabilities and related collateral, represented by both cash and government securities;  repurchase and reverse repurchase agreements and related collateral, represented by both cash and government securities;  borrowings and related government securities provided as collateral for transactions entered into by
In accordance with IFRS 7 – Financial Instruments: Disclosures, this section provides additional information on the transfer of financial assets that are not derecognised (continuing involvement). At 31 December 2015, these assets concern the repurchase agreements entered into by the Parent Company with primary financial intermediaries.
Tot al at 31 Decemb er 2014 182 ( 8,873) - ( 8,691) 7,040 742 809 ( 100)
Financial liabilities arising from repos [B8] (510) (510) (510) (564) (564) (564)
Future commitments related to property leases, which may generally be terminated with six months’ notice, break down by due date as follows: tab. 3.7.3 a) - Commitments for property leases (€m)
Unsecured guarantees issued by the Group are as follows: tab. 3.7.4 - Guarantees (€m)
Su ret ies and ot her gu arant ees issu ed : by banks/insurance companies in the interests of Group companies in favour of third parties 281 261 by the Group in its own interests in favour of third parties - -
At 31 December 2015, the Parent Company had paid a total of €119 million in claims on behalf of the Ministry of Justice, for which, under the agreement between Poste Italiane SpA and the MEF, it has already been reimbursed by the Treasury, whilst awaiting acknowledgement of the relevant account receivable from the
The attestation services rendered by PricewaterhouseCoopers SpA regarded mainly the engagement performed in connection with Poste Italiane’s IPO.
In addition, fees paid in 2015 for auditing services provided by firms other than PricewaterhouseCoopers SpA
At 31 December 2015, the above definition encompasses the following:  BlackRock MultiAssets diversified distribution fund (Open-end Fund)
 MFX – Global Multi – Asset Income Fund – PIMCO (Open-end Fund)
The purpose of Poste Vita’s investment in the funds is to diversify its portfolio of financial instruments intended to cover Class I products (Separately Managed Accounts), with the objective of mitigating the concentration
of investments in Italian government bonds and euro-denominated corporate bonds. Details are provided below.
The table below shows the types of financial instruments in which the BlackRock and MFX – PIMCO Funds invest and the main markets of reference.
Nat u re of involvement in t he u nconsolid at ed st ru ct u red ent it y
Investment in a mix of asset classes, especially debt instruments of various sectors and countries
Pursuit of absolute returns, with low longterm volatility and correlation with the main financial markets
Financial asset FVPL 3,873 515 3,358 Analytical VaR 99.5% over 1-year
Available-for-sale financial assets 21 10 11 VaR 99.5% over a 1-year time horizon
Change between market price as of reporting date and nominal value
IT0004801996 TAGES CAPITAL PLATINUM Available-for-sale financial assets 216 57 159 VaR 99.5% over a 1-year time horizon
Difference b et ween carrying amou nt and maximu m loss exposu re
B lackRock Diversified Dist r ib u t ion Fu nd
Details of this item are as follows: tab. 3.8.1 - List of investments consolidated on a line-by-line basis (€000)
SDS System Data Software Srl (Rome) (*) 100.00% 16 269 2,816
Italia Logistica Srl was merged with and into SDA Express Courier SpA, effective 1 June 2015 for tax and accounting purposes. The period loss, related to the first 5 months of 2015, was €1,376 thousand.
(a) Data derived from the consolidated accounts for the period ended 30 September 2015, the latest approved by the company. (b) Data derived from the accounts for the period ended 31 December 2014, the latest approved by the company.
(c) Data derived from the accounts for the period ended 31 December 2013; Group companies do not hold any equity interests in Programma Dinamico SpA.
(d) The other associates of the SDA Express Courier Group are: Epiemme srl (dormant), International Speedy Srl (in liquidation), MDG Express
Srl, Speedy Express Courier Srl and T.W.S. Express Courier Srl. (*) The amount includes commissions, interest income and other similar income.
LIABILITIES AND EQUITY Note 2015 of which, related party transactions of which, related party transactions
Cash and deposits attributable to BancoPosta [A9] - 3,160,654,030 - 3,160,654,030
Note 2015 of which, related party transactions of which, related party transactions
Increase/(decrease) in fair value during the year [tab. B3] 1,531,496,129 1,790,690,934
Increase/(decrease) in fair value during the year [tab. B3] 12,721,107 143,870,358
Items not to be reclassif ied in the Statement of profit or loss for the year
Actuarial gains/(losses) on provisions for employee termination benefits [tab. B5] 78,728,915 (170,907,158)
Total comprehensive income for the year - - - 1,065,760,966 66,210,759 (67,015,400) 1,064,956,325
Attribution of profit to reserves - - - - - - -
Recognition of Receivable authorised by 2015 Stability Law in implementation of sentence of the European Court1 of which attributable to BancoPosta RFC - - 1,000,000,000 1,573,116,374 48,016,424 1,235,728,568 3,856,861,366
Changes due to share-based payments - - - - - 552,284 552,284 of which attributable to BancoPosta RFC - - 1,000,000,000 2,499,982,110 8,463,736 1,533,707,577 5,042,153,423
Use of provisions for risks and charges [tab. B4] (390,820) (232,852)
Cash generated by/(used in) movements in working capital [b] 2,223,321 (251,587)
(Income)/Expenses and other non-cash components attributable to financial activities (926,509) (867,508)
Cash generated by/(used for ) f inancial assets and l iabil ities attr ibutable to
Disposals: Property, plant and equipment, investment property and assets held for sale 3,576 2,066
Cash and cash equivalents at end of year [tab. A10] 1,519,733 985,536
As required by art. 2, paragraphs 17-octies et seq. of Law 10 of 26 February 2011, converting Law Decree 225 of 29 December 2010, in order to identify ring-fenced capital for the purposes of applying the Bank of Italy’s prudential requirements to BancoPosta’s operations and for the protection of creditors, at the General
The separation of BancoPosta from Poste Italiane SpA is only partly comparable to other ring-fenced capital solutions. Indeed, BancoPosta is not expected to meet the requirements of articles 2447 bis et seq. of the
 the collection of all forms of savings deposit from the public in accordance with art. 11, para. 1 of
Legislative Decree 385/1993 of 1 September 1993 - Consolidated Banking Law (Testo Unico Bancario, or
All of the assets and rights arising out of various contracts, agreements and legal transactions related to the above activities have also been conferred on BancoPosta RFC
. Funds deposited by Public Administration entities are, instead, deposited with the Ministry of the Economy and Finance and earn a variable rate of return linked to a basket of government securities and money market indices, in accordance with a specific agreement with the MEF
regarding treasury services, signed on 27 March 2015 and covering the three-year period 2014-2016. In addition, under the agreement with the MEF, renewed on 11 June 2014 for the three-year period 2014 2016, a percentage of the funds deriving from private customer deposits may be placed in a special "Buffer"
a. Contracts for the collection of savings from the public, both in the form of deposits (e.g., postal current accounts) and the related services (e.g., issuance of postal cheques, payment of bills by payment slip and direct debits) and in other forms; b. Contracts for the provision of payment services including the issuance, management and sale of payment cards, including prepaid cards (e.g., “postamat”, “postepay”), acquiring services and money transfers (e.g., post office money orders); c. Investment services contracts (e.g., brokerage, distribution and investment advisory services) and related services (e.g., securities custody); d. Agreements with Cassa Depositi e Prestiti SpA in connection with collection of savings through postal securities and deposits; e. Agreements with approved banks and brokers for the promotion and lending to the public (e.g. mortgages, personal loans); f. Agreements with approved banks and brokers for acquiring and payment services; g. Agreements with approved brokers to promote and place financial instruments, bancassurrance and insurance products (e.g., share, bond and mutual fund subscriptions, life and non-life insurance); h. Other agreements relating to bancoposta services; i. Contracts and related legal arrangements with Bancoposta employees belonging to a separate cost centre; j. Contracts with suppliers to the bancoposta costs centre and related legal arrangements; k. Shares and investments in companies, consortia, payment/credit card issuers or money transfer service companies; l. Euro area government securities and securities guaranteed by the Italian government, held pursuant to art. 1, paragraph 1097 of Law 296 of 27 December 2006, as amended, and the related valuation reserves, including hedging derivatives; m. Accounts payable (e.g., postal current accounts) and receivable in connection with the above points; n. Intersegment accounts payable and receivable respectively to and from Poste Italiane; o. Deferred tax assets and liabilities relating to bancoposta; p. Post office and bank account cash balances associated with bancoposta operations; q. "Buffer" account at the Treasury, Ministry of the Economy and Finance; r. Cash deposits at the Treasury, Ministry of the Economy and Finance relating to Public Administration balances held in post offices; s. Cash and cash equivalent in connection with bancoposta operations; t. Litigation relating to bancoposta and associated settlements; u. Provisions in connection with BancoPosta RFC's contractual and legal obligations. 68
1, paragraph 285 of the 2015 Stability Law (Law 190 of 23 December 2014), it became possible for BancoPosta RFC to invest up to 50% of its deposits in securities guaranteed by the Italian government.
Given the fact that Poste Italiane is a single legal entity, the Company's general accounting system maintains its uniform characteristics and capabilities. In this context, the general principles governing administrative and accounting aspects of BancoPosta RFC are as follows:  identification of transactions in Poste Italiane SpA's general ledgers relating to BancoPosta's ring-fenced operations which are then extracted for recording in BancoPosta's separate ledgers;  allocation to BancoPosta of all relevant revenues and costs. In particular the services rendered by the different functions of Poste Italiane SpA to BancoPosta RFC, are exclusively recorded as payables in
BancoPosta’s separate books, in special accounts only, and subsequently settled;  settlement of all incoming and outgoing third party payments by Poste Italiane SpA’s Chief Financial
Office;  allocation of income taxes based on BancoPosta's separate income statement after adjusting for deferred taxation;  reconciliation of BancoPosta's separate books to Poste Italiane's general ledger;  the activities – or services – carried out by the various departments within Poste Italiane SpA on behalf of
SpA’s Board of Directors. In implementation of Banco Posta RFC’s Regulation, these General Guidelines identify the services in question and determine the manner in which they are remunerated.
The services provided by Poste Italiane to BancoPosta are subdivided into three macro areas in accordance with their nature:  Commercial activities, represented by the sale of BancoPosta products and services to all customer segments.
The general policies and instructions contained in the General Guidelines in relation to transfer pricing are detailed in separate Operating Guidelines, jointly developed by BancoPosta and the Issuer’s other functions.
70 Until 31 December 2014, the services were governed by "General Operating Guidelines", which have been replaced by the "General Guidelines governing the process of contracting out BancoPosta’s corporate functions to Poste Italiane" approved by Poste Italiane’s Board of Directors on 27 May 2015.
The transfer prices set out in the Operating Guidelines, which were revised in 2015, are determined according to objective criteria that reflect the real contribution of the various functions to BancoPosta RFC’s results. In this regard, the transfer prices paid, inclusive of commissions and any other form of remuneration due, are determined on the basis of market prices and tariffs for the same or similar services, identified, where possible, following a benchmarking process. When the specifics and/or the particular nature of a service provided by one of the Issuer’s functions do not allow the use of a comparable market price, a cost-based method is used, again with the support of benchmarking to ensure that the price charged is adequate for the service provided. In this case, an appropriate mark-up, determined with reference to those used by comparable peers, is applied. The resulting transfer prices are reviewed annually.
The following table includes a summary of the services provided to BancoPosta RFC by the Issuer’s functions, with a brief indication of how the transfer prices are determined.
Poste Office Network Percentage of revenue generated Penalties for failure to meet predetermined quality standards
Mail and Logistics Services Prices for mail sent to customers and internal mail
In this regard, the new Operating Guidelines for 2015, relating to essential operating functions and control functions, were submitted to the Bank of Italy in accordance with the Supervisory Standards and the 60-day term, within which the authority may initiate an administrative procedure blocking implementation, has expired.
The cost of the services rendered by Poste Italiane functions outside the ring-fence, and the revenue earned from the latter by BancoPosta, contribute to BancoPosta's results. The relevant transactions, profit and loss and balance sheet 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.
Pursuant to art. 2, paragraph 17-undecies of Law Decree 225 of 29 December 2010
Retained earnings 1,534 (2) 949 587 Net profit for period 1,536 - 949 587
Cumulative actuarial gains/(losses) on defined benefit plans (2) (2) - -
BancoPosta RFC, on approval of Poste Italiane SpA’s financial statements, the General Meeting shall – on the recommendation of the Board of Directors – vote on the appropriation of the Company’s profit for the year, and in particular: the share attributable to BancoPosta RFC, as indicated in the Separate Report, taking account of specific regulatory aspects and, above all, the need to comply with prudential capital adequacy requirements (…)”.
Movements in property, plant and equipment are as follows: None of the above items is attributable to BancoPosta RFC.
At 31 December 2015, 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, with a carrying amount of €84 million.
Asset s u nd er const ru ct ion and prepayment s
 €33 million relating to plant, of which €25 million for plant and equipment related to buildings and €6 million for the installation and extraordinary maintenance of video surveillance systems;  €23 million to upgrade plant (€13 million) and the structure (€10 million) of properties held under lease;  €75 million relating to “Other assets”, including €64, million for the purchase of new computer hardware for post offices and head offices and the consolidation of storage system, €6 million for the purchase of furniture and fittings in connection with the new layouts for post offices and €2 million to renew the equipment used in mail delivery;  €36 million relating to assets under construction, of which €15 million to purchase hardware and other technological equipment not yet operational,€9 million relate to the restyling of post offices, €9 million to the restructuring of head offices, and €2 million to the renovation of primary distribution centres.
Reversals of impairment losses are due to changes in estimates relating to owned industrial buildings
(property used in operations) and leased commercial buildings (leashold improvements) for which account was taken, prudentially, of the effects of reduced utilisation or removal from the production cycle in future on the relevant value in use (note 2.4 – Use of estimates).
Most of the properties included in this category are subject to lease agreements classifiable as operating leases, given that Poste Italiane SpA retains substantially all the risks and rewards of ownership of the properties. Under the relevant agreements, tenants usually have the right to break off the lease with sixmonth notice. Given the resulting lack of certainty, the expected revenue flows from these leases are not referred to in these notes.
The following table shows movements in intangible assets: None of the above items is attributable to BancoPosta RFC.
The balance of intangible assets under construction includes activities primarily regarding the development for software relating to the infrastructure platform (€19 million), for BancoPosta services (€19 million), for the postal products platform (€10 million, for use in providing support to the sales network (€5 million) and for the re-engineering of reporting processes for other business and staff functions (€4 million).
This item includes the following: No investments are attributable to BancoPosta RFC.
Movements in investments in subsidiaries and associates are as follows: tab. A4 - Investments (€m)
Ad d it ions Ad ju st ment s Balance at 31 Decemb er
 The injection of €9 million of capital into PosteShop SpA to cover losses incurred through to 31 December 2014 and establish an extraordinary reserve, as approved by the extraordinary general meeting of the investee company’s shareholders on 21 April 2015, in part via use of the “Other provisions for risks and charges” made in 2014 (€8 million).
 The injection of €40 million into SDA Express Courier SpA to cover the losses incurred by the subsidiary through to 30 June 2015 and establish an extraordinary reserve, as approved by the extraordinary general meeting of the investee company’s shareholders on 3 August 2015.
Cons. Servizi di Telefonia Mobile ScpA - - - - - - -
Tot al su b sid iar ies 1,811 243 - - - ( 25) 2,029 in associat es
withdrawing member, whilst awaiting settlement, are not included in computation of the quorum for members’ meetings”. At 31 December 2015, whilst awaiting settlement, the carrying amopunt of the investment has been adjusted to reflect the expert appraisal, the related impact has been acounted for in profit or loss and the remaining amount reclassified to “Available-for-sale investments”.
In addition, on 6 October 2015, Poste Italiane SpA transferred its 100% interest in Poste Energia SpA to EGI
Finally, after the end of the year under review, on 26 Janury 2016, the Company’s Board of Directors approved the partial demerger of PosteMobile SpA’s fixed line telecommunications business to Poste Italiane.
The transaction was approved by the Board and not by a general meeting of shareholders (as it is subject to the simplified requirements applicable to demergers involving a wholly owned company, as specified below), in accordance with article 20.2 of the Company’s Bylaws and articles 2505, paragraph 2 and 2506-ter, paragraph 5 of the Italian Civil Code. The demerger was also approved by an extraordinary general meeting of PosteMobile’s shareholders.
tab. A4.2 - List of investments in subsidiaries and associates (€000)
Difference b et ween equ it y and carrying amou nt
Banca del Mezzogiorno-MedioCredito Centrale SpA 100.00 364,509 32,427 425,511 425,511 371,978 53,533
Financial assets attributable to BancoPosta break down as follows at 31 December 2015.
At 31 December 2015, loans of €417 million in buy & sell back transactions involving government securities with a notional value of €400 million, entered into with leading bank counterparties and relating to the shortterm investment of liquidity.
The variable rate in question is calculated as follows: 50% on the basis of yields of 6-month BOT and the remaining 50% on the basis of the monthly average of Rendistato, a rate reflecting the average interest rate paid by Italian government bonds with maturities ranging from 2 to 7 years.
Non-cu rrent asset s Cu rrent asset s Tot al tab. A5.1 - Loans and receivables (€m)
Amounts deposited with the M EF - 5,855 5,855 - 5,467 5,467
the underlying securities at maturity but with settlement of the difference between the forward price of the securities and their market value.
 MEF on behalf of the Italian Treasury, amounting to €1,331 million, consisting of: The balance of cash flows for advances, amounting to €1,693 million, represents the net amount receivable as a result of transfers of deposits and excess liquidity, less advances from the MEF to meet the cash requirements of BancoPosta. These break down as follows: The amount in question is significantly higher than at 31 December 2014 due to the combined effect of the revised payment schedule for ex-INPDAP pensions, whereby increased payments credited to the paying agency INPS, accounted for under “Payables due to current account holders”, are reflected in increased receivables due from the Treasury.
Amounts payable for operational risks (€34 million) regard the portion of advances obtained to fund the operations of BancoPosta, relating to advances for transactions for which there were insufficient funds, and for which reversal is certain or probable.
Investments in securities relate to investments in fixed-income euro area government securities, consisting of
Changes in fair value through equity - - - 1,759 - - - 1,759
Changes in fair value through profit or loss - - - 1,328 - - - 1,328
Effect of sales on profit or loss - - - 392 - - - 392
Changes in fair value through profit or loss - - - (432) - - - (432)
Changes in cash flow hedge transactions - - - - - - - -
Effect of sales on profit or loss - - - 385 - 1 - 386
Accrued income for current year - 187 - 302 - - - 489
Sales and settlement of accrued income - (208) (2,945) (3,724) (3,977) (4,213) (6,922) (8,145)
Securities with a nominal value of €497 million are encumbered, as they have been delivered to counterparties for use as collateral in connection with repurchase agreements.
On 31 December 2015, the Company subscribed to two fixed-rate bonds, in the amount of €750 million each, with six-monthly interest payments and maturing in 4 and 5 years, issued by Cassa Depositi e Prestiti and guaranteed by the Italian government.
Equity instrments include:  €111 million, relating to the fair value of an ordinary share in Visa Europe Ltd, previously allocated to
Poste Italiane SpA at the time of the company’s incorporation and, at that time, accounted for at a nominal value of €10.00. At 31 December 2015, the fair value of the investment has been adjusted to take into account the likely impact of the acquisition and merger of Visa Europe Ltd with the USregistered company, Visa Incorporated. As announced on 21 December 2015, Visa Europe has informed its Principal Members that each of them will be paid a consideration and, at that date, the amount due to
shares, which are listed on the New York Stock Exchange, if disposal is desired;  €3 million relating to the fair value of 11,444 class C shares in Visa Incorporated. These equity instruments are not quoted on a regulated market but may be converted into an equal number of Class A shares, which are listed on the New York Stock Exchange, if disposal is desired.
Movements in derivative financial instruments are as follows: * Increases / (decreases) refer to the nominal value of new transactions and changes in the fair value of the overall portfolio during the year.
** Gains and losses through profit or loss refer to any ineffective components of hedges, recognised in other income and other expenses from financial activities.
*** Transactions settled include forward transactions settled, accrued differentials and the extinguishment of asset swaps linked to securities sold.
Regarding derivative instruments recognised at fair value through profit or loss, the Company entered into new contracts with a total notional amount of €108 million, to generate a fixed return, for 2015, on the public customers’ current account deposits deposited with the MEF, the majority shareholder, which earn a variable rate of return (tab. A5.1). These transactions generated gains of €4 million during the year, recognised in profit or loss (tab. C1.2.1).
notional fair value notional fair value notional fair value notional fair value notional fair value notional fair value
This item consists of two irredeemable subordinated loans of €400 million, issued to Poste Vita SpA in order to bring the subsidiary’s capitalisation into line with expected growth in earned premiums, in compliance with the specific regulations governing the insurance sector.
Non-current loans also include €78 million (nominal amount €75 million) in Contingent Convertible Notes subscribed on 23 December 2014 by Poste Italiane SpA, in connection with the strategic transaction that resulted in Etihad Airways’ acquisition of an equity interest in Alitalia SAI SpA
These loans break down as follows: This is a loan convertible, on the fulfilment of certain negative pledge conditions, into an equity instrument pursuant to art. 2346 of the Italian Civil Code, carrying the same rights associated with the loan. 78
, refers to the repayment of loans provided in the past by Cassa Depositi e Prestiti to the former Postal and Telecommunications Administration. At 31
December 2015, the fair value of the receivable, which is expected to be collected by 2016, is €3 million.
Banca del Mezzogiorno-MedioCredito Centrale SpA 200 - 200 200 - 200
Accrued interest on non-current loans 3 - 3 4 - 4
This item regards BTPs with a total nominal value of €500 million (a fair value of €569 million). Of these, instruments with a value of €375 million have been hedged using asset swaps designated as fair value hedges. Securities with a nominal value of €450 million are encumbered, as they have been delivered to counterparties in repurchase agreements (tab. B7.1).
This item relates to units of equity mutual investment funds with a fair value of €6 million.
Changes in fair value through profit or loss - - 26 - - 26
Effects of sales on profit or loss - - - - - -
Sales and settlement of accrued income - - (9) - - (9)
Changes in fair value through profit or loss - - (5) - - (5)
At 31 December 2015, outstanding derivative financial instruments report fair value losses of €51 million and include:  nine asset swaps used as fair value hedges in 2010 to protect the value of BTPs with a nominal value of €375 million against movements in interest rates. These instruments have enabled the Company to sell the fixed rate on the BTPs of 3.75% and purchase a variable rate;  a swap contract entered into in 2013 to hedge the cash flows of a €50 million bond issued on 25
Specifically:  Amounts due from Ministries and Public Administration entities refer mainly to the following services: – Integrated Notification and mailroom services, amounting to €246 million rendered to local government authorities (€92 million), Agencies and other central public entities (€78 million),
Security), totalling €61 million; – Presidenza del Consiglio dei Ministri - Dipartimento dell’Editoria (Cabinet Office – Publishing department), totalling €52 million, relating to publisher tariff subsidies for the financial years from
of which attributable to BancoPosta RFC - 795 795 - 1,389 1,389
Cu rrent asset s Tot al tab. A7.1 - Receivables due from customers (€m)
Amounts due for other BancoPosta services - 109 109 - 79 79 of which attributable to BancoPosta RFC - 587 587 - 1,172 1,172
 Receivables from overseas counterparties primarily relates to postal services carried out by the Company for overseas postal operators.
 Receivables arising from Unfranked mail delivered include €92 million in amounts due from customers who use the service on their own behalf and €85 million for amounts due from agents who provide the service for third parties, primarily regarding bulk mail. Collection of these receivables is delegated to the authorised agents who provide the service. €27 million of the total is classified in “Non-current assets”.
 Other trade receivables include: €29 million related to Posta Target services; €27 million for Posta Time services; €24 million generated by parcel post operations; €23 million for Advice and Billing Mail services; €19 million related to Notification of Legal Process service and €17 million for telegraphic services.
Movements in provisions for doubtful debts are as follows: Provisions for doubtful debts relating to Public Sector entities regard amounts that may be partially unrecoverable as a result of legislation restricting government spending, delays in payment and problems at debtor entities. During 2015, part of these provisions was released to income following collection of originally doubtful receivables.
Specifically:  Universal Service compensation includes: As described in note 2.4 above, receivables relating to Universal Service compensation at 31 December 2015 were determined in keeping with the existing subsidy cap mechanism foreseen by the Contratto di
- Regarding the outstanding balance of compensation for 2013, which was collected in full in 2015, with resolution 493/14/CONS of 9 October 2014, AGCom has initiated an assessment of the net cost incurred by the Company. On 24 July 2015, the Authority notified the Company that it will extend the assessment also to financial year 2014.
- With reference to services rendered in 2011, AGCom recognised a sum of €381 million, compared to the €357 million calculated originally by the Company. Provision of €50 million has been made in the state budget for 2016.
 Receivables arising from electoral subsidies refer solely to compensation for previous years.
At 31 December 2015, funds to pay some of the above receivables have not been appropriated in the state budget, which means that the payment is either suspended or deferred (note 2.4 – Use of estimates).
. This amount is balanced by a matching entry in “Other taxes payable” until expiration or
tab. A7.5 - Movements in provisions for doubtful debts due from the MEF (€m)
December 2015 of which attributable to BancoPosta RFC 8 (8) - - - - - - tab. A8 - Other receivables and assets (€m)
Provisions for doubtful debts due from others - (57) (57) - (55) (55)
Ot her receivab les and asset s 866 786 1,652 731 860 1,591
Interest accrued on IRES refund [C10] - 46 46 - 69 69 of which attributable to BancoPosta RFC 716 565 1,281 563 620 1,183
early extinguishment of the Interest bearing Postal Certificates, i.e. the date on which the tax is payable to the tax authorities (tab. B9.3); – €290 million relating to stamp duty to be paid in virtual form in 2016 and to be charged to customers; – €163 million relating to stamp duty to be charged to Postal Savings Book holders, which the
Company pays in virtual form as required by law; – €23 million to withholding tax on interest paid to current account holders for 2015, which is to be recovered from customers.
Details of this item are as follows: Cash at post offices, relating exclusively to BancoPosta RFC, regards cash deposits on postal current accounts, postal savings products (Interest bearing Postal Certificates and Postal Savings Books) or advances obtained from the Italian Treasury to fund post office operations. This cash may only be used in settlement of these obligations. Cash and cash equivalents in hand are held at post offices (€866 million) and companies that provide cash transportation services whilst awaiting transfer to the Italian Treasury (€2,077 million). Bank deposits relate to BancoPosta RFC‘s operations and include amounts deposited in an account with the Bank of Italy to be used in interbank settlements, totalling €216 million.
The item breaks down as follows: At 31 December 2015, cash deposited with the MEF – held in the so-called buffer account – include approximately €217 million in customers’ deposits subject to investment restrictions but not yet invested (note
Bank deposits and amounts held at the Italian Treasury include €1,082 million deposited by the MEF in a noninterest bearing current account at the Italian Treasury on 15 October 2015 and released on 29 December 2015, following the decision of the European Commission on the compatibility of the Service Contract 20152019 with EU rules on state aid. Moreover, bank deposits and amounts held at the Italian Treasury include €11 million whose use is restricted by court orders related to different disputes tab. A9 - Cash and deposits attributable to BancoPosta (€m)
The share capital consists of 1,306,110,000 no-par value ordinary shares, of which the Ministry of the
Economy and Finances holds 64.7%, while the remaining shares are held by institutional and retail investors.
- Cash flow hed ge reserve 9 - retained earnings 949 C
. As the 2016 Stability Law has introduced a reduction in the corporate income tax (IRES) rate from 2017, the tax effects of the payment were accounted for in 2015.
 the cash flow hedge reserve reflects changes in the fair value of the effective portion of cash flow hedges outstanding. In 2015, net fair value gains of €13 million include €12 million attributable to the value of
Pursuant to a ruling of the General Court of the European Union dated 13 September 2013, which found in favour of the Company. 84
Considering that the payment of the the sums determined by the Decision of 2008 was made out of the Company’s retained earnings - which “ideally” included the interest paid on Poste Italiane SpA’s deposits with the MEF, regarded as inappropriate by the European Commission given that it was, in essence, a capital contribution by the State to a State-owned company – the sums returned by the MEF were credited to retained earnings, to the extent provided for in the 2015 Stability Law.
More specifically, with reference to the difference of €45 million between the amount claimed by the Parent
Company and the amount recognised by law, at 31 December 2014 (i) retained earnings were increased up to the limit provided for by the 2015 Stability Law; (ii) the remaining €33 million in interest accrued until 31 December 2013 was written off; and (iii) an adjusment of €9 million was made in relation to interest for the year. In 2015, an adjustment was made in relation to the €3 million accrued until the day the sum was collected.
Increases/(decreases) in fair value during the year - - 1,791 144 1,935
Tax effect of changes in fair value - - (569) (46) (615)
Increases/(decreases) in fair value during the year - - 1,531 13 1,544
BancoPosta RFC’s derivative financial instruments and €1 million attributable to financial instruments held outside the ring-fence.
Movements in provisions for risks and charges are as follows: Specifically:  Provisions for non-recurring charges relate to operational risks arising from BancoPosta’s operations. They primarily regard the liabilities arising from the reconstruction of operating ledger entries at the time of the
Provisions for disputes with staff (1) 181 15 - (21) (36) 139
Movements in provisions for risks and charges in the year ended 31 December 2014 (€m)
Provisions for disputes with staff (1) 221 25 - (25) (40) 181
Provisions for expired and statute barred postal savings certificates of which attributable to BancoPosta RFC 348 56 1 (21) (26) 358
whose characteristics are believed by such customers to not match their profile and/or whose performance is not in line with their expectations and estimated risks for charges and expenses to be incurred in connection with seizures effected by BancoPosta as garnishee-defendant. Provisions for the year primarily reflect liabilities deriving from the wrong application of statute-of-limitation terms, administrative violations and risks related to delegated services. Uses, amounting to €29 million, relate to settlement of disputes and payment of other liabilities during the period. Releases to profit or loss, amounting to €4 million, relate to liabilities recognised in the past that have failed to materialise.
 Provisions for disputes with 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. Provisions for the year of €57 million reflect the estimated value of new liabilities measured on the basis of expected outcomes. The reduction of €22 million relates to the reversal of liabilities recognised in the past, whilst a reduction of €25 million regards the value of disputes settled.
 Provisions for personnel expenses are made to cover expected liabilities arising in relation to the cost of labour, with are certain or likely to occur but whose estimated amount is subject to change. They have increased by €74 million to reflect the estimated value of new liabilities and decreased as a result of past contingent liabilities that failed to materialise (€24 million) and settled disputes (€33 million).
December 2017. Use of €257 million was made during the year under review.
 Provisions for taxation contributions have been made to cover potential future tax liabilities.
 Other provisions cover probable liabilities of various type, including: estimated liabilities deriving from the risk that specific legal actions undertaken in order to reverse seizures of the Company’s assets may be unable to recover the related amounts; claims for rent arrears on properties used free of charge by the
Attainment of legal requirements for retirement tab. B5.3 - Actuarial gains and losses (€m)
These payables include net amounts accrued at 31 December 2015 and settled with customers in January 2016. The balance includes amounts due to Poste Italiane Group companies, totalling €215 million, with €111 million deposited in postal current accounts by Poste Vita SpA.
At 31 Decemb er tab. B6 - Financial liabilities attributable to BancoPosta (€m)
Specifically:  Amounts due on prepaid cards, totalling €1,445 million, relate to the electronic top-up of Postepay cards.
The increase was due mainly to Postepay Evolution, a new product.
 Amounts due on domestic and international money transfers represent the exposure to third parties for: – domestic postal orders, totalling €396 million; – domestic and international transfers, totalling €136 million.
Cheques to be credited to post office savings books - 508 508 - 333 333
Amounts to be credited to customers - 168 168 - 124 124
Payables for items in process - 60 60 - 41 41
Balance at 30 Decemb er 2015 Balance at 30 Decemb er 2014
Other than the guarantees described in the following notes, borrowings are unsecured and are not subject to financial covenants, which would require the Company to comply with financial ratios or maintain a certain minimum rating. Financial institutions borrowings are subject to standard negative pledge clauses
This item refers to fixed rate loans whose residual value, measured at the amortised cost at 31 December 2015, and whose fair value at the same date is €1 million. The outstanding principal assigned by law to the
Amounts due to Cassa Depositi e Prestiti for loans - 1 1 1 2 3
Financial liabilities due to subsidiaries - 72 72 - 887 887
At 31 December 2015, outstanding repurchase agreements, totalling €510 million, involve securities with a total nominal amount of €450 million, entered into during the year to optimise returns and to meet its shortterm liquidity requirements. The fair value of these repurchase agreements amounts to €510 million.
At 31 December 2015, the committed and uncommited lines have not been used. Unsecured guarantees with a value of € 162 million have been used on behalf of Poste Italiane SpA and with a value €54 million, on behalf of Group companies. No collateral has been provided to secure the lines of credit obtained.
At 31 December 2015, these instruments have a fair value of €51 million (€58 at 31 December 2014).
Movements in derivative financial instruments during 2015 are described in section A6.
These liabilities relate to short-term loans and intercompany current accounts paying interest at market rates and break down as follows: B8 – TRADE PAYABLES
Tot al 1,229 1,222 of which attributable to BancoPosta RFC 65 70
Ind irect su b sid iar ies of which attributable to BancoPosta RFC 32 30 tab. B8.3 - Prepayments and advances from customers (€m)
Tot al 185 185 of which attributable to BancoPosta RFC - -
 Amounts payable to pension funds relate to sums due to FondoPoste and other pension funds following the decision by certain of the Company’s employees to join supplementary funds.
 Amounts due to the Istituto Nazionale per l’Assicurazione contro gli Infortuni sul Lavoro (INAIL, the
National Occupational Injury Compensation Authority) relate to injury compensation paid to employees of the Company for injuries occurring up to 31 December 1998.
Balance at 31 Decemb er 2015 Balance at 31 Decemb er 2014 tab. B9.1 - Amounts due to staff (€m)
Other amounts due to staff 77 164 of which attributable to BancoPosta RFC 13 11 tab. B9.2 - Social security payables (€m)
Cu rrent liab ilit ies Tot al of which attributable to BancoPosta RFC - 6 6 - 6 6
SpA employees between 1 January 1994 and 31 July 1994;  €9 million, relating to the return of the extraordinary contribution, pursuant to article 2 Law 778/85, received from the MEF to cover shortfalls of the pension fund of the former Postal and
Other amounts due to subsidiaries tab. B9.3 - Other tax liabilities (€m)
Withholding tax on employees' and consultants' salaries - 108 108 - 97 97
Withholding tax on postal current accounts - 7 7 - 21 21 of which attributable to BancoPosta RFC 716 59 775 563 35 598
Balance at 31 Decemb er 2015 Balance at 31 Decemb er 2014 tab. B9.4 - Other amounts due to subsidiaries (€m)
This item breaks down as follows: In detail:  sundry payables attributable to Bancoposta’s operations primarily relate to transactions effected in previous years in the process of settlement;  guarantee deposits primarily relate to amounts collected from customers as a guarantee of payment for services (postage-paid mailing services, the use of post office boxes, lease contracts, telegraphic service contracts, etc.).
Deferred income outside the ring-fence primarily regards:  €10 million in grants approved by the competent public authorities in favour of the Company, whose matching costs have not been incurred yet;  €5 million (of which €4 million relates to income to be recognised after 2015) relating to advance collection of the rental on a thirty-year lease of a pneumatic postal structure in Rome.
Balance at 31 Decemb er 2015 Balance at 31 Decemb er 2014 tab. B9.6 - Accrued expenses and deferred income (€m)
Revenue from sales and services, amounting to €8,205 million, breaks down as follows: Postal services
In detail:  Unfranked mail relates to revenue from the mailing of correspondence by large customers from the post office network, including those conducted using the Bulk Mail formula.
 Stamps relates to the sale of stamps through post offices and authorised outlets, and sales of stamps used for franking on credit.
 Postage-paid mailing services relate to revenue from the delivery of publications and mail-order goods on behalf of publishers.
Other sales of goods and services 74 74 tab. C1.1 - Revenue from Postal Services (€m)
reflecting the provision made in the state budget for the purposes provided for by article 1 paragraph 274 of Law 190/2014 (2015 Stability Law) which were unchanged at the reporting date. To this end, reference is made to note 2.4 – Use of estimates and A7.4 – Due from the MEF. The remaining amount due of €279 million reflects revenue previously written down in provisions for doubtful debts due from the MEF, after the Ministry made new provision to honour previous contractual obligations.
This revenue breaks down as follows: In particular:  Fees for the collection of postal savings deposits relate to remuneration for the provision and redemption of Interest-bearing 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 4
Other products and services 80 102 tab. C1.2.1 - Income from investment of postal current accounts deposits (€m)
Interest income on asset swaps of available-for-sale financial assets 4 41
 Revenue from the distribution of loan products relate to commissions received by the Company on the placement of personal loans and mortgages on behalf of third parties.
 Income from delegated services primarily regards amounts received by the Company for the payment of pensions and vouchers issued by INPS (€60 million), and for the provision of treasury services on the basis of the agreement with the MEF (€57 million).
Bancoposta segments. The main components are: fees received for collecting applications for residence permits, totalling €29 million, income from call centre services, amounting to €3 million, and income from the provision of ancillary franking and packaging services, totalling approiximately €1 million.
This item regards the following: Dividends from subsidiaries tab. C2 - Other income from financial activities (€m)
Other income 15 16 tab. C3.1 - Dividends from subsidiaries (€m)
Under the relevant lease agreements, tenants usually have the right to break off the lease with six months’
For the purposes of reconciliation with the statement of cash flows, for 2015 this item amounts to €3 million after losses of €2 million. For 2014, this item amounted to €3 million after losses of €2 million .
Recovery of expenses, transaction costs and other income (1) 4 4 tab. C3.3 - Gains on disposals (€m)
Gains on disposal of investments 3 tab. C4 - Cost of goods and services (€m)
Raw, ancillary and consumable materials and goods for resale 107 121
Automated services from the Department of Land Transportation - 16 tab. C4.2 - Lease expense (€m)
Other expenses relating to BancoPosta RFC’s operations consist of the following: tab. C4.3 - Raw, ancillary and consumable materials and goods for resale (€m)
Interest paid to MEF(1) 1 tab. C5 - Other expenses from financial activities (€m)
Expenses from financial instruments at fair value through profit or loss 2 -
Company by virtue of court orders not yet become final. Under the terms of these arrangements, these employees waived the legal and economic effects of the re-employment ruling and about 929 of them undertook to return, in instalments over the medium/long term, without interest, the back-pay collected for the periods not worked, which the Company had expensed out in previous years.
These salaries amounted to approximately €11.3 million, but the Parent Company recognised the present value of €11 million as income for the current year.
The following table shows the Company’s average and year-end headcounts by category: Furthermore, taking account of staff on flexible contracts, the average number of full-time equivalent staff in tab. C6 - Personnel expenses (€m)
Provisions for employee termination benefits: supplementary pension funds and INPS 258 260
Other operating costs break down as following: tab. C7 - Depreciation, amortisation and impairments (€m)
Provisions (reversal of provisions) for receivables due from M EF [tab. A7.5] (68) 57
Provisions (reversal of provisions) for sundry receivables [tab. A8.2] 2 4
Net provisions for tax and social security liabilities made/(released) [tab. B4] (2) (1)
(1) For the purposes of reconciliation with the statement of cash flows, for 2015 finance costs, after foreign exchange losses and sundry finance costs on available-for-sale financial assets, amount to €70 million (€100 million in 2014).
Finance costs on financial liabilities 38 56 on loans from Cassa Depositi e Prestiti - 4 on financial institutions borrowings 8 13 on derivative financial instruments 1 7 on amounts payable to M EF 2 5
Finance costs on provisions for employee termination benefits [tab. B5] 27 38
Income tax of €145 million for the year reflects the effects of net non-recurring income/(expense) totalling €12 million, as described below.
Net provisions for risks and charges and bad debts (14) -2.31% 6 2.06%
Current tax assets/(liabilities) for the year ended 31 December 2015 primarily regard:  €5 million in provisions for IRES and IRAP for the year after payments on account for IRES and IRAP, tax cedits from previous years and IRES withholding tax incurred;  the remaining IRES credit of €4 million to be recovered on unreported IRAP deduction, following submission of a claim pursuant to article 6 of Law Decree 185 of 29 November 2008 and article 2 of Law
Decree 201 of 6 December 2011, which provided for a partial deductibility of IRAP from IRES. In the second half of 2015, direct tax credits of €518 million (plus interest of €28 million, making a total of €546 million) were collected. In addition, adjustments to tax credits previously recognised, amounting to €9 million (included among net non-recurring expense/(income) were made, following recalculation performed after the payment received from the tax authorities. Interest accrued during the year of €4 million was recognised in “Finance income” (tab. C9.1) and “Other receivables and assets” (tab. A8).
Collection of IRES refund claimed (518) - (518) - - -
Adjustment of IRES refund claimed (9) - (9) - - -
Provisions to profit or loss (112) (27) (139) (93) (200) (293)
Movements in deferred tax assets and liabilities are shown below: The 2015 Stability Law (Law 190/2014) permitted the deduction of personnel expenses for staff employed on permanent contracts from the IRAP tax base. In addition, in Circular 22E of 9 June 2015, the tax authorities clarified that “Provisions relating to personnel expenses included in the financial statements for periods prior to the entry into effect of this legislation, which had not been considered deductible on the basis of existing rules governing IRAP, will be considered deductible – from the tax year following that underway at 31
tab. C10.5 - Movements in deferred tax assets and liabilities (€m)
Non-recurring income/(expense) recognised in profit or loss due to adjustment to IRES rate (20) -
Sa ld o al 31 d icemb re ( 475) ( 275)
The following table shows a breakdown of movements in deferred tax assets and liabilities: The increase in deferred tax liabilities related to financial assets and liabilities (€974 million) is due mainly to movements in the fair value reserve, as described in section B3.
Non-recurring income/(expenses) recognised in profit or loss - - - 24 - - 24
Income/(expenses) recognised in profit or loss due to adjustment to IRES rate
Income/(expenses) recognised in equity - (76) - - - - (76)
Income/(Expenses) recognised in profit or loss - - - (5) (5)
Non-recurring income/(expenses) recognised in profit or loss - - - 7 7
Income/(expenses) recognised in equity due to adjustment to IRES rate (118) - - - (118)
tab. C10.8 - Deferred tax assets and liabilities recognised in equity (€m)
Banca del Mezzogiorno-MedioCredito Centrale SpA - 200 4 - - 5 - - -
Consorzio Servizi Telef. Mobile ScpA - - - - - - - 38 -
Ministry of the Economy and Finance 7,186 3 537 13 391 - - 102 21
Other related parties external to the Group - - 3 - - - - 3 61
Banca del Mezzogiorno-MedioCredito Centrale SpA - 200 3 - - 5 - - -
Consorzio Servizi Telef. Mobile ScpA - - - - - - - 47 -
Poste Holding Participações do Brasil Ltda - - - - - - - - 1
Other related parties external to the Group - - 2 - - - - 12 59
Capit a l expend it u re Cu rrent expend it u re tab. 4.4.4 - Impact of related party transactions on the results of operations (€m)
Banca del Mezzogiorno-MedioCredito Centrale SpA 2 - 3 - - - - - -
Ministry of the Economy and Finance 627 1 5 - - 1 - 59 -
Other related parties external to the Group 21 3 - - - 16 39 - -
 Amounts received from the MEF relate primarily to payment for carrying out the USO, the management of postal current accounts, as reimbursement for electoral tariff reductions and subsidies, and as payment for delegated services, integrated e-mail services, the franking of mail on credit, and for collection of tax returns and for collection and accounting of electronic payments.
Employment termination benefits - 13,867 tab. 4.4.6 - Remuneration of Statutory Auditors (€000)
Fondoposte Pension Fund, the national supplementary pension fund for non-managerial staff. As indicated in article 14, paragraph 1 of Fondoposte’s By-laws, the representation of members among the various officers and boards (the General Meeting of delegates, the Board of Directors, Chairman and Deputy Chairman,
An analysis of the Company’s net debt/(funds) at 31 December 2015 is provided below, showing the portion attributable to capital outside the ring-fence and BancoPosta RFC: tab. 4.5.1 - Net debt/(funds) (€m)
Loans from Cassa Depositi e Prestiti (1) - - (1) (1)
Net f inancial assets/( l iabi l i t ies) ( 895) 1,885 79 1,069
Net f inancial assets/( l iabi l i t ies) ( 1,818) ( 302) 154 ( 1,966)
Cash and d eposit s at t r ib u t ab le t o BancoPost a - 2,873 - 2,873 -
Balance at 31 Decemb er 2014 Capit a l ou t sid e r ing - fence BancoPost a RFC Eliminat ions
Ind u st r ia l net d eb t 880 ( 1,556)
Ind u st r ia l net d eb t for capit a l ou t sid e r ing - fence inclu d ing in t ersegment t ransact ions
The fair value measurement techniques used by the Company are described in note 2.5 – Determination of fair value. This section provides information regarding determination of the fair value of the financial assets and liabilities recognised at their fair value. The additional information related to financial assets and liabilities recognised at their amortised cost are described in the respective notes.
Financial assets attributable to BancoPosta 32,148 666 111 32,925 28,602 254 - 28,856
Available-for-sale financial assets 32,148 338 111 32,597 28,602 205 - 28,807
Available-for-sale financial assets 575 - 5 580 575 - 5 580
I t em At 31 Decemb er 2015 At 31 Decemb er 2014
In accordance with IFRS 7 – Financial Instruments: Disclosures, this section provides additional information on the transfer of financial assets that are not derecognised (continuing involvement). At 31 December 2015, these assets concern the repurchase agreements entered into with primary financial intermediaries.
Tab 4.5.6 - Transfer of financial assets that are not derecognised (€m)
F inancia l liab ilit ies at t r ib u t ab le t o BancoPost a[B6]
Financial liabilities arising from repos (510) (510) (510) (564) (564) (564)
The following table provides a breakdown of postal savings deposits collected in the name of and on behalf of Cassa Depositi e Prestiti, by category. The amounts are inclusive of accrued, unpaid interest.
Unsecured guarantees issued by Poste Italiane SpA are as follows: tab. 4.6.1 - Postal savings deposits (€m)
Property, plant and equipment 54 65 tab. 4.6.2 a) - Property lease commitments (€m)
Lease rent als d u e: within 1 year of the reporting date 150 154 between 2 and 5 years after the reporting date 338 372 more than 5 years after the reporting date 51 59 tab 4.6.3 - Guarantees (€m)
Justice, for which, under the agreement between Poste Italiane SpA and the MEF, it has already been reimbursed by the Treasury, whilst awaiting acknowledgement of the relevant account receivable from the
Disclosure of fees paid to the independent auditors in accordance with art. 149 duodecies of the “
Type of service Su pplier of service Fees ( * )
Other events after the end of the reporting period are described in the above notes.
Responsibility for coordinating and managing the investment strategy and the hedging of capital market risks has been assigned to the Parent Company’s Coordination of Investment Management function, which aims to ensure a uniform approach across the Group’s various financial entities. Treasury management for the
Administration entities are deposited with the MEF. The investment profile is based on the constant monitoring of habits of current account holders and a use of a leading market operator's statistical/econometric model that forecasts the interest rates and maturities typical of postal current accounts. Accordingly, the portfolio composition aims to replicate the financial structure of current accounts by private customers. The company has also an asset-liability model in place to match the maturities of deposits and loans. The above mentioned model is thus the general reference for the investments, in order to limit exposure to interest rate risk and liquidity risks. The prudential requirements introduced by the third revision of the Bank of Italy Circular 285/2013 require Bancoposta to apply the same regulations applicable to banks in terms of its controls, establishing that its operations are to be conducted in accordance with the Consolidated Law on Banking (TUB) and the Consolidated Law on
Finance (TUF). Bancoposta RFC is, therefore, required to establish a system of internal controls in line with the provisions of Circular 285
), the containment of risks within the limits set by the RAF, protection of the value of assets and against losses, and identification of material transactions to be subject to prior examination by the risk control function.
Directors, which require the Company to invest in instruments such as government securities, highquality corporate or bank bonds and term bank deposits. Liquidity is also deposited in postal current accounts, subject to the same requirements applied to the investment of deposits by private current account holders.
Traditional life policies, classified under Class I and V, primarily include products whose benefits are revaluated based on the return generated through the management of pools of financial assets, which are separately identifiable in accounting terms only, within the company’s assets (so-called separately managed accounts). Typically, the Company guarantees a minimum return payable at maturity on such products (31 December 2015, this return ranged between 0% and 1.5%). Gains and losses resulting from measurement are attributed in full to policyholders and accounted for in specific technical provisions under the shadow accounting method. The calculation technique used by the Group in applying this method is based on the prospective yield on each separately managed account, considering a hypothetical realisation of unrealised gains and losses over a period of time that matches the assets and liabilities held in the portfolio (see note 2.3 in relation to “Insurance contracts”).
Management) model which simulates, for each separate portfolio, the change in value of the financial assets and the expected returns under a “central scenario” (based on current financial and commercial assumptions) and under stress and other scenarios based on different sets of assumptions. This model makes it possible to manage the risks assumed by Poste Vita SpA on a quantitative basis, thereby fostering reduced earnings volatility and optimal allocation of financial resources.
Certain Class I and V products entail guaranteed revaluations linked to a specific asset (so-called capitalisation contracts), where returns are indexed to separately managed accounts only after the second or third year. Based on the procedure described above, all these products were linked to separately managed accounts, taking on the risk characteristics typical of Class I products.
From an organisational viewpoint, the model consists of:  the Risk and Control Committee, established in 2015, whose role, based on adequate research activity, is to act in an advisory capacity and make recommendations to support the Board of Directors in assessing and making decisions regarding Poste Italiane SpA’s internal control and risk management system.
Group’s financial assets. In view of the matters dealt with, the Committee is divided into three sections: ⁻ Finance, with the role of defining and overseeing the financial strategy; ⁻ Savings, with responsibility for establishing guidelines to be applied in the development of savings products; ⁻ Financial investment strategies, with the role of ensuring effective governance and the greatest possible alignment with strategic decisions regarding the allocation and management of financial assets;  an Investment Committee established at the Group’s insurance company, Poste Vita SpA, which, based on analyses by the relevant functions, provides advice to senior management on the development, implementation and oversight of investment strategy;  appropriate functions established within the Parent Company and the subsidiaries providing financial and insurance services (BancoPosta Fondi SGR SpA, BdM-MCC SpA and Poste Vita SpA) that perform Risk Measurement and Control activities, ensuring the organisational separation of risk assessment from risk management activities. The results of these activities are examined by the relevant advisory Committees, which are responsible for carrying out an integrated assessment of the main risk profiles;  BancoPosta RFC’s Cross-functional Committee, set up under the BancoPosta RFC Regulation, which provides advice, makes recommendations and coordinates BancoPosta's operations with those of other Poste Italiane functions. The Committee is chaired by the Parent Company’s CEO. Other permanent members are the Head of BancoPosta and the heads of the functions within Poste
Market risk relates to:  price risk: the risk that the value of a financial instrument fluctuates as a result of market price movements, deriving from factors specific to the individual instrument or the issuer, and factors that influence all instruments traded on the market;  foreign exchange risk: the risk that the value of a financial instrument fluctuates as a result of movements in exchange rates for currencies other than the functional currency;  fair value interest rate risk: the risk that the value of a financial instrument fluctuates as a result of movements in market interest rates.
Spread risk became a major component of market risk in 2011-2012. Spread risk is the risk of a potential fall in the value of bonds held, following a deterioration in the creditworthiness of issuers. This is due to the importance that the impact of the spread of returns on government securities had on the fair value of euro zone government securities, reflecting the market’s perception of the credit rating of sovereign issuers.
(banking book), with effects in terms of interest spreads and, as such, an impact on future results.
Cash flow inflation risk reflects the uncertainty related to future cash flows due to changes in the rate of inflation observed in the market.
In constructing the Risk Model used by BancoPosta RFC, account was also taken of the existing prudential supervisory standards for banks and the specific instructions for BancoPosta, published by the Bank of Italy on 27 May 2014 with the third revision of Circular 285 of 17 December 2013.
Financial statement balances at 31 December 2015 have been subjected, where applicable to a stress test, based on actual volatility during the year, considered to be representative of potential market movements.
Financial assets at FV through profit or loss 10,004 436 (436) 436 (436) - - - -
Financial assets at FV through profit or loss 4,234 66 (66) 66 (66) - - - -
Fair value through profit or loss 208 11 (11) 11 (11) - - - -
The above analysis did not include the fair value, in the amount of €111 million, of the investment in Visa
Europe Ltd., described in note A5.2 for which, at the reporting date, where was no historical data or other evidence of market fluctuations to be utilised in a stress test.
Other investments include:  Units of mutual investment funds, amounting to €1,231 million, held by Poste Vita SpA, to meet its obligations to policyholders under the separately managed portfolios;  Units of mutual investment funds held by the Parent Company outside the ring-fence, amounting to €6 million.
Available-for-sale financial assets 77 71 9 (9) - - 9 (9)
In line with previous years, the following interest rate sensitivity analysis was based on changes in fair value with a parallel shift in the forward yield curve of +/- 100 bps. The measures of sensitivity shown in the following analysis provide a reference point which is useful in assessing potential changes in fair value in the event of greater movements in interest rates.
Fair value though profit or loss - - - - - - - - - 2014 effect s
Class III insurance products, investments with a fair value of €1,894 million, relating to corporate bonds
Coupon stripping consists in detaching the interest payment coupons from a note or bond. Coupon stripping transforms each government security into a series of zero-coupon bonds. Each component may be traded separately.
The value of the portfolio of Italian government bonds is much more sensitive to the credit risk associated with the Italian Republic than to changes in so-called risk-free interest rates. This is due, in part, to the fact that changes in credit spreads, compared to changes in risk-free rates, also affect the value of variable rate bonds and, especially, to the fact that, unlike pure interest rate risk, which is hedged by the Parent Company, no hedging policy is in place to protect against credit risk. Therefore, if interest rates rise as a result of a wider credit spread for the Italian Republic, losses on government bonds are not offset by movements in the opposite direction of other exposures.
The table below shows the results of the analysis of sensitivity of the most significant positions in the portfolios of both the Parent Company and the Poste Vita group to sovereign risk at 31 December 2015.
Nominal Fair valu e +100b ps -100b ps +100b ps -100b ps +100b ps -100b ps 2015 effect s
Available-for-sale financial assets 24,441 29,320 (2,148) 2,411 - - (2,148) 2,411
Not ional Fair Valu e +100b ps -100b ps +100b ps -100b ps +100b ps -100b ps +100b ps -100b ps 2015 effect s
Financial assets at FV through profit or loss 8,042 8,128 (298) 298 (298) 298 - - - 2014 effect s
Available-for-sale financial assets 68,689 75,890 (4,989) 4,989 (4,846) 4,846 - - (143) 143
Financial assets at FV through profit or loss 7,904 7,920 (302) 302 (300) 300 (2) 2 - -
Poste Vita Group - Effect of credit spread on fair value
Equ it y reserves b efore t axat ionI t em Posit ion Change in valu e
The table below shows the VaR analysis performed on the most significant positions in the portfolios of both the Parent Company and the Poste Vita group at 31 December 2015.
Financial assets at FV through profit or loss 8,042 8,128 15 2014 effect s
Credit risk refers to all assets, except shares and units of mutual funds.
In 2015, the ratings revised by the main agencies did not result in changes in the weighted average rating of the Group’s exposures, which, for investments other than Italian government bonds, was A3 at 31 December
Available-for-sale financial assets 2,579 112,999 474 116,052 1,978 103,199 402 105,579
Support Annexes). Exposure is quantified and monitored using the “market value” method provided for by
In relation to “Revenue and receivables due from the state”, the nature of the Group’s customers, the structure of revenue and the method of collection limit the risk of default on trade receivables. However, as explained in note 2.4, certain of the Parent Company’s activities envisage only partial reimbursement by the government of the cost incurred by the Company and amounts due to Poste Italiane are not always included in the state budget. Such activities are typically regulated by statute and specific agreements or contracts which involve particularly complex renewal processes (e.g. the universal postal service and discounted tariffs for election campaigns),
Poste Italiane Group - Credit risk on other receivables and assets (€m)
Due from tax authorities - tax withholdings 2,667 - 2,352 -
Interest accrued on IRES refund 47 - 70 of which past due 46 48
 diversification of the various forms of short-term and long-term borrowings and counterparties;  availability of relevant lines of credit in terms of amounts and the number of banks;  gradual and consistent distribution of the maturities of medium/long-term borrowings;  use of dedicated analytical models to monitor the maturities of assets and liabilities.
Bet ween 1 and 5 years Over 5 years Tot al
Flows from Poste Vita group's policies 9,728 40,039 69,376 119,143 8,071 37,630 58,869 104,570
The above table shows expected cash outflows at the date of the financial statements, broken down by maturity, while the maturities of postal current account deposits are reported on the basis of the estimates made with a statistic/econometric model. Repayments of principal at nominal value are increased by interest payments calculated, where applicable, on the basis of the yield curve applicable at 31 December 2015. The liabilities of Poste Vita SpA and Poste Assicura SpA are reflected in “Flows from the Poste Vita group’s policies”.
Asset/liability management (ALM) analysis to manage assets effectively in relation to its obligations to policyholders, and also develops projections of the effects deriving from financial market shocks (asset dynamics) and of the behaviour of policyholders (liability dynamics).
With regard to Group cash flow management, a centralised treasury management system enables the automatic elimination of co-existing large debit and credit balances attributable to individual companies, offering the Group advantages in terms of improved liquidity and a reduction in the related risk. The system is used for four of the main subsidiaries and, with regard to banking activities, makes use of zero balance cash pooling. In this way, cash flows between the current accounts of subsidiaries and the Parent Company are transferred on a daily basis.
Sensitivity to cash flow interest rate risk at 31 December 2015 on the Group’s positions is shown in the table below.
Change in valu e Effect on liab ilit y t oward s policyhold ers Pre- t ax profit
Administration entities in the following: deposits with the MEF, with a nominal value of €5,855 million; fixed and variable rate government bonds with a total nominal value of €170 million, as well as fixed rate bonds swapped into variable rate through fair value hedges, with a total nominal amount of €1,440 million; and an inflation-linked bond issued by the Italian Republic, with a nominal value of €100 million, which has been hedged against changes in its fair value;  a portion of the securities portfolio held by the Poste Vita group, with a nominal value of €10,966 million;  receivables of €916 million, reflecting collateral posted to secure liabilities arising in relation to derivative financial instruments.
Available-for-sale financial assets 7,423 8,511 280 (280) 272 (272) 8 (8)
At 31 December 2015, cash flow inflation risk regards inflation-linked government securities not subject to cash flow hedges or fair value hedges. These have a total nominal value of €8,138 million, of which €6,061 million were held by the Poste Vita group, €2,060 million by BancoPosta RFC and €17 million by Bancoposta
Price risk relates to financial assets that the Company has classified as “Available-for-sale” (AFS) or “Held for trading” and certain derivative financial instruments where changes in value are recognised in profit or loss.
The following sensitivity analysis relates to the principal positions potentially exposed to fluctuations in value.
The principal financial assets subject to price risk and the results of the analysis carried out as at 31 December 2015 for the Company are shown in the following table.
+ Vol - Vol + Vol - Vol + Vol - Vol 2015 effects
The preceding analysis did not include the €111 million in fair value relating to the investment in Visa Europe
Ltd., described in note A5, for which, as of the reporting date, there no historical data or other evidence of market changes that can be used in the stress test.
At 31 December 2015, this item primarily refers to equity instruments denominated in US dollars and Special
The foreign exchange risk relates to the shares denominated in US dollars.
Date of reference of the analysis Position in SDR Position in €
This refers to the effects of changes in interest rates on the price of fixed rate financial instruments or variable rate financial instruments converted to fixed rate via cash flow hedges and, to a lesser degree, the effects of change in interest rates on the spread of floating rate financial instruments or fixed rate financial instruments converted to variable rate via fair value hedges. The impact of these effects is directly related to the financial instrument duration.
Nominal value Fair value +100bps -100bps +100bps -100bps +100bps -100bps 2015 Ef fects
Fair value through profit or loss (50) (7) 4 (5) 4 (5) - -
Available-for-sale financial assets exposed to fair value interest rate risk regard primarily:  €30,915 million in government bonds held by BancoPosta RFC, which consist of: fixed rate bonds amounting to €11,131 million, variable rate bonds converted into fixed rate bonds via asset swaps used as cash flow hedges, amounting to €2,177 million, variable rate bonds amounting to €2,681 million (of which €2,508 million in inflation-linked instruments and €173 million CCTeus, which are variable rate
Within the context of financial derivatives, the risk in question concerns the decrease in fair value, in the amount of €5 million, of a derivative contract entered into by the Parent Company in 2013 to hedge the cash flows of the bond with a nominal value of €50 million issued on 25 October 2013 (note 4.3, tab. A6.4).
With reference to the interest rate risk exposure determined by the average duration of the portfolios, in 2015 the duration of BancoPosta’s overall investments went from 5.2 to 5.58.
The value of the portfolio of Italian government bonds is much more sensitive to the credit risk associated with the Italian Republic than to changes in so-called risk-free interest rates. This is due, in part, to the fact that
changes in credit spreads, compared to changes in risk-free rates, also affect the value of variable rate bonds and, especially, to the fact that, unlike pure interest rate risk, which is hedged by the Company, no hedging policy is in place to protect against credit risk. Therefore, if interest rates rise as a result of a wider credit spread for the Italian Republic, losses on government bonds are not offset by movements in the opposite direction of other exposures.
In 2015, the spreads between German bunds and government bonds issued by many other European countries, including Italy, continued to decline, in the case of 10-year terms to 97 bps at 31 December 2015
In addition to using the above sensitivity analysis, the Company monitors spread risk by calculating its maximum potential losses, through an estimate of Value at Risk (VAR) on statistical bases, over a 1-day time horizon and at a 99% confidence level. Risk analysis performed through VaR takes into account the historical variability of the risk (spread) in question, in addition to modelling parallel shifts of the yield curve.
The table below shows the results of the analysis of sensitivity to country risk of the most significant positions in the Company’s portfolios at 31 December 2015.
Poste Italiane SpA - Effect of credit spread on fair value (€m)
Available-for-sale financial assets 26,428 32,415 (3,036) 3,422 - - (3,036) 3,422
Available-for-sale financial assets 500 569 (22) 17 - - (22) 17 2014 Ef fects
Available-for-sale financial assets 500 569 (26) 27 - - (26) 27
Poste Italiane SpA estimates the VaR for available-for-sale financial assets and derivative instruments, also taking into account the combined effects of fair value interest rate risk and spread risk (also in this case the
 financial assets held outside the ring-fence show a potential maximum loss on available-for-sale financial assets, relating to fair value interest rate risk and spread risk, of €4 million at 31 December 2015 (€2 million at 31 December 2014).
In 2015, the ratings revised by the main agencies did not result in changes in the weighted average rating of the Company’s exposures, which, for investments other than Italian government bonds, was A3 at 31
The Company’s financial assets exposed to credit risk at 31 December 2015 are shown in the table below. The ratings reported in the table have been assigned by Moody’s.
Item from Aaa to Aa3 from A1 to Baa3 from Ba1 to Not rated Total from Aaa to Aa3 from A1 to Baa3 from Ba1 to Not rated
Trade receivables exposed to credit risk at 31 December 2015 are shown in the table below.
In relation to “Revenue and receivables due from the state”, the nature of the Company’s customers, the structure of revenue and the method of collection limit the risk of default on trade receivables. However, as explained in note 2.4, certain of the Company’s activities envisage only partial reimbursement by the government of the cost incurred by the Company and amounts due are not always provided for in the state budget. Such activities are typically regulated by statute and specific agreements or contracts which involve particularly complex renewal processes (e.g. the universal postal service and discounted tariffs for election campaigns).
The Company’s other receivables and assets exposed to the risk in question at 31 December 2015 are shown in the table below.
Interest accrued on IRES refund 46 - 69 of which past due 45 47
“Sovereign debt” includes bonds issued by, and loans provided to, central and local governments and government bodies.
In order to minimise the risk of experiencing difficulties in raising sufficient funds, at market conditions, to meet its obligations, the Company applies a financial policy based on:  diversification of the various forms of short-term and long-term borrowings and counterparties;  availability of relevant lines of credit in terms of amounts and the number of banks;  gradual and consistent distribution of the maturities of medium/long-term borrowings;  use of dedicated analytical models to monitor the maturities of assets and liabilities.
The following tables compare the Group’s liabilities and assets at 31 December 2015, in terms of liquidity risk.
Financial liabilities attributable to BancoPosta 21,457 11,978 18,458 51,893 22,990 9,061 16,726 48,777
Available-for-sale financial assets 1,657 9,047 30,059 40,763 3,067 8,461 22,454 33,982
In terms of BancoPosta RFC’s specific operations, the liquidity risk regards the investment of current account deposits in euro zone government securities. The potential risk derives from a mismatch between the maturities of investments in securities and those of liabilities, represented by current accounts where the funds are available on demand, thus compromising the Company’s ability to meet its obligations to current account holders. This potential mismatch between assets and liabilities is monitored via comparison of the maturity schedule for assets with the statistical model of the performance of current account deposits, in accordance with the various likely maturity schedules and assuming the progressive total withdrawal of deposits over a period of twenty years for retail and business customers, ten years for balances held with PostePay and five years for Public Administration customers.
Cash flow interest rate risk refers to the uncertainty over future cash flows generated by variable rate instruments and variable rate instruments created through fair value hedges following fluctuations in market interest rates. Sensitivity to cash flow interest rate risk relating to these instruments is calculated by assuming a parallel shift in the yield curve (+/- 100 bps). Sensitivity to cash flow interest rate risk at 31 December 2015 on the Company’s positions is shown in the table below.
Nominal value +100 bps -100 bps +100 bps -100 bps 2015 effects
Financial liabilities due from the MEF (887) (9) 9 (9) 9
Date of reference of the analysis Change in value Pre-tax profit
Specifically, with respect to financial assets attributable to BancoPosta, the cash flow interest rate risk primarily relates to:  investment of the funds deriving from the current account deposits of Public Administration entities in the following: deposits with the MEF, with a nominal value of €5,855 million; fixed and variable rate government bonds with a total nominal value of €170 million, as well as fixed rate bonds swapped into variable rate through fair value hedges, with a total nominal amount of €1,065 million; and an inflationlinked bond issued by the Italian Republic, with a nominal value of €100 million, which has been hedged against changes in its fair value;  receivables of €864 million reflecting collateral posted to secure liabilities arising in relation to derivative financial instruments.
With respect to financial assets, the cash flow interest rate risk primarily relates to:  loans to other Group companies, totalling €805 million;  fixed rate government bonds swapped into variable rate bonds via fair value hedges, amounting to a total nominal amount of €375 million.
In relation to cash and cash equivalents, cash flow interest rate risk primarily regards amounts deposited with the MEF and held in the so-called buffer account (€391 million).
In the latter part of 2015, certain contracts on investment management services to BancoPosta RFC expired.
“pure life” insured amounts the Group’s insurance companies transfer their risks to reinsurers in keeping with the nature of the products sold and conservation levels adequate to the companies’ capital structure. The main reinsurers of the Group are characterised by substantial financial strength.
For products with the capital sum subject to positive risk, such as term life insurance, this risk has negative consequences if the actual frequency of death exceeds the death probabilities realistically calculated (second order technical bases).
Nevertheless, at 31 December 2015, the mortality risk is limited for the Group, considering the features of the products offered. The only area where this risk is somewhat significant is term life insurance, for which actual death rates are compared from time to time with those projected on the basis of the demographics adopted for pricing purposes; to date, the former have always turned out to be much lower than the latter. Moreover, mortality risk is mitigated through reinsurance and by setting limits on both the capital and the age of the policyholder when policies are sold.
Pricing risk is the risk of incurring losses due to the inadequate premiums charged for the insurance products sold. It may arise due to:  inappropriate selection of the technical basis;  incorrect assessment of the options embedded in the product;  incorrect evaluation of the factors used to calculate the expense loads.
As Poste Vita’s mixed and whole-life policies have mostly cash value build-up features, accumulating in accordance with a technical rate of zero, the technical basis adopted does not affect premium calculation
(and/or the insured capital). In fact, there is nearly no pricing risk associated with the choice between technical bases in Poste Vita’s portfolio, except for the term life insurance products discussed above.
 Catastrophe risk: the risk that extreme and exceptional events have a negative impact that has not been taken into account when pricing the policies.
 Anti-selection risk: this relates to the company’s unwillingness to insure an event not classified as future, uncertain and damaging.
In particular, with regard to real estate funds sold in the period 2002-2005, which have given rise to a number of complaints and disputes, in addition to assessing the need for provisions in the financial statements, Poste
The Poste Italiane Group has several Contact Centres, for both the internal and the external markets, combining the different contact channels to effectively manage customer service. To optimise the use of internal and external resources, it was decided to combine contact centre operations for all Group companies and, in 2015, calls for tenders were launched to find a suitable provider to manage the entire service. On completion of the tender process, the companies to which SDA Express Courier had outsourced the services until the end of 2015 – Uptime SpA, a joint venture102 and Gepin Contact SpA (the other shareholder of
From a civil law standpoint, however, with a memorandum on 26 February 2016, Gepin Contact claimed damages of €10.5 million from SDA. As grounds for this claim, the counterparty pointed out that, as it only received the notice of termination on 29 December 2015, it was unable to access the special redundancy fund, which was abolished by Legislative Decree 148/2015 on 31 December 2015. According to the plaintiff’s version of events, SDA should have taken account of this issue and terminated the contract in due time to prevent such an occurrence. As matters stand, the claim appears to be largely unfounded. Indeed, SDA
merely exercised – in the correct manner – its contractual right, by which, among other things, the parties had established that there can be no grounds for any claim for damages or compensation. From another standpoint, SDA’s conduct could not have been legitimately interpreted as giving Gepin any assurance that the contract would have been extended.
MCC underreported its taxable income by €16.2 million, relating to the sale of non-performing loans to a company in the Unicredit Group, to which BdM-MCC belonged at the time. Considering that for the 2008 tax year the bank had elected to participate in the tax consolidation arrangements used by the Unicredit Group, on 19 September 2012 the tax authorities served the consolidating entity, Unicredit SpA, and BdM-MCC at the domicile of the consolidating entity, with an assessment notice related to the second of the two alleged violations. On 2 October 2014, the challenge to the assessment notice filed by Unicredit SpA and BdM-MCC
SpA was upheld by the Tax Tribunal. In May 2015, the tax authorities filed an appeal against the first decision before the Provincial Tax Tribunal. The hearing was scheduled for 10 May 2016. However, given that responsibility for these events and the related conduct rests with the previous owner of the bank, whose lawyers are defending the bank in this case, it is felt that any liabilities arising from such violations cannot, in any way, be attributed to BdM-MCC SpA.
Ufficio Grandi Contribuenti) notified Poste Vita SpA of an alleged violation of the VAT regulations in the 2004 tax year, resulting in fines of approximately €2.3 million for the alleged failure to pay VAT on invoices for service commissions. Poste Vita SpA appealed the above findings before the Provincial Tax Tribunal of Rome.
In December 2010 and September 2011, the tax authorities sent notices of two further small fines for the same violation in fiscal years 2005 and 2006. These fines have also been appealed. With regard to the dispute over VAT for 2004 and 2006, the Provincial Tax Tribunal of Rome has found in the company’s favour, ruling that the tax authorities’ allegations are without grounds. The tax authorities have challenged such rulings by filing an appeal. The Regional Tax Tribunal of Rome rejected both appeals and confirmed the lack of grounds of the claims against Poste Vita. On 23 October 2015, the State Attorney’s Office challenged these decisions and summoned the company to appear before the Court of Cassation. The counterclaims filed by Poste Vita before the Court of Cassation were served to the tax authorities on 3 December 2015 and subsequently entered in the Cassation’s registry on 17 December 2015. Regarding the disputes relating to 2005, the first hearing before the Provincial Tax Tribunal of Rome was held on 13 July 2015. As on that date the Provincial
Riscossione - Ufficio Grandi Contribuenti (Regional Tax Office for Large Taxpayers) began an audit of Poste
In addition, on 6 July 2015, the Nucleo Polizia Tributaria Roma (Tax Police) carried out an inspection at Postel
SpA regarding income tax, IRAP and withholding tax, pursuant to and in accordance with articles 32 and 33 of Presidential Decree 600 of 29 September 1973, article 35 of Law 4 of 7 January 1929, and art. 2 of
January 2015) a number of notices of adjustment, some of which have resulted in payment orders, for a total amount payable of €12.33 million, which, according to the agency, represents unpaid social security contributions. The companies immediately challenged the grounds for the payment orders, initially through administrative channels before the Administrative Committee for Employee Pensions, and then in the form of legal action before the Court of Genoa. The Court awarded an injunction suspending the payment orders and adjourned the discussion until the related hearings. In a brief filed on 24 May 2014 with regard to one of the pending actions, INPS has for the first time clarified the nature of its claim for unpaid contributions, arguing that the two companies, whilst correctly paying pension contributions to IPOST (a fact that cannot be contested in the light of the authentic interpretation provided by art 7, paragraph 9 sexies of Law Decree 101/2013), should have paid non-pension contributions to INPS, on the assumption that IPOST represents a supplementary pension scheme and not an alternative to the general regime, and that its sole purpose is to provide old age, invalidity and survivors’ pensions. According to this interpretation, Postel SpA is required to insure their employees with INPS in order to provide other forms of cover (income support, extraordinary income support, unemployment benefit and family benefits) not provided by IPOST. In part based on the
opinion of its legal counsel, the company maintains that is has correctly applied the relevant legislation and that INPS’s claims are without grounds. The degree of uncertainty linked to the outcome of the pending challenges – for which a hearing has been scheduled for 7 June 2016, in the Court of Genoa - has, in any event, been prudentially taken into account in calculating provisions for risks and charges at 31 December
On 13 September 2013, the Court of Justice of the European Union upheld Poste Italiane SpA’s appeal, overturning the decision of the European Commission of 16 July 2008 on state aid, ordering the EC to pay legal costs. Acting on the European Commission’s Decision, and in accordance with instructions from the
(Law 190 of 23 December 2014), on 13 May 2015, the Company collected the amount of €535 million from its then sole shareholder, the MEF (Note B2). Following the European Court’s decision, however, the
On 15 October 2013, the European Commission started a preliminary investigation, pursuant to EU
On 14 March 2012 the Antitrust Authority launched an investigation of Poste Italiane SpA to establish if the
notification of the ruling to cease the abuse by charging VAT on postal services. On 21 June 2013, Poste
Italiane SpA appealed the Authority’s ruling before the Lazio Regional Administrative Court and on 7 February 2014 the appeal was rejected. On 25 March 2014, the Company, therefore, appealed to the Council of State, at the same time requesting suspension of the Regional Administrative Court's sentence and, accordingly, the
Authority's ruling. Lastly, on 10 September 2015 the Company informed the Authority and the parties concerned that it had waived the appeal filed with the Council of State requesting that legal costs be equally apportioned among the parties. With ruling 1160/15, filed on 13 October 2015, the Council of State declared the appeal closed. Moreover, on 11 August 2014, Law 116, converting Law Decree 91/2014 into law, amended Italian legislation to bring it into line with EU laws, based on the approach adopted by the Antitrust
On 9 March 2015, the Authority notified Poste Italiane SpA of an investigation of BancoPosta RFC for alleged violation of articles 20, 21 and 22 of the Consumer Code, regarding the “Libretto Smart” product. Specifically, the Authority claimed that, in advertising campaigns in February 2015, emphasis was placed on returns offered by Libretto Smart without providing details of the offer the advertised returns were associated with.
Authority notified its intention to extend the investigation to include Cassa Depositi e Prestiti SpA. On 21
December 2015, the AGCM notified Poste Italiane of its final ruling in which, pursuant to articles 20, 21 and 22 of the Consumer Code, it deemed the Company's conduct unfair and imposed a fine of €0.54 million, limited to a tenth of the maximum applicable amount taking into account the mitigating circumstance that
Service. In the same ruling, the Authority also ruled that Poste Italiane should desist from such conduct in the
future. The Authority did not impose a fine. Poste Italiane lodged an appeal against this ruling before the
Poste Italiane SpA and PosteMobile SpA and requesting that the latter be ordered to pay compensation for damages incurred arising from the violations referred to in the above ruling, amounting to €337 million. The preliminary hearing has been scheduled for 7 April 2016. Prior to this hearing, Poste Italiane, which deems its actions to have been in full compliance with current regulations and has already appointed a counsel for the defence, will file documents at the Registry to be submitted to the judge and prepare an appropriate response, based on a sound defence of its conduct. However, given the complex and novel nature of the matters in hand and the uncertain nature of any judgment, it is difficult to make a reliable forecast on the outcome of the dispute.
Law Decree 201 of 6 December 2011, converted into Law 214 of 22 December 2011, transferred responsibility for regulation and supervision of the postal sector from the Ministry for Economic Development to the Italian Communications Authority (AGCom). A summary of the main pending proceedings is provided in the following notes.
 The investigations concerning the “universal postal service”. These concern, following transposition into the Italian legal system of the third Postal directive (Directive 2008/6/EC), the quantification of the charge for the Universal Postal Service through application of the so-called “net avoided cost”. With this methodology, the net cost amount is calculated as the difference between the net operating costs for a supplier of the designated universal service – when this is an entity required to provide universal service –
During 2015, three violations of anti-money laundering legislation were notified to Poste Italiane SpA. The
Economy and Finance, including 24 for failure to report suspect transactions and 2 in relation to violations of the rules governing limits on the use of cash and bearer instruments.
Following the inspection that took place between 1 April and 14 July 2014, for the purposes of assessing the governance, management and control of investments and financial risk, and compliance with anti-money laundering regulations, on 17 September 2014, IVASS notified Poste Vita SpA of its recommendations and the start of an administrative procedure regarding the alleged violation of four provisions concerning anti-money laundering regulations. The company has submitted defence briefs and the procedure will be closed within two years.
The CONSOB commenced a general inspection of the investment services offered by Poste Italiane SpA’s
BancoPosta division in April 2013, pursuant to art. 10, paragraph 1 of the Consolidated Law on Finance. The inspection was completed in May 2014 and, based on the results, the regulator issued a report on 7 August 2014, noting a number of areas for attention and precautions to be adopted in relation to the provision of investment services. The Company is currently taking steps to address the various concerns raised by strengthening its organisational structure and procedures as part of a specific project. Progress is on track and was reported on in a detailed note sent to the CONSOB 4 June 2015. As part of the above inspection, the
CONSOB also launched a penalty procedure that was completed on 26 August 2015, with notification of
Poste Italiane, as jointly and severally liable party, of the ruling that has fined certain representatives of the
Company a total amount of €60 thousand for violation of art. 21 of the Consolidated Law on Finance.
(in particular IZI SpA) appointed to monitor postal service quality standards. According to the Authority, the data was processed without providing the parties concerned with the relevant privacy notices and without obtaining their consent to use of the data.
Poste Italiane replied to the Authority before the specified deadline, noting that it had launched a special internal audit in order to be able to provide comprehensive replies to the requests made, as well as updates on subsequent outcomes and the final audit. From the findings of this audit, it appears that certain members of staff interfered with the monitoring systems in violation of the Company's policy. It is currently impossible to ascertain whether this behaviour may have influenced determination of the service quality indicators recorded, and the possibility that the impact of such events may give rise to legal proceedings and fines cannot be ruled out. Poste Italiane has requested its legal experts to go ahead with all appropriate measures.
Section 1 – Declaration of compliance with International Financial Reporting Standards ........................... 363
A.2 – Part relating to principal financial statement items .......................................................................................... 367
A.3 – Information on transfers between financial asset portfolios .......................................................................... 377
PART B – INFORMATION ON THE STATEMENT OF FINANCIAL POSITION .......................................................... 380
Section 1 – Cash and cash equivalents – Item 10 ...................................................................................................... 380
Section 4 – Available-for-sale financial assets – Item 40 ........................................................................................... 381
Section 13 – Tax assets and liabilities – Assets Item 130 and Liabilities Item 80 ............................................... 388
Section 14 – Non-current assets (or disposal groups) held for sale/discontinued operations and related liabilities - Assets Item 140 and Liabilities Item 90 ............................................................................................... 390
Section 2 – Due to customers – Item 20 ....................................................................................................................... 393
Section 7 – Adjustments for changes in hedged financial liabilities portfolio – Item 70 ............................... 394
Section 11 – Employee termination benefits – Item 110 ......................................................................................... 395
Section 12 – Provisions for risks and charges – Item 120 ........................................................................................ 397
Section 2 – Fees and commissions – Items 40 and 50 .............................................................................................. 403
Section 4 – Profits/(Losses) on trading – Item 80 ....................................................................................................... 405
Section 5 – Fair value adjustments in hedge accounting – Item 90 .................................................................... 405
Section 6 – Profits/(Losses) on disposal or repurchase – Item 100 ....................................................................... 406
Section 8 – Net losses/recoveries on impairment – Item 130 ................................................................................ 406
Section 10 – Net provisions for risks and charges – Item 160 ................................................................................ 408
Section 17 – Profits/(Losses) on disposal of investments – Item 240 ................................................................... 409
Section 18 – Taxes on income from continuing operations – Item 260 ............................................................. 410
Section 19 – Income/(Loss) after tax from discontinued operations – Item 280.............................................. 410
40. Fee and commission income 3,538,129,910 3,560,991,883 50. Fee and commission expense (54,748,272) (49,121,948)
Other components of comprehensive income after taxes not reclassif ied to profit or loss 20. Property, plant and equipment - 40. Defined benefit plans 667,332 (1,680,402)
50. Non-current assets held for sale - 60. Share of valuation reserve attributable to equity-accounted investments - -
Movements dur ing the year - - - 6,672 - 887,980,380 - - 586,969,571 1,474,956,623 at 31 December 2015
1. Cash f low from operations 536,645,316 599,268,586 - profit/(loss) for the year (+/-) 586,969,571 439,664,565 - gains/(losses) on financial assets held for trading and on assets and liabilities designated at fair value (-/+) (2,233,704) (664,551)
- net losses/recoveries on property, plant and equipment (+/-) - - - net provisions and other expenses/income (+/-) 252,210,138 342,591,023 - unpaid taxes and duties (+) 94,882,006 59,873,776 - net losses/recoveries on disposal groups after tax (+/-) - 2. Cash f low from/(used for ) f inancial assets (3,687,945,062) (2,114,996,699)
Net cash f low from/(used for ) operating activities (615,800,607) (1,128,753,456)
- acquisition of property, plant and equipment - - - acquisition of intangible assets - - - acquisition of business division - -
Net cash f low from / (used for ) investing activities 1,196,000,003 1,103,348,726
Net cash f low from / (used for ) f inancing activities (289,664,565) (174,030,213)
Cash and cash equivalents at beginning of the year 2,878,161,445 3,077,596,388
The Separate Report has been prepared in compliance with the International Financial Reporting Standards
The following are applicable from 1 January 2015:  IFRIC 21 – Levies, adopted with (EU) Regulation 634/2014. The interpretation provides guidance on how to account for a liability for a levy imposed by a government, when the liability is to be accounted for in accordance with IAS 37.
 Annual Improvement Cycle to IFRSs 2011 - 2013, adopted with Regulation (EU) no. 1361/2014 in connection with the annual projects to improve and revise international accounting standards.
The international accounting and financial reporting standards to be adopted in the near future are listed in the following table.
Amendments to IFRS 10 - IFRS 12 - IAS 28 Investment Entities – Applying the Exception to Consolidation 18 Dec 2014
The Separate Report has been prepared in application of Bank of Italy Circular 262 of 22 December 2005 –
The statement of cash flows has been prepared using the indirect method
Certain reclassifications have been made in the financial statements and notes to assure the consistency of comparatives with the figures for 2015.
The Separate Report forms an integral part of Poste Italiane SpA's financial statements and has been prepared on a going concern basis in that BancoPosta's operations are certain to continue in the foreseeable future.
BancoPosta's accounting policies, described in the Separate Report, are the same as those adopted by Poste
Italiane SpA and are relevant to all of BancoPosta RFC's operations.
Under the indirect method, net cash from operating activities is determined by adjusting profit/(loss) for the year to reflect the impact of non-cash items, any deferment or provisions for previous or future operating inflows or outflows, and revenue or cost items linked to cash flows from investing or financing activities.
Balances relating to transactions between BancoPosta RFC and Poste Italiane SpA ("Intersegment transactions") are recognised in the statement of financial position at 31 December 2015 as shown below: (€m)
B Total l iabil ities and equity 60,970 282 56,970 530
Guidelines establish, among other things, levels of service and the related transfer prices, and become effective, in accordance with the General Guidelines, following an authorisation process involving the relevant functions, the Chief Executive Officer and, when provided for, Poste Italiane SpA’s Board of Directors. When
Chapter 1 BancoPosta, Section II, paragraph 2, the Board of Statutory Auditors is required to verify, at least every six months, that the policies adopted are fit for purpose and are in compliance with the related statutory requirements and supervisory standards.
The services are charged for in the form of transfer prices, which were revised in 2015. In this regard, the transfer prices paid, inclusive of commissions and any other form of remuneration due, are determined on the basis of market prices and tariffs for the same or similar services, identified, where possible, following a benchmarking process. When the specifics and/or the particular nature of a service provided by a Poste
Italiane function do not allow the use of a comparable market price, a cost-based method is used, again with the support of benchmarking to ensure that the price charged is adequate for the service provided. In this case, an appropriate mark-up, determined with reference to those used by comparable peers, is applied. The resulting transfer prices are reviewed annually.
December 2015, the AGCM notified Poste Italiane of its final ruling in which, pursuant to articles 20, 21 and 22 of the Consumer Code, it deemed the Company's conduct unfair and imposed a fine of €54 million, limited to a tenth of the maximum applicable amount taking into account the mitigating circumstance that Poste Italiane had adopted initiatives aimed at allowing customers to benefit from the bonus rate.
Italiane SpA. BancoPosta RFC sent related defence briefs to the Ministry of the Economy and Finance regarding each of the notified cases. Overall, at 31 December 2015, there are 26 pending proceedings at the
Ministry of the Economy and Finance, including 24 for failure to report suspect transactions and 2 in relation to violations of the rules governing limits on the use of cash and bearer instruments.
for attention and precautions to be adopted in relation to the provision of investment services. BancoPosta
RFC is currently taking steps to address the various concerns raised by strengthening its organisational structure and procedures as part of a specific project. Progress is on track and was reported on in a detailed note sent to the CONSOB 4 June 2015. As part of the above inspection, the CONSOB also launched a penalty procedure that was completed on 26 August 2015, with notification of the Company, as jointly and severally liable party, of the ruling that has fined certain representatives of the Company a total amount of €60 thousand for violation of art. 21 of the Consolidated Law on Finance.
Financial assets held for trading are recognised at fair value with any changes in fair value recognised in profit or loss in line item 80 - Profits/(Losses) on trading. Derivatives are accounted for either as assets or liabilities depending on whether their fair value is positive or negative.
Available-for-sale financial assets are initially recognised on the settlement date at fair value which is generally the price paid. Any changes in fair value occurring between the trade and settlement dates are recognised in the Separate Report. If, exceptionally, recognition is the result of the reclassification of Held-to-maturity assets,
recognition is at fair value at the time of the reclassification. Any difference in the initial amount at which debt securities are recognised and the amount of repayments is amortised over the term of the security.
Held-to-maturity financial assets are measured at amortised cost using the effective interest rate method adjusted for any impairments. Any gains or losses are recognised in profit or loss in line item 10 - Interest and similar income. In the event that there is objective evidence of an impairment, the impairment loss recognised as the amount that would equate the carrying amount to the present value of the projected cash flows. Any impairment loss is then recognised in profit or loss. If, subsequently, the reasons giving rise to the impairment cease to exist, the impairments are reversed to reinstate the amortised cost that would have been the carrying amount if there had been no impairment.
Derivative hedges are initially recognised on conclusion of the relevant contract. There are two types of hedge:  fair value hedges reduce or eliminate exposure to risk that could potentially cause movements in the fair value of a recognised balance sheet item;
 cash flow hedges reduce or eliminate exposures to fluctuations in future cash flows attributable to specific risks associated with recognised balance sheet items.
Derivatives are initially recognised at fair value on the date the derivative contract is executed. If 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 the specific policies 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 inception of the hedge and throughout the term of the hedge.
When the hedge is related to recognised assets or liabilities, or an unrecognised firm commitment, the changes in fair value of both the hedging instrument and the hedged item are recognised in profit or loss.
When the hedging transaction is not fully effective, resulting in differences between the above changes, the ineffective portion represents a loss or gain recognised separately in line item 90 - Fair value adjustments in hedge accounting.
In the case of hedges associated with a highly probable forecast transaction (such as, the purchase of fixed income debt securities), the reserve is reclassified to profit or loss in the period or in the periods in which the asset or liability, subsequently accounted for and connected to the aforementioned transaction, will affect profit or loss (for example, an adjustment to the return on the security).
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 line item 90 - Fair value adjustments in hedge accounting. If, during the life of the derivative, the forecast hedged transaction is no longer expected to occur, the related gains and losses accumulated in the cash flow hedge reserve are immediately reclassifiedin line item 80 – Profits/(Losses)
BancoPosta's share of taxes on Poste Italiane SpA's overall income is charged to BancoPosta RFC based on the profit or loss presented in this Separate Report adjusted for deferred taxation. In particular:  for IRES, the computation takes all permanent and temporary changes in BancoPosta's operations into account. Any items not directly relating to BancoPosta are included in the Poste Italiane computation;  for IRAP, the computation is made in the same way, except that taxes on employment costs are allocated to BancoPosta RFC using the standard unbundling techniques for the regulatory books of the mandatory
Tax assets and liabilities presented in the Separate Report will be settled directly through the intercompany account with Poste Italiane SpA, which is the entity officially assessed to taxes.
Provisions for risks and charges are recorded to cover losses that are either probable or certain to be incurred, for which, however, there is an uncertainty as to the amount or as to the date on which they will occur.
Provisions for risks and charges are made when the entity has a present (legal or constructive) obligation as a result of a past event, and it is probable that an outflow of resources will be required to settle the obligation.
Financial liabilities held for trading are carried at fair value though profit or loss.
Financial liabilities held for trading are derecognised on the cessation of rights to the cash flows associated with the liability.
Gains and losses arising from movements in the fair value of financial liabilities held for trading are recognised in profit or loss in line item 80– Profits/(Losses) on trading.
Foreign currency items are translated at each reporting date as shown below:  monetary items at closing exchange rates;  non-monetary items are recognised at their historical cost translated at the transaction date spot rate;  non-monetary items designated at fair value at closing exchange rates.
Foreign exchange differences realised on settlement or translation differences arising from the use of exchange rates other than the rate used to translate the item on initial recognition are recognised in profit or loss in line item 80 - Profits/(Losses) on trading.
Related parties within the Poste Italiane Group are Poste Italiane SpA’s functions outside the ring-fence and
Poste Italiane SpA’s direct and indirect subsidiaries and associates. Related parties external to the Group include the MEF and those entities, including joint ventures, controlled by the MEF, and associates of such entities. Related parties also include Poste Italiane SpA’s key management personnel. The state and public sector entities other than the MEF are not classified as related parties. Related party transactions do not include those deriving from financial assets and liabilities represented by instruments traded on organised markets.
The termination of employment (TFR) liability to be paid on cessation of employment is calculated using the projected unit credit method and then discounted to recognise the time value of money prior to the liability being settled. The liability recognised in the financial statements is based on calculations performed by independent actuaries. The termination of employment (TFR) liability to be paid on cessation of employment is calculated using the projected unit credit method and then discounted to recognise the time value of money prior to the liability being settled. The liability recognised in the financial statements is based on calculations performed by independent actuaries. As the BancoPosta RFC
Where, following entry into effect of the new legislation, the employee has not exercised any option regarding the investment of vested employee termination benefits, the Company has remained liable to pay the benefits until 30 June 2007, or until the date, between 1 January 2007 and 30 June 2007, on which the employee exercised a specific option. Where no option was exercised, from 1 July 2007 vested employee termination benefits have been paid into a supplementary pension fund.
Service costs charged by Poste Italiane SpA’s functions outside the ring-fence, which include a portion of the fees paid included in the transfer prices charged in accordance with the operating guidelines for Poste
Preparation of the Separate Report requires the application of accounting standards and methods that are at times based on complex subjective judgments and estimates based on historical experience, and assumptions that are considered reasonable and realistic under the circumstances. Use of such estimates and assumptions affects the amounts reported in the financial statements, with reference to the statement of financial position, the income statement, the statement of comprehensive income, the statement of cash flows and the notes.
from those reported in previous financial statements, due to uncertainties regarding the assumptions themselves and the conditions on which estimates are based. 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.
Impairments and recoveries of loans and receivables, consequently, relate exclusively to unpaid trade receivables. Impairments and reversals are made with reference to assessments of credit risk based on historical experience of similar receivables, an analysis of past due items (current and historical), losses and collections and the monitoring of the current and future economic conditions in the related markets.
Provisions for risks and charges represent probable liabilities in connection with personnel, customers, suppliers, third parties and, in general, liabilities deriving from present obligations. The amounts of the provisions are based, among other things, on the estimated cost of operating contingencies, such as disputes with customers regarding investment products of a nature and/or performance deemed by customers to be inconsistent with their expectations, seizures incurred and not yet definitively assigned, and the likelihood of paying compensation to clients in those cases where there is no definitive ascertainment.
BancoPosta RFC had adopted the Poste Italiane Group’s fair value policy. This policy sets out the general principles and rules to be applied in determining fair value for the purposes of preparing the financial statements, conducting risk management assessments and supporting the market transactions carried out by the Finance departments of the various Group entities. The principles and rules to be applied in measuring the fair value of financial instruments have been defined in compliance with indications from the various (banking and insurance) regulators and the relevant accounting standards, ensuring consistent application of the valuation techniques adopted at Group level.
In compliance with IFRS 13 - Fair Value Measurement, as endorsed by EU Regulation 1255/2012 of 11
Level 1: this level is comprised of fair values determined with reference to (unadjusted) prices quoted in active markets for identical assets or liabilities to which the entity has access on the measurement date. For
BancoPosta RFC, the financial instruments included in this category consist of bonds issued by the Italian government, the valuation of which is based on the bid prices quoted on the MTS (wholesale electronic market for government securities). Level 1 bond price quotations incorporate a credit risk component.
Level 2: this level is comprised of fair values based on inputs other than Level 1 quoted market prices that are either directly or indirectly observable for the asset or liability. Given the nature of BancoPosta RFC’s operations, the observable data used as input to determine the fair value of the various instruments include yield curves and projected inflation rates, ranges of rate volatility, inflation option premia, asset swap spreads or credit default spreads which represent the creditworthiness of specific counterparties and any liquidity adjustments quoted by primary market counterparties.
 Derivative financial instruments: º Plain vanilla interest rate swaps: valuation is based on discounted cash flow techniques, involving the computation of the present value of future differentials between the receiver and payer legs of the swap. The construction of yield curves to estimate future cash flows indexed to market parameters
(money market rates and/or inflation) and computation of the present value of future differentials are carried out using techniques commonly used in capital markets.
º Interest rate swaps with an embedded option: valuation is based on a building block approach, entailing decomposition of a structured position into its basic components: the linear and option components. The linear component is measure using the discounted cash flow techniques described for plain vanilla interest rate swaps above. Using the derivatives held in BancoPosta RFC's portfolio as an example, the option component is derived from interest rate or inflation rate risks and is valued using a closed form expression, as with classical option valuation models with underlyings exposed to such risks.
The derivatives held in BancoPosta RFC's portfolio may be pledged as collateral and the fair value, consequently, need not be adjusted for counterparty risk. The yield curve used to compute present value is selected to be consistent with the manner in which cash collateral is remunerated. This approach is also followed for security in the form of pledged debt securities, given the limited level of credit risk inherent in the securities held as collateral by BancoPosta RFC.
BancoPosta RFC holds specific equity instruments for which there are no directly or indirectly observable market prices. Reference should be made to the specific disclosures provided in Part B, Section 4, Assets.
There were no occurrences during the year resulting in a requirement to transfer financial assets and liabilities measured at fair value on a recurring basis between levels 1 and 2 of the fair value hierarchy.
F inancia l asset s/ liab ilit ies at fa ir valu e At 31 Decemb er 2015 At 31 Decemb er 2014
The derivatives held in BancoPosta RFC's portfolio may be pledged as collateral and the fair value, consequently, need not be adjusted for the counterparty's credit risk (Part A, Section A.4.1).
This form of profit or loss is not applicable to BancoPosta RFC.
(Interest-bearing Postal Certificates and Postal Savings Books) or advances obtained from the Treasury to fund post office operations. This cash may only be used in settlement of these obligations. Cash includes banknotes totalling €8 million.
Securities issued by other issuers with a fair value of €1,500 million regard two fixed rate securities subscribed on 31 December 2015, having a nominal value of €750 million each. The securities pay six-monthly interest, have terms to maturity of 4 and 5 years, respectively, were issued by Cassa Depositi e Prestiti and are guaranteed by the Italian government.
Decemb er 2014 1. Micro- fa ir valu e hed ged financia l asset s 14,927 9,290 c) Foreign exchange risk - 2.
Micro-cash flow hed ged financia l asset s 2,177 2,103 b) Foreign exchange risk - -
Equ it y inst ru ment s UCIs Loans Tot al
Section 5 – Held-to-maturity financial assets – Item 50 5.1 Held-to-maturity financial assets: analysis
Securities with a nominal value of €4,993 million are encumbered as follows:  €4,072 million, carried at an amortised cost of €4,101 million (Part B, Other information, Table 2) and delivered to counterparties in connection with repurchase agreements concluded prior to 31 December 2015;  €345 million, carried at an amortised cost of €373 million (Part B, Other information, Table 2) and delivered to counterparties for use as collateral for asset swaps;  €545 million, carried at an amortised cost of €552 million and delivered to the Bank of Italy as collateral for intraday credit granted;  €31 million, carried at an amortised cost of €31 million and delivered to the Bank of Italy in relation to the clearing service offered by the central bank for the execution of Sepa Direct Debits.
Section 6 – Due from banks – Item 60 6.1 Due from banks: analysis
Asset s pu rchased Ot her 4. Credit cards, personal and salary loans - - - x x x - - - x x x
Carrying amou nt Fair valu e Carrying amou nt Fair valu e
;  a deposit of €1,331 million held with the Italian Treasury at the MEF, relating to the following:  net advances of €1,693 million, being deposits received and any excess liquidity, less advances from the MEF to meet cash requirements;  the net amount payable in relation to postal savings, totalling €170 million, being the balance of withdrawals less deposits during the last two days of the year and cleared early in the following year.
Fair valu e at 31 Decemb er 2015 Not ional amou nt at 31
Fair valu e at 31 Decemb er 2014 Not ional amou nt at 31
Decemb er 2014 8.2 Hedging derivatives by hedged portfolio and type of hedge
Section 9 – Adjustments for changes in hedged financial assets portfolio – Item 90
There are no investments in subsidiaries, joint arrangements or companies subject to significant influence.
BancoPosta does not own property, plant and equipment either for operating or investment purposes.
Movements in current tax assets and liabilities are shown below: (€m)
Asset s/ ( Liab ilit ies) Asset s/ ( Liab ilit ies) Asset s/ ( Liab ilit ies) Asset s/ ( Liab ilit ies)
prepayments for the current year 163 13 176 90 97 187 balance payable for previous year 73 - 73 48 6 54
Collection of IRES refund claimed (12) - (12) - - -
Deferred tax assets through profit or loss - - - - - - 23 - 63 12 86 12
Deferred tax assets through equity 3 - 24 5 - - - - - - 27 5
Deferred tax assets through profit or loss - - - - - - 22 - 66 11 88 11
Provisions for d ou b t fu l d eb t s
Provisions for r isks and charges 13.2 Deferred tax liabilities: analysis
Deferred tax liabilities through profit or loss - - - - - -
Deferred tax liabilities through equity 682 112 49 8 731 120
Decemb er 2014 2.1 Deferred tax assets derecognised in the year 11 25 a) relating to previous years - b ) due to changes in accounting policies - 2. 2 New taxes or tax rate increases - 3. 1 Deferred tax assets derecognised in the year (88) (73)
b) write-downs of non-recoverable items - c ) due to changes in accounting policies - 3. 2 Reduction of tax rate (4) -
Decemb er 2014 2.1 Deferred tax liabilities recognised in the year (393) (577)
Items in process 281 267 - items in transit between local branches 8 11
Tax receivables primarily relate to tax payments on account, €290 million of which for virtual stamp duty payable in 2016 and €23 million for withholding tax on interest paid to current account holders for 2015.
“Items in process, other” includes:  customer postal cheques of €80 million in collection from banks;  uses of debit cards issued by BancoPosta to be debited to customer accounts, totalling €64 million;
(Part B, Liabilities, Table 10.1) until expiration or early extinguishment of Interest-bearing Postal
Certificates, which is the date on which the tax must be paid to the authorities;  €163 million relating to stamp duty charged to Postal Savings Books, which BancoPosta RFC pays in virtual form as required by law;  amounts in the process of recovery, totalling €18 million, which are not available since the related amounts have been seized and have not yet been assigned to creditors of Poste Italiane SpA’s functions outside the ring-fence. Any losses on realisation of collateral are for the account of Poste Italiane SpA’s functions outside the ring-fence.
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 implementing paragraphs 1 to 3 of article 19 of Decree Law 201 of 6 December 2011 having regard to stamp duty on current accounts and financial products (Official Gazette 127 of 1 June 2012).
Repurchase agreements are classified as fair value Level 2 transactions, whereas the fair value of other types of transaction included in this line item approximates to their carrying amounts and they are consequently classified as Level 3.
BancoPosta RFC has uncommitted overnight lines of credit amounting to €1,118 million and overdraft arrangements of €81 million provided by Poste Italiane SpA, both undrawn at 31 December 31 December 2015. From 2014, the Bank of Italy has granted BancoPosta RFC access to intraday credit in order to fund intraday interbank transactions. Collateral for this credit facility is provided by securities with a nominal value of €545 million and the facility is unused at 31 December 2015.
Decemb er 1. Current accounts and demand deposits 43,093 40,012 4. Obligations to repurchase equity instruments - -
Repurchase agreements are classified as fair value Level 2 transactions, whereas the fair value of other types of transaction included in this line item approximates to their carrying amount and they are consequently classified as Level 3.
BancoPosta RFC held no financial instruments in the trading book at either 31 December 2015 or 31
No financial liabilities are held in portfolio designated at fair value through profit or loss (the "fair value option”).
Section 6 – Hedging derivatives – Item 60 6.1 Hedging derivatives by type and hierarchical level
Fair Valu e at 31 Decemb er 2015 Not ional amou nt at
Decemb er 6.2 Hedging derivatives by hedged portfolio and type of hedge
Cred it r isk Pr ice r isk Mu lt iple r isks 1. Available-for-sale financial assets 1,474 - - - - x 73 x x 3. Held-to-maturity financial assets x - - x - x - x x
Tot al liab ilit ies - - - - - - - - 2. Portfolio of financial assets and liabilities x x x x x - x - -
Section 7 – Adjustments for changes in hedged financial liabilities portfolio – Item
Items in process: 872 653 - amounts to be credited to Postal Savings Books 508 333 - items in transit between local branches 4 7
“Tax liabilities other than those included in Item 80” primarily include:  €716 million in stamp duty accrued to 31 December 2015 on outstanding Interest-bearing Postal
BancoPosta RFC, since this cost is recognised in personnel expenses, as the contributions are paid over to pension funds or other social security institutions.
Uses of provisions to pay benefits include the substitute tax withheld.
Other decreases were caused by transfers to certain Group companies and actuarial gains of €1 million recognised as a contra-entry in equity (Part D).
“B.1 Provisions for the year” includes personnel expenses of €5 million. Other decreases relate to transfers to the income statement during the year as a result of the derecognition of prior year liabilities, including a part of the provisions for personnel expenses.
Provisions for non-recurring charges relate to operational risks attributable to BancoPosta RFC. They regard, among other things, the liabilities arising from the reconstruction of operating ledger entries at the time of
Poste Italiane SpA’s incorporation, liabilities deriving from the provision of delegated services for social security agencies, fraud, violations of administrative regulations, compensation and adjustments to income for previous years, risks linked to disputes with customers regarding instruments and investment products whose characteristics are believed by such customers to not match their profile and/or whose performance is not in line with their expectations, and estimated risks for charges and expenses to be incurred in connection with seizures effected by BancoPosta as garnishee-defendant.
Provisions for expired and statute barred Postal Certificates held by BancoPosta have been made to cover the cost of redeeming certificates relating to specific issues, the value of which was recognised in revenue in Poste
Italian SpA’s profit or loss in the years in which the certificates became invalid. The provisions were made in response to the Company’s decision to redeem such certificates even if expired and statute barred. At 31
At 31 December 2015, undistributed earnings total €949 million. Other revenue reserves include the initial reserve of €1 billion provided to BancoPosta RFC on its creation.
Tot al at 31 Decemb er 2015 745 - 745 672 73 - x
Amou nt of net financia l asset s report ed in financia l st at ement s
Tot al at 31 Decemb er 2014 7,359 - 7,359 6,429 886 x 44
Amou nt of financia l asset s offset in financia l st at ement s
Amou nt of net financia l liab ilit ies report ed in financia l st at ement s
Relat ed amou nt s not su b ject t o offset in t he financia l st at ement s Net amou nt at 31 Decemb er
Section 1 – Interest – Items 10 and 20 1.1 Interest and similar income: analysis
Deb t s Secu r it ies Ot her t ransact ions
Decemb er 2014 5. Financial liabilities held for trading - - - - 6. Financial liabilities designated at fair value - - - - -
Decemb er 2014 c) Management, brokerage and advisory services: 2,210 2,173 4. Securities custody and administration 8 12 7. Order receipt and transmission 4 5 8.2 Relating to financial structuring - 9. Arrangement of third-party services: 2,175 2,133 d) Collection and payment services 1,080 1,129 h) Multilateral trading services - i ) Current account maintenance and management 239 252
Postal Savings Books, carried out on behalf of Cassa Depositi e Prestiti under the Agreement of 4 December 2014 covering the five-year period 2014-2018.
6. Door-to-door marketing of financial instruments, products and services - d ) Collection and payment services (51) (45)
Section 4 – Profits/(Losses) on trading – Item 80 4.1 Profits/(Losses) on trading: analysis
Section 6 – Profits/(Losses) on disposal or repurchase – Item 100 6.1 Profits/(Losses) on disposal or repurchase: analysis
Tot al liab ilit ies - - - - - -
B . Du e from cu st omers - - ( 12) - - - 1 ( 11) -
f) provisions for post- employment benefits - g ) payments to external supplementary pension funds: (1) (1)
Expense/ Amou nt s 9.2 Average number of employees by category (*)
Decemb er 2014 1) Cost of services provided by Poste Italiane SpA: (4,251) (4,500)
Provisions for risks and charges during the year primarily regard liabilities for the risks linked to claims from customers relating to erroneous invalidations or instruments and investment products, administrative violations and risks relating to delegated services. Releases to profit or loss, amounting to €4 million, relate to liabilities recognised in the past that failed to materialise.
Section 17 – Profits/(Losses) on disposal of investments – Item 240
bis Reduction in current taxation due to tax credit pursuant to Law 214/2011 (+) - 4. Increase/(decrease) in deferred tax assets (+/-) (1) 1 5. Increase/(decrease) in deferred tax liabilities (+/-) - -
Profit component / Amou nt s 18.2 Reconciliation between theoretical tax charge at statutory rate and effective tax charge
Adjustments for change in IRES tax rate introduced by 2016 Stability Law 8 0.9% - 0.0%
Net provisions for risks and charges and impairments of receivables 4 0.5% 3 0.4%
Deduction of IRAP paid on personnel expenses, Law Decree 201/2011 - 0.0% (24) -3.5%
with effect from periods of assessment commencing after 31 December 2016 (from 1 January 2017). For this reason, at 31 December 2015, a net non-recurring expense of €8 million has been charged to profit or loss and net non-recurring income of €114 million has been recognised in equity. This reflects adjustments to deferred tax assets and liabilities recoverable or payable after 2016 in order to reflect the new IRES tax rate.
Section 19 – Income/(Loss) after tax from discontinued operations – Item 280
I t ems Gross amou nt Tax on income Net amou nt 10. Profit / ( Loss) for t he year X X 587 50. Non-current assets held for sale - - 70. Hed ges of fore ign invest ment s: - - a ) changes in fair value - - b ) reversal to profit or loss - - a ) changes in carrying amounts - - b ) reversal to profit or loss - - a ) changes in fair value 12 (4) 8 b) reversal to profit or loss (71) 23 (48)
100. Availab le- for - sa le financia l asset s: 1,143 ( 216) 927 a) changes in fair value 1,526 (451) 1,075 b) reversal to profit or loss (383) 123 (260)
Ot her component s of comprehensive income not reclassified t o profit or loss
Share of va lu at ion reserve at t r ib u t ab le t o equ it y-accou nt ed invest ment s: Tot al ot her component s of comprehensive
BancoPosta's operations, conducted in accordance with Presidential Decree 144/2001, consist in the management of liquidity generated by postal current account deposits, carried out in the name of BancoPosta but subject to statutory restrictions, and collections and payments on behalf of third parties.
, with the option of investing up to 50% of the deposits in securities guaranteed by the Italian government 113 , whilst deposits by Public Administration entities are deposited with the MEF. In 2015, BancoPosta was engaged in the reinvestment of funds deriving from maturing government securities and in the trading of securities in order to progressively match the portfolio's maturity profile with the investment model adopted by Poste Italiane SpA.
Falling yields on Italian government securities, which benefitted from the launch of the ECB’s Quantitative
The investment profile is based, among other things, on the constant monitoring of habits of current account holders and a use of a leading market operator's statistical/econometric model of typical postal current account interest rates and maturities. The above mentioned model is thus the general reference for the investments (the limits of which are determined by specific guidelines approved by the Board of Directors) in order to limit exposure to interest rate risk and liquidity risks.
Management System (Guidelines for Internal Control and Risk Management System or “SCIGR”). These guidelines provide a detailed, organic and efficient view of BancoPosta RFC’s internal control and risk management system. From an organisational viewpoint, the model consists of:  the Audit and Risk Committee, established in 2015, which, with regard to BancoPosta’s operations, provides support to the Board of Directors in relation to risks and the internal control system, with particular reference to all the activities deemed instrumental and necessary to enable the Board of
Italiane SpA’s CEO. Other permanent members are the Head of BancoPosta and the heads of the functions within Poste Italiane SpA primarily involved with Bancoposta. The Committee provides advice,
From 1 April 2015, the match between BancoPosta’s private customer deposits and the related investments, verified on a quarterly basis, is assessed with reference to the amortised cost computed on the basis of the outright price of the instruments in portfolio. Prior to this, the match was assessed with reference to the nominal value of the instruments in portfolio.
makes recommendations and coordinates BancoPosta's operations with those of other Poste Italiane functions;  the Finance, Savings and Investment Committee, which is responsible for establishing policies governing management of the savings of retail customers, as well as strategies to be applied in managing financial assets. In view of the matters dealt with, the Committee is divided into three sections: º Finance, with the role of defining and overseeing the financial strategy; º Savings, with the role of establishing guidelines to be applied in the development of savings products; º Financial investment strategies, with the role of ensuring effective governance and the greatest possible alignment with strategic decisions regarding the allocation and management of financial assets;  the Financial Risk Committee, which ensures an integrated view of risk exposure and whose members include the Head of BancoPosta's Risk Management;  Poste Italiane SpA’s Coordination of Investment Management function, the work of which is regulated by specific operating guidelines, and which oversees investment strategy and the hedging of capital market risks in respect of the liquidity deriving from BancoPosta current account deposits, in accordance with the guidelines established by the various corporate bodies;  BancoPosta’s Risk Management unit, responsible for measuring and controlling risk and duly observing the independence of control functions from management. The results of these activities are examined by
In constructing the Risk Model used by BancoPosta RFC, account was also taken of the existing prudential supervisory standards for banks and the specific instructions for BancoPosta contained in Bank of Italy Circular
The prudential standards require BancoPosta to establish a system of internal controls in line with the provisions of the 15 th revision of Circular 263 of 27 December 2006, which, among other things, requires achievement of the following objectives:  definition of a Risk Appetite Framework (RAF);  the containment of risks within the limits set by the RAF;  protection of the value of assets and against losses;  identification of material transactions to be subject to prior examination by the risk control function.
Credit risk refers to counterparty, credit and concentration risks, as explained below.
Republic of Italy risk as a result of its deposits at the MEF and its investments in Government securities. Credit risk models, explained below, show, however, that for capital requirements this type of investment does not determine capital absorption.
Monitoring credit risk is particularly focused on the following exposures:  euro area government securities (or those guaranteed by the government) in which private customer account deposits are invested;  deposits at the MEF in which Public Administration account deposits are invested;  amounts due from the Italian Treasury as a result of depositing funds gathered less payables for advances disbursed;  items in process: cheque clearing, use of electronic cards, collections;  temporarily overdrawn post office current accounts caused by debiting fees: limited to those which were not classified as impaired since the accounts were in funds in early 2016;  cash collateral for outstanding transactions with banks and customers, in accordance with agreements intended to mitigate counterparty risk (CSA - Credit Support Annexes and GMRA – Global Master
The following methods are used to estimate the exposure to counterparty risk inherent in each of the following types of transaction: - the “Market Value” method is used for asset swaps and forward purchases of government securities; - Credit Risk Mitigation (CRM) techniques, the Full Method
Concentration risk is measured using the method described in EU Regulation 575/2013.
The standard method entails risk weightings in accordance with the nature of the exposure and the identity of the counterparty and the counterparty's external credit rating.
The full CRM method entails reducing risk exposure by the value of guarantee. Specific rules are applied to take into account market price volatility of the guaranteed asset as well as the collateral received.
A.1 Exposure to performing and non-performing loans: amounts, impairments, movements, economic and geographic segment
A.1.1 Distribution of credit exposure by portfolio and credit quality by carrying amount
Ot her performing exposu res Tot al 1. Available-for-sale financial assets - - - - 32,415 32,415 2. Held-to-maturity financial assets - - - - 12,886 12,886 5. Financial assets designated at fair value - - - - - 6. Financial assets held for sale - - - - - -
Collect ive provisions Net exposu re 1. Available-for-sale financial assets - - - 32,415 - 32,415 32,415 2. Held-to-maturity financial assets - - - 12,886 - 12,886 12,886 5. Financial assets designated at fair value - - - X X - 6. Financial assets held for sale - - - - - - -
“Off-balance sheet exposures, Performing” relates to the counterparty risk associated with securities provided as collateral under counterparty risk mitigation agreements and for Repo financing with Securities Financing
A . On-b alance sheet exposu res c) Non-performing past-due exposures - - - - X - X d ) Performing past-due exposures X X X X - X - -
A. On-balance sheet credit exposure 96 978 53,724 - 1 - 736 55,535
The nature of BancoPosta’s operations exposes it to a substantial degree of concentration in respect of the
Italian state. The concentration can be seen in Table A.2.1 under External Rating Class 3, which includes the
Ot her d er ivat ives Governm ent s and cent ral b anks
The concentration in central Italy is due to the fact that nearly all exposures consist of Italian Government securities and deposits at the MEF.
Large exposures a) Carrying amount (€m) 60,671 b) Weighted amount (€m) 1,243
A B C A B C A B C A B C A B C A B C
B . Der ivat ive inst ru ment s - - - X X X X X X X X X X X X X X X - -
Du e from cu st omers Tot al of which non-performing: of which non-performing: Asset / Port folio
Financial asset s d esignat ed at fa ir valu e
Interest rate risk is measured internally using the economic value method. This results in a need to develop an amortisation schedule for the funding consistent with its nature and to select a time horizon and confidence
The exposure to interest rate risk, as measured internally, is subject to stress tests of the principal risk factors –
over a time horizon of 1 day at a 99% confidence level.
(VaR) over a time horizon of 1 day at a 99% confidence level.
BancoPosta RFC's fair value interest rate risk hedges include entering into OTC fair value hedge asset swaps primarily with banks for individual securities in portfolio. These derivatives cannot hedge spread risk since they hedge market interest rate fluctuations through rate swaps. BancoPosta RFC made greater use of this type of transaction in 2015, in response to the low level of interest rates and in order to protect against the negative effects of rising interest rates.
From December 2015, a duration analysis is also performed on amounts deposited in PostePay and PostePay Evolution cards, so far “prudently” considered as being on demand, but which, in common with current account deposits, are highly granular and stable, as well as being insensitive to interest rates.
BancoPosta RFC's cash flow interest rate risk hedges include entering into OTC cash flow hedge asset swaps primarily with banks for individual securities in portfolio.
3.1 With underlying securities - Options - Other derivatives 3.2 Without underlying securities - Options - Other derivatives 4.
BancoPosta's available-for-sale financial assets portfolio at 31 December 2015 had a duration of 5.89 (31
All of BancoPosta RFC's investments are classified as held-to-maturity and available-for-sale financial assets. The sensitivity analysis shown above is for the last of these categories.
The value of the portfolio of Italian government bonds is much more sensitive to the credit risk associated with the Italian Republic than to changes in so-called risk-free interest rates. This is due, in part, to the fact that changes in credit spreads also affect the value of variable rate bonds and, especially, to the fact that, unlike pure interest rate risk, no hedging policy is in place to protect against credit spread risk. This means that, in the event of increases in interest rates attributable to pure rate component, unrealised losses on fixed rate bonds are offset by an increase in the value of hedging IRSs (a fair value hedge strategy). If, on the other hand, interest rates rise as a result of a wider credit spread for the Italian Republic, losses on government bonds are not offset by movements in the opposite direction of other exposures.
Financial liabilities held for trading - - - - - - - 31 Decemb er 2015 var iab ilit y 26,428 32,415 ( 3,036) 3,422 - - ( 3,036) 3,422 2014 effect
Financial assets/liabilities held for trading - - 31 Decemb er 2015 var iab ilit y 26,428 32,415 260 2014 effect
Financial assets/liabilities held for trading - - 31 Decemb er 2014 var iab ilit y 23,941 28,751 238
The sensitivity to cash flow interest rate risk at 31 December 2014 and 31 December 2015 is summarised in the table below and was computed assuming a +/- 100 bps parallel shift in the market forward interest rate curve.
Cash flow inflation rate risk at 31 December 2015 relates to government inflation indexed bonds which were not hedged through the arrangement of cash flow hedges or fair value hedges entered into by BancoPosta
RFC, having a nominal value of €2,060 million and a fair value of €2,508 million. The effects of sensitivity analysis are immaterial.
+ Vol - Vol + Vol - Vol + Vol - Vol 2015 effect
Available-for-sale financial assets 31 Decemb er 2014 var iab ilit y 56 14 ( 14) - - 14 ( 14)
D. Ot her liab ilit ies - - - - - -
Available-for-sale Investments 31 Decemb er 2015 var iab ilit y 77 71 9 ( 9) - - 9 ( 9)
Available-for-sale Investments 31 Decemb er 2014 var iab ilit y 68 56 4 ( 4) - - 4 ( 4)
A . Su pervisory t rad ing b ook - - - -
A.3 Financial derivatives on exchange rates and gold - - - -
B.3 Financial derivatives on exchange rates and gold - - - -
Und er lyings/ Resid u al t erm t o mat u r it y
It is policy to minimise liquidity risk through:  diversification of the various forms of short-term and long-term borrowings and counterparties;  gradual and consistent distribution of the maturities of medium/long-term borrowings;  use of dedicated analytical models to monitor the maturities of assets and liabilities:  the availability of the interbank markets as a source of repurchase agreement finance due to the fact that such assets consist of financial instruments deemed to be highly liquid assets by current standards.
Details on the risk management model are contained in the note on financial risks at the beginning of this Part
The liquidity risk resulting from contract terms requiring the provision of additional collateral in the event of a downgrade of Poste Italiane SpA is negligible. Such contracts include those for margin lending of derivatives, which require the threshold amount to be reduced to zero in the event that Poste Italiane SpA’s rating is downgraded to below “BBB-“. The threshold amounts relating to margin lending contracts included in repurchase agreements are equal to zero, meaning that these transactions are not subject to liquidity risk.
Ratio and Net Stable Funding Ratio) defined by the Basle 3 prudential regulations. These indicators aim to assess whether or not the entity has sufficient high-quality liquid assets to overcome situations of acute stress lasting a month, and to verify that assets and liabilities have sustainable maturity profiles assuming a stress scenario lasting one year. Thanks to the nature of its balance sheet (significant holdings of EU government securities and a preponderance of retail deposits), in BancoPosta’s case the indicators are well above the limits imposed by the prudential regulations.
The threshold amount is the amount of collateral that is not required to be provided under the contract; it therefore represents the residual counterparty risk to be borne by a counterparty.
The time distribution of assets and liabilities is shown below, as established for banks' financial statements
Asset - Liab ilit y/ Resid u al t erms t o mat u r it y
The prudential regulations applicable to banks and investment firms from 1 January 2014 are contained in
Requirements Directive, or “CRD IV”), containing the reforms required in order to introduce the “Basel 3”
regulations. In the third revision of the above Circular, the Bank of Italy has extended the prudential requirements applicable to banks to BancoPosta, taking into account the specific nature of the entity. As a result, BancoPosta RFC is required to comply with Pillar 1 capital requirements (credit, counterparty, market and operational risks) and those regarding Pillar 2 internal capital adequacy (Pillar 1 and interest rate risks), for the purposes of the ICAAP process. The relevant definition of capital in both cases is provided by the above supervisory standards.
In view of the extension of prudential standards to BancoPosta, BancoPosta RFC is now required to establish a system of internal controls in line with the provisions of Bank of Italy Circular 285/2013, which, among other things, requires the definition of a Risk Appetite Framework (RAF) and the containment of risks within the limits set by the RAF
Decemb er 2014 b) required by articles - - - Available-for-sale financial assets 2,500 1,573 - Property, plant and equipment - - - Hedges of net investments in foreign operations - - - Non-current assets included in disposal groups - - - Actuarial profits/(losses) on defined benefit plans (2) (3)
- Valuation reserves relating to equity accounted investments - 7. Profit/(Loss) for the year 587 440
“Reserves, other” consists of the initial reserve of €1 billion provided to BancoPosta RFC on its creation, through the attribution of Poste Italiane SpA's retained earnings.
Asset / Amou nt s Balance at 31 Decemb er 2015 Balance at 31 Decemb er 2014
Deb t secu r it ies Equ it y inst ru ment s UCIs Loans 2.2 Reversal to income statement of negative reserve: 2 - - 3. 3 Reversal to income statement of positive reserve on disposal (263) - - -
Other increases of €113 million regard a revised estimate of deferred tax liabilities on the valuation reserves for available-for-sale financial assets, following the change in the IRES tax rate described in Part C, Section 18 of this Separate Report.
;  undistributed earnings, being Bancoposta RFC’s profits appropriated on approval of Poste Italiane SpA’s financial statements.
Amou nt at 31 Decemb er of which CET1 instruments subject to transitional requirements - of which AT1 instruments subject to transitional requirements - of which T2 instruments subject to transitional requirements - -
Common Equ it y T ier 1 - CET1, b efore applicat ion of pru d ent ia l filt ers
Pru d ent ia l CET1 filt ers ( +/ - )
Element s t o b e d ed u ct ed from T2
Transit ional reg ime - Impact on T2 ( +/ - )
Ad d it ional T ier 1 - AT1 b efore e lement s t o b e d ed u ct ed and ad ju st ment s for t he t ransit ional reg ime
Element s t o b e d ed u ct ed from AT1
Tot al Ad d it ional T ier 1 - AT1 ( G - H +/ - I )
T ier 2 - T2 b efore invest ment s t o b e d ed u ct ed and ad ju st ment s for t he t ransit ional reg ime
CET1 consists of the initial equity reserve of €1,000 million provided to BancoPosta RFC on its creation and retained earnings of €949 million.
Contributions from non-controlling shareholders to BancoPosta RFC are excluded, as they are not provided for in the special regulations governing the ring-fence.
);  Common Equity Tier 1 ratio (the ratio of CET1 to total RWA): equal to 7.0% (4.5% being the minimum requirement and 2.5% being the capital conservation buffer);  Tier 1 ratio (the ratio of T1 and total RWA): equal to 8.5% (6.0% being the minimum requirement and 2.5% being the capital conservation buffer).
In calculating both the capital requirements regarding credit and counterparty risk and the Credit Valuation
Exposures resulting from the investment of funds raised from deposits paid into accounts by private and Public
Administration customers (euro zone government securities and amounts deposited with the MEF) and amounts due from the Italian Treasury as a result of depositing funds gathered, less payables for advances disbursed, do not, for the purposes of credit risk, result in the absorption of capital, as these exposures have a zero weighting.
Counterparty risk derives from exposures resulting from cash flow and fair value hedges and repurchase agreements
Market risks solely regard foreign exchange risk which, in BancoPosta RFC’s case, principally derives from foreign currency bank accounts, foreign currency holdings and the MasterCard and VISA shareholdings. In calculating the capital requirements regarding foreign exchange risk, the standardised approach provided for by EU Regulation 575/2013 is applied.
– Basic Indicator Approach) provided for by EU Regulation 575/2013. This consists of applying a percentage of 15% to the average of the relevant indicator for the last three years as at the end of the reporting period.
Risk weighted assets, or RWA, are calculated by applying a risk weighting to the assets exposed to credit, counterparty, market and operational risks.
See the previous description in Part E – Section 1, Credit risk.
The estimated risk exposure for derivative financial instruments is based on the “Market value” method, whilst the exposure deriving from repurchase agreements is estimated using the Credit Risk Mitigation (CRM) techniques, the “Full Method”. Further information is provided in Part E – Section 1, Credit risk.
BancoPosta RFC calculates the relevant indicator as the sum of the following income statement items (in accordance with IAS): net interest income (items 10-20); net fee and commission income (items 40-50); the portion of "other operating income" not generated by extraordinary or non-recurring items (a portion of the positive component of item 190); net profits on the trading book (items 80, 90, 100b, 100c, 110); dividends (item 70).
Cat egories / Amou nt s Unweight ed amou nt s/ Requ irement
Market risk solely regards foreign exchange risk, which absorbs less than 1% of total capital requirements.
At 31 December 2015, BancoPosta RFC complies with the prudential requirements specified in the section on qualitative information.
Relat ed part ies ext ernal t o t he Grou p
Other related parties external to the Group - - - - - - 10
Impact of related party transactions on the financial position at 31 December 2014
Impact of related party transactions on the results of operations for the year ended 31 December 2015
Ministry of the Economy and Finance 34 (1) 130 - - (1) - -
Other related parties external to the Group - - 3 - - - (1) -
Consorzio Servizi Telef. Mobile ScpA - - - - - - (5) -
The economic flows and performance of the operations are reported internally on a regular basis to executives without identifying segments. BancoPosta RFC's results are consequently evaluated by senior management as one business division.
3. We also attest that: 3.1 the Poste Italiane Group’s consolidated financial statements for the year ended 31 December 2015: a) have been prepared in compliance with the International Financial Reporting Standards endorsed by the European Union through EC Regulation 1606/2002, issued by the European Parliament and by the Council on 19 July 2002; b) are consistent with the underlying accounting books and records; c) give a true and fair view of the financial position and results of operations of the issuer and the companies included in the scope of consolidation.
Attestation of the separate financial statements for the year ended 31 December 2015 pursuant to art. 154-bis , paragraph 5 of Legislative Decree 58/1998 and art. 81-ter of CONSOB Regulation 11971 of 14 May 1999 1. The undersigned, Francesco Caio, as Chief Executive Officer, and Luciano Loiodice, as Manager responsible for Poste Italiane SpA’s financial reporting, having also taken account of the provisions of art.154-bis, paragraphs 3 and 4 of Legislative Decree 58 of 24 February 1998, attest to: - the adequacy with regard to the nature of the Company and - the effective application of the administrative and accounting procedures adopted in preparation of the separate financial statements during the period from 1 January 2015 to 31 December 2015.
3. We also attest that: 3.1 the separate financial statements for the year ended 31 December 2015: d) have been prepared in compliance with the International Financial Reporting Standards endorsed by the European Union through EC Regulation 1606/2002, issued by the European Parliament and by the Council on 19 July 2002; e) are consistent with the underlying accounting books and records; f) give a true and fair view of the financial position and results of operations of the issuer.
3.2 the Directors’ Report on Operations includes a reliable analysis of the operating and financial performance and situation of the issuer, as well as a description of the main risks and uncertainties to which it is exposed.