Just one year on from finalising our “Deliver 2022” Strategic Plan, we are proud to present the first Integrated Report of Poste Italiane Group. The Integrated Report is the first tangible result of a new way of doing business that involves the entire organisation.
Starting from this strategy, the integration process of ESG principles within the organisation has involved the transformation of a series of business processes. A key part of this process was the incorporation of these principles within the Internal Control and Risk management system and planning processes, enabling the Group to clearly comprehend the risks that could influence our ability to deliver on our business goals, thanks to a well-defined process for assessing, measuring and managing non-financial risks.
The sustainable management principles adopted by the Company are not only applied within the organisation, but are also promoted on the outside and in its commercial relations. In this sense, Poste Italiane works with suppliers who share the same values and who meet specific sustainability requirements: acceptance of the ethical guidelines and behavioural standards defined in the Code of Ethics, Poste Italiane Group’s Integrated Policy and the Group policy for the protection of human rights is a tangible proof of the commitment made by the Company.
Again, with regard to external relations, we have decided to reconfirm our support for local communities by establishing 10 commitments to small towns. We have promised 3,000 mayors that we will implement practical solutions for the development of their areas, aimed at guaranteeing the continuity and availability of services, access to infrastructure, digital transformation, security and the transfer of expertise.
None of this, however, would be possible without our most precious resource: our people. This is why we believe it is indispensable to ensure the wellbeing of all our employees, by offering them continuous training, career development and equal opportunities as they progress through their working lives, and by valuing diversity. We have long introduced programmes designed to improve the work-life balance of our employees, and this year, in order to boost this commitment, we have launched new corporate welfare plans intended to boost employee satisfaction by responding to their specific needs and aspirations.
In conclusion, we can look backwards with proud at the results achieved so far and look forwards with confidence in our ability to deliver in the future, aware that only through a constant, real commitment to achieving common goals and by promoting the values that we share with our stakeholders, will we be able to grow together and rise to the sustainable development challenges to come.
In order to complement the disclosure on the Group’s value creation process, the document also presents a study of Poste Italiane Group’s impact on the country’s economy.
In terms of the methodology applied, the 2018 Integrated Report has been drafted on the basis of the main international reporting standards, which in addition to the accounting standards in force, also include the Framework for Integrated Reporting published by the International Integrated Reporting Council (IIRC) and the reporting standards contained in the “GRI Sustainability
This Annual Report includes the following documents: the Report on Operations, which constitutes Poste Italiane’s Integrated Report, Poste Italiane Group’s consolidated financial statements, Poste Italiane’s separate financial statements which include BancoPosta RFC’s separate report, the related attestations provided in accordance with art.154-bis, paragraph 5 of Legislative Decree 58/1998, and the reports of the Board of Statutory Auditors and the Independent Auditor on the year ended 31 December 2018. The Report also includes the “Report on Corporate Governance and ownership structures”, published on the Company’s website in the Governance section, and which accounts for an integral part of this Annual Report. Reference should be made to this latter document for all further information on aspects relating to corporate governance.
From this reporting period, amounts shown in millions of euros have been rounded, with the result that the sum of the rounded figures does not always tally with the rounded total.
To facilitate the identification of non-financial information, the “Introduction” paragraph of the chapter “Consolidated non-financial statement” includes a detailed table which links the scopes of Legislative decree 254/16 with the paragraphs contained in the Consolidated non-financial statement section.
Report on operations 2018 Presentation of Poste Italiane Group’s first Integrated Report
On 6 March 2018, Poste Italiane SpA and Anima Holding SpA, together with Poste Vita SpA, BancoPosta Fondi SpA SGR and Anima SpA SGR, to the extent of their respective responsibilities, signed implementing agreements designed to redefine and strengthen their partnership in the asset management sector, in accordance with the general terms of the preliminary agreement dated 21 December 2017.
As provided for in the above implementing agreements, as part of the transaction, Poste Italiane thus transferred all its shares in Anima SGR resulting from the transaction to Anima Holding for the price of €120 million.
With the aim of more effectively driving growth in the payment services market and strengthening the service offering for retail, business and Public Administration customers, Poste Italiane has combined the Group’s expertise and competencies in the field of mobile and digital payments in one specialist entity. Following receipt of the necessary approvals, the initiative was implemented via the contribution in kind, to PosteMobile SpA, of the Group’s card payments and payment services business, following its removal from the ring-fence that applies to BancoPosta RFC. This was followed by PosteMobile’s establishment of a separate ring-fenced entity through which it is able to operate as a “hybrid” electronic money institution (“EMI”), whilst also continuing to operate as a mobile virtual network operator.
In keeping with objective in the “Deliver 2022” plan to maximise the value of Italy’s largest distribution network, Poste Italiane has begun the process of streamlining and simplifying the Group’s organisational model, with the aim of strengthening the operating model and making it more efficient.
�� The launch of a growth strategy involving the adoption of an increasingly customer-centric commercial approach, whilst at the same fully exploiting the specific characteristics of the different sales channels and the various types of product and service on offer. This has led to redefinition of the criteria for assigning responsibility for corporate customer segments between the Business and Public Administration and the Post Office Network functions, focusing the latter on small business and retail customers and giving the Business and Public Administration function responsibility for the other segments. In order to take advantage of the particular nature of Business and Public Administration customers, a Financial Sales Coordination function has been set up within BancoPosta, whilst the Business and Public Administration function now includes unit specialising in the sale of express delivery and parcels services.
�� Simplification of the geographical structure of the Post Office Network, Mail, Logistics and Communication, Human Resources and Organisation and Chief financial Office functions, by combining and rationalising the existing structure in order to create six macro areas in place of the previous nine, and revamping the organisational structure with the aim of making the related processes more effective and efficient. Similarly, during the year, the geographical structure of the Information Technology and Real Estate and the Security and Safety functions was cut to six areas. These initiatives represent the first step in implementing a new geographical model supported by more streamlined and effective processes, which will be extended to all the staff and business support functions.
�� Continuation of the process of centralising back office activities within the Chief Operating Office and the function’s reorganisation with the aim of boosting the effectiveness and efficiency of operating processes.
�� Implementation of the Group’s new organisational model in relation to efforts to combat money laundering and the financing of terrorism. This has led to centralisation of the processes involved in managing, coordinating and implementing the related strategies and policies, creating a Group Anti-money Laundering function that also provides outsourcing services to Group companies subject to the related statutory requirements.
The Group has an integrated, multichannel distribution network, which serves the country’s entire population via a physical network of post offices and staff on the ground and digital infrastructure with state-of-the-art multimedia channels.
Further organisational units within Group companies provide further support for commercial initiatives.
The Post Office Network function manages the commercial front end for the Private Customer and SME segments and is in charge of the post office network and area and branch offices covering the entire country.
Changes in the workforce in the macro areas into which the Post Office Network function is divided reflect the above organisational initiatives which, in addition to simplifying the geographical structure, have resulted in the transfer of the sales force specialising in the Medium-sized Business segment to the Business and Public Administration function. The number of Specialist Mobile Consultants has been boosted at branch office level.
A single Customer Care and Back Office unit operating at Group level was created in 2018, partly by reorganising the geographical structure of operations based on a hub and spoke model.
This new model has led to improved levels of service (calculated as the ratio of calls answered to calls received) and has cut average response times and the average time needed to handle complaints.
Postal Financial Post office B & PA Digital Insur. Mobile Parcels
Key 10 Multi-product sorting centres (for both standard and express products)
7 Priority Centres with low levels of mechanisation 4 SDA HUBs
The logistics process2 is locally organised on two levels, the first of which deals with coordination and is represented by Area Logistics Offices responsible for one or more regions, whilst the second is operational and includes sorting and distribution centres (Delivery Offices).
The progressive rollout of the new “Joint delivery” model began in 2018. The new model aims to align the delivery network with expected changes in demand for letter post and parcel services and with the changing needs of customers. The new model, which is expected to be fully up and running before the end of 2019, enables parcels to be delivered via the network of postmen and women, introducing afternoon and weekend deliveries.
In order to fully present how the Company, through its strategy and business model, creates shared value for the community and its stakeholders, by responding to their needs and contributing to the social and environmental development of the country, Poste Italiane has drawn up a model that estimates the economic impacts generated on the community, by adding “direct” impacts (those closely linked to the Company’s economic activities), “indirect” impacts (those deriving from the purchase of intermediate goods from Italian suppliers) and “induced” impacts (those deriving from the purchase of intermediate goods from Italian suppliers). In particular: �� GDP has been estimated as the difference between the value of production and the intermediate costs of production; �� employment corresponds with jobs supported by Poste Italiane’s economic activity; �� earned income is based on the salaries and wages paid to workers employed in the economy thanks to the activities carried out by Poste Italiane in the country; �� the tax contribution takes into account the total taxes paid to national and local Public Administrations.
The impacts generated by the Group’s operations In addition to generating direct impacts through its business activities, Poste Italiane also generates indirect impacts by promoting the development of other firms involved in the provision of the goods and services needed to make its products, and directly stimulates households consumption for those families whose income derives from family members employed by the Group and its suppliers.
Contributions due to consumer spending financed by the earned income of workers directly and indirectly employed by the Group
Contributions generated by businesses thanks to the Group’s expenditure on goods and services
Poste Group Suppliers1. Direct contrib utions 2. Indirect contrib utions 3. Induced contrib utions
Every million euro spent by Poste Italiane has an impact of €4 million on Italian households’
Every million euro spent by Poste Italiane has an impact of €6 million on the country’s GDP
DIRECT: INDIRECT+INDUCED: Every million euro spent by Poste Italiane creates jobs for people in Italy 184,000 jobs total effect (direct, indirect and induced)
Every million euro spent by Poste Italiane has an impact of €1 million on the country’s tax revenues €1.7 billion total effect
The impacts generated by the Group’s investment Poste Italiane generates impacts along its entire value chain, both “upstream” through procurement from local suppliers, and “downstream” through investments in Italian companies. By doing so, the Company is able to sustain Italy’s economic development by financially supporting local companies, as well as the State through investments in corporate and government bonds.
Identification, through internal and external analysis, of the sustainability topics potentially relevant to the Group
Stakeholder engagement Listening to the requirements of the main stakeholders played a key role for the Company in drawing up its sustainability strategy.
As a starting point, the Company carefully mapped the categories of stakeholder it relates with during the course of its activities, identifying those stakeholders who may affect the achievement of strategic objectives and those who may be significantly affected by them. This mapping was carried out in accordance with the international AA1000-Stakeholder Engagement Standard (SES). As a result of this activity, seven macro-categories of stakeholder were identified: shareholders and investors, local communities (trade associations, media, academia), customers (consumer associations), the Public Sector and the authorities (regulators, Fondimpresa), suppliers (business partners), personnel (Poste Italiane people, labour unions) and the environment.
Staff Internal communication tools (intranet, newsletters, mailshots, etc.); internal and external events for staff; periodic meetings; first- and second-level bargaining; periodic staff satisfaction surveys
The Company is committed to ensuring structured and systematic dialogue with its stakeholders via various tools operating on a continuous basis to share ideas that may be used to create shared value. Among these, the Multi-stakeholder Forum provides an important opportunity for direct discussion between the Company and its stakeholders, thus allowing the Company to better understand the external environment and acquire key elements to consolidate the foundations of its sustainability strategy.
The observations that emerged during the 2018 Multistakeholder Forum Thanks to the listening activities described above, Poste Italiane was able to get a clear idea of external parties’ needs with respect to its operations, and of available possibilities to create social and environmental benefits by taking advantage of their operational capabilities. The issues most discussed during the working sessions and the main observations of the stakeholders involved in the engagement process include the following.
Paying attention to staff. The role of employees was discussed in the context of issues relating to the promotion of corporate welfare and occupational health and safety, which is a key priority for Poste Italiane given that the Company employs more than 134,000 people. The Forum gave rise to some insights regarding the adoption of good health and safety practices, which are not limited to the workplace and may also be extended to the private sphere and, therefore, to the entire social fabric.
Reduction of environmental impact. With particular reference to waste management, participants recommended the Company adopts tailor-made measures for specific business activities, especially those that enable more efficient optimisation of waste management.
Incorporation of ESG criteria into the Company’s businesses. This issue was dealt with in a cross-cutting way in comparison to the many sustainability issues taken into consideration during the Forum, and particularly regarded the Company’s two core businesses: investment and insurance services. Stakeholders believe that taking on a proactive role in this area is an effective competitive advantage tool that requires specific skills for incorporating ESG criteria within the Company’s core business and ongoing relations with other companies.
The materiality matrix The following materiality matrix provides a graphic representation of the most relevant issues to the Company, with the exception of topics “Economic and Financial Sustainability” and “Corporate Governance” which are dealt with in the Report on Operations and in the Report on Corporate Governance and the Ownership Structure.
The topics reported are key to understand the Company’s business activities, their performances and their economic, social and environmental impacts.
The impacts relating to the material topics identified are entirely generated by the organisation, with the exception of the “environmental impacts of logistics” and “occupational health and safety” topics, which also derive from the activities of suppliers who work on a significant portion of the Group’s operations on behalf of Poste Italiane.
Guarantee the privacy of customers data, protect intellectual property and provide an effective management system for IT security and cyber security in order to ensure business continuity, protect the information assets of the Company, customers and other stakeholders, and the security of transactions.
Ensure equal opportunities in the development of individual careers, by promoting career development paths for all employees regardless of their personal characteristics (age, gender, sexual orientation, disability, ethnic origin, nationality, political opinions and religious beliefs) in accordance with the principles of impartiality and non-discrimination.
With a view to continually incorporating sustainability aspects into the Company's strategy and organisation, each material topic was also analysed, by determining the possible emergence of associated risks, the stakeholders potentially involved, the potential impact on stakeholders and Poste Italiane, and the main management methods implemented by the Company.
Staff; suppliers and business partners; financial community; customers Independent regulatory and/ or supervisory authorities
�� Strengthening of Company initiatives regarding specific issues (e.g. quality) �� Improvement of products and services �� Development of customer assistance model �� Complaints management
�� Analysis and optimisation of occupational health and safety organisational models �� Extension of production models to operational sites (e.g. lean manufacturing) �� Support for the implementation and certification of OSMSs in the production units of Poste Italiane SpA and other Group companies
�� Management of risks and opportunities relating to ESG factors within traditional insurance processes
Possible discrimination against Poste Italiane employees (e.g. gender, age, political or sexual orientation, marital status, etc.)
�� Human rights �� Introduction of oversight measures for the protection of human rights
�� Economic �� Health and safety �� Human rights �� Quality of life, wellbeing
�� Implementation of restructuring projects in compliance with the regulatory framework (National Collective Labour Contract and laws), which is characterised by governable social impacts �� Management of staff in line with legal requirements, policies and Company procedures
�� Economic �� Incorporation of ESG criteria within the operations assessment process �� Constant structured dialogue with bodies and authorities and agreed local community engagement initiatives �� Structured dialogue with consumer associations
Lack of transparency in communication and application of objective drivers in employees' career paths
As part of the sustainability development path, a methodology for assessing ESG issues was applied, with reference to the identification, assessment, management and monitoring of the two main risks connected with "climate change" and "human rights". This led to: �� definition of ESG impact and probability metrics relating to climate change and human rights; �� revision of the risk model with inclusion of the ESG category; �� pre-mapping of ESG issues relating to climate change and human rights, including by examining the catalogue of corporate risks already identified in other areas; �� identification and assessment of risks relating to climate change and human rights, and accompanying information (e.g. causes, consequences, etc.); �� incorporation of sustainability indicators into monitoring and reporting activities.
Poste Italiane's commitment to ensuring respect for human rights - promoted in the context of its own activities as well as in the context of activities entrusted to third parties or conducted with partners - is enshrined in the "Group policy for the protection of human rights", which illustrates the Group-wide structured approach in the protection of human rights. In addition to defining the monitoring and management principles of risks and opportunities relating to all forms of human rights through systematic application at every organisational and functional level within the Company, the Policy also includes Poste Italiane’s commitment to pursuing socially responsible investment and management activities.
In this regard, the Group's risk management model provides for identification of corporate activities and organisational areas in which a human rights violation risk might occur, by applying risk assessment procedures. In particular, the risks associated with human rights3 have been identified and analysed by considering various drivers - in relation to Poste Italiane (employees) and third parties (suppliers, sub-suppliers, customers, local communities, the financial community) - which are shown below. In addition, Poste Italiane provides for specific mitigation measures to respond to the risks identified and associated with each driver.
3. Risks that might have an impact on respect for human rights; these are intrinsic to all human beings, regardless of their nationality, residence, gender, nationality or ethnic origin, colour, religion, language or any other status.
�� Signing of new employment contract which provides for remuneration negotiated with the labour unions and uniform conditions for all workers
�� In addition to the ethical and social principles set out in the Code of Ethics, formal acceptance of anti-corruption and human rights principles by the Group's suppliers, subcontractors and partners 6. Training �� Training initiatives and individual training plans for Poste Italiane employees, regarding both processes and products
�� Promotion of communication, training and information initiatives to increase engagement 7. Occupational health and safety �� Occupational health and safety and environmental competence and responsibility plans
�� Dissemination and updating of knowledge/techniques and regulations as well as behavioural standards
�� Communication with the Italian Data Protection Authority in order to provide information and clarifications
4. The risks associated with climate change (e.g. extreme weather events, rising temperatures, sea level rise, etc.) that have an impact on Poste Italiane's businesses (indirect impact), as well as the risks associated with Poste Italiane's activities and operations that affect climate change (direct impact).
�� Participation in specific training courses and workshops 2. Technological developments �� Investment in new low-emission technologies (e.g. green fleet, installation of recharging points at Poste Italiane sites to power the electric vehicle fleet, installation of LED lighting)
�� Development and dissemination of the digitisation process - regarding processes and procedures as well as products and services - to help reduce pressures on the environment 3. Market scenario �� Development of existing products and services with alternatives that take ESG criteria into account (e.g. investment, insurance)
�� Products and services offering that incorporates high ethical standards and environmental criteria (e.g. development of insurance solutions that, on the one hand, encourage the adoption of sustainable and responsible behaviours by policyholders and, on the other, help to mitigate ESG risks)
�� Use of energy sources that do not use fossil fuels (e.g. solar energy from photovoltaic panels on buildings)
�� Participation in climate-related working groups and initiatives, partly with a view to defining sectoral benchmarks and/or helping to draw up guidelines
�� Dialogue and collaboration with national and international bodies and associations regarding the definition and adoption of models, policies and strategies aimed at combating climate change
Ph ys ic al ri sk s 5. Extreme weather conditions �� Adoption of business continuity plans
Incorporating sustainability within Poste Italiane's Strategy 5. The financial and operating objectives shown in the tables refer to 2022.
�� Revenue: €3.5 billion (2017: €3.6 billion ), with an increase in revenue from the Parcels segment, and easing of the decline in the Mail segment.
�� Parcels delivered by postmen and women: over 100 million (2017: 35 million).
From October 2018, the Payments, Mobile and Digital segment, together with PostePay, has been authorised by the Bank of Italy to operate as an Electronic Money Institution in line with the Plan's objectives. Operating as an internal fintech, it will enable full advantage to be taken of the growing convergence between market segments. This division will also serve as a competence centre for the implementation of the Group's digital strategy.
Regarding Financial Services, the model focuses on the distribution of third-party products without credit risk, controlled by a distribution platform. The model aims at promoting sustainable growth, through a more efficient allocation of capital and a wider range of products. Important steps in the implementation of the Plan include the renewal of the postal savings agreement signed at the end of 2017 with Cassa Depositi e Prestiti, the three-year distribution agreement signed in April 2018 with Intesa Sanpaolo, the agreement with Unicredit regarding the distribution of loans, and reaching in March 2018 a series of agreements with the Anima Group regarding closer cooperation for savings management services.
In its Insurance Services, Poste Italiane aims to maintain its leadership in the life sector by rebalancing its customer portfolios and shifting from traditional life policies to unit-linked products. The objective is also to achieve significant growth in non-life insurance and private pension plans.
�� Distribution of non-life policies: over 2 million new contracts per year (2017: 0.4 million) as a result of a distribution model that completes the insurance product offering.
The importance that Poste Italiane attaches to these issues is borne out by the 2019 incentive scheme, which provides for the assignment of a sustainability goal - in addition to the objectives traditionally assigned to the Chief Executive Officer and General Manager - to all key management personnel, the Head of BancoPosta, the Head of Internal Auditing and the heads of the various functions. Moreover, sustainability objectives are monitored monthly using the Balanced Score Card (BSC) tool, and analysed as part of the Group's risk management process using a specific Group GRC (Governance, Risk & Compliance) platform.
The Group's Sustainability Policies The incorporation of sustainability within the Company's regulatory system has led to the definition of the following policies.
Integrated Policy The policy contains a commitment to promptly comply with current regulations and general principles to be observed in the areas of quality management (UNI EN ISO 9001:2015), occupational health and safety (BS OHSAS 18001:2007), prevention of corruption (ISO 37001:2016), and management of data security and information systems (ISO/IEC 27001:2013 and ISO/IEC 20000:2011 respectively).
Tax Strategy The strategy is arranged as a set of principles and rules aimed at promoting dissemination of the values of honesty, fairness and compliance with tax regulations, thereby encouraging the development of collaborative and transparent conduct towards the tax authorities and third parties, in order to minimise any substantial impact in terms of either tax or reputational risk.
The policy sets out a clear approach to the issue of human rights, which is broader than legal requirements and enables monitoring and management of risks and opportunities relating to all forms of human rights, and also confirms the Group's commitment to pursuing socially responsible investment and management activities.
The policy sets out the principles and methods implemented by the Group to protect and promote the physical and mental wellbeing of people through prevention, a culture of safety and implementation of management systems.
The policy contains a commitment to respond to the social needs of local communities and the country as a whole with integrity and transparency, in accordance with procedures that aim to ensure the effectiveness of supported initiatives, while avoiding any potential conflict of interest.
In its responsible insurance policy, Poste Vita defines principles that enable inclusion of ESG aspects in the management of its insurance activities, and concrete adherence to principles and guidelines recognised at national and international level regarding the incorporation of sustainability criteria within traditional insurance processes.
The Group's Environmental Social and Governance (ESG) Strategic Plan Poste Italiane's ESG Strategic Plan is based on six key sustainability pillars in the ESG areas. Each pillar includes specific actions and objectives the Company is committed to achieving relating to the proper management of material topics. These have been identified by taking into account the targets the United Nations has defined at global level in the Sustainable Development Goals, and the contribution Poste Italiane can make to achieving them through its operations.
Signatory of: Principles for Responsible Investment (PRI): the PRIs are a set of six principles that set out the main actions to be taken by investors and provide specific tools (e.g. frameworks, guidelines) aimed at incorporating environmental, social and governance (ESG) factors within traditional investment policies
Principles for Sustainable Insurance (PSI): the PSIs are a voluntary initiative, supported by the United Nations, aimed at addressing risks and opportunities relating to ESG issues in the insurance sector. Launched in 2012, the PSIs are aligned with and complement the principles of the UN Global Compact
Sodalitas: established in 1995 on the initiative of Assolombarda, this foundation was the first organisation to promote corporate sustainability in Italy, by contributing to the development of the role of companies as social as well as economic players, and putting the strengths of corporate culture at the service of civil society. A unique organisation in Italy, it brings together the commitment of more than 100 leading companies and a group of volunteer managers, and is a reference point for companies that consider sustainability to be a vital strategic dimension. It has gained respect as a partner of European institutions for implementing the sustainability agenda in Italy, and stands out for its ability to implement multi-stakeholder initiatives for generating shared social value
Anima per il Sociale: an association that brings together a group of managers and companies with the mission of spreading the culture of corporate social responsibility and sustainability among local companies, at an economic, social and environmental level. The partnership enables the Group to access the association's network - consisting of large companies, associations, non-profit organisations, bodies and authorities - in order to keep up to date through monitoring, communication and training activities and by participating in Corporate Social Responsibility initiatives and events
CSR Manager: a network made up of professionals working in all kinds of organisations (companies, business foundations, trade bodies, the Public Administration, non-profit entities) who manage social, environmental and sustainability issues relating to business activities. This network of association provides the opportunity to participate in conferences held, access documents and studies prepared by the network and share best practices with the other members
Valore D: founded in 2009, this is the first association of companies to promote women's diversity, talent and leadership in support of greater gender balance within its 150 member organisations. This collaboration enables Poste Italiane, as a supporting member since 2012, to actively participate in programmes and workshops organised by the association, as well as to take part in benchmarks and the sharing of best practices regarding the issues of diversity management, achievement of work-life balance and welfare
�� financial objectives based on realistic hypothesis/assumptions, with low execution risk; �� a corporate transformation plan; THE VALUE CREATION PROCESS AT POSTE ITALIANE
Mail, Parcels and Distribution • Universal Postal Service • Letter post and parcels • Delivery of e-commerce products • Electronic communications
Intellectual • reputation • internal rules and regulations • intellettual property rights
The latest expression of this ability is the Deliver 2022 Strategic Plan, which aims to maximise the value of what amounts to the largest distribution network in Italy, by responding to the changing needs of customers and grasping new business opportunities on the path towards digitisation. Announced at the end of February 2018, the plan will enable full capitalisation of the unique strengths of Poste Italiane's network, which has more than 12,800 post offices nationwide, by establishing: Section Summary
The engine driving this process of value creation over time is the distinctive business model the Company has adopted to achieve the targets the Group has set itself for each operating sector, with the ESG objectives in the Integrated Strategic Plan. In particular, as previously mentioned, Poste Italiane operates as an integrated industrial group via Strategic Business Units specialising in activities that share the Group's multi-channel distribution network and uniform governance.
Financial Services • Collection and management of postal savings • Asset management • Sale and distribution of financial products
The main forms of capital Poste Italiane uses to create value over time Although the capital on which Poste Italiane's business is based is heterogeneous, it has characteristics that enable it be specifically determined and measured through performance indicators. The following table illustrates the characteristics of each form, and refers to the sections of this document in which a more detailed description is provided.
�� Percentage of tenders conducted on the basis of environmental and social criteria
�� FS 14 Initiatives to improve access to financial services for disadvantaged people
�� New customers in the categories most at risk of financial exclusion as a percentage of total new acquisitions
The Mail, Parcels and Distribution business is at the heart of Poste Italiane's operations. Poste Italiane plans and manages commercial products and services relating to mail, integrated services, parcels, express couriers and logistics solutions, and the integrated logistics chain, which involves management of the entire process including acceptance, collection, sorting, transport, delivery and returns procedures, partly through the services provided by its subsidiaries (Postel, SDA and Mistral Air). The logistics chain, which is integrated at local level, breaks down into two levels: coordination and operations. The coordination level is managed by six logistics areas, each covering a regional or multi-regional area which are responsible for ensuring that the end-to-end logistics process for all products and services is carried out correctly. At operational level, each logistics macro-area consists of Sorting Centres and Distribution Centres. These centres provide specialised deliveries, value-added services, messaging services, delivery of undelivered items and acceptance for large customers
The Payments, Mobile and Digital (PMD) segment – which was set up with the aim of creating a single offering centre for retail, business and Public Administration customers, by pooling Poste Italiane Group's distinctive expertise in these areas - aims to provide centralised oversight of payment services, as well as being the centre of expertise for supporting implementation of the Group's digital strategy. The segment includes collection and payment services for BancoPosta's assets (outsourced), and payment card products and services provided by PosteMobile (renamed PostePay from 1 October 2018), which over the years has gained experience in the digital field and in supporting mobile banking and mobile payments. The PMD segment is also responsible for extracting value from the equity investment in SIA
Poste Italiane provides financial services based on a service model that focuses on the distribution of third-party products in the absence credit risk, provided via a specific distribution platform. The Company aims to achieve sustainable growth, based on efficient capital allocation and a wide range of products. Important steps in this area include the renewal of the postal savings agreement signed at the end of 2017 with Cassa depositi e prestiti, the three-year distribution agreement signed in April 2018 with Intesa Sanpaolo, the agreement with Unicredit regarding the distribution of loans, and the conclusion in March 2018 of a series of agreements with the Anima Group regarding closer cooperation for asset management services. The services provided by BancoPosta, Poste Vita and BancoPosta Fondi SGR regard: product development; management of cash/deposits from proven public customers and the related investments; postal savings products; collection and payment services; the placement and distribution of financial and insurance products; card payments
Insurance services are managed by the PosteVita insurance group, which includes the parent PosteVita (a life insurance company), its subsidiary PosteAssicura (a property and non-life insurance company), and Poste Welfare Servizi (a company that provides assistance services to its customers regarding the management of health funds, and data acquisition and validation services). Insurance services are distributed by BancoPosta, via Poste Italiane's distribution network. Business processes are focused on developing and managing insurance products and services for customers. These processes consist of activities relating to "product development and reinsurance", including: the assessment of customer demand; the creation and development of products, in coordination with BancoPosta; reinsurance; activities relating to the underwriting and management of policies; underwriting; operational management; the handling of information requests and complaints; financial management
Poste Italiane’s shares are listed on the Mercato Telematico Azionario (the MTA, an electronic stock exchange) organised and managed by Borsa Italiana SpA. The Company is controlled by the Ministry of the Economy and Finance (MEF), which holds 64.26% of the share capital, including a direct 29.26% interest and an indirect 35% interest through Cassa depositi e prestiti SpA (CDP), itself controlled by the MEF.
4. The only internal member, Head of Poste Italiane SpA's Internal Auditing. 5. Committee members were appointed by the Board of Directors' meeting of 28 April 2017. At the meeting of 19 February 2018, the Board of Directors renamed the Nominations Committee and the Audit and Risk Committee the Nominations and Corporate Governance Committee and the Audit, Risk and Sustainability Committee, respectively.
The corporate governance structure reflects the recommendations in the Corporate Governance Code for listed companies published by Borsa Italiana, the provisions of Legislative Decree 58 of 24 February 1998 (the Consolidated Law on Finance), where applicable, the Supervisory Standards issued by the Bank of Italy and applicable to Poste Italiane in view of the unbundled activities conducted by BancoPosta RFC (Patrimonio destinato BancoPosta), and the legislation applicable to electronic money institutions as regards the activities carried out by Poste Italiane in implementation of the agreements entered into with PostePay – the ring-fenced EMI.
The role of the Chairwoman of the Board of Directors is to lead and oversee the Board of Directors. She is the Company’s legal representative and exercises the powers provided for by law and the Company’s By-laws, and those assigned by the Board of Directors’ meeting of 28 April 2017, and subsequently modified at the meeting of 25 January 2018.
The Chief Executive Officer and General Manager, to whom all first-level departments report (except for the Internal Auditing function, which reports directly to the Board of Directors under the supervision – designed to act as a link with the Board of Directors – of the Chairwoman), has full powers for the administration of the Company, unless otherwise provided for by law and the Company’s By-laws and with the exception of the powers reserved to the Board of Directors. The Chief Executive Officer is also the Company’s legal representative within the scope of the powers delegated to him.
With regard to the governance system adopted by BancoPosta RFC, the rules governing the organisation, management and control of BancoPosta’s operations are contained in the specific BancoPosta RFC Regulation.
Poste Italiane’s Board of Directors met on 14 occasions in 2018 to examine the following principal matters and approve the following resolutions.
25 January 2018 Proposed changes to BancoPosta RFC: Injection of fresh capital by Poste Italiane into BancoPosta RFC to boost leverage ratio
27 April 2018 Authorisation to purchase and dispose of treasury shares 9 May 2018 Interim report for the three months ended 31 March 2018 29 May 2018 Long-term contract with Amazon for postal delivery services (parcels)
28 June 2018 Revision of the 231 Model 1 August 2018 Interim report for the six months ended 30 June 2018
Revision of the Group Anti-Money Laundering Guidelines and appointment of the Head of the Group Anti-Money Laundering function.
Revision of SDA Express Courier's business plan and authorisation for the company's recapitalisation, amounting to a total of €50 million.
18 October 2018 Arrangement of committed revolving credit facilities of up to €2 billion with a maximum term of 36 months.
Approval of the application for Poste Italiane SpA's participation in the Collaborative Compliance regime established by Legislative Decree 128/2015 and approval of the Poste Italiane Group's Tax Strategy
Approval of the new Guidelines for managing transactions with Related and Connected Parties
Supplementary agreement relating to the contract for the sale of Banca del Mezzogiorno – MedioCredito Centrale SpA signed on 8 February 2017 by Poste Italiane and Invitalia
Renewal of the two-year agreement for 2019-2020 between the MEF and Poste Italiane, governing the return on the investment of current account deposits by Public Administration entities 6. Further details of Poste Italiane’s corporate governance system are provided in the Report on Corporate Governance and Ownership Structures for 2018.
For this reason, the Company has proceeded to adopt an SCIGR that is integrated with both the system’s internal and external environments. On the one hand, its components must be coordinated and interdependent with each other whilst, on the other, the overall system has to be integrated into the general organisational, administrative and accounting structures.
In line with statutory requirements and the related best practices, the SCIGR consists of three levels of control and involves a range of actors throughout the organisation.
The main risks associated with the activities of the Poste Italiane Group are shown below.
Strategic This category of risk could influence achievement of the goals set out in the Strategic Plan and are identified, classified and monitored with the involvement of management from the GRG function. This process describes the key nature of the risks, the triggers and the potential consequences or effects, in both financial terms (e.g. losses, increased costs due to delays or the failure to implement restructuring plans and efficiencies, reduced revenue), and in other terms (e.g. customer satisfaction)
Operational Operational risk refers to the risk of losses resulting from inadequate or failed internal processes, people and systems, or from external events. Management of operational risk takes place at both the level of specialist units within the Group (the Risk Management functions within BancoPosta, the Poste Vita Group, BancoPosta Fondi SGR and PostePay), in compliance with the respective supervisory standards, and at an integrated level, involving the GRG function. The following risks, among others, are closely monitored: i) IT risk, above all the risk that malfunctions and/or shortcomings in information systems could result in the loss of data integrity, leaks of personal data or breaches of confidentiality, potentially causing disruption to the services provided to customers; ii) health and safety risk, with specific regard to the risk of workplace injury to employees or contractors as a result of operating activities (e.g. the collection, transport and sorting of parcels and letter post, and the delivery of postal products using motor vehicles); iii) physical security risk, relating to access to the headquarters premises of Group companies, to post offices or other private areas by unauthorised or unidentified persons, and the limited protection of Poste Italiane’s assets and property against criminal behaviour (robberies, losses resulting from fraud, theft, ATM attacks, vandalism, etc.). Operational risk also includes disruption and/or obstacles to entry to the Group’s operating facilities (mail sorting centres and delivery centres, etc.) due to industrial action or strikes
Reputational This category regards the risks connected with a negative perception among the Group’s stakeholders, in response to which the Group has adopted a stakeholder engagement framework in order to identify and assess this type of risk at source. The main element of reputational risk to which the Group is, by its nature, exposed is linked to market performance and primarily associated with the placement of postal savings products and investment products issued by third-party entities (bonds, certificates and real estate funds) or by Group companies (insurance policies issued by the subsidiaries, Poste Vita and Poste Assicura, and mutual funds managed by BancoPosta Fondi SpA SGR), and those linked to the perceived and effective quality of the services linked to letter post and parcel delivery
Insurance risks derive from the stipulation of insurance contracts and the terms and conditions contained therein (technical bases adopted, premium calculation, the terms and conditions of cash surrender, etc.). In technical terms, mortality is one of the main risk factors for Poste Vita SpA, i.e. any risk associated with the uncertainty of a policyholder’s life expectancy, alongside the risk associated with surrenders.
The main forms of financial risks to which the Group is exposed are described below.
Liquidity This is the risk that the Poste Italiane Group is unable to meet its obligations deriving from financial instruments due to its inability to raise sufficient funds or to effectively sell assets in the market (market liquidity risk), or at market conditions (funding liquidity risk). The Poste Italiane Group applies a financial policy based on diversification of the various forms of short-term and long-term borrowings and counterparties, the availability of significant lines of credit in terms of amounts and the number of banks, and the use of dedicated analytical models to monitor the maturities of assets and liabilities
Fair value interest rate This is the risk that the value of a financial instrument fluctuates as a result of movements in market interest rates. 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 changes in interest rates on the fixed components (the interest 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’s duration
Cash flow interest rate This is defined as the uncertainty related to the generation of future cash flows, due to fluctuations in market interest rates. Such risk may arise from the mismatch – in terms of interest rate, interest rate resets and maturities – of financial assets and liabilities until their contractual maturity and/or expected maturity (banking book), with effects in terms of interest spreads and, as such, an impact on future results.
This is the risk of a downgrade of the Italian Republic, to which Poste Italiane is indirectly exposed. Poste Italiane’s rating is closely linked with the sovereign rating and, based on the methods currently used by the rating agencies, further downgrades of Italy could have a similar impact on Poste Italiane’s ratings. In addition, any new downgrade of Italy, above all a downgrade to below investment grade, could cause a further widening of the spread between the yields on Italian and German government bonds, leading to the effects described in the “Spread risk” category
Implementation of this process enables the Group to pursue the following key objectives: �� to identify and engage with stakeholders in all phases of the process, with the aim of ensuring widespread, shared and close participation on the ESG goals integrated into the Group’s strategy; �� to identify material topics in order to enable the Poste Italiane Group to adopt a Sustainable Development Policy in line with the related scenario analysis and the expectations of key stakeholders; �� to identify business and reputational risks, with particular attention to ESG risks (those of a social nature, including risks relating to human rights, and the environmental risks connected with climate change); �� to implement the actions decided and agreed on through coordination of the various functions involved; �� to use the available tools and models for monitoring sustainability initiatives, and the related indices measuring the Group’s performance, to be implemented within the Group’s GRC (Governance, Risk & Compliance) platform; �� to provide integrated reporting, above all for investors, illustrating how the organisation’s strategy, governance, performance and outlook are enabling it to create value over the short, medium and long term; �� to promote the dissemination of a corporate culture increasingly based around the concept of sustainable development, by drawing up specific policies and appropriate communication campaigns targeting both external and internal stakeholders.
The level of integration of sustainability strategies within the organisational structure is an indicator of the robustness of a business ’s corporate governance processes, resulting in an understanding of how non-financial factors are managed.
Poste Italiane ranks in the “Top Ten” in the Integrated Governance Index for 2018.
In 2018, Poste Italiane was eleventh in the Integrated Governance Index (IGI) out of 47 companies, obtaining the tenth best score and this entering the “Top Ten”. Poste Italiane was awarded almost 65% of the available points, placing the Company above average in the overall sample (54.5%). Moreover, at industry level, Poste Italiane ranks third, scoring just below the second ranked company and again above the average (56.2%).
Report on operations 2018 4. Governance and integrated risk management model
13. An indicator developed by the Bank of Italy in collaboration with the Centre for Economic Policy Research (CEPR) which provides an indication of the current economic performance of the euro area in terms of quarterly GDP growth shorn of the most variable components (seasonal factors, measurement errors and short-term volatility).
The international macroeconomic environment was positive in 2018, despite a weakening of global growth. The economic cycle reached its peak at the beginning of 2018, with the pace of growth gradually dropping off over the rest of the year. The OECD, in its Interim Economic Outlook for November 2018, predicted global growth of 3.7%, in line with the figure for 2017, but lowered estimates for 2019 to 3.5% from the 3.7% predicted in September. The OECD also highlighted how performance was uneven among the various countries, noting that economic activity in the euro are had slowed more than expected8.
The slowdown in growth resulted in an easing of commodity prices. After sharp increases in the third quarter ($82.69 a barrel on 28 September), the oil price fell to $54.15 by the end of the year. The agreement reached by OPEC and Russia at the beginning of December, reducing output, probably avoided a further fall in prices, but may not be sufficient to bring prices back towards $80, given that world demand is expected to be weak9.
Against a backdrop provided by the general slowdown in Europe, the UK economy continued to grow. Unemployment was stable at approximately 4%, helping to support consumer spending, despite rising inflation, whilst net exports made a positive contribution to GDP thanks to the weakness of sterling. The outcome of the Brexit process remains uncertain11, as does the related impact on the economy and on relations with Europe.
Quantitative Easing, the ECB would find itself in the difficult situation of trying to normalise monetary policy in a decelerating economy14.
EBIT amounts to €1,499 million, marking an increase of 34% compared with the previous year (€1,123 million), primarily due to revenue growth in almost all the Group’s operating segments and a reduction in operating costs.
of which: of which: 21.0% 102 488 590 of which early retirement incentives 619 500 119 23.9%
n/s: not significant * The figures for 2018 and 2017 have been reclassified in accordance with the reorganisation following from the transfer of BancoPosta RFC’s card payments and payment services unit (the Financial Services segment) to the newly established PostePay SpA (the Payments, Mobile and Digital segment) with effect from 1 October 2018.
The Group’s total revenue of €10.9 billion is up €236 million (2.2%) compared with the previous year.
Total revenue from Financial Services amounts to €5,221 million, marking growth of 4.2% compared with the €5,010 million of the previous year. Alongside an improvement in the interest margin, the improvement reflects a 16.6% increase in commission income on the collection of postal savings deposits, reflecting the mechanisms established in the new agreement with Cassa depositi e prestiti, as well as a positive contribution from asset management. The result also reflects a reduction in realised gains, in line with the Group’s new strategy of reducing the dependence of its results on non-recurring items, and a decrease in revenue due to the sale of Banca del Mezzogiorno–MCC, completed on 7 August 2017.
Personnel expenses of €6,137 million (€6,093 million in 2017) reflect a reduction of €75 million in the ordinary component, linked to a decrease in the average workforce (approximately 3,700 fewer FTEs compared with 2017) and an increase in the cost of early retirement incentives, which is up from €500 million in 2017 to €619 million in 2018, primarily due to provisions for early retirement schemes, totalling approximately €136 million, which will cover the cost of further early retirement initiatives for
personnel meeting the related requirements in the next 5 years under existing legislation (such as, for example, the Solidarity Fund and art. 4 of the Fornero Law).
Depreciation, amortisation and impairments amount to €570 million (up 4.5% compared with 2017).
Net finance costs of €8 million compare with the figure of €55 million for 2017, which reflected the impairment loss of €82 million on the Contingent Convertible Notes issued by Alitalia in 2014, and the impairment loss of €12 million on the Atlante fund.
Net Profit for 2018 amounts to €1,399 million (€689 million for 2017).
Consolidated financial position and cash flow at 31 December (€m) 2018 2017 Increase/(decrease)
Trade receivables, Other receivables and assets and Inventories 6,914 6,170 744 12.1%
Property, plant and equipment and Investment property 1,957 23 - 12 1 1,993
Trade receivables, Other receivables and assets and Inventories 2,534 382 2,798 2,433 (1,232) 6,914
Trade payables and other liabilities (3,259) (502) (1,917) (836) 1,231 (5,282)
'Provisions for risks and charges (980) (16) (512) (11) (1) (1,519)
Technical provisions for the insurance business - - - 125,076 - 125,076
Investments accounted for using the equity method 1,294 286 222 157 (1,451) 508
Trade payables and other liabilities (2,892) (171) (1,526) (781) 582 (4,788)
of which: fair value reserve 12 - 180 179 - 371
Property, plant and equipment and Investment property (68) 5 (1) 3 1 (60)
Investments accounted for using the equity method 140 (6) (8) - (137) (11)
Trade receivables, Other receivables and assets and Inventories 182 267 344 461 (509) 744
Trade payables and other liabilities (367) (331) (391) (55) 649 (494)
'Provisions for risks and charges 51 5 20 - (1) 76
Technical provisions for the insurance business - - - 1,497 - 1,497
The Poste Italiane Group’s non-current assets amount to €3,035 million at 31 December 2018, a reduction of €42 million compared with the figure at the end of 2017. This figure reflects investment of €538 million – offset by depreciation, amortisation and impairments, totalling €570 million – and the Parent Company’s subscription, in April 2018, for shares issued by Anima Holding SpA as a result of its rights issue, amounting to €30 million. Further movements regard impairment losses of approximately €40 million recognised following impairment tests.
The Group’s investment amounted to €538 million in 2018, an increase of 15% compared with 2017 (up €71 million).
As part of IT-related initiatives, investment in the optimisation of the applications and systems used in supplying services. This included the “Cloud” project, which aims to migrate and transform the technology platforms used by the Mail, Parcels and Distribution segment to Cloud infrastructure.
Investment in ICT was allocated to the Strategic Business Units who made requests, although the Group’s service model assigns responsibility for coordinating all the Group’s investment for every Business Unit to a central department within Poste Italiane.
Net working capital amounts to €1,737 million at 31 December 2018, an increase of €285 million compared with the end of 2017. This reflects an increase in receivables of €740 million, mainly due to an increase in payments on account of withholding tax and substitute tax on capital gains on Life insurance policies.
The €343 million increase in net deferred tax assets/(liabilities) primarily reflects the recognition of deferred tax assets of €385 million on the non-deductible movement in the obligatory technical provisions relating to the Life business and the net positive effect on taxation of fair value losses taken to reserves. These losses primarily reflect positive and/or negative movements in the value of investments classified in the new FVTOCI category (a net positive effect on deferred tax assets and liabilities of €121 million).
Equity amounts to €8,105 million at 31 December 2018, an increase of €555 million compared with 31 December 2017. The change primarily reflects net profit for the year of €1,399 million, partly offset by the payment of dividends totalling €549 million from net profit for 2017, a reduction of €440 million in the fair value reserve (including the positive effect of €1,233 million resulting from the transition to IFRS 9), reflecting movements (positive and/or negative) in the value of investments classified in the new FVTOCI category, and an increase of €150 million in the cash flow hedge reserve.
Total net funds at 31 December 2018 amount to €5,372 million, down from the figure at 31 December 2017 (when net funds totalled €5,567 million). The change during the period reflects the increase in net working capital and a reduction in the fair value of investments classified as FVTOCI, which is not reflected in the change in technical provisions for the insurance business (as these investments are primarily held by BancoPosta RFC).
The net funds attributable to the Mail, Parcels and Distribution Strategic Business Unit are down €204 million, from €1,335 million at 31 December 2017 to €1,131 million at 31 December 2018.
Intersegment loans and receivables and financial liabilities 168 161 7 4.3%
This reflects: �� operating profit of €61 million (including €156 million in net profit and depreciation and amortisation and €95 million reflecting the change in provisions for risks and charges and for employee termination benefits or TFR); �� a net inflow from the change in equity, totalling €75 million, primarily due to net dividends of €315 million, (dividends received of €864 million, after dividends paid to shareholders of €549 million), net of the fresh capital injected into BancoPosta RFC, amounting to €210 million, and into Anima Holding SpA, totalling €30 million; �� an outflow of €484 million for investing activities; �� a net inflow from the change in net working capital and other transactions, totalling €144 million, primarily due to the gain of €120 million realised on the sale of shares in Anima SGR to Anima Holding.
The borrowings shown in the above analysis primary regard the following: �� an EIB loan of €200 million maturing in March 2019 (current bank borrowings); �� a private placement of €50 million (bond issues).
Another EIB loan of €200 million reached maturity and was repaid in April 2018.
A five-year bond issue with a nominal value of €750 million, issued by the Parent Company on 18 June 2013, matured and was repaid in June 2018.
Non-current financial assets include BTPs with a total value of €532 million (a nominal value of €500 million).
Whilst registering a 3% decline, the Mail business recorded an improvement with respect to historical trends and the reduction was offset by growth in the Parcels business (up 10%), in line with the objectives set in the Deliver 2022 Plan.
Card payments recorded a 22% increase in revenue, thanks to the contribution from PostePay Evolution. Revenue from the Mobile business are also up (3%), having benefitted from the good performance of fixed line services.
Revenue from Financial Services is up 4%, reflecting a good performance from Postal Savings, and the positive contribution from assets management linked to the stronger partnership with the Anima group.
As part of the strategy designed to promote the digital single market and with the aim facilitating the shipment of parcels within the European market and drive the development of e-commerce, Regulation (EU) 2018/644 was approved on 4 March 2018.
The regulation supplements the measures contained in Directive 97/67/CE17 regarding cross-border parcel delivery services and, for the purposes of implementation, establishes a minimum level of regulatory oversight. The role of Italy’s national regulator (the Autorità per le Garanzie nelle Comunicazioni or AGCom) has been confirmed, and it has given specific responsibilities with a view to surveying the market and obtaining information on the providers of parcel delivery services currently operating in the market.
19. This is a form of anti-competitive behaviour designed to block entry to or exclude competitors from a market. It occurs when the difference between the price at which a vertically integrated provider sells a certain essential product or service – when that provider also has a dominant market position – and the downstream price is negative or insufficient to cover the competitors’ costs.
The Ministry for Economic Development Decree, setting out procedures for the issue of the special individual licenses, was published in September 2018. Law 205 of 27 December 2017 (the 2018 Budget Law) and Law 145 of 30 December 2018 (the 2019 Budget Law) introduced changes to text of Law 890 of 20 November 1982, regarding the delivery of legal process and notifications of violations of the Highway Code by post.
Finally, according to the new regulatory framework governing these services, in Resolution 600/18/CONS of 12 December 2018, the regulator has set out measures and the related procedures for the payment of compensation for legal process and violations of the Highway Code.
In Resolution 266/18/CONS, dated 6 June 2018, AGCom has fixed new, higher basic rates for the universal postal services provided to publishers18 (for shipments in excess of 2,000 copies) with effect from 1 July 2018. However, subsidised rates paid by publishers and non-profit associations and organisations are unchanged. This will ensure continued provision of a service of general economic interest, the aim of which is to make information available to end users.
Within the constraints imposed by AGCom Resolution 728/13/CONS in order to protect consumers, from 3 July 2018, Poste Italiane has introduced new rates for certain universal services. The increases meet the need to maintain high standards of quality, enabling a partial recovery of the costs incurred in guaranteeing the universal postal service throughout the country. On 3 September 2018, the consumer associations, CODACONS and Associazione Articolo 32-97, lodged a challenge against the rate rises before the Lazio Regional Administrative Court. The hearing on the merits of the challenge has yet to be scheduled.
In Resolution 452/18/CONS, AGCom has introduced a “price test” in order to assess the effective replicability of bulk mail service offerings with a value in excess of €500 thousand. These services are carried out by Poste Italiane on behalf of major private customers or offered by the Company when bidding for contracts in public tenders. Replicability is measured in terms of the position of a postal operator who, in order to offer a complete delivery service, must use Poste Italiane’s network in the areas in which it does not have a direct presence. The test aims to ensure compliance with the principle of non-discrimination and reduce the potential for Poste Italiane’s competitors to suffer from margin squeeze19.
Contratto di Programma (Service Contract) The Contratto di Programma (Service Contract) regulates relations between the Ministry of the Economy and Finance, the Ministry for Economic Development and Poste Italiane SpA in connection with the Universal Postal Service.
Customer visits to post offices / daily average (m) 1.42 1.45 (0.03) -2.1%
Stands promoting PosteMobile products and services 341 341 - - * Ratio of the load capacity used and the total load capacity of vehicles. ** Number of vehicles used in delivery operations. *** This format, present in post offices with high growth potential, is used to promote ancillary current account services and provide information on insurance products, directing interested customers to specialists in the relevant area.
The Mail, Parcels and Distribution Strategic Business unit reports negative EBIT of €430 million, an improvement of €86 million compared with negative EBIT of €517 million for the previous year.
Total costs of €8,112 million are down compared with 2017 (a decline of €28 million), reflecting a reduction in other operating costs (down €98 million). This is primarily linked to a reduction in variable costs at the airline, Mistral Air, as a result of its previously mentioned withdrawal from the passenger transport market, at Postel due to a decline in the volume of printing, and a decrease in other costs following the release of provisions for disputes with third parties, as the related liabilities for which provision had been made in previous years failed to materialise.
Net finance costs of €31 million represent a 72.2% improvement compared with the previous year, when the figure was impacted by the impairment loss (€82 million) on the Contingent Convertible Notes issued by Midco (the company that owns 51% of Alitalia SAI).
Total Mail attributable to the Group 2,951 3,124 (173) -5.5% 2,621 2,689 (68) -2.5%
* Includes services for publishers, multi-channel services, printing, document management, other basic services. This item also includes tariff subsidies relate to external revenue earned on products and services discounted in accordance with the law.
** Universal Service compensation also includes compensation relating to the standard parcels service.
The Recorded Mail segment registered an increase in volumes and revenue of 2.1% (4 million more items), and 1.5% (up €15 million), respectively, compared with 2017. This primarily reflects growth in inbound international registered mail relating to the shipment of small objects linked to the development of e-commerce.
Direct Marketing volumes are down 7.7% (42 million fewer items), due to customers rationalising their mail spend. This slowdown led to a contraction in revenue of 10.8% (€15 million).
Finally, other revenue that includes, among other things, revenue from the Printing services provided by the subsidiary, Postel, is down 10.3% in volume terms (100 million fewer shipments) and 5.7% in revenue terms (down €16 million) compared with 2017, due to a decline in the market for printing services. Publisher tariff subsidies amount to approximately €61 million and are also included in other revenue (€43 million in 2017).
The performance of the Parcels segment saw growth in volumes and revenue of 12.6% (14.2 million more items) and 9.8% (€68.2 million), respectively, compared with 2017. This is essentially due to the expansion of Poste Italiane’s presence in the e-commerce market and the positive performance of the B2C segment, which generated revenue of €301 million, an increase of 27.8% compared with 2017, on 74 million items shipped. The B2B segment, which in 2017 was adversely affected by industrial action at the subsidiary, SDA, in September and October, registered growth in both volumes and revenue of 7.5% (2 million more items) and 5.4% (€11 million), respectively.
The quality of the Universal Postal Service The quality results achieved for the Universal Service, whose objectives are defined by AGCom, are shown below. The regulator verifies compliance with the objectives and publishes the results annually, together with those regarding ordinary mail reported by the independent body.
Delivered within Target 2018 2017 * The figure for 2018 has been calculated as J1 in unregulated municipalities and J2 in regulated municipalities, following the introduction of the new alternate day delivery model in regulated areas. The figure for 2017 is based on J1 at national level, without distinguishing between regulated and unregulated municipalities.
The market for mobile and digital payments 20. Source: Bank of Italy – Data based on supervisory reports, back up by internal and external data provider estimates. 21. Source: www.spid.gov.it 22. Source: AGCom Communications Observatory no. 4/2018.
The card payments market again registered growth in 2018, continuing the trend seen in 2017. The latest available figures show that the total value of transactions stood at €160 billion in September 2018 (up 6.5% compared with the same period of the previous year), despite a reduction in the average value of individual transactions for every type of card. This reduction indicates increasingly widespread usage, partly due to the progressive extension of the service to segments where use is less intensive. Prepaid cards saw the sharpest growth in terms of both value and the number of transactions (up 24% and 30%, respectively, compared with the same period of the previous year). Credit cards, on the other hand, were again the second most used form of payment after debit cards, generating transactions worth €50 billion in approximately 700 million transactions (up 12% compared with the same period of the previous year) and resulting in an increase in the average spend20.
In terms of the digital market, 92% of the Italian population has access to the internet (55 million people) and there are around 35 million social media users, with the number of users rising continuously year after year. 85% of users access the internet from a mobile device and 52% use social media from their mobile phone. The average time spent on the internet is 6 hours a day, including 2 hours primarily spent on social media.
Digitalisation is also a growing priority for the Public Administration. The SPID, the Public Digital ID system aims to provide citizens with a single system for logging in to access all the online services provided by the Public Administration. The system enables access to over 4,300 online services provided by approximately 4,000 participating central and local government entities, including INPS, the tax authority, municipal authorities and universities21. In 2018, the number of people registering for the SPID digital identities provided by Poste Italiane rose by around 700,000, with highs of over 5,000 registrations a day coinciding with tax deadlines.
2018 has seen a strengthening of competition in the sector as a result of the launch of the new operator, Iliad, followed, at the end of June, by the entry of Ho.Mobile, Vodafone’s second brand. Against this backdrop, PosteMobile was the only operator to increase its market share, thanks to its defensive segmented marketing and pricing strategies, which enabled it to stop customers switching and prevent SIM cards from remaining unused.
Daily online users (web and app) (m) 1.5 1.3 0.2 13.8%
The Payments, Mobile and Digital segment reports EBIT of €204 million for 2018, an increase of 4.7% compared with the previous year.
At 31 December 2018, there are approximately 19 million Postepay cards in circulation (17.7 million in 2017), including 6.3 million Postepay Evolution cards, an increase of 33.0% compared with 31 December 2017.
Revenue from other payments totals approximately €85 million (up 2.9% compared with 2017) and reflects the positive performance of revenue from bank transfers (up 56% compared with 2017) and from the processing of tax payments using forms F23/F24 (up 1.6%), which offset the reduction in revenue from international transfers (down 14% compared with 2017).
The reduction in mobile service revenue, after taking into account intersegment items (down €6.4 million), reflects a decline in revenue from product sales, offset by an increase in fixed line revenue (up €13.8 million), due to strong growth in the PosteMobile Casa customer base, which is up from 42,000 lines in 2017 to 118,000 in 2018.
Operating review In order to effectively respond to changes in the market and the entry into effect of the European Payment Services Directive (PSD2), in 2018, the Group embarked on a strategy designed to expand PosteMobile’s operations, including through the creation of a new Payments, Mobile and Digital Strategic Business Unit and the launch of operations typical of an electronic money institution (“EMI”), following the company’s transformation into a hybrid EMI.
The first product to be launched by PostePay SpA, from November 2018, was Postepay Connect, the integrated solution that exploits the synergies between connectivity and digital payments. Postepay Connect combines the advantages of Postepay Evolution and PosteMobile SIM cards in order to offer an integrated digital experience via its Postepay App. The product brings together payment services and telecommunications services in a single offer with an annual charge. It provides services designed for the community represented by Postepay Connect customers, such as: the real-time transfer free of charge of data (G2G) from PosteMobile Connect SIM card to another PosteMobile Connect SIM card; money transfers between two Postepay accounts (p2p); the purchase of extra data using the Postepay App with the cost debited automatically to a Postepay Evolution account; automatic renewal of the card and the SIM debited to a Postepay Evolution account.
As regards collections, partly in response to development of the PagoPA platform, made available by the Digital Italy Agency (AgID), enabling the progressive digitalisation of payments to Public Administration entities, work was carried out in 2018 on reengineering the payment slip product. In this regard, from October 2018, payment slips are now integrated into payment notices from Public Administration entities and can be used to effect payments through either physical (post offices) or digital channels. This development marks an important milestone in the digital transformation, which envisages the development of services making it easier to make payments to the Public Administration.
In terms of fixed line services, the PosteMobile Casa offering consolidated its competitive position in its target market, launching cross-selling promotions with other products marketed by Poste Italiane.
This will be carried out in implementation of the service previously assigned to Poste Italiane by article 81, paragraph 35.b) of Law Decree 112 of 25 June 2008, regarding the Carta Acquisti (Social Card). The service will be provided on the same financial terms and conditions as for the Social Card and will involve the issue of the same number of electronic cards needed to distribute the benefit.
This performance was reflected in management of the securities portfolio. By the beginning of the year, all the gains necessary to complete the process of stabilising revenue in 2018 had been achieve in line with the Plan target for 2018, and a series of forward sales of government securities were carried with settlement at the beginning of 2019. In the second half of the year, management of the portfolio focused on purchases of securities maturing towards the end of 2018, in addition to those maturing in early 2019 and securities to replace those sold for settlement at the beginning of 2019. All the purchases achieved yields that were higher than expected and above those available until May 2018. Yields towards the higher end of the BTP curve also benefitted from deposits from Public Administration customers, which were deposited with the Ministry of the Economy and Finance. The return on these deposits was significantly higher in the second half of 2018 than in the first half.
The euro progressively weakened over 2018, reflecting the slowdown of the euro area economy and the fact that the US economy continued to see solid growth ahead of expectations. In this scenario, the euro declined from approximately US$1.20 to the euro to US$1.15.
Regulatory environment On 3 January 2018, the new Directive 2014/65/EU (so-called “MiFID2”) came into effect throughout the European Union. Together with MiFIR - Markets in financial instruments regulation (Regulation (EU) 600/2014), the Directive has amended the previous regulations. The new regulations have increased the efficiency and transparency of financial markets, boosting protections for investors and strengthening certain organisational requirements and rules for intermediaries.
EU Regulation 2016/679 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data (the so-called GDPR Regulation) came into effect on 25 May 2018. Poste Italiane has revisited its internal data protection procedures, defining the related roles and responsibilities (appointing a Data Protection Officer), updating the information provided to customers on data protection and their rights in this regard and strengthening the measures designed to protect the data held by the Group.
On 13 December 2018, the European banking Authority (EBA) published a “Consultation Paper. EBA draft guidelines on ICT and security risk management” and began a public consultation in accordance with EU Directive 2366/2015 (PSD2). This requires the Authority to draw up guidelines for the definition, implementation and audit of the security measures that payment service providers must adopt in order to manage operational and IT security risks. The consultation is due to come to an end on 13 March 2019.
Increase/(decrease)2017 2018 Results of operations (€m) 2018 2017 10.8% 7 63 70 Distribution of third-party products 263 272 (9) -3.4%
* Include asset management (bonds, government securities, equity instruments, certificates, etc.).
Loans and mortgages - volumes lent (€m) 3,143 2,642 501 19.0%
* Net inflows include asset management (bonds, government securities, equity instruments, certificates, etc.). ** The figure does not include Poste Italiane’s own liquidity. *** The figure includes revenue from financial and insurance services.
The Financial Services Strategic Business Unit generated EBIT of €859 million in 2018, an increase of 33.1% compared with the previous year (€646 million).
Gross gains during the period total €404 million, compared with €547 million in 2017, in line with the goal set in the Deliver 2022 Plan of reducing the dependence on non-recurring items.
The modest reduction in income from the distribution of third-party financial products, amounting to €263 million in 2018 compared with €272 million in 2017 (down 3.4%), is primarily due to the loss of revenue linked to the sale of BDM-MCC on 7 August 2017. Despite adoption of the new accounting standard, IFRS 15, as a result of which fees to be passed on to partners, following the early repayment of loans, are to be accounted for as a direct reduction in revenue from 1 January 2018, this category of revenue is up as a result of the increased volume of loans and salary loans arranged in 2018.
In line with the Deliver 2022 Plan, commercial initiatives in 2018 were designed to enhance the offering of postal savings products, and develop the distribution of financial, insurance, consumer credit and corporate loan products and services.
In terms of Postal Savings, the new agreement between Poste Italiane and Cassa depositi e prestiti for the three-year period 2018-2020, signed in December 2017, came into effect in 2018. On the one hand, the intention is to consolidate the role played by Interest-bearing Postal Certificates and Savings Books in the Italian savings market and, on the other, to launch a new and expanded range of products and services, partly thanks investment in technology, advertising, promotions and training. As a result, the offering was enlarged in 2018, in terms of both the type of product and returns. Training was provided to personnel responsible for promoting Interest-bearing Postal Certificates and Savings Books to the public and a number of promotional and communication campaigns were launched. Further steps were also taken in 2018 to improve the customer experience, taking better account of customer needs, including through both digital inclusion initiatives and a multi-channel approach. In December 2018, the BancoPosta App was expanded with new functions relating to the management of Interestbearing Postal Certificates and Savings Books, making it possible to manage Postal Savings products in one place together with the other products and services offered by BancoPosta. The activities carried out during the year resulted in an increase in net inflows with respect to the previous year.
In terms of loans, at the end of July 2018, the offer of property mortgages provided by Intesa San Paolo solely to employees of Poste Italiane was launched. The offer of mortgages, in order to purchase property or to replace or refinance an existing mortgage, was extended to all customer in October 2018.
CONSOB The changes made to the related procedures and IT systems, and the further initiatives planned for 2018 in order to implement the MiFID II Directive, were the subject of a specific report to the CONSOB in March 2018.
Class I premiums amount to €54.2 billion, an increase of 8.6% compared with the previous year, confirming that this is the leading class. Class III products, on the other hand, recorded a 4.5% reduction in premiums to €26.8 billion compared with 2017.
Single premiums continued to be the preferred form of payment for policyholders, representing 93.5% of total premiums written and 61.6% of policies by number.
With regard, finally, to distribution channel, around 70% of new business was obtained through banks and post offices in 2018, with premium revenue of €57.3 billion up 4.2% compared with 2017.
Premiums by class/product Premiums since beginning of year % change 2018 vs 2017
* Source: ANIA ** The term “EU insurers” refers to the Italian subsidiaries of undertakings with a registered office in an EU country operating under the right of establishment and freedom to provide services. The figures refer solely to undertakings taking part in the survey.
In terms of distribution channel, agents continue to lead the way with a market share of 75.7%.
The provisions in the Regulation should be interpreted alongside the Letter to the Market dated 5 July 2018, in which the regulator puts forward the first concrete attempt to apply the principle of proportionality, in line with the Solvency II standards, which call for prudential provisions to be applied on the basis of the risk profile of the undertaking, determined with respect to the nature, significance and complexity of its business risks.
In addition, on 2 August 2018, the regulator issued IVASS Regulation 42, setting out the disclosures to be included in solvency and financial condition reports (“SFCRs”) by undertakings and groups. The Regulation also establishes that the disclosures must be subject to an external audit by independent or statutory auditors and sets out the form that the audits must take. The above Regulation primarily aims to boost the confidence of potential users of the reports with regard to the quality and reliability of a major part of the disclosures contained in an SFCR.
On 12 February 2019, IVASS published Regulation 43 concerning implementation of the provisions regarding the temporary suspension of short-term losses on securities, introduced by law Decree 119 of 23 October 2018, converted into Law 136 of 17 December 2018. The legislation allows a temporary exemption from the regulations provided for in the Italian Civil Code and has been introduced in response to financial market volatility in 2018.
-42.2% (0) 1 0 of which early retirement incentives 1 1 (0) -0.6%
KPIs for the Insurance Services segment 31 December 2018 31 December 2017 Increase/(decrease)
* Includes gross premium revenue before the premium reserve and outward reinsurance premiums.
Net Life revenue is down 1.5% from €1,356 million in 2017 to €1,336 million in 2018, primarily due to a reduction in gross premium revenue of compared with the previous year (down €3.7 billion). This resulted in a reduction in upfront fees of €81 million, partially offset by an increase of €18 million in the net investment result which, on the other hand, benefitted from the greater volume of assets under management.
Net Non-life revenue is up 38.5% compared with the previous year (an increase of €34 million), driven by the growth of the business, with total gross premium revenue amounting to €187 million, a 33% increase compared with 2017 (€141 million). This was accompanied by a positive technical performance as a result of a reduced volume of claims with respect to the growth in sales.
Total costs of €606 million are down €51 million compared with 2017. They primarily consist of intersegment costs, amounting to €467 million (€519 million in 2017), mainly regarding fees paid for distribution, collection and maintenance services, totalling €431 million. This figure is down from the €483 million of the previous year, reflecting the reduction in gross premium revenue.
Net profit of €1,001 million is higher than the pre-tax result (€917 million) and compared with the previous year (€546 million, up 83.3%). This reflects the positive impact in 2018 of deferred tax income on the non-deductible change in technical provisions, amounting to €385 million. This reflects application of paragraph 1-bis of art. 111 of the Consolidated Law on Income Tax (introduced by art. 38, paragraph 13-bis of Law Decree 78 of 31 May 2010). This legislation provides for a partial exemption (based on a specific percentage deduction) of the movement in the obligatory technical provisions relating to the Life business from taxation, whereas the full amount of such movements was previously included in the tax base for the purposes of IRES. In Poste Vita’s case, the percentage deduction is 98.5%.
In keeping with its strategic objectives, in 2018, the Poste Vita insurance group primarily focused its efforts on: �� strengthening its leadership in the life insurance market, with a greater focus on Class III policies and pensions; �� boosting its position in the protection and welfare segment.
Management of the Non-life business was also along the lines set out in the business plan, seeking to meet the new needs of customers in the areas of welfare and health insurance, expanding the offering and enhancing the model for network support. Poste Assicura’s premium revenue of €187 million is a significant improvement on the previous year (up 33%). The performance was driven by all segments and above all welfare, where premium revenue rose from €5 million in 2017 to €25 million.
Other information The increase in the spread during the year had a negative impact on the market value of the securities held by Poste Vita, offset in the Group’s IFRS financial statements by changes in technical provisions. In the financial statements prepared under Local GAAP, the company took advantage of the option granted by IVAS Regulation 43/2019 and suspended losses of approximately €450 million on securities held in current assets. As mentioned above, statutory net profit of approximately €580 million also benefitted from the recognition of deferred tax income on the partial deductibility of the movement in the obligatory technical provisions relating to the Life business, totalling approximately €385 million, which improved the Solvency Ratio by around 8-10 percentage points.
The Solvency Ratio at 31 December stands at 211%, down from 279% in December 2017.
Given the performance of the spread and pressure on the solvency ratio, in 2018, the insurance company examined and implemented measures to support its solvency ratio, including the use of so-called ancillary own funds (AOFs), represented by unfunded capital instruments in the form of unsecured guarantees or commitments that may be included in the computation of own funds.
It should be noted that, in view of the maturity, in May 2019, of a subordinated security with a nominal value of €750 million, currently included in Tier 2 capital, if the Solvency Capital Requirement were at least equal to the amount registered at the end of December 2018, in June 2019 the full amount of the commitment, totalling €1,750 million, could be included in the computation of the company’s supervisory capital.
Poste Italiane SpA’s total revenue amounts to €9,289 million for 2018, broadly in line with the previous year (€9,290 million in 2017). This reflects a good performance from revenue from sales and services (up €359 million), which benefitted from a strong performance from financial services, a reduction in other income from financial activities (down €228 million or 35.3%), in line with the Group’s new strategy of reducing its dependence on non-recurring gains, and a decrease in other operating income, which is down from €584 million in 2017 to €452 million, reflecting a reduction in dividends from subsidiaries.
Other operating costs of €2,103 million are down 2.9% compared with the €2,165 million of 2017. This reflects higher provisions for risks and charges in 2017, for the most part linked to the operational risk associated with the Company’s sale of units in real estate funds in the period between 2002 and 2005.
Property, plant and equipment and Investment property 1,882 1,964 (82) -4.2%
Trade receivables and other receivables and assets 4,415 4,061 354 8.7%
Non-current assets of €4,528 million are up €98 million compared with the end of 2017, essentially following the subscription for new shares issued by PosteMobile (from 1 October, renamed PostePay), amounting to €140 million, via the contribution of the card payments and payment services business unit following its prior removal from the BancoPosta RFC’s ring-fence. The balance also reflects impairment losses on investments, totalling €121 million, based on the impairment tests carried out and the injection of €90 million in fresh capital into SDA Express Courier to cover losses incurred through to 31 December 2017 and 30 June 2018 and to recapitalise the company, as authorised by Poste Italiane’s Board of Directors on 25 January 2018 and 20 September 2018. The balance also includes the subscription for the new shares issued by Anima Holding, totalling €30 million.
The balance also takes into account provisions for operational risk, reflecting adjustments to provisions for potential liabilities linked to claims brought by customers who invested in real estate funds in the period between 2002 and 2005 and whose performance was not in line with their expectations.
Intersegment loans and receivables and financial liabilities 829 718 111 15.5%
Industrial net (funds)/debt outside the ring-fence after adjusting for intersegment transactions (634) (1,010) 376 -37.2%
The operating model, organisational structure and the associated responsibilities assigned to the various functions are set out in BancoPosta RFC Regulation approved by Poste Italiane’s Board of Directors and last revised on 31 January 2019.
In compliance with the regulations for the sector, the BancoPosta function is responsible for coordination of the Group company, BancoPosta Fondi SGR.
On 25 January 2018, Poste Italiane SpA’s Board of Directors approved the removal from BancoPosta RFC’s ring-fence of the assets and liabilities attributable to the card payments and payments services business unit and their subsequent transfer to the Group company, PosteMobile, in order to enable the latter to operate as a hybrid electronic money institution (“EMI”). Following the receipt of clearance from the Bank of Italy, the Extraordinary General Meeting of Poste Italiane’s shareholders held on 29 May 2018 approved the proposed removal, from the ring-fence that applies to BancoPosta RFC. On 26 September 2018, PosteMobile was entered into the Register of Electronic Money Institutions set up by article 114 – quater of the Consolidated Law on Banking. From 1 October 2018, Poste Mobile assumed its new name of “PostePay” and began operating as an intermediary specialising in mobile and digital payments.
Following on from the Board of Directors’ resolution of 25 January 2018 and the subsequent Extraordinary General Meeting of Poste Italiane SpA’s shareholders, on 27 September 2018, Poste Italiane injected €210 million of fresh capital of into BancoPosta RFC.
Net interest income / Net interest and other banking income***** 27% 26%
* CET 1 Capital includes the initial equity reserve and non-distributable revenue reserves (Tier 1 capital), taking into account the transitional regime (Regulation 2017/2395 EU).
Profit/(Losses) on financial assets and liabilities measured at fair value through profit or loss 9 - 9 -
Net losses /recoveries on impairment of loans and advances (22) (15) (7) 46.7%
The interest margin amounts to €1,527 million, an improvement of 5.5% (€79 million). This reflects returns on investment linked to the volume of funds raised through postal current account deposits and repurchase agreements, and the return earned on interest-bearing deposits at the MEF, which as a whole generated interest income of €1,556 million, up 5.3% on the €1,477 million of the previous year (up €79 million). Interest expense, on the other hand, mainly regards interest paid to current account holders, interest on repurchase agreements and interest on deposits used as security for derivative transactions, amounting to €29 million, in line with the previous year.
Fee and commission expense is up from €65 million in 2017 to €140 million, essentially as a result of trading relations relating to the provision of payment and card payment services provided under a service arrangement with PostePay from 1 October 2018.
Provisions for risks and charges of €72 million primarily relate to operational risks linked to the distribution of Post Savings products, the distribution of real estate funds whose performance was not in line with customers’ expectations, and the fees to be passed on to financial partners in relation to the sale of loan products. The reduction of €110 million in this item is primarily linked to a reduction in net provisions for liabilities resulting from the distribution of real estate funds.
Net credit losses amount to €22 million for 2018, compared with €15 million for the previous year.
Income tax expense for 2018 amounts to €233 million (€185 million in 2017, an increase of 25.9%). The resulting net profit totals €597 million.
Total permanent and flexible workforce 1,343 1,730 463 1,660 * Shown in full-time equivalent terms.
At 31 December 2018, the BancoPosta function has 11 second-level functions, including 4 Marketing functions: Affluent, Business and Public Administration, Place Marketing and Mass Market and Small Business; 1 Sales function: Financial Sales Coordination; 3 Staff functions: Administration and Outsourcing Governance, HR Business Partner BancoPosta and Planning, Control and Data Analysis; 3 Control functions: Compliance, Internal Auditing and Risk Management. 2018 witnessed a number of organisational and corporate changes with the BancoPosta function, designed to focus on the intermediary’s role in overseeing product development and distribution, in collaboration with Group companies, and in managing the sales network. In this context, in compliance with regulations for the related sector, BancoPosta has assumed responsibility for the coordination of BancoPosta Fondi SGR (the Group’s asset management arm).
This reorganisation has been accompanied by a restructuring of the card payments and payment services business unit, which, following its removal from BancoPosta RFC’s ring-fence, has been transferred to a ring-fenced entity that will operate as an electronic money institution at PostePay. This was accompanied by the centralisation of back-office functions and responsibility for managing the risks relating to money laundering and the financing of terrorism within Poste Italiane.
Statement of financial position Assets (€m) at 31 December 2018 at 31 December 2017 Increase/(decrease)
Financial assets measured at fair value through other comprehensive income 32,040 39,140 (7,100) -18.1%
With regard to financial assets represented by sundry receivables, these primarily include: (i) amounts deposited with the MEF, totalling €7,233 million (€6,390 million at 31 December 2017); (ii) guarantee deposits of €1,652 million (€1,179 million at 31 December 2017); (iii) receivables relating to the balance of amounts resulting from the processing of payments to and from third parties via Poste Italiane, totalling €843 million (€732 million at 31 December 2017); (iv) trade receivables of €875 million (€774 million at 31 December 2017); (v) repurchase agreements of €251 million (not present at 31 December 2017).
Hedging derivatives amount to €368 million, down from €395 million at 31 December 2017.
Hedging derivatives are up from €1,637 million at 31 December 2017 to €1,829 million (an increase of 11.7%).
Provisions for risks and charges, amounting to €511million at 31 December 2018, compared with €543 million at 31 December 2017 (a reduction of €32 million), include provisions made in relation to disputes and charges relating to personnel, customers and third parties in general, and various liabilities deriving from obligations assumed. The movement in this item reflects a combination of new provisions, uses and other movements during the year, as described in specific sections of the notes to the financial statements.
BancoPosta RFC’s equity at 31 December 2018 amounts to €2,879 million (€2,759 million at 31 December 2017) and includes: (i) the BancoPosta RFC reserve, totalling €1,210 million, including €1,000 million relating to BancoPosta RFC’s initial reserve and the €210 million capital injection on 27 September 2018, following the shareholder resolution of 29 May 2018; (ii) retained earnings of €1,057 million; (iii) valuation reserves of €15 million (primarily reflecting the value of the fair value reserve); (iv) net profit for 2018, amounting to €597 million.
Under the guiding principles adopted at Group level, one of the most important aspects of the system is the control environment in which employees carry out their activities and exercise their responsibilities. This environment is based on integrity and other ethical values, the organisational structure, the allocation and exercise of authorities and responsibilities, the separation of duties, staff management and incentive policies, staff expertise and, more in general, the corporate culture. BancoPosta’s control environment is evidenced by: �� the Group Code of Ethics; �� implementation of the Organisational Model required by Legislative Decree 231/2001 and the related corporate procedures; �� the system for delegating powers to function heads in accordance with their responsibilities; �� the organisational structure of BancoPosta, as reflected in organisational charts, service orders, organisational notices and procedures determining the roles and responsibilities of the various functions; �� the “General Guidelines governing the process of contracting out BancoPosta’s corporate functions to Poste Italiane and/ or third parties”, governing the process of outsourcing BancoPosta RFC’s operations to Poste Italiane functions in terms of decision-making processes, the minimum content of operating guidelines, levels of services, information flows and control procedures, and the process of outsourcing BancoPosta functions to third parties, identifying the related operational phases and the roles and responsibilities of the various bodies and functions involved in the process; �� the Guidelines in the Internal Control and Risk Management System (also “SCIGR”), describing the roles and duties of BancoPosta RFC’s control functions, and the procedures for coordinating and ensuring the exchange of information between these functions and Poste Italiane’s control functions and the flow of information to corporate bodies.
In compliance with the regulatory requirements contained in the Bank of Italy’s Supervisory Standards and the CONSOB regulation governing the controls to which BancoPosta is subject, in early 2019 BancoPosta’s Internal Auditing function prepared its Annual Report for 2018, the purpose of which is to provide information to the various corporate bodies on the completeness, adequacy, functionality and reliability of the overall system of controls, with specific regard to processes, procedures, information systems and mechanisms applied in the oversight of BancoPosta’s activities. The Report was prepared on the basis of the findings of the audit activities carried out by the function and set out in the Audit Plan for 2018. The report contains information on the outcomes of the audit of the services contracted out by BancoPosta to Poste Italiane functions under operating guidelines and the activities outsourced to providers external to the Company.
BancoPosta RFC events after 31 December 2018 Following the receipt of clearance from the Bank of Italy on 18 December 2018, the outsourcing of BancoPosta’s financial management service to BancoPosta Fondi SGR, a Poste Italiane Group company, was effective from 1 January 2019. BancoPosta Fondi SGR is a specialist, regulated intermediary, with specific expertise in asset management and set up to act as a competence centre for the management of financial investments. Financial management, which under Bank of Italy regulations is defined as an “Important Operational Function”, was previously carried out, under internal operating guidelines, by a function within Poste Italiane. At the same time, again from 1 January 2019, BancoPosta Fondi SGR outsourced its Internal Audit and Risk Management to BancoPosta, designed to achieve an overall strengthening of the controls conducted by the audit departments involved.
Outlook for BancoPosta RFC In 2019, BancoPosta RFC will continue to implement the strategic objectives in Poste Italiane’s Deliver 2022 Plan, in line with its continued commitment to leveraging its customer base, distribution network and brand.
In addition, expansion of the range of financial products will continue with the aim of better responding to the different needs of customers.
Intersegment transactions Intersegment transactions between BancoPosta and Poste Italiane functions outside the ring-fence are set out in Poste Italiane Financial Statements for the year ended 31 December 2018 (BancoPosta RFC’s Separate Report, Part A of the notes).
First company in the financial and communications sectors to obtain the anti-corruption certification
Increase staff training on the Group's ethical principles (including respect for human rights)
Ethics and transparency constitute the highest values of Poste Italiane’s corporate identity. These fundamental principles guide the way in which the Company implements its business activities, which is, by its nature, is based on trust, as well as the management of relations with all its stakeholders.
In November 2018, in order to make its commitment to legality and transparency effective, Poste Italiane adopted an Integrated Management System with the primary aim of ensuring uniform governance of the systems implemented at Company level, whilst guaranteeing quality, occupational health and safety, data security, and prevention of corruption across all corporate processes and activities.
In April 2018, as part of its internal audit and risk management system, in line with existing national and international best practices and the reference regulatory framework, Poste Italiane revised the “Internal System for Reporting Violations” (whistleblowing) guidelines, which are aimed at regulating the internal system for reporting - including anonymously - actions or events relating to violations of the internal and/or external rules governing Poste Italiane’s activities (including the Code of Ethics), as well as the reporting of unlawful or fraudulent conduct that may directly or indirectly cause economic and financial harm, or damage to the Company’s image.
The 2018 integrity and transparency process was marked by a significant commitment to strengthening the Anti-Bribery Management System, adopted on a voluntary basis in accordance with ISO 37001:2016 Anti-Bribery Management System standard. The actions undertaken include attribution to the Group Risk Management Function within Corporate Affairs of the “Corruption Prevention Compliance Function”, which has the appropriate competence, status, authority and independence to exercise its role of supervising the planning and implementation of the Anti-Bribery Management System. The process concluded positively with Poste Italiane SpA’s achievement of Anti-Bribery Certification, via concrete implementation of the integrity and transparency principles that will enable the Company to specifically respond to the challenges of the Deliver 2022 Plan and the expectations of stakeholders, whilst taking advantage of the opportunities arising from the innovations and transformation process underway. Concrete implementation of these principles in all business contexts gives the Company leadership in the national arena and is a model for inspiring contributions to Italy’s development and wellbeing. Poste Italiane was the first Italian company in the financial and communications sector to obtain the Anti-Bribery Certification, which concerns the planning, guidance, supervision and coordination of postal and financial services. In committing itself to obtaining a voluntary certification to reduce these risks, the Company has shown a high degree of responsibility towards the market and all stakeholders in general.
In order to prevent and suppress fraud and any other business or financial offence and to ensure the authenticity of people’s physical and digital identities, internet access is provided to the “Identity Check”, an initiative that enables reporting of relevant information. Thanks to the agreement with the Tax Police (Guardia di Finanza), Poste Italiane will also make its computer assets available to verify and protect citizens’ digital identities by setting up a task force to study new criminal scenarios.
As evidence of the degree of attention Poste Italiane pays to the correct management of its businesses, the Company has applied for and obtained renewal of its legality rating for a two-year period. It was awarded the top score, which has only been given to 6% of the applicant companies. The legality rating tool, which applies to Italian companies, was introduced in 2012 to promote and introduce the principles of ethical conduct into the business environment by granting an “award”, which indicates the legality compliance level of the companies that have applied for it. On attribution of the rating, advantages in the granting of public funding are linked to facilitation of access to bank lending.
The Group invests in training and information activities for its staff to guarantee dissemination of a culture of integrity and transparency throughout the value chain. In order to ensure that its employees are aware of anti-corruption issues, Poste Italiane implements a compulsory e-learning and classroom training programme for all staff on anti-corruption principles and, in particular, on reporting mechanisms and any significant changes to anti-corruption legislation and/ or the adopted regulatory system. In addition, the Group’s general and specific anti-corruption principles are also communicated to its stakeholders through the Code of Ethics. In line with its human rights policy, Poste Italiane’s objective is to increase its integrity training offering by providing in-house workshops to the entire workforce on specific issues, such as human rights.
For the Poste Italiane Group, promoting responsible supply chain management is primarily synonymous with the sustainability, functionality and traceability of procurement. The Company bases its procurement processes on pre-contractual and contractual relations geared towards full compliance with legality and transparency, by monitoring compliance with current regulations and corporate directives regarding aspects such as quality, worker protection and environmental standards, starting from supplier qualification procedures.
The path mapped out in the procurement process also includes ESG issues, involving investigation of suppliers’ possession of specific requirements via sustainability audits (e.g. respect for their employees’ working conditions, etc.).
Poste Italiane guarantees equal opportunities to all suppliers, and the opportunity to compete in contract awarding procedures. Suppliers involved in contract awarding procedures are required to comply with the EU and Italian legislation on competition, refraining from anti-competitive or unethical conduct that is contrary to the rules that safeguard competition. The Poste Italiane Group requires its suppliers - including any subcontractors, and their partners - to formally accept the guiding ethical and social principles and obligations regarding conduct set out in the Code of Ethics, the Poste Italiane Group’s Integrated Policy and the Human Rights Protection Policy, which, as of January 2019, became an integral part of the contractual relationship.
In this context, the Group intends to strengthen governance and oversight of procurement processes, and continue the development of the project relating to the digitisation of internal processes in order to simplify and speed them up and reap environmental benefits, as well as strengthening the principles of transparency and impartiality in the processes of awarding works, service and supply contracts. With a view to making business processes and competitiveness more effective, Poste Italiane is committed to promoting the adoption of selection, assessment and monitoring criteria for suppliers in order to measure their social and environmental performance and mitigate any ESG risks
• The qualification system, set up following publication of a specific notice for each product or service category and governed by specific documentation, limited to the open categories, can be accessed by all economic operators meeting the established requirements for participation
In 2018, the process of centralising Group companies’ procurement activities in the Corporate function continued. This led to centralisation of the procurement of PostePay and the PosteVita Group, with the aim of implementing an integrated Group procurement model and strengthening procurement risk oversight.
In recent years, the Parent Company’s procurement has been marked by constant, large-scale use of competitive procedures that guarantee competitive advantages for the Company and ensure impartiality, transparency and equal collaboration opportunities for suppliers. Contract awarding procedures are also managed via the Procurement Portal (“Poste-procurement”), the internet platform used for all procurement activities as well as for management of the Supplier Register. This IT system was set up to ensure efficient and integrated management of the entire procurement process, as well as to encourage and improve collaboration with suppliers, whilst meeting the requirements of confidentiality, authenticity, competitiveness, integrity and data sharing availability.
• Web platform used to conduct online tenders and in general in procurement
• Group companies operate in the free market when procuring goods and services for use in operations and in achieving their business objectives, in keeping with the Public Tenders Code
All suppliers seeking qualification for the Supplier Register are required to meet general requirements (moral and professional suitability), as well as specific business, financial, technical and organisational requirements. In addition, in its relations with suppliers of works, services and supplies, Poste Italiane operates on the basis of standard contractual clauses that may be revised in accordance with any new regulatory provisions and any special needs expressed by an internal customer. The adoption of uniform contractual standards thereby provides a timely means of speeding up the process, keeping contracting timeframes to a minimum and, above all, improving the oversight of data on the various matters involved.
During the year, planning and implementation activities were carried out regarding the product segments (new and expiring) in accordance with the precepts of the New Supplier Register Regulations. Moreover, management of the new qualification process and the transition process was started in order to ensure the coexistence of the old qualification system until the new segments have been populated in accordance with the provisions of the Supplier Qualification Guidelines.
Finally, among the policies described in the Internal Regulations for the Award of Works, Service and Supply Contract Procedures, pursuant to Law no. 190/2012 as amended and supplemented entitled “Provisions regarding the prevention and repression of corruption and illegality in the Public Administration”, Poste Italiane periodically publishes on its website, in a section freely available to all citizens, information regarding the contract awarding procedures identified by the relevant legislation, in accordance with the procedures established therein.
The “Open and Transparent Contracts” portal is another key element of this approach.
The Vendor Rating Index (VRI) is a tool Poste Italiane has adopted for overall assessment of suppliers with regard to aspects relating to the levels of quality provided by the Company in the supply of goods and/or services. The VRI assessment is carried out at six-month intervals, with the overall results expressed on a scale from 0 to 100, and corresponding qualitative assessment brackets suppliers. The VR system is based on a structured methodology with three areas of interest: administrative, commercial and technical, for each of which the corresponding quality is assessed. The evaluation is carried out by individual supply and by supplier.
Selection of suppliers On the basis of the procurement requests prepared by the requesting departments, Poste Italiane then proceeds to the selection of suppliers (which in the case of procedures arising from the Supplier Register, takes place among qualified operators), and, subsequently, to the signing of the contract with the identified supplier.
In its relations with suppliers of works, services and supplies, Poste Italiane operates on the basis of standard contractual clauses which may be revised in the light of regulatory provisions or adapted to meet specific internal requirements. In particular, the main clauses cover the following: the regularity of supplier’s social security contributions and remuneration; compliance with labour regulations (Legislative Decree 276/03 as amended and supplemented, Public Contracts Code); the applicability of Collective Labour Agreements; absence of breaches of occupational safety regulations (Legislative Decree 81/2008 as amended and supplemented); absence of environmental offences (Legislative Decree no. 152 of 3 April 2006, as amended and supplemented).
Additional specific health and safety measures have been introduced into works contracts, whose assessments and measurements are contained in the Safety and Coordination Plans (SCP) and the specific Operational Safety Plans (OSP). As evidence of Poste Italiane’s commitment to occupational health and safety, the Group has established and provided for possible termination of supply contracts in the event of a breach of one or more aspects of the relevant safety documentation.
The Group intends to promote the adoption of ethical standards of conduct by its suppliers, also by encouraging the attainment of certifications, such as quality (ISO 9001), environmental (ISO 14001), social (SA 8000) and occupational health and safety certifications (OHSAS 18001).
Logistics Regarding procurement for the main services (full rent fleet, transport services, etc.), an environmental-sustainability score is awarded during tendering procedures based on the emission category of vehicles used for services, with a high score given to bids that provide for categories with lower CO2 emissions.
In the context of works contracts, specifically those relating to construction and plant works characterised by moderately priced services to be implemented in buildings or on sites located nationwide, this system encourages the presence of local labour, as well as the supply of preferably locally-sourced materials, with a view to reducing procurement costs by optimising the environmentallysustainable aspects of the system (reduction of travelling times and distances, and the resulting CO2 emissions).
For the same purpose, Poste Italiane subdivides works into lots by geographical area limited to large metropolitan areas (e.g. Rome, Catania, Palermo and Naples) and/or two or more provinces.
With regard to organisational controls in terms of checking, assessing and monitoring parties and counterparties, the Group Risk Management function in the Corporate Affairs function carries out activities to identify all the operational and reputational details needed to verify the relative reliability and integrity of corporate, financial and asset analyses of companies and representatives, and analysis of existing relations with Poste Italiane.
Reduce the rate of absenteeism due to sickness Rate of absenteeism due to sickness of 3.49 by 2020
Promote membership of the Welfare platform 15% conversion rate of Group employees’ performance-related bonuses by 2022
Increase women's involvement in staff development plans 4% more women compared with the average of the two-year period 2016-2018 by 2022
A company like Poste Italiane, which plays a key role in Italy, operates across a value chain that involves a significant number of actors, which includes individuals, organisations, authorities and businesses. Consequently, in addition to complying with the regulations it is subject to, Poste Italiane is committed to taking on ever greater responsibility in safeguarding the wellbeing of the people who work in and for the Company, and those who collaborate with it or merely live in the communities where it operates, in order to foster the development of a “corporate culture” and a response to new challenges and market opportunities.
Regarding the initiatives Poste Italiane is involved in, for several years the Company has been working with the Equal Opportunities Department of the Cabinet Office on the active promotion of the 1522 anti-violence and stalking telephone number across its network of post offices. The 24/7 toll-free number, managed by Telefono Rosa’s Helpline, offers support to victims of violence and stalking through specialised operators who, in addition to providing useful information, direct victims to the main public and private social and health services in their local areas.
With the aim of defining, structuring and developing a clear approach to the issue, in December 2018 Poste Italiane adopted the “Poste Italiane Group Policy on the Protection of Human Rights”. This reinforces what is already set out in the Code of Ethics and substantiates the commitment based on international standards, principles, guidelines and recommendations, including the Universal Declaration of Human Rights and subsequent international conventions on civil and political rights; the economic, social and cultural rights of the International Labour Organization; the UN Guiding Principles for Business and Human Rights of 2011; and the United Nations 2030 Agenda along with the 17 Sustainable Development Goals.
The document, which was approved by the Board of Directors in 2018, identifies qualitative and quantitative composition criteria, aimed at effectively fulfilling the duties and responsibilities entrusted to management, partly through the presence of people who ensure sufficient diversity in terms of perspectives and skills, which are necessary to have a good grasp of current business, risks and long-term opportunities relating to the Company’s activities. In defining its diversity criteria, the Board of Directors has taken into account the nature and complexity of the Company’s business, the social and environmental context in which it operates, the experience the Board has gained with regard to its own activities and operating methods and those of its internal committees, as well as the findings of the self-assessment processes conducted in recent years.
In addition to the requirements of professionalism, honourableness and independence and the incompatibility and/or forfeiture criteria provided for by law, regulatory provisions and the Company’s By-laws, the Policy addresses issues relating to age and seniority, gender, geographical origin and international experience (for further details see the “Report on Corporate Governance and the Ownership Structure”).
Supporting maternity and paternity The “Maam” initiative launched by Poste Italiane in 2015 consists of a digital programme aimed at strengthening the skills relating to the procreative experience of motherhood, which may also be useful at the time of returning to work. From 2018, the programme was also extended to fathers.
Voluntary registration is envisaged for the MAAM digital programme and the MAAM manager platform, which provides for direct communication between managers and staff on maternity leave, in order to facilitate an effective return to work.
The programme is also supported by a community of participants who share experiences, emotions and reflections on the process of returning to work and motherhood.
MAAM is designed to help share a cultural model at all levels which is geared towards the inclusion of women in the workplace, and encouraging active parenting for both parents.
Supporting vulnerability The “PosteHelp” project is aimed at offering a network of services and support initiatives to colleagues suffering from serious diseases. The project breaks down into: corporate volunteering to support basic needs, coaching sessions by in-house professionals, and guidance and support activities to identify more accredited treatment centres for specific diseases nationwide. The project was launched in the pilot regions of Lombardy, Lazio, Campania and Sicily.
In the light of increasing innovation, continuous technological and regulatory developments and business needs, Poste Italiane attributes a key role to the ongoing development of knowledge and skills as part of the process of enhancing and enabling people’s growth. The Group’s focus on promoting full potential is underpinned by the principle of excellence based on recognition of merit, respect for corporate values and application of the leadership model at all organisational levels. Therefore, the Company offers fair and transparent tools and methodologies that in their application take account of the diverse nature of the various business areas and functions.
As mentioned in the Code of Ethics, the Group protects, acknowledges and rewards each person’s contribution, and is committed to offering equal employment and career advancement opportunities to all employees, which are key elements in maintaining staff satisfaction.
Specifically, through an annual online survey which involves all corporate functions the Company identifies the training needs that make up the annual Training Plan, which breaks down into three areas: managerial training; specialised technical training; compulsory and compliance training. Starting from an analysis of the above-mentioned regulatory requirements, the Corporate University identifies the appropriate methods to implement training activities, which may be in-class (in-house or external teaching) or through e-learning.
Average of 19% more training provided to middle managers in the two-year period 2017-2018
In addition, Poste Vita has planned two projects for the development and enhancement of human capital: “Executive Master in Insurance & Finance EMIF “, a top-level, specialised two-year master’s programme aimed at talented young people in core areas of the Company; and “Key Competence ”, aimed at mapping the specialised technical skills of professionals involved in the definition and management of insurance products, and also to fill training gaps.
Continuous performance improvement Training has a significant impact on the level of individuals ’ knowledge and skills to support the development of operational performance, professional development, and compliance or alignment of behaviour with corporate values. In order to assess the quality of training, participants are asked to fill in satisfaction questionnaires, which are structured to measure staff satisfaction levels regarding the organisation, teaching, logistics, etc.. Periodic surveys are also envisaged regarding the state of progress of the training plan in terms of hours, participation, topics, trends and information flows shared with reference corporate and control functions. The effectiveness and efficiency of training initiatives are monitored by means of specific indicators (e.g. course pass rate, absence rate).
To support human resource development policies, Poste Italiane uses the Development System as a basic architecture to manage roles, skills and development paths within the organisation, which is divided into three main macro-processes that pursue specific goals: �� Scouting: aimed at identifying individual potential and the most qualified staff. The characteristics and criteria for accessing the scouting processes envisaged by Poste Italiane are specific and differentiated according to the target population, and the level of professional maturity revealed by the participants.
�� Management planning: aimed at identifying development priorities with a view to succession and the reduction of “managerial risk”. Poste Italiane periodically reviews the managerial development planning process through review meetings between the Human Resources and Organisation Function and the department heads.
�� Development: aimed at supporting the individual growth of staff members and accelerating their professional development. The development actions comprise a set of structured and coordinated interventions designed to support people on their growth path in terms of corporate needs, based on the findings of scouting and planning processes.
The Management Review and Succession Planning processes, activated respectively to map the managerial population and identify possible successors, supported the definition of succession plans for first and second level organisational positions.
Performance Management was conducted to ensure that people’s performance was geared towards the Company’s objectives, including for 2018. An “extended appraisal” (so-called 180°) was activated for the Group’s entire managerial workforce which, with respect to the managerial behaviour manifested by the appraisee, enabled gathering of different points of view (boss, colleagues, appraisee). Among other things, the Performance Management system enables gathering of opinions, degree of satisfaction, appreciation and level of sharing of the appraisal received by the workforce involved. In addition, to support people on their growth path in terms of corporate needs, a Mentoring programme was activated, which involved internal staff in the roles of both mentor and mentee. The programme’s degree of efficiency and satisfaction was assessed via a web community dedicated to participants and an ad hoc survey.
For 2018-2019, the Key Professional programme was launched for a number of corporate functions and was aimed at enhancing the distinctive skills of professionals through a dedicated development path.
As well as leading to better working and living conditions, increasing people’s wellbeing is a prerequisite for greater loyalty, which translates into increased productive value and self-efficacy at both individual and collective levels. The principles underlying the Company’s welfare policies are outlined below: Within the Poste Italiane Group people have always been a vital resource, comprising the key element that enshrines our real competitive advantage. Consequently, the wellbeing of workers is one of the key ethical principles of the Group, which strives daily to promote a healthy, beneficial working environment free of prejudice, whilst respecting the personality and dignity of each person.
The central importance of our people has led the Company to pay increasing attention to aspects relating to motivation, organisational wellbeing and the creation of a collaborative and participatory environment. In this context, corporate welfare plans have been developed, with the aim of increasing worker satisfaction and strengthening the social security system, via a variety of services provided by the Company.
In the planning and development phase of the welfare plan, Poste Italiane promotes an increasingly intergenerational approach, associated, where possible, with analyses relating to gender, age, professional characteristics and the family status of the people involved in the initiatives. The “age pyramid” is particularly important, as people’s age group affects their actual needs and consequently the types of services the Company shall provide.
Commitment to achieving these objectives is the outcome of the many modern and flexible tools and working models designed to respond to specific personal needs and to ensure the work-life balance that the Poste Italiane Group has created for its employees.
Work-life balance With a view to achieving work-life balance, the Group provides many initiatives for its employees and their families.
The Company’s crèche service is available at the Rome and Bologna offices, and, via a reciprocal agreement, in Milan. Poste Italiane has provided for a contribution based on the type of working hours chosen and/or families’ income status, amounting on average to 50% of the monthly fee, thereby guaranteeing reduced rates to access the service.
Health and prevention Since 2018, Poste Italiane Group employees have been able to benefit from supplementary healthcare. In the “Basic” version, the cost is entirely borne by the Company, while the “Plus” version requires employees to bear additional costs. In both versions, by paying an extra contribution, employees may have the assistance extended to cover their families. Health services may be provided either by employees’ own physicians/healthcare facilities, or by a network of affiliated healthcare facilities. Regarding healthcare, the Company contributes to the financing of the Supplementary Healthcare Fund and other supplementary funds, so that services supplementary to the National Health Service may be recognised.
In July 2018, Poste Italiane signed an agreement with the labour unions regarding the performance-related bonus, which, on a voluntary basis, allows employees to opt to transfer the entire amount of their bonus or a portion thereof to cover the cost of welfare goods and services with a social impact, in addition to those already provided for (supplementary pension). These may include, for example, education and training expenses, care expenses for the elderly and/or dependent family members, transport expenses, etc.. By virtue of the tax and social security benefits provided for by current legislation, transfer of such amounts will be tax-free for employees. An IT platform will be used to implement the initiative, via which employees will be able to substitute their performance-related bonus with welfare goods and services. In line with the corporate strategies relating to paying increasing attention to motivation and organisational atmosphere aspects, the aim of the welfare project is to enhance personal and family wellbeing, enable staff to access a wide range of customisable services, and strengthen safeguards that supplement public welfare (e.g. welfare, healthcare, education, children’s education, support for vulnerable people and assistance), and, in general, to enhance purchasing power thanks to the tax and social security opportunities provided for by law. The value of the Company welfare platform lies in being able to manage the various generational needs of the workforce in an integrated way, monitoring their level of satisfaction and recruitment, creating forms of continuous, multi-channel and user-friendly interaction, and having a personalised welfare “portfolio” in line with differing lifestyles. The platform will be implemented by applying of all Poste Italiane Group’s expertise and technological assets.
Indeed, in its Code of Ethics the Group sets out the reference principles of fairness, impartiality and independence for the promotion of our relations with the labour unions.
Moreover, Poste Italiane guarantees and safeguards the right and freedom of association and collective bargaining, in accordance with current legislation, and adopts an open attitude towards labour unions’ organisational activities.
In this regard, the Group envisages the sharing and signing of specific agreements with the labour unions, regarding matters expressly provided for in the National Collective Labour Agreement, as well as other matters relating to the achievement of objectives outlined in the Strategic Plan that have repercussions for staff in terms of legislation and/or organisational changes
In the event of significant organisational changes (reorganisation and/or restructuring and/or corporate transformation processes) that have social consequences with repercussions on working conditions (e.g. collective redundancy schemes), the Group refers to national collective bargaining, which provides a specific procedure for dialogue between the Company and the national labour unions signing the National Collective Labour Contract.
The agreement confirmed the option for employees to allocate all or part of their performance bonus to Fondo Poste or other supplementary pension funds.
The state of progress of the actions and objectives set out in the signed agreements is guaranteed by periodic audits, and also thanks to specific Monitoring Committees. Any reported incidents and emerging areas of conflict regarding anomalies noted by the labour unions at the local level are also assessed during these processes.
�� Ente Bilaterale per la Formazione e Riqualificazione Professionale (Bilateral Agency for Staff Training and Retraining), through which the Parties jointly promote activities in the field of training and retraining, with regard to the provisions of the Consolidated Law on Occupational Health and Safety, and also with reference to any processes of reorganisation/restructuring/ transformation of the Company, or the introduction of technological innovations. In 2018, in continuation of its activities, the Body supported the development, presentation and activation of various projects through a technical investigation initiative, as well as the signing of agreements that have enabled the Company to access funding from Fondimpresa and the Fondo di Solidarietà (Solidarity Fund) for income support, employment and professional retraining regarding Poste Italiane Group staff. In accordance with the provisions of art. 5 of the current National Collective Labour Contract, the Body received updated information on the activities of the European Social Dialogue Committee for the Postal Sector.
Indeed, staff wellbeing is not only a moral principle, but also the key to successful individual and corporate performance.
This overall vision translates into a corporate strategy focused on pursuing the highest levels of protection and security for workers, through the planning and implementation of actions aimed at ensuring effective management of occupational health and safety in all stages of the value chain.
The ongoing monitoring of injuries contributed, also in 2018, to the implementation of various initiatives on prevention and on occupational health and safety of the workforce and the workplace. In this regard, the prevention programmes and information and awareness campaigns, as well as the occupational safety management systems, which have for some time been adopted in line with current legislation, confirm the belief that an effective model enables systematic management of occupational health and safety.
Given the company’s focus on health and safety issues, which are particularly sensitive for the logistics and delivery sector, specific activities have been planned to consolidate the wealth of knowledge and skills regarding the matter and to raise awareness of the role it plays, including: �� introduction of Lean Manufacturing principles in plants, a philosophy that aims to minimise waste until it is eliminated. This objective is achieved by introducing new automated load handling systems (AGV - automated guided vehicles), and restructuring of real estate in all the departments that comprise the logistics network, which are initiatives that enable a reduction in injuries and improvement in terms of occupational health and safety; �� constant risk assessment and updating of Risk Assessment Documents, following the reorganisation initiatives underway, primarily in the delivery sector; �� training on the use of vehicles provided to around 2,000 staff by the Traffic Police; �� introduction of around 300 new three-wheeled vehicles in the corporate fleet to replace motorcycles.
In 2018, with the aim of strengthening oversight of occupational health and safety, Poste Italiane SpA obtained certification of the Occupational Health and Safety Management System, in compliance with the BS OHSAS 18001 standard, adopted by the “Strutture central e le loro dipendenze territoriali” (Central facilities and their local branches) production units.
With reference to future lines, the Group has set itself the objective of extending the process of certification by an external body to all the production units of the Parent Company and the remaining subsidiaries.
Approximately 8,300 injuries in 2018, almost 400 less than in 2016 (approximately 8,700)
Starting with the Group’s Integrated Policy and Health and Safety Policy, each employer has approved the policy for its production unit, making it available to all workers. All Group companies that have adopted management systems provide for periodic assessment and auditing, in order to ensure compliance with the requirements of the reference standards, and that they are correctly implemented and kept active. In addition to these systems for monitoring and reporting any anomalies, operational checks are carried out at delivery centres and post offices, aimed at assessing overall status in terms of infrastructure safety, plant engineering and work processes, as well as raising awareness among staff working at sites; and control measures are in place aimed at analysing and assessing the occupational health and safety compliance status of the sites, with particular reference to aspects regarding plant and infrastructure.
Provide basic services, including in small municipalities without a post office
Provide 254 small municipalities without a post office with ATMs and postal services via the network of tobacconists and home delivery by postmen and women by 2019
The Company’s inclusive approach is reflected in constant listening activities and dialogue with citizens, authorities and third sector associations, at local and national level, in a continuous process of reconciling relative and legitimate interests.
In line with the increasing integration of sustainability into the Company’s businesses, Poste Italiane intends to strengthen its role in supporting the needs of local communities, through activities that can have a real social and economic impact on local areas, always based on the operating logic of assessing social needs.
The Group’s objective is to play a key role in the development of Italy’s economic system as a whole and to seek constant integration between the needs of the community and its business objectives, by identifying projects and initiatives that respond to shared interests and generate a concrete and measurable impact on the community
In line with the Group’s reference values, interventions on behalf of the community are carried out in accordance with transparent and accountable criteria, as well as formalised procedures aimed at avoiding any personal or corporate conflict of interest.
Poste Italiane has also adopted a specific procedure that governs corporate processes relating to sponsorship and donation initiatives. The procedure governs the corporate processes relating to the means of implementing sponsorship activities and donations to partners, bodies, associations and local authorities operating in local areas. Such contributions, as also specified in the Integrated Policy of the Poste Italiane Group, may not be used to conceal acts of corruption. Indeed, before making contributions, the Company conducts a due diligence process based on the relevance of the initiatives, the reputation of the potential partner, their alignment with corporate objectives and their expected benefits. After making contributions, the Company constantly assesses the compliance of supported initiatives with contractual provisions and the due performance of activities, and also carries out specific checks on the proper fulfilment of contractual obligations. Sponsorship and donation requests are assessed by the Sponsorship and Donation Committee.
Moreover, with a view to monitoring the impacts of the initiatives implemented, with reference to the classification and measurement standard of the London Benchmarking Group (LBG) model, Poste Italiane identifies specific performance indicators to measure the benefits of initiatives for both business and the community.
During 2018, Poste Italiane developed and managed a series of initiatives aimed at promoting environmental sustainability, economic solidarity and social inclusion, the most significant of which are described below.
10 Impegni a favore delle Comunità nei Piccoli Comuni (10 Commitments to Support Communities In Small Municipalities)
�� Central office dedicated to the needs of the community: Establishment of a central office at Poste Italiane’s headquarters dedicated to supporting the specific needs of small municipalities via a toll-free number, which administrators may call to request information and promote initiatives.
�� New ATMs: Installation of 254 ATMs in small municipalities without a post office in order to facilitate access to financial services in local areas, and the possibility for 3,542 small municipalities without ATMs but with a post office to request installation of an ATM.
�� The “Treasury” service in collaboration with CDP: Thanks to the partnership agreement signed between Cassa depositi e prestiti and Poste Italiane regarding provision of treasury services to small municipalities, the initiative provides for two main activities: management of “cash advances” by CDP in the event of temporary liquidity shortages, and management by Poste Italiane of all collection/payment activities and budget checks, through a team of qualified and dedicated staff; and the availability of a post office for activities requiring “physical presence” and access to the entire post office network for collection activities.
�� Increased security inside and outside post offices: Expansion of video-surveillance services inside and outside post offices, in agreement with police forces, to strengthen the security of citizens in local areas.
�� Removal of architectural barriers in the Post Offices of more than 1,000 municipalities: Demolition of 80% of architectural barriers in the 1,379 Post Offices of small municipalities by 2020.
“Valori Ritrovati” (Recovered Values): anonymous and abandoned parcels given to those most in need On the occasion of the 33rd International Volunteer Day, on 5 December 2018 Poste Italiane presented the “Valori Ritrovati” initiative, at the Citadel of Charity of Rome’s diocesan Caritas. The aim of the initiative was to give the contents of parcels that had not been picked up or delivered - so-called “anonymous” or “abandoned” parcels - to the neediest families through the distribution channels of the “Solidarity Emporium”, the emporium chain that provides free basic necessities to needy families.
Taking advantage of the circular economy principle of re-using goods, “Valori Ritrovati” is an example of a concrete and effective solution that preserves value rather than destroying it. Moreover, the collaboration with one of the main local charities strengthens the Company’s presence as a promotor of local development via social inclusion and solidarity initiatives. In addition to the social value, the project has a strong inclusive footprint as it enables needy families to receive goods (for example, clothing, toys, small electrical household appliances, household utensils) that they would not normally have been able to buy.
Il Volontariato d’Impresa (Corporate volunteering) During 2018, as part of the “Volontariato d’Impresa” project, which includes more than 1,000 employees, Poste Italiane redefined its processes and development and management methods on the basis of three key aspects: �� the need to create a structured dialogue and interaction procedure with third sector entities that enables the planning and launch of new volunteering projects promoted and co-designed by Poste Italiane; �� boosting and developing the volunteering community, by strengthening identity, and planning and providing dedicated training activities; �� promoting local initiatives relating to the planning of shared social services (including in collaboration with associations and local authorities), with the participation of Poste Italiane volunteers and the support of the corporate functions involved.
The Cresco Awards: the partnership with Sodalitas to promote sustainable cities On 24 October 2018, within the 35th Annual Assembly of ANCI (Associazione Nazionale Comuni Italiani - National Association of Italian Municipalities) at the Rimini Trade Fair, Poste Italiane participated in the award ceremony of the 2018 Cresco Awards. This event, which gives recognition to the initiatives of Italian municipalities that are most effective in supporting the sustainable development of local areas, is promoted by the Sodalitas Foundation in collaboration with ANCI. With the Cresco Award, Sodalitas aims to link up the companies and municipalities working on sustainability in local areas, taking the Sustainable Development Goals of the 2030 Agenda drawn up by the United Nations as a reference point.
Among the initiative’s 15 partner companies, Poste Italiane received the “Digital development of small municipalities” award, as a result of its initiatives to support the municipalities of Canosa Sannita (province of Chieti), the municipality of Guardia Sanframondi (province of Benevento) and the municipality of Sovizzo (province of Vicenza).
Food Bank), which enables people to donate part of their shopping expenditure to those in need. Poste Italiane has made 162 Company vehicles available for the transport of donated food items. Employees participated both as drivers and as volunteers at Emporium.
21 murales created in 2018 as part of the P.A.I.N.T. project
31. In 2018, Poste Italiane’s support for trade associations amounted to approximately €3.6 million.
Regarding relations connected with legislative issues, the relationship with public decision-makers is aimed at promoting knowledge of a wider range of assessment elements, which enable analysis of the impact and possible consequences of a given law, and optimum representation of proposals to change existing legislation.
The natural synergy between the Group’s mission and the authorities makes it possible to establish strategic agreements and partnerships in the interests of the community, which allow for implementation of investment and initiatives typically aimed at identifying bids relating to innovative integrated services, promotion of the postal network’s nationwide presence that facilitates prompt sharing of planning schemes, and preparation of local teams focused on specific issues31.
The Group also embarked upon specific dialogue initiatives prior to the signing - expected in 2019 - of the Memorandum of Understanding between Post Italiane, the Lazio Region and ANCI Lazio, aimed at identifying forms of collaboration for offering services in addition to the universal postal service to municipalities in Lazio with fewer than 5,000 inhabitants.
To support the achievement of these objectives, the Group is engaged in activities relating to the coordination, representation and monitoring of the political agenda at European and international level within the main bodies mentioned above, and the release of information for regulatory purposes at national, European and international level, as well as the formulation of proposals for amendments and additions to the reference regulatory framework.
Within the international postal organisations, the Group is also actively involved in initiatives aimed at promoting sustainable development. In particular, the Group participates in the EMMS (Environmental Monitoring and Measurement System) programme promoted by the International Post Corporation, a cooperative association comprising 23 postal operators that handle approximately 80% of global traffic volumes. The initiative was launched in 2008 with the aim of monitoring CO2 emissions and assessing the sustainability of the participants’ activities, in order to reduce the impact of postal activities on the environment. The programme currently has 20 participating operators (in addition to 17 of the 23 members of IPC, operators from Brazil and South Africa) who last year delivered 250 million items and managed a total area of approximately 51,640 km2 of proprietary buildings, a fleet of 643 thousand vehicles and approximately 1,782,000 people.
In 2018, the group of participants reported a 29.7% decrease in CO2 emissions produced compared to the 2008 reference figure, falling from 8,360 tonnes to 6,111 tonnes of CO2, with overall savings of more than €1,7 million thanks to the reduction in fuel costs and energy consumption since the launch of the programme. The excellent results achieved confirm postal operators’ commitment to reducing environmental impact and bear witness to their growing professionalism and expertise in this area, making EMMS the sector’s first sustainability programme to be based on sharing best practices and a concrete sustainable development model. Participation in the OSCAR (Online Solution for Carbon Analysis and Reporting) project launched by the Universal Postal Union (UPU, a United Nations agency specialising in the postal sector) continued in 2018. This is a simplified procedure for reporting polluting emissions produced by the activities of operators in the 192 UPU member countries, which applies the principles established by the GreenHouse Gas Inventory Standard for the Postal Sector. The Poste Italiane Group contributes to this monitoring activity, reporting its emissions on an annual basis. In 2018 the Company confirmed its ranking in the medium-high range of performance in terms of environmental sustainability, contributing to the objective of reducing direct emissions by a further 2,000 tonnes of CO2 compared with the previous year.
�� guarantee fulfilment of the legal/regulatory obligations imposed on the Company regarding the provision of universal and non-universal services (e.g. in terms of quality performance, obligations relating to provision of information to customers, definition of the Contratto di Programma (Service Agreement) between the Company and the State, organisation of post offices, verification of the cost of the universal service, regulation of alternate -day mail delivery, etc.).
In addition to promoting relations with the above institutions, the Group pays particular attention to dialogue with consumer associations, both at national and local level. In this regard, Poste Italiane has signed a Framework Agreement with 20 associations, with the aim of constantly improving the quality of products and services and generating constructive and transparent dialogue between the parties. In order to facilitate achievement of the set objectives, the Company set up the “Cantiere Consumatori” (Construction site for consumers). With regard to corporate initiatives that have a significant impact on customers, this permanent working and advisory group - consisting of a spokesperson from each association and Poste Italiane representatives - identifies the best solutions to reconcile reciprocal needs.
As part of the activities of Cantiere Consumatori - where Poste Italiane’s products and services are presented to the associations in advance to gather suggestions and comments - several meetings were held to present the new Joint Delivery model, the Sustainability Report, the update of the Public System for Digital Identity Management (SPID) service, the initiative to protect customers who had invested in real estate funds in previous years, the changes made to post offices in the summer period and changes to the Quality Charter.
Poste Italiane monitors its actions and its range of products and services through continuous and structured dialogue initiatives, such as the annual dialogue organised with key stakeholders in order to monitor the needs of communities and, in particular, of its beneficiaries and the relative level of satisfaction with the products and services offered.
Socio-economic inclusion in small municipalities Among the 10 commitments of the programme dedicated to the communities of small municipalities, by 2020 Poste Italiane plans to demolish over 80% of the architectural barriers in the 1,379 post offices located in small municipalities, as well as the installation of new ATMs to facilitate services in local areas through automatic withdrawals in the 254 small municipalities that do not have a post office. A few months after sharing the programme with the mayors of the municipalities affected by the initiative, the Company has activated all the necessary procedures, and the first installations of Postamat ATMs will take place in April 2019.
As part of its 10 commitments to communities in small municipalities, by of 2019 the Company has undertaken to make available land and buildings it owns in local areas with fewer than 5,000 inhabitants for social and public interest purposes to benefit the community. Specifically, 12 buildings were identified in small municipalities in the regions of Lombardy, Campania, Sicily, Friuli-Venezia Giulia, Emilia Romagna, Tuscany and Marche.
A part of the programme dedicated to small municipalities is the Treasury service offered by Poste Italiane in partnership with Cassa depositi e prestiti. In light of the new regulations introduced in 2017 regarding this matter, this service was created with the aim of providing small municipalities with a response to the phenomenon of “neglected tenders” arising from lower participation by the banking system in treasury calls for tender, especially those relating to small and/
or remote municipalities. Since the end of 2018, 19 municipalities have opted to use Poste Italiane’s Treasury service and the Company has received more than 60 requests for proposals. Moreover, Poste Italiane is in contact with more than 750 municipalities that have expressed an interest in the treasury service, and whose service is due to terminate in the near future.
With this in mind, in line with its diversity inclusion and enhancement policies, the Company has developed a trial initiative aimed at hiring deaf people who are fluent in sign language, to work at special counters for deaf customers in post offices in large cities. As well as offering real employment and the opportunity to develop professional skills, the project aims to provide deaf citizens with a local, accessible and personalised service based on their needs.
The project is divided into two distinct types of activity: �� activation of a multidisciplinary training course aimed at counter staff who wish to acquire basic skills to communicate with deaf customers, consisting of classroom sessions (30 hours) and a workshop; �� participation in a choir including voices and the Mani Bianche Association made up of employees of the Poste Italiane Group who wish to join and their families, as well as all deaf and hearing people, adolescents and adults, who are involved with the not-for-profit Mani Bianche Rome Association.
The Company also provides for the use of Italian Sign Language interpreters to translate the most relevant messages and news items on digital communication channels into sign language, and to support training activities or management interviews with deaf colleagues.
Initiatives for foreign citizens With a view to extending its range of services to foreign citizens and at the same time promoting the socio-economic inclusion of foreign communities in Italy, Poste Italiane has set up multi-ethnic post offices nationwide. Post offices dedicated to foreign citizens - multi-ethnic or mono-ethnic depending on local requirements - are located in areas with a high concentration of foreign citizens or in busy areas, such as near railway stations.
In addition, in order to support “new Italians”, Poste Italiane offers a fund transfer service through the MoneyGram electronic system, which enables foreigners to send remittances to their countries of origin. Via MoneyGram, money can be sent and received worldwide, including over 200 countries and territories. The system provides for “real-time” money transmission, with the amount sent available within a few minutes of the transfer request.
3rd edition of the initiative “Mese dei Nonni” dedicated to senior citizen customers
Established in December 2014 by the first Memorandum of Understanding signed by Post Italiane, Cassa depositi e prestiti and the Ministry of Education, Universities and Research (MIUR), on the occasion of the 94th World Savings Day, the initiative was developed with the aim of spreading a savings culture in schools and educating young people to save. The project provides for the schools involved to implement specific project activities regarding financial education, independently and in collaboration with their local communities. Through dialogue sessions within dedicated workshops, multimedia courses, and games, etc., children are taught about the value of savings as a means for making progress and achieving wellbeing, and its usefulness as a tool for personal growth and also as a key element in building active and responsible citizenship, which is necessary for the development and social cohesion of local areas.
During the first phase of the project, which took place in the three-year period 2014-2017, over 4,000 children took part in the 18 days of training on financial education.
The course is divided into three thematic modules: �� Saving: teaches how to manage financial, energy and natural resources etc. responsibly in order to generate economic and social progress; �� Sharing: stresses the importance of entrusting savings to financial institutions so that, when pooled and invested, they result in economic benefits for the community and become a means to promote the country’s development; �� Quality of life: broadly encompasses savings goals, highlighting the fact that responsible behaviour is a priority for the entire planet and involves the global community.
Improve average complaint handling time average of 15 days needed for handling complaints by 2020
Develop the service model by assigning a dedicated consultant to customers 13,000 dedicated consultants operating across the sales network by 2022
Provide post offices with dematerialised operating procedures 100% of post offices provided with dematerialised operating procedures by the end of 2019
A core element of the Group’s strategy is a total commitment to constantly improving the quality of the products and services it provides to its customers.
In this regard, the Code of Ethics lays down that Group companies must base their relations with customers on competence, professionalism, courtesy, transparency, fairness and impartiality. These values and principles guide the essential rules of the conduct with customers, ensuring fruitful and lasting relationships and providing comprehensive and accurate information on products and services, with a view to enabling informed choices and avoid creating inaccurate expectations.
line with the previous year. This indicator monitors the quality perceived by customers regarding Poste Italiane Group’s most important products, services and channels.
In order to achieve the maximum effectiveness and efficiency of processes, activities and resources, Poste Italiane has decided to adopt an Integrated Management System that brings together the significant aspects of all the management systems currently in place, in order to align business processes and make the widespread distribution of business procedures increasingly flexible. Specifically, Poste Italiane SpA has implemented an effective Quality Management System, in compliance with the UNI EN ISO 9001:2015 standard, with which it undertakes to carry out its activities through the adoption of the following principles: �� maintain adequate service quality, in particular by ensuring efficiency and continuity of service in accordance with the specific requirements; �� maintain the adequacy of the services offered to customers; �� respect time and optimise the cost/quality ratio of products and services.
The Quality Management System aims at ensuring that the products and services provided meet customer expectations and applicable mandatory requirements, as well as enabling continuous improvement of performance to enhance the Company’s competitive position in the market. Indeed, the System is a fundamental tool for defining the rules and limits applicable to quality control at all levels. Any anomalies are duly recorded and reported thanks to specific audits and periodic checks.
The management model regarding the quality of services and products offered starts from a dialogue with customers, allowing the Company to connect with customers in order to identify and better meet needs over time. This attention is characterised by: �� definition and monitoring of quality indicators provided, published in periodic reports shared with top management (e.g. waiting times at post offices through the queue manager tool, which enables real-time intervention thanks to an alert system; customers served within 7.5 minutes, punctual delivery, customer care service levels, etc.); �� an approach aimed at protecting and satisfying customers, measured by the Net Promoter Score (NPS), which measures the propensity to recommend the Company, carried out twice a year regarding the performance of the Business Units (BancoPosta; Posta Comunicazione e Logistica (Mail, Communication and Logistics) and Poste Vita). These are CATI (Computer-Assisted Telephone Interviewing) surveys, conducted by an external research institute with customer samples representative of the target universe. In 2018, the Group further refined the model by spontaneously seeking out customers’ opinions at several postal, financial and insurance services touch points. Once a year, the NPS is also measured for the most representative competitors of the Poste Italiane Group’s four businesses; �� monitoring of satisfaction and gathering of opinions and suggestions to identify opportunities for improvement thanks to the Customer Effort Score (CES) indicator, applied to the channels (post offices, call centres and the web), which makes it possible to analyse whether the Company solves problems quickly and easily; �� adequate complaints handling, which for the Company is a fundamental and decisive activity of contact and dialogue with customers, with a view to identifying and resolving the causes of the inconvenience and implementing the necessary corrective measures to improve business processes.
With a view to overcoming the main problems and improving the quality provided to customers, a “Customer Centricity” initiative was set up in the Financial Services area, organised around twelve primary sites (e.g. commercial Front End development, definition of single Customer Relationship Management, customer assistance, etc.).
The central importance of customers for Poste Italiane is reflected in its continuous engagement, as can be seen in the “Dillo a Poste Italiane” programme, the online panel community through which the Group directly involves its customers and employees in the design of digital products, services and solutions. The initiative is part of the innovation process undertaken by the Group, whereby it intends to actively involve its customers and employees so that they can become co-protagonists in the creation of new products and services, and help the Company to continue improving its current products and services.
The “Dillo a Poste Italiane” panel platform will be an excellent tool to support businesses in designing new products and services as, via access to the back-end features of the platform, the Functions and Group companies will have a set of detailed information regarding customers and individual search activities, and will be able to view the results in real time while searches are being made. With a view to valuing the contribution of customers and in the interests of maximum transparency regarding the results of the initiatives, customers will be able to view what the Group has achieved thanks to their contribution in the “Our projects” section of the www.dilloaposteitaliane. it website. To date, the initiative has been aimed exclusively at customers, with the objective of also extending it to staff by the end of first half of 2019, selected from among those who have direct customer relations and who can share with the Company the needs and wishes of customers they deal with on a daily basis.
For companies in the Insurance segment, the Group has designed and implemented customer care actions by providing outbound telephone campaigns and sending messages to track operations relating to core processes (e.g. claims, complaints, etc.) and customer loyalty. With regard to the Payment, Mobile and Digital segment, among the activities aimed at improving the management of processes relating to the use of payment products and services, Poste Italiane has set up a permanent “ Cantiere Qualità e Conformità” (Quality and Compliance) working group.
In this context, fundamental importance is given to complaints and other requests through which customers express their dissatisfaction, as their correct and timely assessment and management is a useful indicator of service levels. This element contributes to the assessment and management of operational and reputational risks, especially non-compliance and conduct risks. Top management are notified about the progress of complaints on a weekly and monthly basis through specific reporting systems. In this regard, all Group companies have implemented specif-
ic procedures that set out principles and rules for handling complaints, which are approved and periodically reviewed by the respective boards of directors.
ture to centralise the strengthening of complaints management, with a view to achieving an effective dialogue with consumers and quick and easy settlement of disputes. In addition, from a customer centricity standpoint, a function is responsible for defining Group guidelines regarding the design of a multichannel user experience and for implementing control systems that enable identification of any critical issues and deployment of proactive actions to retain customers and minimise defections.
Poste Italiane participated in the Italian edition of the Webranking by Comprend 2018-2019 survey, promoted by Lundquist. The research subjected the Company (together with 110 other Italian listed companies among those with the highest capitalisation) to a transparency test, with the aim of measuring the gap between the information presented by companies and stakeholders ’ requests. Webranking 2018 ranks Poste Italiane among the “Best Improvers”, moving up 16 places from 28th in 2017 to 12th in 2018 (a score of 72 out of 100). The result achieved is in line with Poste Italiane’s growing commitment to implementing transparent management systems and communication channels, within an overall system of improving corporate governance. Poste Italiane’s website is a fundamental communication tool for guaranteeing stakeholders - including suppliers, partners and customers, as well as investors and financial communities - greater disclosure and transparency of information32. During 2018, Poste Italiane continued to expand its corporate website, posteitaliane.it, with a view to presenting its activities and business results, as well as the Company’s strategic vision and the attention it pays to legality and social responsibility issues.
In a rapidly evolving market that requires continuous business development, Poste Italiane’s ability to compete is expressed through innovation - the key to identifying, interpreting and promoting change in order to foster a culture of innovation and the development of new products. Given the complexity and variety of the sectors in which the Company operates, the challenge is to exploit the opportunities offered by new technologies and the substantial amount of data available, so as to be ready to respond to changing scenarios, new customer requirements, and the opportunities offered by social and environmental changes. Moreover, technological evolution entails the acquisition of increasingly advanced cyber security protection systems, aimed at protecting personal data, tangible and intangible assets and intellectual property.
In this regard, starting in 2015, Poste Italiane embarked on an important transformation process involving the entire Group, which has several objectives: placing the customer increasingly at the centre of strategies; enhancing the post office network in synergy with digital channels; developing multichannel access and use methods; strengthening Poste Italiane’s role as a key stakeholder for the Public Admnistration and encouraging the inclusion and development of the digital economy.
Poste Italiane has also introduced digital innovations regarding processes. For example, the Group has implemented the first “fully digital” sales process for a financial product in the postal savings sector: the “Libretto Demate r i a l i z za to” ( D e m a t e r i a l i s e d Savings Book). This innovation enables customers to apply for a dematerialised Libretto Nominativo Ordinario (Ordinary Nominative Book) or Libretto Smart (Smart Book), as an alternative to the traditional paper version, including the possibility of accessing digital services thanks to the BancoPosta app, and the possibility of managing their expenses directly within the app thanks to the Personal Financial Management (PFM) solution. At the same time, investment was made in the automation of parcel sorting, shipping and tracking processes, and logistics innovation projects financed by the European Commission were launched.
Finally, in support of the Company’s digital transformation process, Poste Italiane has defined specific principles in the digital field within IT Vision 2022, with the aim of promoting digitisation, increasing productivity and simplifying operations. The application of these principles - envisaged for all new projects - translates, for example, into the adoption of specific solutions to support the digital revolution, such as the use of native cloud applications; the integration of robotics and bots (software that, by accessing the internet, is able to perform the most varied tasks completely independently); the creation of applications available on the move; and the adoption of advanced analytics and the Internet of Things (IoT).
In line with Poste Italiane’s focus on integrating the physical and digital channels, the Group has expanded its collaboration with Microsoft to support its Digital Transformation Plan and joined the global Hyperledger consortium, which brings together over 260 operators from various industrial sectors worldwide.
The collaboration with Microsoft aims to develop the customer experience, by adopting a Customer Relationship Management (CRM) cloud platform. The project focuses on the amalgamation of the CRM platform for the Strategic Business Units and retail operations, and is in line with the Group’s wider Strategic Plan to maximise the value of Italy’s largest distribution network to achieve sustainable growth. Thanks to the strategic partnership with Microsoft, which primarily relies on the flexibility of the cloud platform, Poste Italiane will have a constantly updated overview of its customers and ongoing activities, in order to optimise the experience and offer increasingly integrated services. Membership of the Hyperledger global consortium, however, is aimed at developing an open source standard for blockchain and other types of Distributed Ledger Technologies (DLT). At a time when digital evolution is rapidly enabling new services, data security is becoming increasingly important. In this context, blockchain is able to provide an effective response to the issues of security, transparency, interoperability and privacy, and Poste Italiane is committed to making it user-friendly, and having it serve Italy’s economic system.
With a view to safeguarding business and achieving strategic and operational objectives, the Group considers it strategically important to guarantee the protection of the information assets of the Company, and of its customers and other stakeholders, and to ensure the security of transactions.
As evidence of the specific attention paid to this issue, the Group’s objective is to pursue ongoing research and subsequent dissemination of advanced technological solutions in order to address IT risks and promote technological innovation
In April 2018, an agreement was signed between the CEO of Poste Italiane, the Chief of Police and the Director General of Public Security. The historic collaborative relationship between the Postal and Communications Police, a special branch of the State Police, and Poste Italiane has enabled achievement of excellent results over the years. However, it has also required adaptation to the rapid evolution of the activities and services offered by Poste Italiane, especially regarding e-commerce payment systems, as well as financial and insurance services, which has entailed stepping up the control and upgrading of both physical and IT security structures. The new agreement particularly regards the prevention and repression of offences involving products and production processes relating to the services offered by the Poste Italiane Group, surveillance activities at post offices during scheduled payment periods, and the creation of task forces to study new computer fraud scenarios, as well as new cyber security tools. Indeed, special attention will be paid to protecting users and raising awareness of the use and management of financial services, especially on the internet. Poste Italiane and the Postal Police have the common goal of reducing risks and offences, such as the misuse of credit cards, phishing, hacking, computer fraud and other kinds of fraud.
Regarding the management and monitoring of IT security activities, a Management System for activities and implementation of dedicated platforms is envisaged, such as “PPS Web”, consisting of modules for the governance, assessment and reporting of IT security risk, “NEMESI”, a Big Data Analysis platform used to identify anomalous or risky behaviour, and “MASM”, a Mobile Security platform used to monitor the availability and operation of official and unofficial Poste Italiane apps.
In order to establish a single Group-wide control unit for all activities and responsibilities relating to privacy, a dedicated function was set up last year, with the task of ensuring the correct application of personal data protection principles and rules. The unit is also responsible for ensuring compliance with personal data protection legislation, with specific reference to the innovations introduced with the entry into force of the General Data Protection Regulation (GDPR).
Moreover, senior management has appointed the Poste Italiane Group’s Data Protection Officer, a role introduced by the GDPR, who is an expert on privacy matters, with the task of promoting compliance with the law and verifying the effectiveness of personal data protection measures.
The Computer Emergency Response Team (CERT) and business continuity In order to ensure that cyber security and data protection activities are monitored at Group level, as early as 2013 the Company created the Computer Emergency Response Team (CERT), consisting of a team of IT security experts.
Specifically, CERT deals with prevention, analysis and protection from cyber threats, in order to increase the Company’s defence capabilities and awareness, to promote and disseminate knowledge and awareness of cyber security at national level. With a view to sharing and exchanging knowledge in the field of cyber security, CERT has the task of coordinating all activities in response to computer emergencies, and maintaining relations with other public and private institutions in order to protect its own computer networks and those of the national system.
CERT’s services and activities are aimed at guiding the security management of the data held and processed by the Company, in order to reduce - within acceptable limits - the risk of breaching the confidentiality, integrity and availability of data, so as to avoid possible negative consequences in terms of economic and image damage.
In 2018 47% fewer IT security breaches and cyber security incidents (around 16) compared with 2017 (around 30)
In November 2018, a strategic initiative was launched to define Poste Italiane’s Crisis Management and Business Continuity Management model (CM/BCM model), with the aim of strengthening the organisation’s resilience, namely its ability to anticipate, prepare for, respond to and adapt to change and sudden setbacks. In this respect, a new model will be developed and applied that will include all the Group services affected by such potential scenarios in line with business requirements, reference standards, current regulations, guidelines and industry best practices.
Altair, a portal to raise the cyber security awareness of Poste Italiane’s staff
As part of CERT’s activities, Altair, the portal designed to raise Poste Italiane’s employees’ awareness of cyber security issues, has been set up. This portal aims to be a reference point for raising awareness on cybersecurity issues, not only for experts in the field, but above all for a wider public, by using language and content designed to meet the needs of both types of user. Altair ranges from more specific topics, such as new malware, spam or cyber-espionage campaign reports, to daily cyber and hi-tech news. The portal provides updates on scheduled training events, in-depth educational content on cyber security issues, guides and useful links to raise users’ IT awareness while they are surfing the web.
WE HAVE A RESPONSIBILITY TO MAKE MINDFUL USE OF OUR PLANET’S RESOURCES AND TO REDUCE OUR ENVIRONMENTAL FOOTPRINT.
Increase the number of electric vehicles used for Mail, Communication and Logistics services 70% more electric vehicles in the fleet by 2020
Increase the share of “green” vehicles (electric, electric hybrid, natural gas and LPG) used for Mail, Communication and Logistics services 17% of the fleet consisting of “green” vehicles by 2020
Reduce the Group’s total energy consumption from non-renewable sources 7.5 GWh less electricity from non-renewable sources consumed by buildings by 2022
Therefore, the quality of products and services also entails implementation of self-regulatory environmental and energy tools, in accordance with applicable laws and regulations, and also with Italian, European and international sustainable development goals.
generated by the Company’s operational activities, in particular, from the use of buildings and logistics and transport activities, whether carried out directly or through suppliers and partners.
This document sets out the three main areas of intervention identified by Poste Italiane regarding which projects and activities are launched to provide an effective response to the needs most felt by the community, taking into account the objectives of the major national and international public and private institutions, with particular reference to the United Nations and the Sustainable Development Goals. Specifically, the Group’s environmental priorities include: �� reduction of the environmental impact of its operating activities: optimisation of energy consumption, reduction of atmospheric emissions from buildings and those linked to logistical activities and staff mobility, reduction of material consumption, and correct waste management and reduction of water consumption; �� incorporation of environmental aspects into the products and services offered: implementation of digitisation processes regarding the goods and services offered, and assessment of environmental risks and opportunities relating to investment choices and the management of insurance activities; �� raising the awareness of employees and third parties regarding the environmental culture: involvement of employees in programmes and initiatives aimed at safeguarding the natural environment and ecology, support for environmental heritage protection and recovery initiatives, dialogue and collaboration with national and international bodies and associations in order to combat climate change and inefficient consumption of resources, and assessment of risks and environmental management methods adopted by counterparties.
The Group has adopted a Management System in compliance with current legislation and national and international best practices. Postel SpA e SDA SpA have obtained UNI EN ISO 14001 certification for their environmental management system. The system consists of internal environmental management rules that are implemented to ensure punctual identification of the most significant environmental impacts and adoption of the most effective management and mitigation measures, through a structured performance monitoring system involving audits and periodic checks.
In line with the provisions of the law, the two Group companies have adopted these environmental policies: �� Postel SpA’s Quality and Environment Policy, aimed at ensuring compliance with environmental legal requirements, sets out the objectives underlying its business conduct, namely respect for the environment, including pollution prevention and other specific commitments (responsible use of resources, protection of biodiversity ) relevant to its operating context; incorporation of the requirements of the Management System within business processes, taking into account the post-delivery impacts of a product or service at the design stage, in order to completely manage the product’s life cycle; definition of objectives compatible with strategic guidelines and the business context.
�� SDA SpA’s Quality, Environment and Occupational Health and Safety Policy, which contains the principles that govern and ensure proper management of environmental issues: direct and permanent engagement of senior managers in the management of the Integrated System; protection and prevention, in terms of optimising the use of resources and minimising environmental impacts; a constant quest for a sustainable procurement system.
�� Energy efficiencies at Sorting Centres. The purpose of this initiative is to extend an energy supervision, control and monitoring platform to the Poste Italiane Group’s most energy-intensive buildings. The main objective is to reduce electricity and gas withdrawals in order to offset expected tariff increases and reduce overall procurement costs. The current Building Management System (BMS) for Sorting Centres will be complemented with indoor and outdoor temperature meters for the various zones. This will enable preparation of a monitoring and management system for refrigeration systems and thermal power plants, based on optimised algorithms which, by recording the temperatures and thermal responses of an individual building in terms of its thermal inertia, will be able to determine the most appropriate time for switching systems on and off in order to guarantee a comfortable level with the lowest possible consumption. It is also planned to create a network to measure the gas consumption of the most energy-intensive sites, which will enable determination and regulation of consumption via a more rational use of thermal energy, and thereby elimination of waste.
�� LED lighting. Once again in 2018, Poste Italiane specifically invested in smart technologies, focusing on the gradual installation of LED (Light Emitting Diode) lighting fixtures to replace fluorescent lamps, in line with the provisions of the relative project launched in May 2017. The four-year project involving preliminary intervention in more than 2,000 buildings, aims to significantly reduce electricity consumption and the related emissions, and save on maintenance costs. The estimated figures based on initial forecast investment of approximately €14 million, add up to expected savings of more than 32 GWh per year, thanks to the replacement of over 250,000 old lighting fixtures, and a reduction in CO2 emissions of 11,000 tonnes per year.
�� Encouraging virtuous behaviour. The behaviour of our Group’s people can have a major impact on energy saving. With this in mind, communication and awareness campaigns have been activated for all staff to guide them towards virtuous behaviour. In this regard, Poste Italiane continued to participate in the “M’illumino di meno” (I use less light) and “Earth Hour” awareness initiatives. The first is a campaign to promote energy saving and sustainable lifestyles. “Earth Hour”, on the other hand, is an international campaign promoted in Italy by the World Wildlife Fund (WWF), which consists in turning off the lights for one hour, from 8:30 pm to 9:30 pm worldwide. The two initiatives, which are similar and occur around the same time of year, constitute a real “green month” focusing on the environment. The element they have in common is switching off or dimming lights in buildings nationwide, a symbolic gesture that provides an opportunity to create virtuous behaviours to be implemented within and beyond the Company.
In the light of technological developments, increasing innovation and constant regulatory changes in the postal sector, Poste Italiane intends to increasingly focus on continually renewing its fleet with more environmentally friendly vehicles, rationalising distances travelled, proper waste management, developing infrastructure for recharging customers’ vehicles, and to demand that external transport providers meet minimum environmental requirements
The new model provides for: a. a so-called “basic service” network, dedicated to traditional postal products to be delivered more than one day after mailing (> J+1), which operates from Monday to Friday and is designed to reach each customer once every two days (with the exception of the cities of Rome, Milan and Naples, where daily deliveries will continue); b. a so-called “business service” network, dedicated to postal products to be delivered on the day after mailing (J+1) and parcels, which operates from Monday to Saturday (and also on Sundays and public holidays at times of peak demand), with delivery scheduled later than for the basic service (late morning or afternoon).
This new operating model, characterised by a change in delivery frequency, leads to a reduction in the number of kilometres travelled and a need for fewer vehicles.
In line with the leading European operators, in order to position its network of postmen in the parcel deliveries market generated by online sales, in 2018 Poste Italiane planned a new mix for its last-mile fleet (currently comprising 27,500 vehicles, of which approximately 13,000 are mopeds) through the introduction of 3-wheeled vehicles to replace 2-wheeled vehicles.
These new types of vehicle are ideal for: �� increasing the load capacity compared to mopeds, whilst continuing to be agile in operations that involve frequent starting and stopping and moving through city traffic; �� improving occupational safety conditions compared to mopeds, thanks to the greater stability of the vehicle, which can reduce the risk of falling/skidding, and elimination of stands, which are linked to the risk of overturning/ falling off a motorcycle; • MAIN RELATED TYPES • OF CAPITAL
In 2018, the Company’s focus on the sustainability and safety of mail and parcel delivery will be stepped up by increasing the green share of the last-mile fleet. Poste Italiane travels using clean energy thanks to the nationwide introduction of 345 three-wheeled motorcycles powered by electricity, which is part of an extensive plan to renew the fleet of vehicles for postmen. The new motorcycles are completely electric-powered, with a capacity of 4 kW that guarantees a maximum speed in line with the limits imposed by the Highway Code in towns and cities, and energy self-sufficiency that enables postmen to complete their daily delivery round with a single charge. The special shape of the three-wheeled vehicle also increases its stability and safety for the driver, and allows for installation of a special trunk that increases the number of parcels and letters that may be transported: up to 210 litres, compared with 76 for traditional motorcycles.
Request third-party managers to adopt Poste Vita’s Responsible Investment Policy 100% of third-party managers involved by 2019
The incorporation of environmental, social and governance (ESG) criteria into traditional investment processes forms one of the cornerstones of the Company’s sustainability policies. By implementing effective investment processes, the financial segment can help protect society, promote innovation and support economic growth, making an important contribution to the country’s sustainable development. As part of the strategy adopted by the Poste Italiane Group in order to pursue its sustainability objectives, the incorporation of ESG principles into the investment processes used by Poste Vita and BancoPosta Fondi SGR is of particular significance.
Poste Vita and BancoPosta Fondi SGR have signed up to the United Nations Principles for Responsible Investments (PRI), making a formal commitment to incorporate ESG criteria in their assessment and decision-making investment processes, and to apply such criteria in relations with counterparties. This decision results from the strong belief that integrating environmental, social and governance criteria within its investment processes is key to achieving sustainable performances over time, reducing the portfolio’s risk profile and acting in accordance with the principles of integrity and transparency.
Responsible investment principles, goals and management criteria have been formalised within the Responsible Investment Policy adopted by the Poste Vita Group, following approval by the company’s Board of Directors, and by BancoPosta Fondi SGR
With the aim of positively influencing management of the investment portfolio and, at the same time, providing a response to the social and environment al needs of society, the Policy has established a general principle requiring the systematic assessment of investment transactions that also takes into account the environmental, social and governance profiles of the corporate or government issuers of the assets included in financial portfolios and of the related managers.
In 2019, another Group company with responsibility for investments, BancoPosta Fondi SGR, will compete the process of adopting its own responsible investment policy.
Poste Vita and BancoPosta Fondi SGR sign up to the Principles for Responsible Investment
With the aim of adopting specific measures enabling the Group to monitor the exposure of the investment portfolios to non-financial risks, the Poste Vita Group and BancoPosta Fondi SGR appointed VigeoEiris, an international social and environmental rating agency to conduct and assessment of the ESG aspects of their portfolio in relation to both direct and indirect investments in order to evaluate the level social responsibility. The assessment, carried out in accordance with universally accepted standards and conventions issued by international bodies regarding human rights, workers’ rights and environmental protection (such as the UN, the OECD and the ILO), covered corporate issuers of both equity instruments and bonds, and ultimately measured their ability to manage stakeholder relations. The assessment process ended with the assignment of a final ESG score (between 0 and 100) to each company. The weighted average score of the portfolios assessed was 49/100 in relation to the assets managed by the Poste Vita Group and 48/100 for those managed by BancoPosta Fondi SGR for corporate issuers. This result was higher than the ESG score of a benchmark of MSCI World ETF shares, used for comparison, of 38/100 at the same date.
By implementing effective risk prevention processes, the insurance segment can help to protect society, promote innovation and support economic growth, making an important contribution to the country’s sustainable development.
By adopting the PSI, Poste Italiane has confirmed the Group’s goal of assessing ESG risks and opportunities, developing innovative insurance solutions and helping to drive business performance. This approach translates into a competitive advantage, into the ability to create value over the long term and into an improved perception of the Group among all its stakeholders.