Recoverable amount of the “Mail, Parcels and Distribution” segment, Measurement of the technical provisions for the insurance business, Valuation of unlisted financial instruments measured at fair value and Recognition of acquisition of the investment in
With regard to the recommendations made by the Independent Auditor in relation to 2016, as referred to in the previous Board of Statutory Auditors’ report, (the need to further improve the adequacy of the design and effective functionality of the overall system of internal controls, and the need to strengthen implementation and development of the IT systems and supports used in the Company’s and the Group’s financial reporting), the Independent Auditor, following the steps taken by the Company in 2017 and the specific commitments given by management to complete the process in 2018, does not believe that the related issues constitute significant shortcomings in internal controls in 2017, partly in view of the targeted audit procedures carried out by Poste
Auditor has stated that nothing has come to its attention that would cause it to believe that the Poste Italiane Group’s non-financial statements for the year ended 31 December 2017 has not been prepared, in all material respects, in compliance with articled 3 and 4 of the Decree and with the GRI Standards. Through specific meetings with both the function involved in preparing the statement and Independent Auditor, the Board of
Statutory Auditors has overseen compliance with the provisions of Legislative Decree 254/2016, within the scope of the responsibilities assigned to us by law.
shareholder register may be consulted in digital form by accessing a dedicated platform; in accordance with the relevant statutory requirements, the register is updated on the occasion of General Meetings and when dividends are paid, with the latest dividend payment occurring in June 2017. As regards the possibility for a shareholder to consult the register in question via the dedicated platform, the Board of Statutory Auditors has recommended that steps be taken to ensure the confidentiality of information about other shareholders. The Board has also suggested that the Company consider insert specific rules into its By-laws, governing access to the shareholder register, when the By-laws are next revised.
ii. Complaint dated 18 September 2017, in which, with reference to a newspaper report, the complainant requested the Board to find out if Poste Italiane
iv. Complaint dated 29 October 2017, regarding Mistral Air Srl’s decision to recognise a specific pilots’ union. Based on our investigation, the Board that there are no grounds for the complaint. The Human Resources department had noted that the union referred to by the complainant did not have a wide membership base and, for this reason, did not have the rights established under title III of Law 300/1970
Mercato – the Antitrust Authority) on 13 December 2017 for an abuse of Poste
Italiane’s dominant market position as per art. 102 of the TFEU. This followed an investigation of the Company’s alleged anti-competitive behaviour in respect of the multi-item ordinary mail delivery market. The Board of Statutory Auditors had already carried out a preliminary examination of the matter, following a complaint from the sale shareholder dated 9 June 2016, in the period in which the AGCM was conducting its investigation. Based on the information obtained during meetings with the head of the Legal Affairs unit and our examination of the documentation prepared by him, in its report to shareholders on 2016, the Board reported that it had found no evidence of irregularities, but that it would continue to monitor developments as the investigation proceeded. Partly in response to developments in the dispute, the Board believes that there are no grounds for criticising the actions of the Company’s management, which has acted in the interests of the Company in taking steps to protect its postal business. The Board of Statutory Auditors has, however, recommended the arrangement of a process requiring that, prior to the launch of any new products or services, the marketing and commercial functions request an ex-ante assessment of the related antitrust risk on the part of the relevant legal affairs function. In addition, the Company has already included in the new
Regulations for BancoPosta’s organisation and operations, approved by the Board of Directors on 29 March 2018, a process for overseeing the launch of new products and services. This involves ex-ante assessments by BancoPosta’s control functions and the resulting issue of a binding opinion, with each function focusing on its respective area of responsibility, in order to validate the new product and implement any subsequent initiatives or further action.
In addition, during the year and to date, the Board of Statutory Auditors has received six reports/petitions from third parties, in response to which the Board requested action by the
In view of the application, from 17 June 2016, of Regulation (EU) 537/2014 regarding the statutory audit of public-interest entities, and the amendments to Legislative Decree 39/10 introduced by Legislative Decree 135/16, in force from 5 August 2016, in line with the
Independent Auditors and monitoring of the cap on fees provided for in the EU Regulation at Group level.
“Disclosure of fees paid to the Independent Auditors in accordance with art. 149 duodecies of the CONSOB Regulations for Issuers”, which includes a table showing the fees payable
6, paragraph 2.a) of Regulation (EU) 537/2014 and the transparency report prepared by them and published on their website pursuant to art. 13 of the above Regulation; ✓ the engagements assigned to the Independent Auditors and companies within its network by Poste Italiane SpA and Group companies; the Board is not aware of any situations in which the Independent Auditors’
Independent Auditor, or of companies within its network, in 2017: Since approval of the new “Guidelines for the assignment of appointments to Poste
Conduct of an audit, at the request of Cassa Depositi e Prestiti, regarding the distribution and management of postal savings products in 2016 (a descriptive report on the accounting system and controls connected with Postal Savings – Bancoposta RFC’s operations and a report prepared by the Independent Auditor of Poste Italiane’s financial statements on specific audits of the procedures that make up the above system within the scope of the services provided by Poste Italiane to CDP).
Assurance of the "Consolidated Non-financial Statement” for the years from 2017 to 2019.
Pursuant to art. 2389, paragraph 3 of the Italian Civil Code, with regard to the remuneration of directors with delegated powers, the Board issued favourable opinions on the fees payable to the Chairwoman of the Board of Directors, the Chief Executive Officer and members of Board Committees. The opinions in question, as defined by art. 2389, paragraph 3, solely regard compensation for the position of executive Director and do not relate to any employment relationship and the related MBO and LTI schemes.
During the year, the Board of Statutory Auditors took part in a total of 91 meetings. The
Board of Directors’ meetings, 14 meetings of the Audit and Risk Committee (including 9 held jointly with the Board of Statutory Auditors), 5 meetings of the Nominations
Committee, 14 meetings of the Related and Connected Parties Committee, 12 meetings of the Remuneration Committee, attended by at least one Statutory Auditor, and 1 Ordinary
The overall commitment for each member, including any further duties carried out by the
Italiane Group as a whole, based on the information and constant updates provided by the
1 of the Corporate Governance Code, and considering the new structure of the authorities assigned by the Board of Directors on 25 January 2018 and approval of the new strategic plan for the period 2018/2022, the Board of Statutory Auditors wishes to stress the need for the Board of Directors to ensure periodic assessment of the adequacy of the organisational structure.
We have examined the Report for 2017 prepared by Poste Italiane SpA’s Internal Auditing function, the corresponding report prepared by BancoPosta's Internal Auditing function and the document resulting from the assessment of the Group’s internal control system conducted by Poste Italiane’s Internal Auditing, according to which “no evidence has emerged, at the date of this report, of any shortcomings in Poste Italiane’s internal control and risk management system, taken as a whole”, with the exception of a concern regarding the internal control system over management of the logistics processes for letter and parcel post. In this regard, noting that the Company has already decided on the action to be taken in order to strengthen the internal control system over this area, the Board of Statutory
Auditors recommends that the Board of Directors monitor effective implementation of the action plans within the indicated deadlines.
The Board of Statutory Auditors met periodically with the Group’s Internal Auditing function and examined its report for 2017. The improvements and corrective measures, identified in response to the issues raised at Group level by the Internal Auditing function, require everyone involved to closely comply with the deadlines provided for. With regard to the various recommendations made by the Board of Statutory Auditors in the previous report on the financial statements for 2016, relating to the need to strengthen the internal control system and Poste Italiane SpA’s role in providing guidance, coordination and control, we welcome the fact that many of the recommendations have been implemented by the Company through the Corporate Affairs department, which has taken a number of important steps described below.
Firstly, the Company has revised its previous internal control system and risk management guidelines, dating back to July 2015. This has involved changing the form of the guidelines to reflect the effective separation of the role of the Supervisory Board, which until 2016 had been assigned to the Board of Statutory Auditors, and amending their substance by incorporating the structure of additional information flows regarding risks between the
Auditors welcomes the creation of the Corporate Affairs department, given specific responsibility for ensuring a consistent approach to managing the Poste Italiane Group’s corporate legal affairs and corporate governance, defining the Group’s procurement policies, supporting senior management in effectively implementing and conducting risk management at Group level, and ensuring definition of the Poste Italiane Group’s corporate social responsibility guidelines and objectives.
In addition, the Board of Directors has implemented various organisational initiatives designed to strengthen the internal control system, as follows: - the new organisational model required by Legislative Decree 231/2001 was approved on - on the same date, the new Guidelines for the application of Legislative Decree 231/2001 by the Poste Italiane Group was approved, setting out the general requirements to be met by all Group companies when adopting and revising their 231 models; - new Group Risk Management Guidelines, setting out the Group Risk Management process, were approved on 20 March 2018; - the Group’s new Money Laundering Prevention Guidelines were approved on 25 January 2018; - new guidelines for the “Corporate Governance System” have been approved, with the aim of establishing the basic principles, the structure and the lifecycles of the various classes of document and the roles and responsibilities of the various person involved, providing guidance for management of the system itself, including with a view to ensuring compliance with the rules set out in the integrated management system; - the new internal Procurement Regulation was approved towards the end of 2017, which has also taken into account the provisions governing public tenders in Legislative Decree 50 of 18 April 2016, as amended. This was accompanied by approval of the “Group
The Board of Statutory Auditors also periodically met with the Supervisory Board to obtain information on its activities in 2017. The Board verified effective implementation of the 231 Model following adoption of the new Guidelines for the application of Legislative
Decree 231/2001, and, together with the Supervisory Board, assessed the adequacy of, among other things, certain procedures out in place by the Company to monitor procurement. We are not aware of any critical issues regarding correct implementation of the organisational model requiring mention in this report.
Committee and the Related and Connected Parties Committee; (iv) examining the annual report on the activities of Poste Italiane SpA’s Internal Auditing function and on those of
BancoPosta's Internal Auditing function; (v) examining the proposed Audit Plan for 2018, prepared by both Poste Italiane SpA’s Internal Auditing function and BancoPosta's Internal
Regulation 11971 of 14 May 1999, in which the Chief Executive Officer and the Manager responsible for financial reporting declare, among other things, that the separate and consolidated financial statements: ✓ have been prepared in compliance with the International Financial Reporting Standards endorsed by the European Union through EC Regulation 1606/2002, issued by the
The Chief Executive Officer and the Manager responsible for financial reporting also declare that the Directors’ Report on Operations includes a reliable analysis of the operating and financial performance and situation of the issuer and the companies included in the scope of consolidation, as well as a description of the main risks and uncertainties to which they are exposed.
15. Observations on the adequacy of the adequacy of the guidelines communicated by the
The Board verified the adequacy of the guidelines communicated by the Company to its subsidiaries pursuant to art. 114, paragraph 2 of the Consolidated Law on Finance, following revision of the “Guidelines for management and publication of confidential information, and creation and maintenance of a register of persons with access to confidential information”, approved by the Board of Directors on 22 June 2017. These guidelines and the “Internal Dealing Guidelines”, also approved by the Board of Directors on 22 June 2017, are in compliance with the amendments to Italian legislation introduced from July 2016, in compliance with Regulation (EU) 596/2014 of the European Parliament and Council of 16 April 2014 relating to market abuse.
delle Assicurazioni Private), with a view to checking the company’s best estimates of its liabilities and the assumptions used in computing the necessary technical provisions and its present and future Solvency Capital Requirement (SCR), as reported in the Board’s previous report. Finding that the degree of implementation of the Solvency II framework was satisfactory overall, the regulator did not identify any specific shortcomings, merely making a number of observations regarding methodology and relating to the governance and control system.
Law on Finance) in order to exchange information in the Board’s possession, has not informed us of any actions or events deemed to merit criticism or to be of an irregular nature, requiring specific reports pursuant to art. 155, paragraph 2 of Legislative Decree 58/1998 (the Consolidated Law on Finance).
On 20 April 2018, the Independent Auditors issued the additional report required by article 11 of the Regulation (EU) 537/2014, of which the “Audit Plan 2017”, the annual confirmation of independence and the “Letter of recommendations for 2017”, previously presented to us by the Independent Auditors, are an integral part. The Board has already examined the contents of such documents during its meetings.
17. Oversight of application of the Corporate Governance Code for list companies
✓ With regard to the activities provided for in the Corporate Governance Code, during the year, the Board of Statutory Auditors not only held 40 of its own meetings, but also ensured its participation in all meetings of the Board of Directors and at all
✓ As noted above, with regard to the content of last year’s report, in compliance with application criterion 1.C.1. letter f) of Corporate Governance Code, and in relation to the powers assigned to the Board of Directors, the Directors have approved guidance for the identification of transactions, carried out by the issuer and its subsidiaries, of strategic, economic or financial importance for the Parent Company, to be submitted for examination and/or approval by the Parent Company’s Board of Directors. In this regard, the Board of Statutory Auditors has recommended that the scope of application be extended to include investment transactions carried out by regulated companies within the scope of separately managed accounts, and material purchases, including during initial consideration.
Directors of banks and financial intermediaries, which are to include assessments of independence.
✓ We welcome the Board of Directors’ decision, in January 2018, to extend the responsibilities of the Nominations and Corporate Governance Committee, also giving the Committee the task of aiding the Board of Directors in conducting assessments, making recommendations and providing advice regarding the
Board, within the scope of our responsibilities, and in accordance with the Corporate
✓ In 2017, the Board of Statutory Auditors verified correct application of the criteria and procedures used by the Board of Directors to assess the independence of
Board of Directors conducted an assessment of the functionality, size and composition of the Board itself and of Board Committees with the support of a
Governance and the Ownership Structure”. With regard to assessment of the independence of the Board’s members, the Board of Statutory Auditors verified that all its members meet the related requirements provided for in both the Consolidated
Law on Finance and the Corporate Governance Code. The process also took into account the outcome of checks conducted by the entity with regard to any outstanding economic or financial transactions and/or relationships with Poste
During the year, and through to today’s date, the Board of Directors has approved various regulations and guidelines designed to strengthen the nature and effective functionality of the overall system of internal controls over BancoPosta RFC: i) the new “Regulations for BancoPosta’s organisation and operations”; ii) the new “General Guidelines governing the process of contracting out BancoPosta’s corporate functions to Poste Italiane”; iii) the “Outsourcing guidelines for BancoPosta RFC”; iv) investment services procedures; v) the “Market abuse guidelines”; vi) the “Guidelines for personal trading in financial instruments by relevant persons”; vii) the “Guidelines for conflict of interest transactions”.
Guidelines for Poste Italiane” and adopted “IFRS 9 guidelines for the Poste Italiane Group”.
“Guidelines for conflict of interest transactions” to comply with MiFID2 requirements, and a further revision of the “Outsourcing guidelines for BancoPosta RFC”.
Lastly, in March 2018, the Board of Directors approved a new regulations governing the organisation of BancoPosta RFC, defining BancoPosta’s operating model, its current organisational structure and the related responsibilities assigned to the various functions.
Italy conducted an inspection pursuant to art. 54 of Legislative Decree 385 of 1993 (the
Consolidated Banking Law), with the aim of assessing the governance, control and operational and IT risk management systems in relation to BancoPosta’s operations. On 5
Board of Directors is periodically reporting to the Supervisory Authority and the Board of
Statutory Auditors on the progress made in implementing the plans. The Board of Statutory
Auditors recommends that the initiatives communicated to the Bank of Italy should be completed, at the latest, within the proposed time-scale and that the control functions conduct checks on their effectiveness.
The Board of Statutory Auditors oversaw BancoPosta RFC in accordance with: − Presidential Decree 144/2001 “Regulations governing the services provided by
BancoPosta”, the relevant regulations contained in the Consolidated Banking Law and in
the Consolidated Law on Finance and the implementing regulations for banks, deemed applicable to BancoPosta by the relevant authorities, and in compliance with the
Statutory Auditors verified, at least every six months, the adequacy of the criteria adopted and, within the scope of our responsibilities as an oversight body, without responsibility for accounting controls, compliance with the applicable statutory and regulatory requirements. Based on the available data and information, the Board of
Based on the activities carried out with regard to BancoPosta RFC, the Board reports that: As reported above, during the year, and through to today’s date, the structure of internal controls over BancoPosta RFC has been further strengthened, including measures already implemented.
The Board of Statutory Auditors held periodic meetings with BancoPosta’s internal auditing function (“Internal Auditing”), which has confirmed that the framework for
In terms of measures designed to combat money laundering, as described in the annual report prepared by the relevant function, despite the medium to high degree of “inherent risk” exposure deriving from the nature and extent of BancoPosta’s operations, the
In a letter from the CONSOB dated 17 January 2018, requesting data and information pursuant to art. 6-bis, paragraph 4, letter a) of Legislative Decree 58/1998, the Board was also asked to provide the supervisory authority with its views on specific aspects of investment services and regarding a request for an update on the progress made in implementing the initiatives launched following the inspection of 2014 and with regard to
BancoPosta’s Compliance function fully completed the action plan for 2017, reporting on the updated results of the assessment and the corrective measures planned for 2018. The function’s assessment of compliance with statutory requirements did not find any instances of “inadequate” compliance, merely a number of examples of partial “non-compliance”,
The Risk Management function reported periodically to the Board of Statutory Auditors on its monitoring activities and developments affecting BancoPosta’s significant risk exposures. At 31 December 2017, indicators of capital adequacy show a high capital ratio
The Board shares the Risk Management function’s concerns regarding the need to further reinforce BancoPosta’s capital position, primarily in order to ensure that its leverage ratio remains within the objectives established in the Risk Appetite Framework.
Directors, as happened at the time of presenting the long-term business plan, continue to periodically monitor the key drivers for the Deliver 2022 Plan and the related sensitivity, checking the related controls and assessing the level of residual risk, specifically on a longterm basis.
Finally, in compliance with Bank of Italy’s Supervisory Standards, the Board has conducted an assessment of its own adequacy in terms of authority, functionality and composition, disclosing the outcome of its assessment in a specific report.
Based on the results of the oversight activities conducted during the year, the Board is not aware of any reason that should prevent approval of Poste Italiane SpA’s separate financial
statements or the Poste Italiane Group’s consolidated financial statements for the year ended 31 December 2017, or of the Board of Directors’ proposal to distribute a dividend.
In our opinion, the consolidated financial statements give a true and fair view of the financial position of the Group as of 31 December 2017, and of the result of its operations and cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union, as well as with the regulations issued to implement article 9 of Legislative Decree No. 38/05.
Note 2.3 to the consolidated financial statements as of 31 December 2017 “Accounting policies adopted – Impairment of assets”
Note 2.5 to the consolidated financial statements as of 31 December 2017 “Use of estimates”, paragraphs “Impairment test and cash generating units” and “Measurement of other non-current assets”
Note 4.4 to the consolidated financial statements as of 31 December 2017 “Operating segments”
The persistent decline of the postal market in which the Poste Italiane Group operates makes the ability to forecast future cash flows and the related prospective operating results of the “Mail, Parcels and Distribution” business segment significantly uncertain. Within this context, based on the new Group Business Plan for the period 2018 – 2022 approved by the Board of Directors of Poste Italiane on 26 February 2018 (the “Business Plan”), the Cash Generating Unit (“CGU”) represented by the “Mail, Parcels and Distribution” business segment was subject to an impairment test, in compliance with IAS36 “Impairment of assets”. Such test was aimed at verifying that the book value of the assets allocated to the CGU, which also includes properties used as post offices and sorting
centres, can be recovered through their use in operations. In this regard, the “value in use” of the CGU was calculated, which represented the estimate of the future cash flows expected from the use of the assets included in the CGU within the context of regular corporate operations and considering the Universal Postal Service obligation. Such cash flows were discounted at an appropriate rate and account was taken of the transfer prices by which BancoPosta’s Ringfenced Capital is expected to remunerate the services provided, through the sole and widespread network used by the Group and allocated to the CGU. Therefore, as part of our audit for the financial year 2017, we focused on the determination of the recoverable amount of the “Mail, Parcels and Distribution” business segment, as well as the reasonableness of the most significant underlying assumptions and hypotheses.
Note 2.5 to the consolidated financial statements as of 31 December 2017 “Use of estimates – Technical provisions for insurance business”
Therefore, as part of our audit activity, we paid particular attention to the analysis of the measurement techniques and methods of the technical provisions for the insurance business in the consolidated financial statements as of 31 December 2017.
Note A.5 to the consolidated financial statements as of 31 December 2017 “Financial assets - Fair value hierarchy”
Note 6 to the consolidated financial statements as of 31 December 2017 “Risk management”
Financial assets classified in levels 2 and 3 of the fair value hierarchy were recognised for an amount of approximately Euro 27,785 million and Euro 1,676 million respectively in the financial statements as of 31 December 2017; moreover, financial liabilities classified in level 2 of the fair value hierarchy were recognised for an amount of approximately Euro 1,676 million.
As part of our audit activity, we paid particular attention to the analysis of the measurement
As part of our audit activities, also supported by experts within the PwC network, we carried out the following main activities in order to address this key audit matter: • critical analysis of the documents supporting the transaction, including the minutes of the corporate governance bodies’ meetings, as well as discussions with the corporate functions involved in the determination of the cost of the transaction; • understanding and assessment of the method used to calculate the fair value of the acquired stake; • analysis of the accounting for the transaction and of the related disclosures provided in the consolidated financial statements as of 31 December 2017, in compliance with IAS28 “Investments in Associates and Joint Venture” and IFRS3 Revised “Business Combinations”.
Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements
Those charged with governance are responsible for overseeing, in the terms prescribed by law, the Group’s financial reporting process.
expressing an opinion on the effectiveness of the Group’s internal control; • We evaluated the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management; • We concluded on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern; • We evaluated the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation; • We obtained sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion on the consolidated financial statements.
From the matters communicated with those charged with governance, we determined those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We described these matters in our auditor’s report.
Additional Disclosures required by Article 10 of Regulation (EU) No 537/2014
Opinion in accordance with Article 14, paragraph 2, letter e), of Legislative Decree No.39/2010 and Article 123-bis, paragraph 4, of Legislative Decree No. 58/1998
Management of Poste Italiane SpA is responsible for preparing a report on operations and a report on the corporate governance and ownership structure of the Poste Italiane Group as of 31 December 2017, including their consistency with the relevant consolidated financial statements and their compliance with the law.
In our opinion, the report on operations and the specific information included in the report on corporate governance and ownership structure mentioned above are consistent with the consolidated financial statements of the Poste Italiane Group as of 31 December 2017 and are prepared in compliance with the law.
Management of Poste Italiane SpA is responsible for the preparation of the non-financial disclosure statement pursuant to Legislative Decree No. 254 of 30 December 2016.
Pursuant to article 3, paragraph 10, of Legislative Decree No. 254 of 30 December 2016, the nonfinancial disclosure statement is the subject of a separate statement of compliance issued by us.
We conducted our audit in accordance with International Standards on Auditing (ISA Italia). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of this report. We are independent of the Company pursuant to the regulations and standards on ethics and independence applicable to audits of financial statements under Italian law. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Note 2.3 to the financial statements as of 31 December 2017 “Accounting policies adopted – Impairment of assets”
Note 2.5 to the financial statements as of 31 December 2017 “Use of estimates”, paragraphs “Impairment test and cash generating units” and “Measurement of other non-current assets”
Note 4.4 to the financial statements as of 31 December 2017 “Operating segments”
CGU within the context of regular corporate operations and considering the Universal Postal Service obligation. Such cash flows were discounted at an appropriate rate and account was taken of the transfer prices by which BancoPosta’s Ring-fenced Capital is expected to remunerate the services provided, through the sole and widespread network used by the Company and allocated to the CGU.
Note A.5 to the financial statements as of 31 December 2017 “Financial assets attributable to BancoPosta - Fair value hierarchy of financial assets attributable to BancoPosta”
Note 6 to the financial statements as of 31 December 2017 “Risk management”
Financial assets attributable to BancoPosta,classified in levels 2 and 3 of the fair value hierarchy were recognised for an amount of approximately Euro 3,254 million and Euro 37
Level 2 of the fair value hierarchy comprises the measurement of financial instruments based on inputs other than quoted prices in organised and regulated markets (“level 1”), and directly and indirectly observable in the market, with reference to the same instruments. On the contrary, level 3 of the fair value hierarchy includes the measurement of financial instruments based also on inputs that are directly not or indirectly observable in the market.
As part of our audit activity, we paid particular attention to the analysis of the measurement techniques and methods of the financial instruments that are unquoted on regulated markets and measured at fair value in the financial statements as of 31 December 2017. In particular, the use of estimates mainly concerns specific types of structured securities and derivatives classified in levels 2 and 3 of the fair value hierarchy in compliance with IAS39 “Financial instruments: recognition and measurement” and IFRS13 “Fair value measurement”.
Those charged with governance are responsible for overseeing, in the terms prescribed by law, the Company’s financial reporting process.
As part of an audit conducted in accordance with International Standards on Auditing (ISA Italia), we exercised our professional judgement and maintained professional scepticism throughout the audit. Furthermore: • We identified and assessed the risks of material misstatement of the financial statements, whether due to fraud or error; we designed and performed audit procedures responsive to those risks; we obtained audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control; • We obtained an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control; • We evaluated the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management; • We concluded on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern; Reports and Attestations
• We evaluated the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We also provided those charged with governance with a statement that we complied with the regulations and standards on ethics and independence applicable under Italian law and communicated with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
We confirm that the opinion on the financial statements expressed in this report is consistent with the additional report to those charged with governance, in their capacity as the audit committee, prepared pursuant to article 11 of the aforementioned Regulation.
Opinion in accordance with Article 14, paragraph 2, letter e), of Legislative Decree No. 39/10 and Article 123-bis, paragraph 4, of Legislative Decree No. 58/98
We have performed the procedures required under auditing standard (SA Italia) No. 720B in order to express an opinion on the consistency of the report on operations and of the specific information included in the report on corporate governance and ownership structure referred to in article 123-bis, paragraph 4, of Legislative Decree No. 58/98, with the financial statements of Poste Italiane SpA as of 31 December 2017 and on their compliance with the law, as well as to issue a statement on material misstatements, if any.
In our opinion, the report on operations and the specific information included in the report on corporate governance and ownership structure mentioned above are consistent with the financial statements of Poste Italiane SpA as of 31 December 2017 and are prepared in compliance with the law.
Responsibility of Management and Those Charged with Governance for the NFS
Management is responsible for identifying the content of the NFS, within the matters mentioned in article 3, paragraph 1, of the Decree, considering the activities and characteristics of the Group and to the extent necessary to ensure an understanding of the Group’s activities, its performance, its results and related impacts.
Moreover, for material information, considering the activities and characteristics of the Group: - at the Parent Company level: a) with reference to the qualitative information included in the NFS, and in particular to the business model, the policies adopted and the main risks, we carried out interviews and acquired supporting documentation to verify their consistency with available evidence; b) with reference to quantitative information, we performed analytical procedures as well as limited tests, in order to assess, on a sample basis, the accuracy of consolidation of the information; - for the Parent Company and the following subsidiaries: Poste Vita SpA, SDA Express Courier SpA, Postel SpA, Mistral Air SpA and Poste Mobile SpA, which were selected on the basis of their activities and their contribution to the performance indicators at a consolidated level, we carried out site visits during which we met local management and gathered supporting documentation regarding the correct application of the procedures and calculation methods used for the key performance indicators.