Company, but for all stakeholders, through a structured business model and a clear strategy.
Poste Italiane’s Integrated Report is now in its third edition, continuing its objective of sharing the Group’s sustainability journey with stakeholders in a clear and comprehensive manner, highlighting all the activities undertaken to support the country’s growth and the creation of shared value.
1. ESMA document on European common supervisory priorities for 2020 “European common enforcement priorities for 2020 annual financial reports” 2. CONSOB Attention Notice no. 1/21 of 16 February 2021.
Below are two focuses on the area of Poste Italiane’s suppliers, respectively the impacts generated by Italian suppliers in the individual Territorial Areas and the indirect contributions generated by Italian Small and Medium Enterprises (SMEs) suppliers.
With reference to the various areas examined, there are values of Gross Domestic Product between €60 million and €1 billion. This results in an employment level of no less than one thousand people and total employment income between €40 million and €450 million approximately.
The following diagram illustrates the interaction between the strategy, the value creation process and forms of financial and non-financial capital that characterise Poste Italiane’s business model.
Phisical-structural • Properties, Post Offices, branches and ATMs • Logistics network • Hardware IT infrastructure • IT software systems
Tink AB During the first quarter of 2020, as part of the agreements signed in December 2019 with the Swedish company Tink AB, one of the leading Open Banking5 platforms in Europe, the Poste Italiane Group, through its subsidiary PostePay SpA and other investors, subscribed to a capital increase in Tink with an investment of approximately €20 million, acquiring an investment of 5.1% in the share capital issued, or 4.8% on a fully diluted basis in Tink capital. The subscription of the capital increase was completed on 10 March 2020. Subsequently, on 18 June 2020, PostePay participated in a new capital increase with an investment of €0.63 million, keeping the investment of 4.8% unchanged. This capital increase by Tink was carried out to partially finance the acquisition of the Spanish company Eurobits Technologies S.L, Tink competitor in the open banking technology solutions market, which includes among its customers the main financial institutions in its reference market. On 11 December 2020, PostePay took part in a new capital increase in Tink with an investment of €1.5 million, keeping its interest in the company’s share capital virtually unchanged (4.7% on a fully diluted basis). The purpose of this capital increase is to acquire a stake in Eurazeo, a leading European investment company with a portfolio of assets under management of more than €18 billion.
As part of its collaboration with technology start-up company Milkman SpA, which specialises in the management of “last mile” logistics for advanced delivery services in Italy, on 24 April 2020, Poste Italiane subscribed a capital increase of €15 million in MLK Deliveries SpA, acquiring 70%. The remaining 30% of MLK Deliveries is owned by Milkman SpA.
By notarial deed dated 30 June 2020, SDA Express Courier SpA sold 5% of the shares held in Consorzio Logistica e Pacchi ScpA to Poste Assicura SpA.
Digital web channels and apps Outside post offices, the Group’s services are provided via digital channels (poste.it website and APPs), which in the 2020, showed significant development, amplified by the Covid-19 emergency and related travel restrictions.
On 5 February 2020, the Ministry of Justice, in order to encourage the full development of the liberalisation process of the notification services of judicial documents and violation of the Highway Code, adopted the new Guidelines for training courses for employees responsible for notification by mail, enabling alternative operators with special licenses to actually enter the market.
Development of a new collaboration with Pharmap for the home delivery of medicines
The new Postepay Connect Back offer has been developed: up to €4 per month in cashback will be credited to the Postepay Evolution card for any unused Giga
Provided support for the Cashless Italy Plan to encourage electronic payments
With these new provisions on out-of-court dispute resolution systems of the Bank of Italy, as of 1 October 2020, amendments were introduced regarding the extension to 60 days of the maximum response time to complaints submitted by customers and the protection offered by the Financial Banking Arbitrator (ABF) was extended with the increase from €100 thousand to €200 thousand of the limit of competence for the value of disputes.
The letter to the market reaffirms the importance of adopting the correct methods for the sale of products combined with loans, expressly referring to the collaboration with the Competition and Market Authority (AGCM). BancoPosta’s overall assessment of compliance with the issues under consideration as well as the action plan were presented to the Board of Directors in September 2020.
In the countries of the Eurozone, after the first wave of contagions and the consequent decline in economic activity in the first (-3.7%) and second quarters of 2020 (-11.7%)27, since August 2020, the contagion curve has slowly returned to growth, first in Spain, then in France and in some Central and Eastern European countries. By September 2020, the second pandemic wave was already in full swing across the continent, albeit with a different spread between countries. The restrictive measures put in place were relatively less severe than those adopted during the spring of 2020, which were followed by an impact on activity indices limited to services, which slowed sharply in many countries in the Area. Overall, GDP increased 12.5%28 in the third quarter of 2020. For the fourth quarter, after the sharp decline in November, the December Eurozone Purchasing
States were able to respond quickly to the crisis through appropriate economic policies. In addition to the counter-cyclical measures adopted, similar to those already experienced during past recessions, unprecedented action was taken at supranational level. The Next Generation EU (NGEU) by the European Union and the Pandemic Emergency Purchase Programme (PEPP) following ECB initiative, are new developments in common response capacity to a shock that has affected all Member States. The Next Generation EU is a €750 billion temporary recovery instrument that will enable funds to be raised on the capital markets. This instrument will help repair the immediate economic and social damage caused by the Covid-19 pandemic, to create a post-Covid-19 Europe that is greener, more digital, resilient and fit for present and future challenges. Instead, the PEPP represents an unconventional monetary policy measure launched in March 2020 to counter the serious risks posed by the Covid-19 pandemic to the monetary policy transmission mechanism and the Eurozone outlook. The PEPP had an initial budget of €750 billion, increased in June 2020 by €600 billion. In December 2020, concerns about the timing of achieving herd immunity through vaccine deployment and uncertainties about the prospects for easing restrictions led the European Central Bank to adopt an expansionary monetary policy by increasing the PEEP allocation by an additional €500 billion31, with which it will proceed with net purchases of public and private securities until March 2022, while reinvestment of purchases was extended to the end of 2023.
The Policy sets out the principles and methods implemented by the Group to protect and promote the physical and mental well-being of people through prevention, a culture of safety and implementation of management systems.
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.
During the period, the exchange of information and interaction with all Group companies continued, also with the aim of making progress in aligning the main methodological references for carrying out audits and the related assessments of the internal control system, in order to provide the Governance and Control Bodies with an increasingly integrated and homogeneous representation of the Group.
Monitor the environmental impact of logistics activities and encourage a process of change aimed at safeguarding the environment by adopting lower-impact solutions regarding the provision of postal and logistics services, including: the use of hybrid/electric vehicles, rationalisation of distances travelled, correct waste management, and development of recharging infrastructure for customers’ vehicles.
SBUs impacted: y Mail, Parcels and Distribution y Payments and Mobile y Financial Services y Insurance Service
In view of the complexity of Poste Italiane and the numerous business sectors in which the Group operates, as well as the legal and reputational impacts, the Company has defined an integrated compliance process at Group level, with the specific aim of monitoring - in a structured way for each level of the Company and in a manner appropriate to each business sector - the risks of non-compliance to which the Group is exposed, thus fully implementing the principles of integrity, transparency and legality.
Risks impacted: y Strategic y Operational y Compliance y Reputational y Financial and Insurance y ESG
In a year characterised by the health emergency and the social and economic crisis generated by the Covid-19 pandemic, the Group achieved solid and resilient economic and financial performance. The negative variance that emerges when comparing 2019 results is primarily attributable to the significant decline in operations in the second quarter of the year.
In 2020, the Group’s operating profit stood at €1,524 million, down €250 million from last year. The downturn in operating performance had an impact on all the Strategic Business Units with the exception of the Payment and Mobile Services Strategic Business Unit, which recorded operating income of €259 million in 2020, up by €18 million compared with the previous year, thanks to an acceleration in the use of digital payments and a loyal customer base in the TLC segment.
Collections and payments: tax payment service through acceptance of the F23 and F24 models; funds transfer for sending money abroad via Moneygram and Western Union, post giro transfers and direct debit made by Postepay Evolution, payments on the PagoPA system.
Net technical provisions Poste Vita Group (€bn) 140.2 153.7 13.5 9.6%
In particular, Life net revenue decreased by 0.7% (-€10 million) compared to the previous year. This change is mainly the effect of the decline in gross inflows (-€1.1 billion compared to 2019), which led to lower revenue from loadings (-€37 million) and lower revenue from Life protection margin (-€14 million); the decline in revenue is partly offset by the development of other technical provisions (+€28 million).
Digital Properties and main KPIs in the Poste Italiane Group The Poste Italiane digital web and app channels provide access to online services for 27.1 million retail users (20.8 million at 31 December 2019) and operate as both direct sales and after-sales channels. The daily average of web and app users was over 3 million (2 million average daily users in 2019). Digital channel transactions also grew, reaching 90.3 million for a transaction value of €22.2 billion (57.1 million transactions in 2019 for a transaction value of €15.6 billion). The Group’s digital properties include, in addition to the institutional website, the following apps: POSTEPAY BANCOPOSTA POST OFFICE POSTEID POSTEMOBILE
Digitale (Digital Money Box). *** The number of visitors represents the count of the individual cookies (browsers) that visited the site during the observation period. The same user who visits the site using different browsers and/or different devices (PC/mobile) is counted several times.
The balance of Sundry provisions and Other assets/liabilities at 31 December 2020 amounted to €2,532 million and decreased by €491 million compared to 31 December 2019 mainly due to higher net deferred tax liabilities of €418 million largely attributable to the negative change in the fair value of financial instruments classified as FVTOCI. The balance of Provisions for risks and charges also contributed to this item, which amounted to €1,396 million (€1,218 million at the end of December 2019) and includes Provisions for early retirement incentives of €576 million (€421 million at 31 December 2019). The balance also includes the provision for operational risks relating primarily to liabilities arising from the Financial Services SBU’s operations amounting to €139 million (€241 million at 31 December 2019) and the provision for disputes with third parties amounting to €267 million (€313 million at 31 December 2019).
Analysis of the ESMA net debt/(funds) of the Mail, Parcels and Distribution Strategic Business Unit
Poste Italiane SpA’s net profit for the year ended 31 December 2020 was €325 million (€661 million in 2019).
In addition, a further four Addenda were signed to the following Operating Guidelines: i) Corporate Affairs/Real Estate, following the establishment of the Fleet Management function and the reallocation of certain spaces relating to Business Continuity Management; ii) Digital, Technology & Operations, both for the part relating to Information Systems, in order to update the KPIs and include the new PSD2 services, and for that relating to Customer Operation services, in order to update the KPIs; iii) Corporate Affairs/Information Security, in order to update the KPIs.
The profits/(Losses) on financial assets and liabilities measured at fair value through profit or loss includes approximately €2 million of fair value changes related to Visa Incorporated shares. The fluctuation in the fair value of the 400,000 Visa Incorporated ordinary shares subject to the forward sale agreement entered into during 2019 (settlement date 1 March 2021) was negative for €5 million and was recognised in Profits/(Losses) on trading. The latter also includes income from the sale of derivative instruments amounting to €11 million to hedge (for management purposes) the remuneration of the deposit of public funding with the MEF.
Internal control system The elements that characterise BancoPosta’s Control Area60, understood as the general context in which company resources carry out their activities and perform their responsibilities, are primarily represented by: z the Group Code of Ethics; z the Organisational Model pursuant to Legislative Decree no. 231/2001 and the related corporate procedures; z 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; z General Regulation governing the process of assignment and outsourcing of BancoPosta RFC, which respectively regulates the assignment of RFC 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 of the Poste Italiane organisation, identifying the related operational phases and the roles and responsibilities of the various bodies and functions involved in the process; z the guideline 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; z the system used for delegating powers to function heads in accordance with their responsibilities.
Increase personnel training on the Group's ethical principles (including respect for human rights)
Poste Italiane recognises ethics and transparency as the founding values of the corporate identity from which it derives its origin and which support the Company in driving a responsible business and managing relations with stakeholders in a direct and honest way. Compliance with regulations, internal and external policies and codes of conduct, respect for rules and the strictest fairness are of strategic importance for the Group and are the basis for avoiding any conflict that may arise between corporate and personal interests.
Definition of ESG parameters in the participation requirements and in the evaluation criteria of the technical tender offers
The goal is to increase the level of certainty on significant tax issues by creating an open line of communication so that issues that might give rise to risky tax scenarios are addressed in advance. Poste Italiane’s admission to Collaborative Compliance consolidates the path inspired by the values of ethics, integrity and transparency also in the financial and fiscal area.
Within its Code of Ethics, the Company expresses its willingness to recognise and value the contribution of each individual employee, committing to guarantee to each of them, without distinction, equal treatment in work opportunities and professional advancement.
Specific initiatives have been implemented to support the evolution of the corporate culture and managerial attitudes in parallel with the market and organisational transformation. Among these, the Company has launched a “Digital HR Transformation” programme, proposing a fully online training offer adequate and consistent with the new way of working, in-depth analysis on the topics of Blockchain, Lean Culture and Data Analysis, and others entirely dedicated to the new Distance Offer to customers, with the aim of supporting Post Office Network personnel in the presentation of business proposals remotely.
NoidiPoste is the app dedicated to Poste Italiane Group personnel and, from 2020, also to former employees, which aims to connect colleagues and former colleagues, tell them about the company and facilitate the services it offers. It is the company communication channel with the highest number of accesses, with an average of over 3.5 million views per month, equal to over 60% of the total views of the company Intranet. Reaching 100,000 downloads in 2020, the application confirmed its role as an indispensable tool for the professional and personal lives of employees, adding new services including: holidays (over 600,000 accesses per month), payslip, job posting, meal vouchers, column and TG Poste, with an average of 18,000 users per day. In addition, the Meal Vouchers and Job Posting services have been integrated, allowing users to check the remaining balance on their Ticket Restaurant card and to apply for a new job directly from their device.
z Parental leave: more favourable treatment than that provided for by law (art. 43 National Collective Labour Contract).
Health emergency from Covid-19 In March 2020, following the spread of the Covid-19 epidemiological emergency, the Company and the Labour Unions signed some agreements aimed at ensuring, through the adoption of preventive measures, the safety of people and the containment of the virus.
With reference to the initiatives aimed at guaranteeing the coverage and full operation of the delivery service, on 20 February 2020, the Parties signed an agreement for the activation of the special elastic clause for part-time personnel, pursuant to the current National Collective Labour Contract.
Registration to MAAM is aimed at both women on maternity leave and newly parents (mothers and fathers) of children aged from 0 to 3, as well as managers whose personnel involved in the initiative. Approximately 700 moms and dads participated in the programme in 2020, with male participation increasing by +15% over 2019. The initiative is supported by an online community that allows mothers and fathers to discuss parenting and the MAAM path in a protected and stimulating environment by integrating the various experiences through a relational system of over 5,500 participants from various companies, facilitating the process of learning, training and skills development.
The state of emergency related to the Covid-19 pandemic has also had an impact on the calendar of events of which Poste Italiane is a sponsor. With the aim of maintaining the commitments undertaken, the Group has proposed to its partners, where possible, alternative methods that could also guarantee territorial coverage, using digital solutions and remodelling projects remotely.
Thanks to the agreement with 4k s.r.l., the leading company in home delivery of medicines, Poste Italiane is making its capillarity and logistics network available to offer an essential service to people who are unable to leave their homes: thanks to this initiative, citizens can order medicines at home from their local pharmacy, which are delivered instantly within 90 minutes. The service is active in Bergamo, Bologna, Brescia, Carpi, Catania, Como, Ferrara, Genoa, Imola, Livorno, Mestre, Milan, Modena, Padua, Reggio Emilia, Rome, Rovigo, Savona, Teramo, Turin, Varese and Vicenza. For Poste Italiane, this agreement marks its entry into the Pharma sector, which will expand the Group’s value chain.
Close to Small Municipalities Poste Italiane aims to be, through its widespread network of Post Offices, a link between institutions, the territory and the country’s services.
During 2020, the Rai Uno programme “Linea Verde Radici” told the story of life in small Italian villages, showing their gastronomy, customs and traditions. In each episode, the journalist is accompanied by a Poste Italiane letter carrier who acts as a guide to discover the beauty of the place. The letter carriers tell of the strong relationship with the people and the characteristics of the places visited. The involvement of letter carriers in the daily life of the territories is evidence of Poste Italiane’s commitment to Small Municipalities.
Report on operations at 31 December 2020 6. Performance with national and local institutions, addressed to the mayors and prefects of all the territories of the country with the aim of raising awareness among citizens (over 26 thousand direct communications to mayors and prefects), with particular focus on the “red zones”.
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 the relative level of satisfaction with the products and services offered. Based on principles of professionalism, reliability, and ethics, Poste Italiane provides offerings dedicated to all the categories of customers it serves, in accordance with specific needs.
Improve and simplify the interaction between customer and Company 2.68 million
Poste Italiane Group’s Integrated Policy pays particular attention to the issue of quality. In fact, this Policy documents the Group’s commitment to the continuous integration of quality within the company’s development strategy, so that all the processes that contribute to the design, development and creation of a product or service are mapped within the quality management systems.
The Quality Management System allows Poste Italiane to achieve continuous improvement in performance and increase the standard of competitiveness of the Company on the market, ensuring through its functions the maximum satisfaction of customer expectations. 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.
Score (CES) indicator, applied to the Group’s channels (Post Offices, call centres and the web), which makes it possible to analyse how easily and in how long the Company solves problems; z adequate management of complaints, aimed at identifying and remedying, through the necessary corrective actions, the causes that resulted in the inconvenience, with a view to continuous improvement of business processes.
EARLY WARNING Collection of the vulnerabilities that may affect Poste Italiane services from external sources
At the same time, in achieving the excellent results obtained by the Group in the area of IT security, a significant role is attributed to the historic collaborative relationship between the Postal and Communications Police and Poste Italiane. In order to cope with the changes in the scenarios and the new types of malicious events, over the years, the Company has had to rapidly readjust its operations, especially with reference to payment systems for e-commerce and financial and insurance services, for which it has been necessary to intensify the control and updating of physical and IT security structures. In detail, the agreement with the Postal Police envisaged activities aimed at preventing and combating offences relating to the products and production processes of the services offered by the Poste Italiane Group; surveillance at Post Offices during scheduled payment periods; the establishment of task forces to analyse new methods of computer fraud; and the development of new cybersecurity tools.
Development of pre-sale and sale channels of products and services in multi-channel
Commercialised the first Postepay in biodegradable materials million downloads of the Postepay App
(to Catania and Cagliari). During the “peak period ” at the end of the year, in order to respond to the growing distribution needs of e-commerce products, the air fleet was increased from 8 to 11 aircraft, thus further strengthening connections with Southern Italy and the islands, generating an increase in weekly flights of 40% compared to standard traffic.
With a view to business development, during the first quarter of 2021, the sorting centre in Central Italy located near Rome and the one located in Northern Italy became fully operational.
Annual Report 2020 Poste Italiane Group of Postal and Financial Services in accordance with the international UNI EN ISO 14001 standard. The certification was issued by IMQ-CSQ, one of the most authoritative accredited certification bodies at international level.
In continuity with previous years, the Green Month took place on 20 March, aimed at raising awareness of good green practices. Below is the Poste Italiane Green Month Decalogue for 2021: The theme of Poste Italiane Green Month, accompanied on social media by the hashtag #meseverdeposte, for 2021 was the territory of proximity, i.e. how the relationship with what is closest to us in our neighbourhood, town or city has changed and how we have experienced it, especially in a delicate phase like this one. The Group highlighted a series of initiatives that the Company has and is pursuing in various areas, from sustainable mobility to the development of the territory, to promote a conscious approach to environmental issues and achieve the “zero emissions” objective set for 2030.
The Group’s objectives in relation to reducing the environmental impact on logistics in 2020 focused on reducing CO2 emissions by switching to more sustainable means of transport.
C o m p ar is o n b et w ee n th e g re en fl ee t an d t he tr ad it io na l fl ee t
In 2020, BancoPosta Fondi SGR approved the new version of the Guideline on the exercise of voting rights and engagement activities, implementing the Italian Principles of Stewardship for the exercise of administrative and voting rights in listed companies promoted by Assogestioni
Best-in-class ESG funds Poste Investo Sostenibile was launched in January 2020, the new socially responsible mutual fund whose basket of securities on which it directs investments is selected with specific attention to environmental, social and governance (ESG) factors, combining the best remuneration opportunities with the application of strict parameters linked to the sustainability profile of issuers. The fund is also distinguished by the presence of a benchmark composed of indices that are “sustainable”, as they consist of a limited number of securities selected on the basis of ESG criteria. This allows representing the reference universe of an investment in a clear, transparent and objective manner, without compromising the manager’s discretion.
During the year, The Poste Vita Group continued the evolution of the Multi-class range with the launch of “Poste Nuovi Progetti Futuri”, which provides access to the opportunities offered by the financial markets through a gradual approach. In July 2020, the offering was further enhanced with the development of “Poste Progetti Futuri Dinamica”, a new multi-class policy dedicated to Affluent customers.
Percentage of Group companies assessed for risks related to corruption 72 64 66
Disputes with employees 956 489 533 * Periodic trends show a slight increase to the extent of approximately 9% in litigation and in fact, 533 new disputes were recorded during the reporting period compared to 489 cases in 2019. On the “establishment of the employment relationship” front, there has been a significant increase. In fact, new disputes, all referring to Poste Italiane SpA, amounted to 122 (26 in 2019), of which 72 disputes related to fixed-term contract and 32 for Temporary Work. With regard to the “performance of employment relations”, 313 disputes were lodged in 2020, of which 309 related to Poste Italiane SpA There was a 12% decrease in this area compared to 2019 (357 cases). Finally, regarding “termination of employment”, 98 new disputes arose, of which 93 related to Poste Italiane. Also in this area, there was a slight decrease in the amount of approximately 7% compared to 2019 (106 cases).
Fall and/or awkward movement 1,047 1,394 2,441 841 1,338 2,179 593 958 1,551 * With respect to 2020, the figure does not consider employees who contracted the Covid-19 virus, to the extent of 953 men and 1,089 women, for a total of 2,042 events considered as occupational injuries.
ATMs equipped with touchpads for the visually impaired and the blind 7,279 7,728 7,958 of which: ATM with voice guidance 6,307 7,020 7,384
[GRI 305-1] Total direct GHG emissions (Scope 1); [GRI 305-2] Total indirect GHG emissions (Scope 2); [GRI 305-3] Total other indirect GHG emissions (Scope 3)
Operational sites (sorting centres) (%) 14 14 14 * As of 2020, the indicator considers values for the entire Group and classifies buildings by functionality similar to those of Poste Italiane (e.g. industrial plants not only CMP, but also Postel printing works).
Total Fuel emissions from non-renewable sources – Scope 3 (tNOx) 625.19 734.33
The vision for the future is clear: to maximise the value of Italy’s leading omni-channel distribution network, leveraging on the enhanced reputation and confirmed trust of customers as key resources for the sustainable development of Poste Italiane’s business.
NET CASH POSITION OF THE MAIL, PARCELS AND DISTRIBUTION STRATEGIC BUSINESS UNIT: this is the sum of the following items, shown according to the format recommended by ESMA, the European Securities and Markets Authority (document 319 of 2013): financial liabilities after adjusting for intersegment transactions, current financial assets after adjusting for intersegment transactions and cash and cash equivalents.
Net technical provisions for insurance business - - - 153,740 - 153,740
Generated by the Group and directly connected through a business relationship
102-6 Markets served Report on Operations: Areas of operations and organisation of the Group (p.43-71); Omni-channel Commercial Strategy (p.44-50)
Report on Operations: Management and Supervisory Bodies (p.9094 ); Chapter 6. Tables of indicators (p.318); Link: posteitaliane.it/en/board-of-directors.html
Report on Corporate Governance and the Ownership Structure: 6.3 Role and functions (former art. 123-bis, par. 2.d), Consolidated Law on Finance (p.12-14)
102-56 External assurance Report on Operations: Chapter 9. Consolidated non-financial statement (p.351-370)
Report on Operations: Materiality matrix (p.108-111); Poste Italiane’s Sustainability Strategy (p.77-83); Occupational health and safety (p.227-232); Table showing the link with the scope of the Decree, Poste Italiane’s material topics and the GRI Standards (p.354-355)
GRI 405: Diversity and Equal Opportunity 405-1 Diversity of governance bodies and employees
Planet Climate change Greenhouse Gas Emissions (GHG) GRI 305-1 GRI 305-2 GRI 305-3
y Materials efficiency/recycling y 301-1 y Energy efficiency y 302-1 y 302-2 yWater withdrawals by source y 303-1 y 303-3 yWaste management y 306-1 y 306-2 y 306-3 y 306-4 y 306-5
If events or changes in circumstances indicate that the carrying amount of the right of use cannot be recovered, this asset is tested for impairment in accordance with the provisions of IAS 36 - Impairment of Assets.
Regardless of any impairment indicator, the assets listed below are tested for impairment every year: z intangible assets with an indefinite useful life or that are not yet available; the impairment test can take place at any time during the year, provided that it is performed at the same time in each of the following years; z goodwill acquired in a business combination.
The Group’s taxation and accounting standards take account of the effects of Poste Italiane SpA’s participation in the national tax consolidation scheme, for which the option has been exercised in accordance with the law, together with the following subsidiaries: Poste Vita SpA, SDA Express Courier SpA, Poste Air Cargo Srl, Postel SpA, Europa Gestioni Immobiliari SpA, Poste Welfare Servizi Srl, Poste Assicura SpA, BancoPostaFondi SpA SGR, PostePay SpA and as of 20 November 2020, Poste Insurance Broker Srl. The tax consolidation arrangement is governed by Group regulations based on the principles of neutrality and equality of treatment, which are intended to ensure that the companies included in the tax consolidation are in no way penalised as a result. Following adoption of the tax consolidation arrangement, the Parent Company’s tax expense is determined at consolidated level on the basis of the tax expense or tax losses for the period for each company included in the consolidation, taking account of any withholding tax or advances paid. Poste Italiane SpA posts its IRES tax expense to income taxes for the period, after adjustments to take account of the positive or negative impact of tax consolidation adjustments. Should the reductions or increases in tax expense deriving from such adjustments be attributable to the companies included in the tax consolidation, Poste Italiane SpA attributes such reductions or increases in tax expense to the companies in question. The economic benefits deriving from the offset of tax losses transferred to the consolidating entity by the companies participating in the tax consolidation arrangement are recognised in full by Poste Italiane SpA. Other taxes not related to income are included in “Other operating costs”.
The value in use of the CGU was estimated on the basis of the economic forecasts contained in the “2024 Sustain & Innovate” strategic plan approved by Poste Italiane SpA’s Board of Directors on 18 March 2021. In determining the terminal value, calculated on the basis of the last year of explicit forecasts, income was normalised. Reference was also made to the transfer prices that BancoPosta RFC is expected to pay for the services provided by Poste Italiane’s distribution network. A long-term growth rate of 1.23% and a WACC of 4.14% were used. The analysis made it possible to conclude positively on the appropriateness of the figures of the financial statements, as well as the related sensitivity analyses on the significant variables that have confirmed the carrying amounts.
94. The reform of reference indices for the determination of interest rates refers to the reform, which concerns the entire market, of a reference index for the determination of interest rates, including the replacement of a reference index for the determination of interest rates by an alternative reference rate, such as that resulting from the recommendations contained in the July 2014 report of the Financial Stability Board "Reforming Major Interest Rate Benchmarks".
On 29 January 2021, the transaction was completed and Poste Italiane acquired the entire share capital of Nexive from PostNL and Mutares at a price of €34.4 million, based on an enterprise value of €50 million and net debt of €15.6 million.
Under the terms of the transaction, Poste Italiane will acquire a stake in BNL Finance following the demerger, by Poste Italiane in favour of its parent, BNL SpA, of its non-perimeter assets, primarily consisting of around €2 billion in loans compared with a total loan portfolio of over 2.8 billion at the end of 2020.
z On 23 September 2020, the Board of Directors of PostePay SpA approved the sale of the ICT business unit dedicated to telecommunications and Electronic Postman services to Poste Italiane SpA. The transaction took effect on 1 October 2020.
(€m) Notes FY 2020 of which related parties FY 2019 of which related parties
Goodwill related to the Insurance Services SBU, referring to the subsidiary Poste Welfare Servizi Srl, has been tested for impairment as required by IAS 36. Based on the information available and the impairment tests conducted, there has been no need for impairment on the goodwill recognised.
Acquisitions during the year refer to the Parent Company (€135 million) and relate to new contracts and renewal of existing contracts at the beginning of the year of a real estate nature (€83 million), hire of company vehicles (€42 million) and hire of IT equipment (€10 million) and to the subsidiary SDA Express Courier (€65 million) mainly for new contracts and renewal of existing contracts of a real estate nature. The item “Adjustments” refers to contractual changes during the period in question, e.g. for changes in duration due to extension, revision of economic conditions, etc.
Following the transactions that led FSIA Investimenti Srl, at the end of the 2019 financial year, to acquire sole control of SIA SpA (step up acquisition), it became necessary for FSIA to initiate a new process of purchase price allocation of the assets and liabilities of SIA at the date of the acquisition of control, in line with the provisions of IFRS 3 - Business Combinations97. The following table shows the values of intangible assets and goodwill identified at the time of the purchase price allocation, distinguishing the values resulting from the new allocation (balance at 1 January 2020) from the original values.
The item Loans refers to reverse repurchase agreements of €364 million entered into with Cassa di Compensazione e Garanzia SpA (hereinafter the Central Counterparty) for the temporary use of liquidity from private inflows. These transactions are guaranteed by securities for a total notional amount of €360 million. Financial assets and liabilities relating to repurchase agreements managed through the Central Counterparty that meet the requirements of IAS 32 are offset. The effect of netting at 31 December 2020, already included in the exposure to net balances, amounted to €363 million (€1,158 million at 31 December 2019).
Receivables include: z Deposits with the MEF, including public customers’ current account deposits, which earn a variable rate of return, calculated on a basket of government bonds98. The deposit has been adjusted to reflect accumulated impairments of approximately €4 million, to reflect the risk of counterparty default (€3 million at 31 December 2019). During 2020, in the phase of increasing returns following the onset of the pandemic, the Parent Company entered into (operating) hedging derivative contracts on the 10-year indexed remuneration component. The hedging transaction was carried out through forward purchases of the 10-year BTP with settlement of the differential between the pre-set price of the security and its market value.
Forward purchases Forward sales Interest rate swaps Interest rate swaps Forward purchases Forward sales nominal fair value nominal fair value nominal fair value nominal fair value nominal fair value nominal fair value nominal fair value
The item Loans of €21 million refers to the loan granted to the associate FSIA Investimenti Srl on 23 June 2020 and repayable in a single instalment on 29 September 2023, in order to repay the Bank Loan subscribed by the company and finance current operations.
The overall fluctuation in fair value in the year in question was negative for €6 million and recognised in the specific equity reserve.
Due from subsidiaries, associates and joint ventures - 1 1 - 1 1
105. At 31 December 2020, the balance of trade receivables includes €11 million, net of the related provisions for doubtful accounts, relating to rental income falling within the scope of IFRS 15 – Revenue from Contracts with Customers.
Specifically: z Substitute tax paid refers mainly to: – €2,262 million on non-current receivables paid in advance by Poste Vita SpA for the financial years 2014-2019, relating to withholding and substitute tax paid on capital gains on life policies108; – €1,496 million charged to holders of Interest-bearing Postal Certificates and Class III and V insurance policies for stamp duty at 31 December 2020109; this amount is balanced by a matching entry in “Other taxes payable” until expiration or early settlement of the Interest-bearing Postal Certificates or the insurance policies, i.e. the date on which the tax is payable to the tax authorities (tab. B10.3); – €320 million relating to advances paid in relation to stamp duty to be paid in virtual form in 2021 and charged to customers and to be recovered from customers by Poste Italiane; – €118 million relating to stamp duty charged to Postal Savings Books, which Poste Italiane SpA pays in virtual form as required by law.
B3 - Shareholders transactions As approved by the General Shareholders’ Meeting of 15 May 2020, on 24 June 2020, the Parent Company distributed dividends of €402 million (dividend per share equal to €0.309) as the balance for 2019, taking into account the interim dividend of €200 million (dividend per share equal to €0.154) already paid in November 2019. In addition, on 11 November 2020, Poste Italiane’s Board of Directors resolved to advance part of the ordinary dividend for 2020 as an interim dividend. The interim dividend of €211 million was distributed on 25 November 2020 (unit dividend of €0.162).
B7 - Employee termination benefits (€1,030 million) The following movements in employee termination benefits took place in 2020: tab. B7 - Movements in provisions for employee termination benefits
Bonds The item Bonds refers to two loans issued by the Parent Company as part of the €2 billion Euro Medium Term Notes (EMTN) Programme promoted by the Company during the 2013 financial year on the Luxembourg Stock Exchange. Specifically: a senior unsecured loan with a total nominal value of €1 billion issued on 10 December 2020 in two tranches, placed in public form with institutional investors. The first tranche of €500 million matures on 10 December 2024, has an above-par issue price of 100.10 with fixed annual coupon of 0.00% and an effective yield to maturity of -0.025%; the second tranche of €500 million matures on 10 December 2028, with an issue price below par of 99.758, a fixed annual coupon of 0.50% and an effective yield to maturity of 0.531%. At 31 December 2020, the fair value112 of the loan was €1,004 million; a loan with a nominal value of €50 million, privately placed and issued at par on 25 October 2013. The term to maturity of the loan is ten years and the interest rate is 3.5% for the first two years and variable thereafter (EUR Constant Maturity Swap rate plus 0.955%, with a cap of 6% and a floor of 0%). The interest rate risk exposure was hedged as described in note A6 – Financial assets. At 31 December 2020, the fair value113 of the loan was €51 million.
Revenue from Payments and Mobile [C2] 737 664 of which Revenue from contracts with customers 737 664 recognised at a point in time 241 287 recognised over time 497 377
telecommunications contracts used are in the form of bundles combining two performance obligations to which the implicit discount is allocated on the basis of the related fair value. The revenue from this type of offer, however, is not significant in terms of total revenue from payments and mobile services; – Payment services relating to revenue from the processing of tax payments using forms F23/F24 are recognised over time based on the level of service rendered.
z Income from investment of postal current account deposits breaks down as follows: tab. C3.1.1 - Income from investment of postal current account deposits
Impairment losses/reversals of impairment losses due to credit risk 22 (4)
Raw, ancillary and consumable materials and goods for resale 163 124
The increase in consumables is due to the health emergency that has made it necessary to procure personal protective equipment (such as masks, gloves, detergent gels and disinfectants) in order to guarantee the maintenance of operations both at post offices and at mail processing and sorting sites.
Total employees on permanent contracts* 116,886 121,108 112,709 118,523 * Figures expressed in Full Time Equivalent terms.
Recognition at a point in time 259 241 315 - - 815
Items not to be reclassified in the Statement of profit or loss for the year
Cash flow generated by /(used in) movements in working capital [b] 142,556 (109,316)
z Allocation of income taxes based on BancoPosta RFC’s separate report after adjusting for deferred taxation.
Poste Italiane SpA’s liability, pursuant to art. 2, paragraph 17-nonies of Law Decree 225 of 29 December 2010 converted into Law 10, to creditors of BancoPosta RFC is limited to the ring-fenced capital, represented by the assets and contractual rights originally allocated or arisen after the separation. Poste Italiane’s liability is, however, unlimited with respect to claims arising from actions in tort relating to the management of BancoPosta or for transactions for which no indication was made that the obligation was taken specifically by BancoPosta RFC.
The Regulation approved at the Extraordinary General Meeting of Poste Italiane SpA’s shareholder on 14 April 2011, and subsequently amended on 12 May 2020, provides that, where necessary, BancoPosta RFC’s equity shall be sufficient to ensure that it is able to comply with supervisory capital requirements and is aligned with the risk profile of its operations.
The following movements occurred in 2020: z Subscription on 24 April 2020 of the paid share capital increase of MLK Deliveries SpA totalling €15 million, resulting in the acquisition of a 70% stake (the remaining 30% is held by Milkman SpA). Moreover, the acquisition includes purchase and sale options that will allow Poste Italiane, starting from the second quarter of 2023, to purchase the additional 30% of MLK Deliveries SpA and ownership of the Milkman technology for e-commerce applications; z Subscription on 12 February 2020 of the paid share capital increase of sennder Italia Srl for a total of €0.255 million and consequent acquisition of a 75% stake (the remaining 25% is held by sennder GmbH). Moreover, on 25 February 2020, on the basis of agreements between the parties to support business needs in the start-up phase, Poste Italiane SpA made an additional capital contribution totalling €3 million; z Capital contribution in favour of FSIA Investimenti Srl of a total of €2 million made on 23 June 2020; z Sale, on 26 February 2020, of the Information Technology business units of Poste Vita SpA, Poste Assicura SpA and Poste Welfare Servizi Srl to Poste Italiane with effect from 1 March 2020; z On 26 May 2020, the company Poste Tributi ScpA, already in liquidation, was removed from the register of companies; z Sale, on 24 June 2020, of the business unit relating to services for the “gamma BOX and Ioinvio” market (Market Business) of Consorzio Logistica e Pacchi in favour of Poste Italiane with effect from 1 July 2020; z Sale, on 28 September 2020, of the IT business unit relating to mobile telecommunication services and the Electronic Postman platform of PostePay SpA to Poste Italiane with effect from 1 October 2020.
131. Until the assigned shares are fully converted into ordinary shares, the share exchange ratio may be reduced if Visa Europe Ltd. incurs liabilities that, as of the reporting date, were considered as merely contingent.
This item breaks down as follows: tab. A7.1.1 - Loans at amortised cost
Specifically: z Substitute tax paid, attributable to BancoPosta RFC, primarily regards: : – €1,474 million charged to holder of Interest-bearing Postal Certificates for stamp duty at 31 December 2020137; this amount is balanced by a matching entry in “Other taxes payable” until expiration or early extinguishment of the Interestbearing Postal Certificates, i.e. the date on which the tax is payable to the tax authorities (tab. B9.3); – €320 million relating to stamp duty to be paid in virtual form in 2021 and to be recovered from customers; – €118 million relating to stamp duty to be charged to Postal Savings Book holders, which the Company pays in virtual form as required by law; – €11 million in withholding tax on interest paid to current account holders for 2020, which is to be recovered from customers.
138. They carry out transport and custody of valuables awaiting payment to the State Treasury.
Cash held on deposit with the MEF at 31 December 2020 include approximately €1,553 million in amounts deposited with the MEF in a so-called buffer account, consisting of customer deposits subject to restrictions on their use and yet to be invested (note – 5.2 – Information on BancoPosta RFC).
Increase/(decrease) for expected losses - - 6 - - - 6
B3 - Availability and distributability of reserves The following table shows the availability and distributability of Poste Italiane SpA’s reserves. Retained earnings include the profit for 2020 of €325 million.
B4 - Provisions for risks and charges (€1,309 million) Movements in provisions for risks and charges are as follows: tab. B4 - Movements in provisions for risks and charges
Other amounts payable to third parties - 148 148 - 164 164
Other amounts due to subsidiaries tab. B9.4 - Other amounts due to subsidiaries
Postal Services 2,846 2,929 of which Revenue from contracts with customers 2,846 2,929 recognised at a point in time 221 490 recognised over time 2,625 2,439
Revenue from BancoPosta services showed a decrease compared to the 2019 due to the health emergency that has affected our country since March 2020 and that has significantly affected normal operations. The largest decreases refer to revenue from commissions on payment of bills by payment slip and commissions for the distribution of loan products.
Interest income (expense) on asset swaps of FVH on securities at FVOCI and AC (58) (27)
Other income from financial activities increased by €132 million compared to 2019, mainly due to higher profits from the sale of financial assets at FVTOCI (+€46 million) and at amortised cost (+€102 million), partly offset by the lower profits from fair value measurement of instruments at FVTPL (-€17 million).
Net provisions for risks and charges and doubtful debts (10) -2.91% 6 0.73%
Consorzio Servizi Telef. Mobile ScpA - - - - 2 23 - - - - - -
Net cash flow from/(for) financing activities and shareholder transactions (1,306) (211) 16.2 (234) (60) 25.6
The remuneration paid to members of the Company’s Supervisory Board for 2020 amounts to approximately €96 thousand. In determining the remuneration, the amounts paid to managers of Poste Italiane who are members of the Supervisory Board is not taken into account, as this remuneration is passed on to the employer.
Transactions with personnel pensions funds Poste Italiane SpA and the subsidiaries that apply the National Collective Labour Contract are members of the Fondoposte Pension Fund, the national supplementary pension fund for Poste Italiane personnel, established on 31 July 2002 as a non-profit entity. The Fund’s officers and boards are the General Meeting of delegates, the Board of Directors, the Chairman and Deputy Chairman of the Board of Directors and Board of Statutory Auditors. Representation of members on the above boards is shared equally between the companies and the workers that are members of the Fund. The participation of members in the running of the Fund is guaranteed by the fact that they directly elect the delegates to send to the General Meeting.
The performance of the Group’s portfolio in the period under review is as follows: i. the portfolio of financial assets at fair value through other comprehensive income held by Poste Italiane SpA (notional amount of approximately €34 billion) has undergone an overall net increase in fair value of approximately €4 billion: this change was partly recognised in the profit or loss for a positive amount of approximately €2 billion relating to the change in the fair value of securities hedged against interest rate risk, whilst the positive change in the fair value of unhedged securities and the spread risk component (not hedged) was reflected in consolidated equity for approximately €2 billion; ii. an overall net increase of approximately €6 billion in the Poste Vita Group’s financial assets at fair value through other comprehensive income (a nominal value of the fixed income instruments of approximately €97 billion), almost entirely passed on to policyholders and recognised in specific technical provisions under the shadow accounting method.
This change in notches is compared with a threshold that takes into account the following factors: z the rating of the financial instrument at the time of investment; z the rating of the financial instrument at the reporting date; z the seniority of the position within the portfolio (vintage factor); z an additive factor to mitigate the non-linearity of PD with respect to the rating classes155; 155. The additive factor is built in view of the rating level at the reporting date, where the better the final rating the higher the threshold for the transition to Stage 2
Provision to cover expected losses - - (32) - - - (32)
At 31 December 2020, the provision for doubtful debts due from customers includes about €12 million set aside to account for the increased risk caused by the ongoing pandemic. Uses for the year mainly refer to the write-off of receivables following agreements signed with certain customers or following the conclusion of bankruptcy proceedings.
No collateral has been provided to secure the credit lines obtained.
In the case of assets, cash inflows are broken down by maturity, shown at nominal value and increased, where applicable, by interest receivable. Held-to-maturity and available-for-sale financial assets include financial instruments held by BancoPosta RFC and the Group’s insurance companies, shown on the basis of expected cash flows, consisting of principal and interest paid at the various payment dates.
160. Not included in the scope of the analysis in question are €1,325 million of mutual funds with a predominantly bond composition.
Foreign exchange risk refers to the net receivable/(payable) position in SDRs, a synthetic currency resulting from the weighted average of the exchange rates of four major currencies (the euro, US dollar, British pound and Japanese yen) held by Poste Italiane SpA and used worldwide to settle debts and credits among postal operators.
Total amortised cost at 31 December 2020 4 - 415 - - - - 5 - 424 2019 effects
Positions subject to legal recovery and/or insolvency proceedings 88 75 85 72
As regards Poste Assicura SpA’s insurance business, which commenced operations in 2010, the expected growth of the portfolio and the different degrees of risk associated with the products distributed has required the company to adopt a highly prudent approach to reinsurance.
In particular, it has entered into pro rata reinsurance treaties with major reinsurance providers, establishing the amounts to be ceded based on the specific type and size of the risk to be assumed, backed up by excess-loss or stop-loss treaties to cover risks of a certain size (such as policies for accidents, fire, general liability and other damage to property, as well as catastrophic risks such as earthquake). Furthermore, when defining the guarantees offered in order to mitigate the assumption of specific types of risk and particularly unfavourable technical trends, compensation limits have been introduced (stop loss) in the case of certain specific types of loss. The latter approach is used, for example, for the main health risks (retail and corporate), including the credit protection segment.
z Borrowings: these are measured by discounting their future cash flows using as input a yield curve reflecting the spread applicable to the credit risk.
Unquoted equity instruments: this category includes shares for which no price is observable directly or indirectly in the market. For these types of instruments, fair value is determined by considering the implicit valuation at the time of acquisition, adjusted by value adjustments to take account of any changes in price resulting from significant transactions162 observable on the market in the 12 months prior to the reporting date. Alternatively, and in the absence of significant transactions, the fair value of the share is determined using alternative methods (verification of financial data that can be inferred from the company’s Business Plans if available and analysis of the company’s performance, multiple market use, etc.).
Time distribution based on remaining duration of cash flow hedge contracts
With reference to Postel, an audit regarding income tax and withholding tax came to an end on 8 October 2015, with delivery of a tax audit report, contesting the right to deduct VAT and the deductibility of IRAP, in relation to the alleged failure to pay social security contributions for employees and/or contractors used by a supplier between 2010 and 2014. In relation to the notices of assessment for the 2010 and 2011 periods, Postel has decided to avail itself of the facilitated definition pursuant to article 11 of Law Decree no. 50 of 24 April 2017, while with regard to the other assessment periods, the tax authorities have notified: z with regard to the 2012 tax year, on 25 November 2016, additional IRES, IRAP, VAT and withholding tax of €0.1 million, plus penalties and interest. On 19 January 2017, the company appealed the assessment notice, at the same time paying a provisional amount equal to approximately half of the requested amount. At the hearing held on 13 February 2018, the appeal was upheld and the tax authorities were ordered to pay costs. As notified on 3 October 2018, the tax authorities appealed to the Regional Tax tribunal in Rome. Postel appeared before the Tribunal to argue its case on 30 November 2018. A date for the appeal hearing has yet to be scheduled; z with regard to the 2013 tax year, on 24 July 2017, additional IRES, IRAP, VAT and withholding tax of €0.2 million, plus penalties and interest. Postel filed appeal against the claim on 23 October 2017, at the same time provisionally paying a sum equal to approximately half the tax claimed. The appeal was upheld at the hearing held on 26 September 2019. On 24 June 2020, after the deadline for the appeal had expired, the decision in favour of the Company became final; z with regard to the 2014 tax year, on 19 April 2019, the tax authorities requested the payment of additional VAT, IRES, IRAP and withholdings amounting to a total of approximately €0.25 million, plus penalties and interest. Postel filed appeal against the
It should also be noted that on 14 December 2020, IVASS launched an ordinary audit on the assessment of governance, management and control of investments and financial risks, the activities of which are still ongoing.
The events that occurred after the reporting date are described below. For a complete description of these events, please refer to paragraph 3.1 - Principal corporate actions.
Securities used as collateral for intraday credit from the Bank of Italy and for Sepa Direct Debits
Financial assets at FVTPL 6,037 1,356 4,681 Annual VaR 99.5% over a 5-year time horizon and 1-year half life
Financial assets at FVTPL 884 235 650 Annual VaR 99.5% over a 5-year time horizon and 1-year half life
Financial assets at FVTPL 107 17 91 VaR at 99.5% over a time horizon of 1 year calculated from SII sensitivity markets
Financial assets at FVTPL 80 29 51 VaR at 99.5% over a time horizon of 1 year calculated from SII sensitivity markets
The Shares will be awarded by the end of the year following the end of the Performance Period as follows: z for BP Beneficiaries (including the General Manager) for 40% up-front and for the remaining 60% in two equal portions, deferred respectively for 2 and 4 years from the end of the Performance Period. A further Retention Period of one year will be applied to both the up-front and deferred portions; z for the Other Beneficiaries, the granting of Poste Italiane Shares is entirely up front at the end of a three-year Performance Period, with 60% of the Shares subject to a further two-year Lock-up Period.
The following table shows177 payable to the Parent Company’s auditor, Deloitte & Touche, and companies within its network for 2020, presented in accordance with art. 149 duodecies of the CONSOB’s Regulations for Issuers: Disclosure of fees paid to independent Auditors
Items (figures in €) FY 2020 FY 2019 10. Interest and similar income 1,586,562,357 1,639,759,421 of which: interest income calculated using the effective interest method 1,586,562,357 1,639,759,421 20. Interest expense and similar charges (89,265,394) (74,238,340)
The relevant information is provided in note 2.6 – New Accounting standards and interpretations and those soon to be effective – in the section – Financial statements of Poste Italiane – of this Annual Report.
The disclosures provided in these Separate Report are in accordance, to the extent applicable, with the guidance and recommendations of European regulatory and supervisory bodies and standard setters (EBA, ECB and IFRS Foundation) published in 2020 to provide a guideline in the current economic environment, which is heavily influenced by the pandemic.
4.1 Intersegment relations Balances relating to transactions between BancoPosta RFC and Poste Italiane SpA (“Intersegment transactions”) are recognised in the balance sheet at 31 December 2020 as shown below: €m 31/12/2020 of which intersegment 31/12/2019 of which intersegment
On 5 May 2020, a communication from the Bank of Italy was received containing the results of the transparency audits it carried out from 23 May to 19 July 2019 at 24 Post Offices and headquarters, which concerned, among other things: the organisational structure of BancoPosta, the Group and the territorial network, the management of relations with external partners, and the management of payment not approved. In response to the feedback of the Bank of Italy, Poste Italiane has prepared a plan containing the corrective measures to be put in place with an indication of the implementation methods and timing, which was communicated to the Bank of Italy on 3 July 2020.
Foreign currency items are translated at each reporting date as shown below: z monetary items at closing exchange rates; z non-monetary items are recognised at their historical cost translated at the transaction date spot rate; z non-monetary items measured at fair value at closing exchange rates.
On the other hand, a simplified approach to measure the loss provisions is applied to trade receivables that do not contain a significant financing component pursuant to IFRS 15. The simplified approach is based on a matrix of observed historical losses.
z Unquoted equities, for which it is to use the price of quoted equities of the same issuer as a benchmark. The price inferred in this manner is adjusted through the application of a discount, quoted by primary market counterparties, representing the cost implicit in the process to align the value of the unquoted shares to the quoted ones.
A.4.5.2 Changes during the year in assets measured at fair value on a recurring basis (Level 3)
Total of which: a) financial assets held for trading of which b) financial assets designated at fair value of which: c) other financial assets mandatorily measured at fair value
Securities with a nominal value of €6,427 million are encumbered as follows: z €5,930 million, carried at amortised cost for €6,366 million (Part B, Other Information, Table 3), and delivered to counterparties in connection with repurchase agreements concluded at 31 December 2020; z €497 million, carried at amortised cost for €603 million (Part B, Other Information, Table 3), and delivered to counterparties in connection with interest rate swaps and repurchase agreements concluded in the year under review.
b) write-downs of non-recoverable items - c ) due to changes in accounting policies - 3. 2 Reductions of tax rates - 10. 6 Changes in deferred tax liabilities through Equity
changes in current taxation for previous years of which: Current tax assets due from Poste Italiane outside the ring-fence (Item 120 Assets)
C.2 Changes due to changed discount rates - - - -
- On debt securities and interest rates - 11 - - 11 - On equity instruments and share indices - - (5) - (5)
5. Increase/(decrease) in deferred tax liabilities (+/-) (2) 6. Tax expense for the year (-) (-1+/-2+3+3 bis+/-4+/-5) (201) (234)
The decrease in taxes is mainly due to the positive effect of the Patent Box agreement signed on 21 December 2020, which was recognised in current taxes in previous years.
Financial liabilities measured at fair value through Profit or loss (changes in own credit rating): - a ) changes in fair value - b ) transfers to other Equity - 40.
Expected credit losses are determined either over a 12-month horizon or a lifetime horizon, depending on the stage of the exposure, on the basis of the following metrics: z Probability of Default (PD); z Loss Given Default (LGD); z Exposure at Default (EAD); z Time Factor (TF).
196. In particular, the use of such approach is limited to situations where, actually, the final figures are deemed to be no longer representative of the counterparty’s risk.
The main types of instrument used by BancoPosta RFC to hedge credit and counterparty risk are described below: Fixed income instruments
Cumulative losses Net exposure Net exposure 1. Financial assets held for trading - - -
A.1.7 On- and off-balance-sheet credit exposures to customers: gross and net amounts
Non-performing past-due - of which: transferred and not derecognised - - -
A.3 Non-performing past-due exposures - 13 - - - - - - - -
To limit the effects of interest rates on fair value, BancoPosta RFC enters into interest rate swaps Over the Counter (OTC) to hedge the fair value of the repurchase agreements held in portfolio.
The retrospective effectiveness test is run by utilising the “dollar offset approach through the hypothetical derivative205”. With this approach, consideration is given to the hedge ratio of the change in fair value of the actual derivative to the change in fair value of the hypothetical derivative occurred between inception and the valuation date. The hedge is considered effective if the hedge ratio falls in the interval between 80% and 125%.
(€m) Change in value use to recognise ineffective portion of hedge Hedge reserve
Changes in fair value (effective portion) (27) - - - - - - - - -
(€m) Debt securities Equity instruments Loans 2.2 Losses due to credit risk 8 x 2.
Poste Tributi ScpA (in liquidation) - 2 - - - 2 -
Finally, the delivery of the shares, both for up-front and deferred portions, is subject to the fulfilment of the Qualifying Conditions on the date of delivery of the shares.
statements until the approval of the 2019 Financial Statements, and with the new Independent
Manager responsible for financial reporting in the second half of 2020.
The above key aspects were the subject of detailed analysis and updating during the periodic meetings that the Board of Statutory Auditors held with the Independent Auditor, including that of the investee Poste Vita S.p.A. and the Administration, Finance and Control Function (also
Non-financial Statement for the year ended 31 December 2020 has not been prepared, in all material respects, in compliance with articles 3 and 4 of the Decree and with the GRI Standards.
7. and 8. Oversight of the independence of the Independent Auditor. Disclosure of any additional non-audit engagements or ongoing relations with associates of the Independent
In line with Regulation (EU) 537/2014 and in accordance with the Poste Italiane Group’s
2 of Regulation (EU) 537/2014, must be capped at 70% of the average fees paid in the previous consecutive three years for the audit of the accounts of the audited entity. In any case, based on the Guideline "Assignment of engagements to the Poste Italiane Group's Independent Auditor", approved by Poste's Board of Directors on 15 March 2017, unless reasons of opportunity related to the specific professional content and the effectiveness requirements of the assignment to be assigned require it, it is not normally permitted to assign professional engagements other than the statutory audit or other than voluntary or related audit services to the Principal Auditor or to entities belonging to the Network of said Auditor.
Technology Management" area was affected by projects to strengthen the controls necessary to
(to the Digital Experience Function within the DTO); (ii) the sale of the ICT business unit of PostePay, dedicated to telecommunications services and Electronic Postman, to Poste; - establishment of the new Digital, Technology & Operations Function ("DTO") with the aim of (i) creating an ecosystem of innovative product and service solutions and (ii) simplifying the value chain by moving in the direction of the Platform Company model. The Information
Company with the aim of guaranteeing continuous improvement in the quality of services provided to customers, as well as effectiveness and efficiency of the processes managed, in compliance with sector regulations; - launch of major organisational initiatives to centralise Human Resources and Organisation processes in order to ensure unified governance, with the RUO Functions of Postel, SDA,
In addition, the Board of Directors has implemented various organisational initiatives designed to strengthen the Internal Control System: - on 10 June 2020 and 27 January 2021, it approved the update to the Poste's Organisational
Internal Control System; (iii) taking part in the work of the Control and Risk Committee, the
In 2020, the Board verified, in the course of a specific meeting, the adequacy of the guidelines communicated by the Company to its subsidiaries pursuant to art. 114, paragraph 2 of the
17. Oversight of application of the Corporate Governance Code for listed companies.
Considering the significant number of meetings, the Board expressed the opinion that a different organisation and planning of the Board Committees would allow improving the added value that non-executive Directors can bring to the debate. Specifically, given the opportunity to use digital platforms for remote meetings, which eliminates travel time, and given the participation of the Board of Statutory Auditors in all Committees, the spacing and/or splitting of the Committees among themselves and between the
Governance Code. The process also took into account the outcome of checks conducted by the Company with regard to any outstanding economic or financial transactions and/or relationships with Poste Italiane's Group Companies.
The Board examined the Audit Report of BancoPosta's Internal Auditing Function, containing an analysis of the causes of the incidents, an indication of the corrective measures identified and the related completion time frames, which was sent to the Supervisory Authority on 31
Tableau de Bord has been supplemented to implement specific areas of improvement that emerged during the Consob audit and that the Company is awaiting the final feedback from the
Risk Appetite Framework ("RAF") and assessment of Major Transactions"; - Update of the “Financial Management Guideline of Poste Italiane”; - Update of the "BancoPosta Organisational and Operating Regulations"; - Update of the "Regulations governing the process of entrusting and outsourcing BancoPosta
The Board of Statutory Auditors also noted that, with regard to the activities entrusted, the
Supervisory Authority and the recommendations that emerged as a result of the audit activities, some of which will be completed in 2021, were incorporated.
In addition, in line with the objectives of the "Deliver 2022" Business Plan, during 2020, the
“secondary” for card transactions on e-commerce channels. At the same time, from January 2020, fraud prevention and monitoring activities relating to the operation of Poste payment
The Board of Statutory Auditors constantly checked and monitored the effects of the Covid-19 emergency in terms of current and prospective risk, also for the purpose of assessing the impact on the RAF indicators.
Even in the event of stress, the indicator is expected to remain at levels compatible with the 3%
BancoPosta's capital adequacy is commensurate with the risks assumed, measured both on a current and forward-looking basis, and also taking account of potential adverse effects deriving from stress scenarios, which are considered severe but plausible.
Intraday liquidity risk monitoring tools have yet to be completed, the implementation of which is part of a broader project to upgrade the bank payment system at European level (initially planned for the end of 2021, but postponed by the authorities to the end of 2022 also due to the health emergency). To further mitigate this risk, the committed liquidity line with Cassa
The Company's assets are partially allocated to the "Cash Generating Unit" ("CGU"), represented by the "Mail, Parcels and Distribution" business segment characterized by the persistence of negative economic results and the decline of the postal market in which the Company operates, further aggravated by the current macroeconomic scenario and the effects of the COVID-19 health emergency. In compliance with accounting policy IAS 36 "Impairment of assets", based on the economic forecasts of the Group Business Plan "2024 Sustain & Innovate" for the period 2021 - 2024 (the "Business Plan"), approved by the Board of Directors on March 18, 2021, the “Mail, Parcels and Distribution” CGU was subject to impairment test by comparing the carrying amount of it’s assets with the recoverable amount of the CGU to ensure that the book value is justifiable (“impairment test”). In particular, the recoverable amount was determined by estimating the "value in use" of the CGU, representative of the estimate of the future cash flows expected from the use of the assets included in the CGU, including, in particular, the properties used as post offices and mechanization and sorting centers, as part of the ordinary company production process and taking into account the obligation to fulfill the Universal Postal Service and the economic conditions envisaged for the services rendered to BancoPosta’s ringfenced capital. These flows were discounted at an appropriate rate.
 identification and verification of key controls carried out by the Company over the impairment testing process;  obtaining an understanding of the methods and assumptions adopted by the Company to carry out the impairment test;  verification of the consistency of the methodological approach adopted by the Company, with particular reference to the identification of the CGU and the determination of its recoverable amount, with respect to the requirements of the accounting policy IAS 36 "Impairment of Assets";  analysis of the reasonableness, also by obtaining information from the Company, of the principal assumptions adopted to estimate future cash flows expected by the CGU, also taking into account the uncertainties related to the current macroeconomic environment characterised, among other things, by the health emergency related to the pandemic COVID-19, and the key variables used in the valuation model adopted for the impairment test;  verification of the logical and mathematical correctness of the determination of the cash flows in the context of the impairment test mentioned above, as well as of the overall reasonableness of the calculation of the weighted average cost of capital (“WACC”) and of the consistency of the assumptions related to the “terminal value”, that is the value that represents the ability of the company to generate cash flows, estimated beyond the explicit forecast period 2021 – 2024 in the Business Plan;  review of the sensitivity analysis prepared by the Company;  verification of the completeness and compliance of the disclosures provided by the Company in the financial statements with respect to the requirements of the IAS 36 “Impairment of assets”.
We confirm that the opinion on the financial statements expressed in this report is consistent with the additional report to the Board of Statutory Auditors, in it’s role of Audit Committee, referred to in art. 11 of the said Regulation.
As entity in charge of the statutory audit of the accounts of Poste Italiane S.p.A. (the "Company"), we have undertaken a limited assurance engagement of the accompanying separate report of BancoPosta’s Ring-fenced Capital - RFC, which comprise the statement of financial position as at December 31, 2020, the income statement, statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and the notes to the financial statements (“Separate Report”), attached to the Company’s financial statements in accordance with the provisions of Section 8 of BancoPosta’s RFC Regulation, in order to verify the consistency between the data contained in the Separate Report and those reported in the Company’s financial statements at December 31, 2020.
Specifically we carried out the following procedures: 1. analysis of relevant topics with reference to the Group’s activities and characteristics disclosed in the