Number of post offices 12,845 13,048 for the year ended 31 December 2016 2015
Current account deposits (average for the period in €m)(3) 49,643 45,169
(2) These amounts include postal savings deposits, the mutual investment funds marketed, Poste Vita’s technical provisions and average current account deposits (average current account deposits include Long-Term RePos).
The sale of Class I, III, IV and V life insurance products through Poste Vita and of non-life insurance products through Poste Assicura. The marketing and distribution of mutual investment funds.
The Group’s operations are divided into four operating segments: Postal and Business Services, Financial Services, Insurance Services and Asset Management, and Other Services, which are managed by dedicated Group functions and/or companies. The organisation is also based on two distribution channels for retail customers, on the one hand, and business and Public Administration customers, on the other. These channels operate alongside a series of corporate functions responsible for policy, governance, controls and the provision of services supporting business processes. The organisational model, which ensures the development of synergies within the Group as part of an integrated approach to operations, is applied via governance and operating models, characterised by: • coherent and integrated management of the Group, ensuring a uniform and coordinated approach to the market, whilst taking into account the central importance of customers and exploiting potential synergies, as well as assigning responsibility for coordinating subsidiaries to the relevant functions within the Parent Company according to business sector; • an organisational structure focused on core businesses: mail and logistics, payments and financial services, savings and insurance; • Corporate functions capable of ensuring, through coordination and integration of their respective areas of expertise, coherent fulfilment of their assigned roles at Group level and the provision of shared services closely aligned with business needs, thus ensuring efficiency, economies of scale, quality and effective support for the different businesses.
(**) Delivery staff include 30,959 postmen and women and delivery supervisors (33,523 at 31 December 2015).
In addition, as a result of the current process of disposing of the subsidiaries, BancoPosta Fondi SpA SGR and Banca del Mezzogiorno-MCC SpA (described in the section on the Group’s organisational structure), in preparing the financial statements for 2016 the Group has applied the provisions of IFRS 5 “Non-current Assets Held for Sale and Discontinued Operations”. The application of IFRS 5 in order to present the above corporate actions has involved presentation of the two companies’ net assets, in the Poste Italiane Group’s consolidated financial statements, as “Non-current assets and disposal groups held for sale” and “Liabilities related to assets held for sale” and restatement of the related amounts, where lower, in line with the expected realisable value. In Poste Italiane SpA’s separate financial statements, on the other hand, the investments in BancoPosta Fondi SpA SGR and BdM-MCC SpA have been presented in “Non-current assets held for sale and discontinued operations”. In line with the basis of presentation used in Poste Italiane’s financial statements for the year ended 31 December 2016, amounts for Non-current Assets, Working Capital, Net Invested Capital and Net Funds/(Debt) as at 31 December 2015 have not been restated.
The Insurance Services and Asset Management segment reports operating profit of €636 million (up 24.7%) and an excellent operating performance, with €19.9 billion in premium revenue during the period (€18.2 billion in 2015).
(*) Includes services for publishers, multi-cnannel services, printing, document management, other basic services.
(15) The dashboard is a system for summarising and aggregating data regarding a company, in order to present the information in a chart or in number form, thereby providing an immediate and readibly understandable visual format.
Revenue generated by the Financial Services segment is up from €5,155 million in 2015 to €5,294 million in 2016. In detail, revenue from the investment of postal current account deposits amounts to €1,983 million (€1,974 million in 2015), having benefitted from the positive performance of the securities portfolio, resulting in realised gains of €473 million on the sale of securities (€426 million in 2015). This result more than offset the reduction in interest income on investments, which is down from €1,546 million in 2015 to €1,509 million in 2016. Despite a rise in the amount invested due to an increase in deposits(17), this figure reflects a reduction in average returns on investments (both portfolio securities and deposits with the Ministry of the Economy and Finance). Sales of postal savings products, where revenue is linked to a mechanism agreed with Cassa Depositi e Prestiti SpA (tied to the achievement of targets in terms of net savings inflows and average deposits(18)), contributed €1,577 million to revenue (€1,610 million in 2015). At 31 December 2016, Savings Book deposits amount to €119 billion (in line with the figure for 31 December 2015), whilst savings in the form of Interest-bearing Postal Certificates amount to €204 billion (€206 billion at 31 December 2015). Revenue from collection and payment services is down €10 million to €1,048 million, essentially reflecting a reduction in revenue from delegated services, due to both a decrease in the number of pensions paid (both over the counter and through Savings Books), and a reduction in the fee charged on payments into current accounts, following a review of the agreement with INPS in June 2015. The above reduction was partially offset by an increase in non-recurring income from the processing of tax payments using form F24, resulting from the agreement with the tax authorities relating to the recovery of fees attributable to previous years (€15 million collected in September 2016). Revenue from the placement and distribution of third-party financial products is up 20.2%, benefitting from increased revenue from the sale of loan products (€199 million in 2016, compared with €136 million in 2015). Revenue from the provision of electronic money services is up from €241 million in 2015 to €359 million in 2016, primarily due to Visa Inc.’s acquisition of Visa Europe, which resulted in the former’s payment to Poste Italiane of a gain of €121 million in return for the sale of the share held in Visa Europe. The Postepay product also performed well, generating revenue of €152 million (€131 million in 2015) and benefitting from an increase in income linked to the issue and use of Postepay Evolution cards.
(18) In 2016, a number of conditions provided for in the Agreement of 4 December 2014 covering the five-year period 2014-2018 were confirmed, requiring the parties to renegotiate existing agreements in good faith. Whilst awaiting the agreement of new terms and conditions, Poste Italiane has recognised revenue from the services rendered in 2016 on the basis of the Agreement of 4 December 2014.
Finally, with regard to the mutual investment funds business, gross inflows during the period amount to €2.4 billion, up 20% on the previous year, whilst the significant reduction in redemptions was reflected in an increase in net inflows, which are up from €676 million in 2015 to €1,445 million. As a result, the assets of retail customers managed by Banco Posta Fondi Sgr are up from €5.7 billion at the end of December 2015 to €7.3 billion at 31 December 2016. Taking into account the portion of the Poste Vita group’s technical provisions under management, total assets managed by BancoPosta Fondi SGR at 31 December 2016 have risen to €79.8 billion, representing growth of 14% compared with the €70.2 billion of the end of 2015.
The Poste Italiane Group’s net invested capital at 31 December 2016 amounts to €1,909 million, amply financed by equity. A comparison with the end of the previous year, when the figure was €999 million, shows an increase of €910 million. This partly reflects the previously noted application of IFRS 5, resulting in the presentation, for 2016 alone, of the financial assets and liabilities (a total of €595 million net) of BdM-MCC SpA and BancoPosta Fondi SpA SGR in “Non-current assets and disposal groups held for sale and Liabilities related to assets held for sale”. In addition, as these items include all the assets and liabilities of the two companies held for sale, the balances of non-current assets and working capital do not include – for 2016 – the current and non-current assets and liabilities of BdM-MCC and BancoPosta Fondi.
Cash flow generated by operating activities before movements in working capital 1,439 1,192
Mail, Logistics and Communication With regard to the requirements identified in relation to delivery activities, on 27 January 2016, a statement of agreement was signed. This provides for the conversion of up to 125 fixed-term contracts, entered into as a result of statements of agreement reached with the labour unions in 2013 and 2014, to permanent part-time contracts. The conversion to permanent deals, which took place in March 2016, applies to staff in service at the date of signature of the agreement to carry out delivery activities, at the offices to which they have been assigned. On 24 February 2016, a statement of agreement was signed with the labour unions, with the exception of UILposte, following completion of a joint assessment of reorganisation initiatives in 2016, drawn up in accordance with the guidelines agreed on 25 September 2015. The agreement envisages, from 2016, the implementation of new delivery models for provincial capitals and unregulated rural areas and for regulated rural areas, as previously identified in the agreement of 25 September 2015. This approach offers the best way of managing the resulting impact on jobs. The agreement has identified 4 thousand staff surplus to requirements. Whilst retaining the current approach to operational flexibility, the parties have agreed to raise the monthly and annual limits applicable to operational flexibility for delivery staff on a five-day working week. Finally, also as part of the agreement of 24 February 2016, the Company has agreed to offer to convert at least 150 part-time positions within the Mail, Logistics and Communication function, wherever located, to full-time posts for delivery personnel in the provinces of Milan and Monza Brianza. In this respect, an additional agreement was signed on 14 April 2016, which defined the timing and criteria for staff wishing to take advantage of this conversion proposal.
The number of new disputes arising from other contractual terms and conditions amounts to 939 at 31 December 2016, a decrease with respect to the 1,276 of 2015. This area also includes dismissals on disciplinary grounds. New challenges amounted to 139 in 2016, compared with 183 in 2015, with the number of cases lost falling slightly from around 22% in 2015 to around 21% in 2016. A total of 5,604 disciplinary procedures were launched during the year, based on reports from the Security & Safety and/ or Internal Auditing functions, namely on the basis of specific reports received from the competent local departments. At the end of this process, 192 staff were dismissed (241 in 2015) and 5,099 received penalties without dismissal (4,052 in 2015); 313 procedures were concluded without consequence (347 in 2015). Compared with 2015, the number of dismissals fell while the number of staff receiving a penalty without dismissal registered a sharp rise, due to the disciplinary actions taken against more than 1,200 staff for irregularities regarding the monitoring of delivery quality. The principal grounds for dismissal included: “unjustified absence” (around 24%); “irregularities regarding securities trading” (around 23%); “criminal convictions/proceedings” (around 13%); and “irregularities regarding delivery quality monitoring” (around 7%). The main reasons for the imposition of penalties without dismissal were: “failure to fulfil duties and obligations” (around 30%); “absence in the event of a health inspection and failure to comply with sickness regulations” (around 20%); “misbehaviour” (around 14%); and “irregularities regarding the monitoring of delivery quality” (around 19%).
Operational risk Operational risk refers to the risk of losses resulting from inadequate or failed internal processes, people and systems, or from external events. This category of risk includes the risk of workplace accidents or injuries to employees, the risk of criminal acts or attacks resulting in damage to operating assets or activities, fraud, including online fraud (e.g., phishing), and unauthorised transactions, including errors resulting from the failure of IT or telecommunications systems. Certain types of operational risk are described below.
Bank of Italy In December 2015, the Bank of Italy’s Financial Intelligence Unit (UIF) launched an investigation of Poste Vita SpA relating to money laundering prevention as per art. 47 and art. 53, paragraph 4, of Legislative Decree 231 of 2007. The above investigation came to an end on 8 April 2016, with receipt of the final document from the company, containing the clarifications and information requested by the UIF. On 8 July 2016, the UIF sent Poste Vita a notice of assessment and violation, alleging the company’s failure to promptly report suspect transactions (regarding transactions relating to a single policy) pursuant to art. 41 of Legislative Decree 231/2007. The violation in question (punishable, in accordance with art. 57, paragraph 4 of Legislative Decree 231/2007, with a fine amounting to between 1% and 40% of the value of the transactions) may result in a fine of up to approximately €400,000. Poste Vita sent the Ministry of the Economy and Finance a defence memorandum and requested a hearing. Following the investigations, on 27 July 2016, the Bank of Italy requested the company to take corrective action to resolve a number of issues emerging during the checks carried out, and asking the company to report back. The company first informed the Bank that it was taking the necessary steps, after which it would report on the initiatives and corrective action undertaken. This report was submitted on 20 December 2016, with a description of the steps being taken in order to implement the UIF’s recommendations.
Poste Italiane SpA reports profit for the year of €625 million, an improvement of €174 million (38.6%) compared with 2015. Revenue from sales and services amounts to €8,218 million, an increase of €13 million due to the positive performance of service revenue at BancoPosta, which has offset reduced revenue from postal and business services. Other income from financial activities is up from €433 million in 2015 to €599 million in 2016, primarily linked to nonrecurring income of €121 million deriving from the sale of the investment in Visa Europe Ltd. to Visa Incorporated, and to gains on the sale of available-for-sale financial assets by BancoPosta RFC. Other operating income is up from €399 million in 2015 to €478 million in 2016, including €423 million in dividends from subsidiaries.
Salaries, social security contributions and sundry expenses(*) 5,490 5,532 (42) –0.8%
(*) This includes the following items described in note C6 to the financial statements: salaries and wages; social security contributions; employee termination benefits; temporary work; Directors’ fees and expenses; other costs (cost recoveries).
Under the guiding principles adopted at Group level, one of the most important aspects of the system is the control environment in which employees carry out their activities and exercise their responsibilities. This environment is based on integrity and other ethical values, the organisational structure, the allocation and exercise of authorities and responsibilities, the separation of duties, staff management and incentive policies, staff expertise and, more in general, the corporate culture. BancoPosta’s control environment is evidenced by: • the Group Code of Ethics; • implementation of the Organisational Model required by Legislative Decree 231/2001 and the related corporate procedures; • the organisational structure of BancoPosta, as reflected in organisational charts, service orders, organisational notices and procedures determining the roles and responsibilities of the various functions; • the “General Guidelines governing the process of contracting out BancoPosta’s corporate functions to Poste
(3) Represents the contribution from net interest income as a ratio of net interest and other banking income.
This category includes: (a) financial assets held for trading, (b) those that qualify for designation at fair value through profit or loss on initial recognition, or for which the option to measure at fair value can be exercised, and (c) derivative instruments, with the exception of the effective portion of those designated as cash flow hedges. Financial assets in this category are accounted for at fair value and changes during the period of ownership are recognised in profit or loss. Financial instruments in this category are classified as short-term if they are held for trading or if they are expected to be realised within twelve months of the end of the reporting period. Derivative instruments at fair value through profit or loss are recognised as assets or liabilities depending on whether the fair value is positive or negative. Fair value gains and losses on outstanding transactions with the same counterparty are offset, where contractually permitted.
Green Certificates (Emission Allowances) With reference to Group companies subject to these rules(44), Green Certificates (or Emission Allowances) are a means of reducing greenhouse gas emissions, introduced into Italian and European legislation by the Kyoto Protocol with the aim of improving the technologies used in the production of energy and in industrial processes. The European Emissions Trading Scheme, which works on the basis of the cap and trade principle, has capped annual greenhouse gas emissions at European level. This corresponds to the issue, free of charge, of a set number of emission allowances by the competent national authorities. During the year, depending on the effective volume of greenhouse gas emissions produced with respect to the above cap, each company has the option of selling or purchasing emission allowances on the market. In compliance with the requirements of the OIC (the Italian accounting standards setter) regarding “Greenhouse gas emissions allowances”, in addition to being best practice for the principal IAS adopters, the accounting treatment is as follows. The issue, free of charge, of emission allowances involves a commitment to produce, in the relevant year, a quantity of greenhouse gas emissions in proportion to the emission allowances received: this commitment is accounted for in the memorandum accounts based on the fair value of the emission allowances at the time of allocation. At the end of the year, the commitment is reduced or derecognised in proportion to the greenhouse gas emissions effectively produced and any residual value is reported in the section, “Other information”, in the Annual Report. The purchase and sale of emission allowances are accounted for in profit or loss in the year in which the transaction occurs. At the end of the year, any surplus emission allowances deriving from purchases are accounted for in closing inventory at the lower of cost and net realisable value. Any surplus emission allowances allocated free of charge are not accounted for in closing inventory. In the event of a shortfall in emission allowances the resulting charge and related liability are accounted for at the end of the year at fair value.
BancoPosta cash and deposits Cash and securities held at post offices, and bank deposits attributable to the operations of BancoPosta, are accounted for separately from cash and cash equivalents as they derive from deposits subject to investment restrictions, or from advances from the Italian Treasury to ensure that post offices can operate. This cash cannot be used for purposes other than those relating to the aforementioned operations.
(43) This method is based on the ratio of costs incurred as of a given date divided by the estimated total project cost. The resulting percentage is then applied to estimated total revenue, obtaining the value to be attributed to the contract work completed and accrued revenue at the given date.
Poste Italiane Financial statements for the year ended 31 December 2016
(vi) A residual sum due from the Cabinet Office, totalling €1 million, and acknowledged in the MEF Letter. Provision has been made in the state budget for 2017.
In addition, in assessing the value of non-current assets of the Postal and Business service segment, account was taken of any effect on the value in use of certain properties, should such properties no longer be used in operations in future, making adjustments to certain impairment losses taken in the past in the light of new evidence available at 31 December 2016. The fair value of the Parent Company’s properties used in operations continued to be significantly higher than their carrying amount. As in the past, in determining the value of properties used as post offices and sorting centres, Poste Italiane SpA’s universal service obligation was taken into account, as was the inseparability of the cash flows generated from the properties that provide this service, (which the Parent Company is required to operate throughout the country regardless of the expected profitability of each location); the unique nature of the operating processes involved and the substantial overlap between postal and financial activities within the same outlets, represented by post offices, were also considered. On this basis, the value in use of the Parent Company’s land and buildings used in operations is relatively unaffected by changes in the commercial value of the properties concerned and, in certain critical market conditions, certain properties may have values that are significantly higher than their market value, without this having any impact on the cash flows or results of the Postal and Business Services segment.
With regard to hedge accounting, a preliminary analysis has not indicated any concerns over the possibility of retaining existing hedging relationship.
(52) On 14 October 2016, Poste Italiane announced that it had notified Banca Popolare di Milano Scarl of its intention not to renew the shareholders’ agreement signed by the parties on 26 June 2015 and due to expire on 16 April 2017, relating to the companies’ respective shareholdings in Anima Holding SpA. As a result, as of the expiry date of 16 April 2017, the shareholders’ agreement will no longer be in effect.
Recl. to non-current assets and disposal groups held for sale (4) – – – – – (1) – (1)
Industrial patents and intellectual property rights, concessions, licences, trademarks and similar rights 16 (4) 12 16 (2) 14
The balance of intangible assets under construction includes activities conducted by the Parent Company, primarily regarding the development for software relating to the infrastructure platform (€35 million), for BancoPosta services (€21 million), for use in providing support to the sales network (€12 million), for the postal products platform (€8 million). Software is also being developed in relation to the engineering of reporting processes for other business and staff functions (€6 million). During the year the Group effected reclassifications from intangible assets under construction to industrial patents, intellectual property, rights, concessions, licences, trademarks and similar rights, amounting to €53 million, reflecting the completion and commissioning of software and the upgrade of existing software.
Goodwill of approximately €2 million attributable to BdM-MCC SpA has been reclassified to “non-current assets held for sale and discontinued operations”. Information on the agreements governing the sale of the bank is provided in section A11.
Furthermore, a provision of approximately €4 million was recognised in “Other provisions” at 31 December 2016 in order to take into account the liabilities attributable to Poste Italiane SpA as a result of the losses incurred by Risparmio Holding SpA and Equam SpA. The impact of this provision on profit or loss, given that the above are joint ventures, has been recognised in the ”Profit/(Loss) on investments accounted for using the equity method”.
The fair value of the available-for-sale portfolio is €37,159 million. The overall fair value loss for the period of €787 million has been recognised in the relevant equity reserve, recording a negative amount of €1,643 million in relation to the portion of the portfolio not hedged by fair value hedges, and through profit and loss, in relation to the gain of €856 million on the hedged portion.
At 31 December 2016, derivative financial instruments attributable to the Financial Services segment, amounting to €191 million, are attributable to BancoPosta RFC(58).
Forward purchases Asset swaps Asset swaps Forward purchases Forward sales notional fair value notional fair value notional fair value notional fair value notional fair value notional fair value
Of which: (*) Increases / (decreases) refer to the nominal value of new transactions and changes in the fair value of the overall portfolio during the period.
Effects of sales on profit or loss 261 (11) 1 251
Movements in financial instruments at fair value through profit or loss are as follows: TAB. A5.6 – MOVEMENTS IN FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS
• other investments, amounting to €14,345 million and relating to units of mutual investment funds. These instruments include €5,738 million invested in the Blackrock Diversified Distribution Fund, a UCITS, and €4,047 million invested in the Multiflex UCIT to cover Class I products, with the aim of diversifying the insurance business’s exposure to government bonds (see also section Unconsolidated structured entities). Investments amounting to €849 million are used to cover Class III unit-linked products.
(*) Increases/ (decreases) refer to the nominal value of new transactions and changes in the fair value of the overall portfolio during the period.
– With reference to the services rendered in 2012, AGCom has recognised a net cost incurred by the Company of €327 million, compared with compensation of €350 million originally recognised. Provision has not been made in the state budget for the remaining €23 million. Poste Italiane SpA appealed AGCom’s decision on 13 November 2014 before the Regional Administrative Court (TAR).
Provisions for expired and statute barred postal savings certificates 14 – – – – – 14
Overall analysis of provisions: (1) Net releases for Personnel expenses amount to €13 million. Service costs (legal assistance) total €7 million.
• Provisions for disputes with staff regard liabilities that may arise following labour litigation and disputes of various types. Net releases of €9 million relate to an update of the estimate of the liabilities and the related legal expenses, taking account of both the overall value of negative outcomes in terms of litigation, and the application of Law 183 of 4 November 2010 (“Collegato lavoro”), which has introduced a cap on current and future compensation payable to an employee in the event of “court-imposed conversion” of a fixed-term contract. Uses of €30 million regard amounts used to cover the cost of settling disputes.
• Provisions for expired and statute barred Postal Certificates held by BancoPosta have been made to cover the cost of redeeming certificates relating to specific issues, the value of which was recognised in revenue in profit or loss in the years in which the certificates became invalid. The provisions were made in 1988 in response to the Parent Company’s decision to redeem such certificates even if expired and statute barred. At 31 December 2016, the provisions represent the present value of total liabilities, based on a nominal value of €21 million expected to be progressively settled by 2043.
At 31 December 2016, the fair value(70) of the above repurchase agreements amounts to €5,419 million.
At 31 December 2016, the following credit facilities are available: • committed lines of €1,173 million that have not been used; • uncommitted lines of credit of €1,118 million that have not been used; • overdraft facilities of €89 million, of which €2 million has been used; • unsecured guarantee facilities with a value of €517 million (with €377 million available to the Parent Company), of which guarantees with a value of €320 million have been used for guarantees issued to third parties.
• Tax collection and road tax payables relate to amounts due to collection agents, the tax authorities and regional authorities for payments made by customers.
Income/(expenses) recognised in profit or loss (1) 1 – (6) 18 – (1) – 21 32
Income/(expenses) recognised in equity due to adjustment to IRES rate – – (128) – – – (128)
Investments accounted for using equity method 212 – 6 – – 218
Address Software Srl – – – – – – 1 – – –
Cash flow from/(for) operating activities 2,258 3,648 n.a. 2,563 1,221 47.6
Cash and deposits attributable to BancoPosta – 2,494 – – – 2,494 –
The item, “Non-current assets and disposal group held for sale” includes the fair value of financial instruments held by BdM-MCC SpA and BancoPosta Fondi SGR SpA.
Transfers of fixed income instruments between levels 1 and 2 (and vice versa) primarily regard instruments held by Poste Vita SpA. In particular, transfers of bonds from level 1 to level 2 are due to the application of the stricter standards for definition of a “liquid and active” market, as defined in the Group’s Fair Value Policy, a feature that is measured mainly by reference to the bid-ask spread. Transfers of available-for-sale financial assets during the period refer to corporate and coupon-stripped Italian government bonds. Reclassifications from level 2 to level 1 concerned corporate bonds recognised as available-for-sale financial assets and coupon-stripped Italian government bonds, given that the liquidity of the markets where they are traded justified their transition to level 1.
Future commitments related to property leases, which may generally be terminated with six months’ notice, break down by due date as follows: COMMITMENTS FOR PROPERTY LEASES
Consorzio per i Servizi di Telefonia Mobile ScpA (Rome) (*) 100.00% 120 – 120
BancoPosta RFC’s operations consist in the active management of liquidity generated by postal current account deposits, carried out in the name of BancoPosta but subject to statutory restrictions, and collections and payments on behalf of third parties. The funds deposited by private account holders in postal current accounts are invested in euro zone government securities(75), whilst deposits by Public Administration entities are deposited with the MEF. The investment profile is based on the constant monitoring of habits of current account holders and a use of a leading market operator’s statistical/econometric model that forecasts the interest rates and maturities typical of postal current accounts. Accordingly, the portfolio composition aims to replicate the financial structure of current accounts by private customers. The company has also an asset-liability model in place to match the maturities
Available-for-sale financial assets 1,335 183 (183) 158 (158) – – 25 (25)
Available-for-sale financial assets 113,211 126,903 (6,386) 6,319 (5,144) 5,144 – – (1,242) 1,175
(79) Duration is the indicator used to estimate the percentage change in price of in response to a shift in market returns.
This risk is managed as follows: • minimum rating requirements for issuers/counterparties, based on the type of instrument; • concentration limits per issuer/counterparty; • monitoring of changes in the ratings of counterparties.
Balance at 31 December 2016 Balance at 31 December 2015 from Aaa to
The above table shows expected cash outflows at the date of the financial statements, broken down by maturity, while the maturities of postal current account deposits are reported on the basis of the estimates made with a statistic/ econometric model. Repayments of principal at nominal value are increased by interest payments calculated, where applicable, on the basis of the yield curve applicable at 31 December 2016. The liabilities of Poste Vita SpA and Poste Assicura SpA are reflected in “Flows from Poste Vita group’s policies”.
Borrowings from financial institutions (1,204) (12) – – – (12) –
• Anti-selection risk: this relates to the company’s unwillingness to insure an event not classified as future, uncertain and damaging.
On 27 February 2015, the tax authorities notified Poste Italiane SpA of an indictment for accounting irregularities before the Court of Auditors for the Lazio region, regarding a number of accounting records for the handling and distribution of revenue stamps in the years between 2007 and 2010. The hearing was held on 2 July 2015. With sentence no. 332 of 9 July 2015, the Court of Auditors for the Lazio region fined the Parent Company an amount of €8 million, plus monetary revaluation and legal interest. The sentence was notified on 9 September 2015. The Company filed an appeal and the date of the first hearing is pending. In the meantime, the tax authorities collected the sum under the guarantee and requested payment of the remaining sum pursuant to the decision. The Company complied by paying the required amount. The Court of Auditors has scheduled the appeal hearing for 26 April 2017.
(82) In fact, in its ruling of 14 September 2016, the AGCM clarified that, at that time, there were no grounds to justify action pursuant to Law 287/90, as art. 8, paragraph 2-quater of Law 287/90 does not establish a generic obligation to grant access to the network on ad hoc terms, but an obligation to grant access on equivalent terms to those applied to subsidiaries.
Cash and cash equivalents at end of year [tab. A10] 2,715,199 1,519,733
The cost of the services rendered by Poste Italiane functions outside the ring-fence, and the revenue earned from the latter by BancoPosta, contribute to BancoPosta’s results. The relevant transactions, profit and loss and balance sheet amounts, generated by these relationships are only recorded in BancoPosta RFC’s Separate Report. In Poste Italiane SpA’s comprehensive accounts intersegment transactions are on the other hand eliminated, and are not presented. The accounting treatment adopted is similar to that provided for by the accounting standards regulating the preparation of the Group’s consolidated financial statements.
Reclassifications from assets under construction, totalling €35 million, relate primarily to the acquisition cost of assets that became available and ready for use during the year. In particular, these assets regard the rollout of hardware held in storage and completion of the process of restyling leased and owned properties.
The fair value of investment property at 31 December includes approximately €65 million representing the sale price applicable to the Company’s former service accommodation in accordance with Law 560 of 24 December 1993, while the remaining balance reflects price estimates computed internally by the Company(90).
(€m) Industrial patents, intellectual property rights, concessions, licences, trademarks and similar rights
At 31 December 2016, the carrying amount of the investments in the subsidiaries, BancoPosta Fondi SpA SGR and BdM-MCC SpA, totalling €384 million, has been reclassified to the appropriate item under assets (section A11) in compliance with IFRS 5 – Non-current Assets Held for Sale and Discontinued Operations.
These regard investments in fixed income euro area government securities, consisting of bonds issued by the Italian government and securities guaranteed by the Italian government, having a nominal value of €44,570 million. Movements are as follows: TAB. A5.2 – MOVEMENTS IN INVESTMENT SECURITIES
Changes in cash flow hedge transactions – – – – – – – –
Accrued income for current year – 170 – 331 – – – 501
At 31 December 2016, the fair value(94) of the held-to-maturity portfolio, accounted for at amortised cost, is €14,447 million (including €170 million in accrued interest).
Tax effect of transfers to profit or loss – – 123 23 146
Provisions for taxation 4 – – – – 4 of which attributable to BancoPosta RFC 384 115 1 (11) (27) 462
• Other provisions cover probable liabilities of various type, including: estimated liabilities deriving from the risk that specific legal actions undertaken in order to reverse seizures of the Company’s assets may be unable to recover the related amounts; losses incurred by subsidiaries that the Company intends to cover; claims for rent arrears on properties used free of charge by the Company; and claims for payment of accrued interest expense due to certain suppliers. Provisions of €19 million for the year primarily regard the first two types of liability.
Amounts payable due to theft – 159 159 – 158 158
Other amounts payable to third parties – 66 66 – 65 65
The fair value(106) of the two fixed rate EIB loans, totalling €400 million, is €404 million at 31 December 2016.
Other tax liabilities break down as follows: TAB. B9.3 – OTHER TAX LIABILITIES
In particular: • Fees for the collection of postal savings deposits relate to remuneration for the provision and redemption of Interest-bearing Postal Certificates and payments into and withdrawals from Postal Savings Books. This service is provided by Poste Italiane SpA on behalf of Cassa Depositi e Prestiti under the Agreement of 4 December 2014 covering the five-year period 2014-2018. In 2016, a number of conditions provided for in the Agreement of 4 December 2014 covering the five-year period 2014-2018 were confirmed, requiring the parties to renegotiate existing agreements in good faith. Whilst awaiting the agreement of new terms and conditions, Poste Italiane has recognised revenue from the services rendered in 2016 on the basis of the Agreement of 4 December 2014. Any impact of a new agreement on the Company’s operating results, not as yet foreseeable, will be taken into account, on an accruals basis, once such an impact can be reasonably assessed.
Deduction from IRES of IRAP on personnel expenses – – (4) –0.63%
TAB. C10.2 – RECONCILIATION BETWEEN THE THEORETICAL IRAP TAX RATE AND THE EFFECTIVE IRAP TAX RATE
Poste Assicura SpA – – 5 – – 1 – – –
BancoPosta Fondi SpA SGR 23 20 – – – – – – –
Operations not covered by BancoPosta RFC, primarily relating to management of the Company’s liquidity, are carried out in accordance with investment guidelines approved by the Board of Directors, which require the Company to invest in instruments such as government securities, high-quality corporate or bank bonds and term bank deposits. Liquidity is also deposited in postal current accounts, subject to the same requirements applied to the investment of deposits by private current account holders.
Available-for-sale financial assets exposed to fair value interest rate risk primarily regard: • €35,650 million in government bonds held by BancoPosta RFC, which consist of: fixed rate bonds amounting to €12,324 million, variable rate bonds converted into fixed rate bonds via asset swaps used as cash flow hedges, amounting to €1,758 million, variable rate securities amounting to €2,776 million (of which €2,605 million in inflation-linked instruments and €171 million CCTeus, which are variable rate Italian treasury certificates indexed to Euribor), fixed or variable rate bonds converted to variable-rate positions via fair value hedges, amounting to €18,792 million (of which €16,087 million in forward starts); • €1,509 million in fixed rate bonds issued by CDP, and guaranteed by the Italian government, held by BancoPosta RFC; • €562 million in investments held outside the ring-fence.
Within the context of derivative financial instruments, the risk in question concerns the following: • a forward purchase contracts for government bonds registering fair value gains of €6 million (a nominal value of €200 million) and forward purchase contract for government bonds registering fair value losses of €3 million (a nominal value of €200 million), entered into by BancoPosta RFC; • fair value losses of €7 million on a derivative contract, held outside the ring-fence and entered into by the Company in 2013 to hedge the cash flows of the bond with a nominal value of €50 million issued on 25 October 2013 (tab. A6.4).
• gradual and consistent distribution of the maturities of medium/long-term borrowings; • use of dedicated analytical models to monitor the maturities of assets and liabilities.
Available-for-sale financial assets 2,005 9,087 36,522 47,614 1,657 9,047 30,059 40,763
Strictly in terms of employment law, in recent months, a number of former employees of Uptime/Gepin have filed a claim for wrongful dismissal, despite the agreements reached and the negotiations in progress.
10. Interest and similar income 1,542,998,078 1,544,985,186 20. Interest and similar expense (73,840,796) (54,907,970)
120. Net interest and other banking income 5,596,175,894 5,409,025,366 130. Net losses/recoveries on impairment of: (6,363,522) (10,955,347)
The following notes have been numbered in accordance with instructions contained in Bank of Italy Circular 262/2005. Omitted numbers denote information not relevant to the Separate Report.
Gains and losses arising from movements in the fair value of financial liabilities held for trading are recognised in profit or loss in line “Item 80– Profits/(Losses) on trading”.
Revenue is recognised at the fair value of the consideration received, net of rebates and discounts, and in accordance with the accruals basis of accounting. Specifically: • interest is evenly accrued over time at the contractual rate of interest or, for items carried at amortised cost, the effective interest rate; • dividends are recognised when the right to receive payment is established, which generally corresponds with approval of the distribution by the shareholders of the investee company; • service fee income is recognised in accordance with the underlying contracts in the period in which the services are rendered. Fees, less associated costs, are recognised on a percentage of completion basis to the extent that there is reasonable certainty that they will be paid. Fees on activities carried out in favour of or on behalf of the state and Public Administration entities are recognised on the basis of the amount effectively accrued, with reference to the laws and agreements in force, taking account, in any event, of the instructions contained in legislation regarding the public finances; • returns on the portion of current account deposits deposited with the MEF are determined on an accruals basis, using the effective interest rate method, and classified in “Item 10 – Interest and similar income”; • the same classification is applied to income from euro area government securities, in which deposits paid into accounts by private customers are invested; • revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have been transferred to the buyer.
As more fully described in Part I – Share-based payment arrangements, on 24 May 2016, the Annual General Meeting of Poste Italiane SpA’s shareholders approved the “Long-term Incentive Plan for 2016-2018 (LTIP) – Phantom Stock Plan”. The Plan terms and conditions require the occurrence of certain future events, such as the achievement of performance targets, performance hurdles and of certain indicators of capital adequacy and short-term liquidity. For these reasons, measurement of the related liabilities, based partly on the conclusions reached by independent actuaries, requires the application of estimates based on current information about factors that may change over time, thereby resulting in outcomes that may be different from those taken into account during preparation of this Separate Report.
Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 1. Held-to-maturity financial assets 12,683 14,447 – – 12,886 15,057 – –
5. Non-current assets held for sale and discontinued operations – – – – – – – –
Deferred tax assets through profit or loss – – – – 23 – 63 12 86 12
Balance at 31 December 2015 2.1 Deferred tax liabilities recognised in the year (19) (393)
3.1 Deferred tax liabilities derecognised in the year 459 161 b) due to changes in accounting policies – –
(120) Introduced by article 19 of Law Decree 201/2011 converted with amendments by Law 214/2011 in the manner provided for by the MEF Decree of 24 May 2012: Manner of implementing paragraphs 1 to 3 of article 19 of Decree Law 201 of 6 December 2011 having regard to stamp duty on current accounts and financial products (Official Gazette 127 of 1 June 2012).
“Tax liabilities other than those included in Item 80” primarily include: • €861 million in stamp duty accrued to 31 December 2016 on outstanding Interest-bearing Postal Certificates in accordance with the requirements referenced in Part B, Assets, Table 15.1; • €153 million regarding taxes and road tax payable to collection agents, the tax authorities and regional authorities for payments made by customers; • €3 million in tax withholdings on current account interest earned by customers.
- Debt securities – – – – – – – – –
6) Refund of costs of third party employees seconded to the company – –
18.2 Reconciliation between theoretical tax charge at statutory rate and effective tax charge
1.2 partially guaranteed – – – – – – – – – – – – – –
- of which non-performing – – – – – – – – – – – – – – –
B.2 Unlikely to pay – – X – – X – – X – – X – – X – – X
B = Partial recognition of financial assets sold to third parties (carrying amount)
Central counterparties 1. Debt securities and interest rates 17,956 – 13,455 –
3) Currencies and gold - notional amount – – – – – – –
– Short positions – – – – – – – – – -
On-balance sheet liabilities – – – – – – – – – –
(132) Contributions from non-controlling shareholders to BancoPosta RFC are excluded, as they are not provided for in the special regulations governing the ring-fence.
Part H – Related party transactions 1. Payments to key management personnel
Other related parties external to the Group – – – – – – (2) –
The Performance Targets, to which receipt of the cash bonus is subject, are as follows: • an indicator of earnings over e three-year period, based on the RORAC (Return On Risk Adjusted Capital), used for the LTIP with the aim of taking into account the continuity and sustainability of the long-term performance after appropriately adjusting for risk; • an indicator of shareholder value creation, based on the Total Shareholder Return, used to measure performance based on the value created for Poste Italiane’s shareholders compared with other FTSE MIB-listed companies.