ItaliaCamp Srl This company intermediates the supply and demand of ideas and solutions for the development of social, economic and scientific projects as well as consultancy for businesses and entities for the supply of services relating to projects, both in the public and private context.
The impacts generated by Poste Italiane Poste Italiane’s business activities, in addition to generating direct impacts (i.e. closely linked to the Company’s economic activity), requires the purchase of goods and services produced by other companies (generating indirect impacts) and allows families who have received income thanks to the work done for the Group and its suppliers to purchase new goods and services (generating induced impacts).
Income from work €7.5 billion total effect (direct, indirect and induced)
One of the most fruitful in terms of opportunities for reflection and exchange of ideas, is the Multi-stakeholder Forum, which takes place annually. The Forum, which includes plenary sessions and dedicated group sessions, creates an opportunity for dialogue and strategic discussion on sustainability issues relevant to the sector, in order to share ideas and projects useful for the creation of shared value with the main stakeholders with whom Poste Italiane interacts in carrying out its activities. In particular, the third edition took place in 2019, involving more than 400 participants, including representatives of local communities, the financial world and rating agencies, trade associations and Labour Unions, the tertiary sector, the world of business, professions and employees. The meeting was also attended by the members of the Interfunctional Sustainability Group, which brought the Company’s point of view on the importance of the sustainability issues discussed.
Poste Italiane undertakes to prepare appropriate internal control measures and spread a corporate culture within the organisation based on integrity, professional ethics and honesty in order to build trusting relationships with its stakeholders and conduct its activities correctly and transparently in every single operation.
� Reduce the Group’s total energy consumption from non-renewable sources (e.g. fossil fuels)
� Promotion of communication, training and information initiatives to increase engagement 7. Occupational health and safety � Occupational health and safety and environmental competence and responsibility plans
The Company is aware of the risks that climate change may pose to its business activities and therefore considers it important to identify the potential economic impacts of climate change. This importance was reaffirmed by the World Economic Forum in the Global Risk Report 2020, which identifies climate risks among the top five risks at global level.
The commitment to promote the correct management of environmental issues is confirmed by the Company’s signing of the United Nations Global Compact, which defines specific principles in relation to environmental protection through the adoption of a responsible approach and the implementation of specific initiatives to reduce environmental impact. Similarly, the companies BancoPosta Fondi SGR and Poste Vita, signatories of the Principles for Responsible Investment (PRI) and of the Principles for Sustainable Insurance (PSI), undertake to adopt specific measures to assess the proper management of environmental risks and opportunities in their investment decisions and insurance policies.
� Collaboration with policy makers to represent the need for clear and stable regulations
� Dialogue with investors and analysts, with a focus on climate change issues
� Implementation of the new delivery operating model. �Parcels delivered by letter carriers: over 100 million (2017: 35 million). �B2C parcels market share: 40% (2017: 30%). �CAPEX to support the transformation: approximately €0.5 billion in the period 2018-2022.
ESG Guidelines Aug ’18 1st Multistakeholder Forum Feb ’18 2012 Sustainability Report Mar ’13 2017 Sustainability Report Mar ’18
Integrated Policy The Policy contains a commitment to promptly comply with current regulations and general principles to be observed in the areas of quality management (UNI EN ISO 9001:2015), occupational health and safety (BS OHSAS 18001:2007), prevention of corruption (ISO 37001:2016), and management of data security and information systems (ISO/IEC 27001:2013 and ISO/IEC 20000:2011 respectively).
Financial • share capital (owned, floating) • debt capital • expense of the universal postal service • postal savings and deposits • insurance premiums
� GRI 305-4 Intensity of GHG emissions related to real estate facilities
Poste Italiane intends to promote complete and effective disclosure of its ESG performances, which are strongly linked to the ESG Strategic Plan. The ESG Group Strategy is based on 8 pillars relating to the 18 material topics.
The interim dividend of €0.154 per share, gross of any legal withholding taxes, was made with effect from 20 November 2019, with ex-dividend date of coupon no. 5 coinciding with 18 November 2019 and record date (i.e. the date on which the dividend was entitled to be paid) coinciding with 19 November 2019.
7. OECD Economic outlook, world GDP - November 2019. 8. ISTAT - Eurozone economic outlook - 8 January 2020. 9. Eurostat, GDP Eurozone - 5 December 2019.
Signs of easing came in December 2019, when it was announced that the signing of the Phase 1 agreement of the US-China negotiations would take place, as it did on 15 January 2020; moreover, trade talks between the US and the EU were suspended until the US elections and the outcome of the UK elections, while making Brexit inevitable, reduced fears of an impact on the economy under the agreed terms and timing of implementation.
Consolidated EBIT grew to €1,774 million, or 18.4% (+€275 million) compared with 2018, reflecting the positive contribution of all of the SBUs in which the Group operates: Insurance Services Strategic Business Unit (+€140 million, +16.1%), Payments, Mobile and Digital Strategic Business Unit (+€38 million, +18.6%), Financial Services Strategic Business Unit (+€15 million, +1.7%) and Mail, Parcels and Distribution Strategic Business Unit (+€83 million, +19.3% from a negative EBIT in 2018 of €430 million to a negative EBIT of €347 million).
The decline in volumes of Unrecorded Mail (123 million fewer items, or 9% less than in 2018) led to a fall in revenue of €86 million (-11%). This reflects the replacement of paper-based mail by electronic mail.
In regards to Logistics, the Group plans to invest €150 million in automation over the life of the plan and in implementing a lean production system to reduce the number of full-time equivalents (FTEs) by about 1,600 across the various operational sites and internal departments.
The main indicators of digital channels show continued growth in their use by Poste Italiane’s customers. The number of consumer customers registered to digital channels (web and app) have reached 20.8 million, also thanks to the increase in SPID-enabled22 PosteID digital identities to 4.1 million. Users who visit Poste Italiane’s digital properties every day, both web and mobile, have reached almost 2 million visitors, with a higher growth on the App channel. The transactions carried out by customers on digital channels have exceeded 57 million, of which more than 65% are carried out through apps, while in terms of value of transactions, web and mobile channels are equivalent. Since September, with the introduction of the new access factors required by Strong Customer Authentication, there has been a significant growth in downloads and app usage that has led to 30.8 million apps downloaded and 5.4 million wallets.
After income tax expense for the year (€68 million compared to €55 million in 2018), the segment’s net profit amounts to €272 million, up 77.4% on 2018.
Monetics In particular, in addition to Postepay Connect, the offer that combines the card Postepay Evolution and the PosteMobile SIM - with annual charge, the version that provides for monthly payment of the price plan included in the offering has been marketed since January 2019. All customers can therefore manage payment and telephone services quickly and intuitively thanks to the Postepay App; transfer data free of charge in real time from a PosteMobile Connect SIM card to another PosteMobile Connect SIM card (G2G); transfer money between two Postepay accounts (p2p); and purchase extra data using the Postepay App with the cost debited automatically to a Postepay Evolution card. In October 2019, in order to make the Connect range increasingly flexible and suitable for all customers’ spending and consumption needs, an additional tariff plan with six-monthly renewal was introduced.
Dec 2016 Mar 2017 Dec 2017Jun 2017 Mar 2018 Sep 2018Sep 2017 Jun 2018 Dec 2018 Dec 2019
Regulatory environment From 1 January 2019, the Guidelines regarding fraud data reporting requirements pursuant to the Payment Services Directive 2 (PSD2) have been applied, with payment service providers (PSPs) required to report detailed statistical data regarding frauds linked to the various forms of payment to their respective supervisory authorities, as well as the aggregated data the latter are required to share with the European Banking Authority (EBA) and the ECB.
Poste Italiane has also complied with the new provisions regarding “Transparency of banking and financial transactions and services. Fairness in dealings between intermediaries and customers”, which form an integral part of the general regulations governing organisational requirements and internal control systems, strengthening the organisational measures and controls that intermediaries (producers and the distributors of third-party products) are required to adopt in order to process, distribute, monitor and (if necessary) modify the products offered to customers. The requirements introduced by the new provisions have been applied in the “Product Governance guidelines” annexed to “BancoPosta’s Organisational and Operational Regulation” referred to above. Also, with regard to transparency requirements, further changes to the practical guidance for customers, consumer credit and consumer mortgages have been introduced in relation to the use of benchmarks and repayment methods. In July 2019, Bank of Italy Provision no. 156 was published, which makes some amendments to the above mentioned Implementing Provisions of the PAD (Payment Account Directive), concerning payment accounts offered to consumers. The amendments in force since 1 January 2020 concern, inter alia, pre-contractual and periodic information documents. In particular, two new documents to be provided to customers have been introduced, drawn up in accordance with the standard, non-modifiable models contained in the EU Commission Regulations: the Fee Information Document (FID) and the Statement of fees (SOF). Poste Italiane has completed the necessary adjustment activities.
Postal savings deposits: Savings deposits through Interest-bearing Postal Certificates and Postal Savings Books issued by Cassa Depositi e Prestiti.
Securities portfolio management The securities portfolio, in which deposits from private customers on postal current accounts with a nominal value of €52 billion are used, consists of €49 billion of Italian fixed-income government securities and €4 billion of debt securities issued by Cassa Depositi e Prestiti (guaranteed by the Italian government).
It should also be noted that the Company introduced the use of transitional measures on technical provisions following the approval by the Supervisory Authority in August 2019. The application of these measures resulted in a decrease in the Solvency II technical provisions of €1,908 million before tax, resulting in an increase in eligible own funds of €1,320 million. This trend, having no impact on the value of the capital requirement, allowed the Solvency Ratio to increase by 36 percentage points to 312% at 31 December 2019.
With regard to the complementary pension provision, in July 2019, the Individual Pension Plan (PIP) was expanded with two new investment profiles, dynamic and guided, in addition to the guaranteed one.
Other operating costs amounted to €2,170 million, up 3.8% compared to €2,090 million in 2018, due to higher variable costs for services related to business development and in particular digital and parcel services.
BancoPosta also has an “Organisational and Operational Regulation” approved by the Board of Directors of Poste Italiane, the latest update of which dates back to 31 January 2019. These regulations describe BancoPosta’s operating model, its organisational structure and the related responsibilities assigned to the various functions, as well as the processes for assigning BancoPosta’s business functions to Poste Italiane and for outsourcing BancoPosta RFC. Together with the aforementioned Regulation, the single Product Governance guideline for investment, insurance and banking products was also presented to the Board of Directors, which has been developed in a specific procedure and applied with reference to the entire BancoPosta range of products. The process of “Governance of Assignments and Outsourcing” of BancoPosta RFC, already subject to review in 2018, was further strengthened in 2019 with reference to the regulatory, organisational and monitoring of the activities assigned, with a view to improving the quality of processes.
Mass Market, Affluent, Business and Public Administration marketing functions were also redefined with a view to rationalising the interface with external product factories.
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.
In 2019, Poste Italiane confirmed its legality rating, once again receiving the highest rating of three stars from the AGCM and being among 6% of the companies that have obtained this recognition
With regard to organisational controls in terms of checking, assessing and monitoring parties and counterparties, the Group Risk Management function in the Corporate Affairs function carries out activities to identify all the operational and reputational elements of risk needed to ensure verification of the requirements of reliability and integrity, through analyses of the corporate, financial and asset profiles of companies and representatives and their relations with the Poste Italiane Group.
In continuity with previous years, Poste Italiane has implemented the criteria set out in Green Public Procurement (GPP) in order to combine sustainability in terms of reducing environmental impacts and cost rationalisation.
In 2019, all tenders relating to cleaning and sanitation services (13 contracts awarded) were in compliance with the MEC.
The new postmen’s uniforms: functionality and design in the name of the environment
By 2021 Number of injuries -790 events in the PCL area compared to
� MLAB: is the process of identifying solid professionals and managers, with consolidated experience in a framework position, to be developed on positions of greater complexity. The high potentials feed the “Pyramid of Talents”, with particular reference to the “Key Talent” basin.
NoidiPoste app is the new application for Poste Italiane Group employees to access useful content and services on the move. Available on AppleStore and GooglePlay, the app provides mobile access to a wide range of content and services, such as managing business travel and illness or booking holiday homes for colleagues with specific requirements, customising homepages and menus, and much more. In 2019, the app integrated the “Meal Vouchers” and “Job Posting” services, providing the chance to see the remaining balance of the Ticket Restaurant card and to see job postings and apply directly via app. With the aim of improving and implementing the services in the app, the “Your opinion counts” service, integrated in the app, provides the opportunity to respond to quick surveys, also useful to guide the development of services designed to improve the professional life of Poste employees in a co-design perspective. Reaching 60,000 downloads in 2019, the app is the most widely used mobile channel, allowing to increasingly strengthen access to corporate channels outside the office. “Your opinion counts”, as a new activity of listening to the people of Poste therefore aims to be a further opportunity for discussion with the employees of the Company to know and develop their degree of involvement and satisfaction and at the same time communicate the commitment of the Company to find answers to their questions in a perspective of continuous improvement of the company’s performance.
As part of the actions aimed at modernising working methods and conditions within organised contexts and in line with the Company’s objective of guaranteeing worklife balance, agile work as an evolutionary experience with respect to the space-time flexibility systems already adopted by the Company has begun in the Company, on an experimental basis, following the agreement with the labour unions. The experiment involves workers operating in defined organisational areas (including Group companies, PosteVita and PostePay) and, based on the progress of the initiative, the extension to other functional areas will be assessed.
On 30 July 2019, an agreement was signed to award performance -related bonuses to employees of Poste Italiane SpA, Poste Vita SpA, Poste Assicura SpA, EGI SpA, BancoPosta Fondi SGR and PostePay. The agreement, which has a one-year validity, allows to further emphasise the contribution made by staff towards the achievement of corporate objectives in 2019. On 10 September 2019, a similar trade union agreement - on the subject of “Performance-related bonus” - was agreed with the labour unions by Postel SpA and Address S.r.l..
Strengthening caring measures towards colleagues with chronic diseases and/ or serious pathologies through corporate awareness plans and the availability of services aimed at inclusion 2022 % of the detected target reached by the caring measures identified 40% New
Generations The Company recognises and values integrated strategies for the development and management of the needs of the different generations that work together within the organisation. From this point of view, in consideration of the demographic outlook and its impact on company turnover, policies aim at fostering dialogue and inter-generational discussion.
Interculturalism The Company is committed to promoting and systematising the mix of different cultures within it through the promotion of an intercultural vision and open to multi-level discussion, based on organisational and social cooperation.
The guiding principles of Poste Italiane’s human rights policies and the measures implemented to ensure their respect within the Company and towards all stakeholders were illustrated by the CEO of Poste Italiane during the workshop organised with SIOI “Business and Human Rights: the role of Businesses for Sustainable Development”. The aim of the event was to confirm and strengthen the commitment made in 2018 by Poste Italiane with the approval of the Group Policy for the Protection of Human Rights. In this regard, Poste Italiane has confirmed its vision of a successful business model by reaffirming that this combination can only be affirmed in a society where the law, the protection of human rights and environmental sustainability are adequately safeguarded because the systematic use of Corporate Social Responsibility criteria can have a positive impact on competitiveness, now representing a minimum requirement for international economic markets. Poste Italiane is aware that it can play a role in the affirmation of the principles of sustainable development in the Italian business world and works towards a common commitment, raising awareness and encouraging the exercise of responsibility and business improvement.
The document, which was approved by the Board of Directors, identifies qualitative and quantitative composition criteria, aimed at effectively fulfilling the duties and responsibilities entrusted to management, partly through the presence of people who ensure sufficient diversity in terms of perspectives and skills, which are necessary to have a good grasp of current business, risks and long-term opportunities relating to the Company’s activities. In defining its diversity criteria, the Board of Directors has taken into account the nature and complexity of the Company’s business, the social and environmental context in which it operates, the experience the Board has gained with regard to its own activities and operating methods and those of its internal committees, as well as the findings of the self-assessment processes conducted in recent years.
As part of the initiative to support the Small Municipalities, in 2019, the Group signed the Memorandum of Understanding between Post Italiane, the Lazio Region and ANCI Lazio, aimed at identifying forms of collaboration to offer services in addition to the universal postal service to Municipalities in Lazio with fewer than 5,000 inhabitants.
As proof of the constant attention that Poste Italiane pays to local communities, also following the commitments made to the Small Municipalities, there were over 1,500 meetings with local institutions in 2019, a number that increased significantly compared to 2018.
Effective data protection and adequate corporate IT security are essential elements for a company to protect its information assets, as well as those of its customers and stakeholders, and ensure business continuity.
With this in mind, a specific board induction session was held in 2019 on the subject of cybersecurity which, in accordance with the provisions of the new Corporate Governance Code, was aimed at providing members of the Board of Directors and the Board of Statutory Auditors with adequate knowledge of the evolution of the relative risks and the methods of managing them within the Group. This induction activity has allowed the Board of Directors of Poste Italiane to express its propensity to risk associated with IT security within the Group’s Risk Appetite Framework.
The Group uses an Integrated IT Quality and Security Management System that incorporates the aspects highlighted by international standards regarding sector benchmarks in order to obtain recognition of the Quality & Security Assurance of the services provided by Poste Italiane by obtaining and maintaining Third-Party Certifications, either mandatory or voluntary. This includes verification activities aimed at ascertaining the effectiveness and efficiency of the processes and security measures implemented according to the certifications obtained.
The initiative Paths for innovation continued in 2019; it was set up in 2017 with the launch of some Innovation Storms or company Hackathons that have as their objective the engagement and involvement of the corporate population in experiences of creativity and problem solving related to issues of interest to the business. The activation of the Hackathons was the last stage of a path that was developed with internal selection, training and finally engagement on the development of ideas to solve open issues of business. The first step of the path allowed to intercept the people most adherent to a predefined profile through some tests and classroom sessions dedicated to Digital issues. The resources selected then analysed issues of change and innovation by participating in an “Envisioning Lab”, a full immersion with focus on the clusters of the Deliver 2022 Strategic Plan, through lectures, speeches and testimonies by professionals in the field and teaching of Design Thinking, arriving then to a challenge during the final Hackathon. Making people protagonists of change, involving them in business transformation processes, soliciting moments of cross-functional collaboration, spreading innovative working methods and encouraging the exploration of areas and topics outside their own comfort zones or everyday working life, are the objectives that “Paths for innovation” seeks to renew year after year by supporting the dissemination of a digital mindset. The energy, participation and engagement that have emerged, push the Company to continue to expand the pool of people to whom to propose participation.
Poste Italiane embarked on an important transformation process involving the entire Group, which has several objectives: placing the customer increasingly at the centre of strategies; enhancing the Post Office network in synergy with digital channels; developing multichannel access and use methods; strengthening Poste Italiane’s role as a key stakeholder for the Public Administration and encouraging the inclusion and development of the digital economy.
Postepay Code In line with the acceleration that Poste Italiane is giving in terms of contribution to innovation, Postepay is aiming at an increasingly richer offer of services and functionalities, with the aim of digitising consumers and retailers in a way that is increasingly focused on apps.
• Environmental protection • Incorporation of environmental aspects into the products and services offered
The Group has adopted a Management System in compliance with current regulations and national and international best practices, and a Group-wide certification process has been launched, with priority being given to those companies with the greatest environmental impact. In this regard, Postel SpA and SDA SpA have obtained UNI EN ISO 14001 certification for their environmental management system. The system consists of internal environmental management rules that are implemented to ensure punctual identification of the most significant environmental impacts and adoption of the most effective management and mitigation measures, through a structured performance monitoring system involving audits and periodic checks.
In compliance with the obligations set out in Legislative Decree 102/2014, which provides for the promotion and improvement of energy efficiency, the Group carries out continuous energy audits, through a system for monitoring the withdrawal of electricity, based on a network of meters connected to a central data collection system that generates a report on energy consumption at each site, thus enabling identification of sites that are critical in terms of high consumption. The energy audits must be drawn up by Energy Management Experts (EGE- Esperti in Gestione dell’Energia) who are certified in accordance with UNI CEI 11339:2009. Consequently, a certification process for internal staff has been launched. In relation to energy efficiency, 43 projects were coordinated on the territory focused on reducing consumption (gas and electricity) and emissions.
In light of technological developments, increasing innovation and constant regulatory changes in the postal sector, Poste Italiane intends to increasingly focus on continually renewing its fleet with more environmentally friendly vehicles, rationalising distances travelled, proper waste management, developing infrastructure for recharging customers’ vehicles, and to demand that external transport providers meet minimum environmental requirements
Poste promotes knowledge of ESG issues in investment processes With the aim of disseminating and increasing the know-how of the management classes on the subject, in October 2019, the Group companies, BancoPosta Fondi SGR, Poste Vita and Poste Assicura, held an update session on the subject of responsible investment and ESG management for all the Directors and Statutory Auditors of the respective companies. In addition, the companies spoke at the CSR and SRI 2019 trade fair to talk about impact investing, highlighting how the adoption of a sustainable investment strategy can create value for the investor and the company.
Poste Vita Protetti With the modular offer Poste Vivere Protetti Poste Assicura has decided to completely revise its non-vehicle insurance offer, replacing the entire existing product range with an integrated modular offer; a single product dedicated to retail customers, modular and customisable according to the specific needs of customers. The maximum age of insured persons for all guarantees related to injuries and illness is raised to 79 years of age, offering more opportunities to take out insurance. The modular offer will make it possible to avoid overlapping guarantees and select only the coverages that really meet the customer’s needs, with an additional economic advantage. The new offer can also be entered into by foreigners resident in Italy and specific legal protection coverages will be provided for specific cases of interest, innovative and very close to current issues, especially with regard to minors, in relation to: cyberbullying and stalking; criminal defense for crimes committed; online shopping; online reputation and fraudulent use of credit cards.
Total number of IT security breaches involving customers' data 4 9 7
No. of procedures % dematerialised No. of procedures % dematerialised No. of procedures % dematerialised * Figures in thousands. ** The total volumes of procedures have increased mainly due to the introduction of new types of procedures. However, there has been an increase in dematerialisation percentages across the entire range of procedures managed.
Of which: Jet fuel (GJ) 538,845 379,090 388,304 * The target set for 2019 is 1,698,000 GJ (471,800 MWh) for total energy from renewable sources (internal and external) and 4,522,000 GJ (1,349,000 MWh) for total energy from non-renewable sources (internal and external).
Direct emissions – Scope 1 (tCO2e) 47,724 44,140 44,266 of which
In keeping with 2019, the offering of the Insurance Services Strategic Business Unit will aim to consolidate the Group’s leadership in the Italian market, supported by a progressive rebalancing of the offering to provide products with greater value added (multiclass), but that have risk-return profiles that are still moderate, in keeping with the type of customer served by the Group.
Poste Italiane’s Consolidated non-financial statement (NFS or Statement) for the year ended 31 December 2019 has been drafted on the basis of the 8 key sustainability pillars of the Group’s ESG Strategic Plan which covers environment, social and governance issues (ESG) and has been designed with the aim of generating long-term value for stakeholders.
In addition to ensuring compliance with the provisions of the Italian Legislative Decree 254/2016 (“Decree”) through the integrated disclosure provided in the NFS, conformity with the law requirements is also ensured by providing references to other sections of the Annual Report and to other company documents, when the information is already contained therein or if useful to provide additional clarifications. In particular: � the company’s organisational and management model is illustrated within the Annual Report in the following paragraphs: “Incorporating sustainability within Poste Italiane’s strategy”, “Poste Italiane’s business model” and “Poste Italiane’s integrated internal control and risk management system”. Such paragraphs describe the way in which the organisation, thanks to its business activities, generates results enabling it to deliver on its strategic objectives and create value over the short, medium and long term; � risk management, implemented through the Group Risk Management (GRM) model, based on the Enterprise Risk Management (ERM) framework, is described in the paragraph “Sustainability topics relevant to Poste Italiane” and “Poste Italiane’s integrated internal control and risk management system”, where the main non-financial risks, their potential impacts related to material topics and treatment actions are described in greater detail; � company policies are described in the paragraph “The Group’s sustainability policies” which sets out the general rules of conduct on which all of Poste Italiane’s activities must be based. In addition, the chapter “Performance” provides information, with regard to each material topics, on the related strategic objectives and the operating processes used to deliver on them; � performances are illustrated in the paragraphs of the chapter “Performance”, which describes the main initiatives for the year, and in the paragraph “Indicators tables”, which shows the results achieved in the last three years.
102-25 Conflicts of interest Report on Corporate Governance and the Ownership Structure: 14. Other corporate governance procedures (pursuant to art. 123-bis, paragraph 2.a), Consolidated Law on Finance)
Report on Operations: 7. Consolidated non-financial statement 102-50 Reporting period Report on Operations: 7. Consolidated non-financial statement 102-51 Date of most recent report 2018 Integrated Report 102-52 Reporting cycle Report on Operations: 7. Consolidated non-financial statement 102-53 Contact point for questions regarding the report For further information and details regarding the topics and indicators covered in this Report, contact: Poste Italiane SpA Corporate Affairs/Group Risk Management Viale Europa, 190 00144 Rome – Italy 102-54 Claims of reporting in accordance with the GRI Standards
� Poste Italiane’s sustainability strategy � The management and reporting of climate change risks according to the indications of the Task Force on Climate-related Financial Disclosures
Air Quality TR-AF-120a � Poste Italiane’s sustainability strategy � Other direct emissions from logistics activities � Other indirect emissions from logistics activities
� Access to financial services � Economic development in areas of high poverty � Responsible finance
LOSS RATIO is a measure of the technical performance of an insurance company providing P&C cover and is calculated as the ratio of total losses incurred (including claims expenses) and gross earned premiums.
Adjustments and eliminations Total of which ordinary personnel expenses 5,448 31 42 40 5,561 of which early retirement incentives 340 0 2 0 342 of which disputes and other extraordinary items (6) 0 0 0 (6)
Key Performance Indicators for principal Poste Italiane Group Companies The figures shown in the tables below reflect the financial and operational indicators (as deduced from the related reporting packages) of the principal Group companies, prepared in accordance with International Financial Reporting Standards (IFRS) and approved by the boards of directors of the respective companies.
Contents FINANCIAL STATEMENTS OF POSTE ITALIANE AT 31 DECEMBER 2019 2. Basis of preparation and significant accounting policies 291 3. Changes to accounting policies 313 4. Material events during the year 322 5. Poste Italiane Group Financial statements for the year ended 31 December 2019 328 6. Poste Italiane SpA Financial statements for the year ended 31 December 2019 398 7. Risk management 474 8. Determination of fair value 513 9. Hedging transactions 518 10. Proceedings pending and principal relations with the authorities 523 11. Material non-recurring events and/or transactions 528 12. Exceptional and/or unusual transactions 528 13. Events after the end of the reporting period 528 14. Additional information 529 15. BancoPosta RFC separate report for the year ended 31 December 2019 552
In accordance with CONSOB Resolution 15519 of 27 July 2006, the statement of financial position, the statement of profit or loss and the statement of cash flows show amounts deriving from related party transactions. The statement of profit or loss also shows, where applicable, income and expenses deriving from material non-recurring transactions, or transactions that occur infrequently in the normal course of business. Given the diverse nature and frequency of transactions conducted by Group companies, numerous income and expense items of a non-regular nature may occur with considerable frequency. These items of income and expense are only presented separately when they are both of an exceptional nature and were generated by a materially significant transaction.
39. The tax authorities have issued regular official interpretations only in respect of certain of the tax-related effects of the measures contained in Legislative Decree 38 of 28 February 2005, Law 244 of 24 December 2007 (the 2008 Budget Law) and the Ministerial Decree of 1 April 2009, implementing the 2008 Budget Law, which introduced numerous changes to IRES and IRAP. The MEF Decree issued on 8 June 2011 contains instructions regarding the coordinated application of EU-endorsed international accounting standards coming into effect between 1 January 2009 and 31 December 2010, in addition to regulations governing determination of the tax bases for IRES and IRAP. In addition, the new standards are subject to the rules contained in the endorsement tax decrees issued by the Ministry of the Economy and Finance, in application of the provisions of Law no. 10 of 26 February 2011 (Decreto milleproroghe).
Intangible assets An intangible asset is an identifiable non-monetary asset without physical substance, which is controllable and capable of generating future economic benefits. The initial book value is adjusted for accumulated amortisation, where an amortisation process is envisaged, and for any impairment losses.
Cash and deposits attributable to BancoPosta Cash and securities held at post offices, and bank deposits attributable to the operations of BancoPosta RFC, 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 may only be used in settlement of these obligations.
� in the case of bundles of goods or services involving different performance obligations, allocate the transaction price to the performance obligation; to that end, it is necessary to estimate the stand-alone selling price of each component; � recognise revenue when or as the entity fulfils the performance obligation, that is upon delivery of the good or service to the customer. Performance obligations can be fulfilled: – “at a point in time”: in the case of obligations fulfilled at a point in time, revenue is recognised only as control over the good or service is passed to the customer. In that respect, consideration is given not only to the significant exposure to the risks and benefits related to the good or service but also physical possession, customer’s acceptance, the existence of legal rights, etc.; – “over time”: in the case of obligations fulfilled over time, the measurement and recognition of revenue reflect, virtually, the progress of the customer’s satisfaction. An appropriate approach is defined to measure progress of the performance obligation (the output method).
Revenue from activities carried out in favour of or on behalf of the state is 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 provisions contained in legislation regarding the public finances. The return on the current account deposits held by the MEF is determined using the effective interest method and is recognised as revenue from financial services. The same classification is applied to income from Eurozone government securities, in which deposits paid into accounts by private customers are invested
Shareholder transactions: Amount due from MEF following cancellation of Decision EC 16/07/2008 39 39
– IAS 23 - Financial costs: an entity determines the amount of financial costs eligible for capitalisation by excluding financial costs applicable to loans obtained specifically for the purpose of acquiring a qualifying asset, until all the operations necessary for the asset to be usable or sellable are completed.
Initial assessment of the agreement Under the new accounting rules, at the inception of the contract, the Group assesses whether a contract is, or contains, a lease: the contract is, or contains, a lease if in exchange for a consideration it confers the right to control the use of a specified asset for a period of time. The activity is usually specified as explicitly stated in the contract or when it is available for use by the Group. The right of control is evaluated on the basis of the right to obtain substantially all the economic benefits deriving from the use of the asset and the right to decide on its use.
The following statement shows the impact of first-time adoption on the Poste Italiane Group’s statement of financial position.
Total equity attributable to owners of the Parent 8,105 - 8,105
Amounts booked as profit and loss at 31 December 2019 (€m)
NET PROFIT FOR THE PERIOD 1,342 1,399 of which, attributable to owners of the Parent 1,342 1,399 of which, attributable to non-controlling interests - -
After-tax increase/(decrease) in reserves related to group of assets and liabilites held for sale [tab. B4] - -
Total comprehensive income for the year - - - - 1,087 26 (1) - 1,292* 2,404 - 2,404 * This item includes profit for the period of €1,342 million and actuarial losses on provisions for employee termination benefits of €50 million, after the related current and deferred taxation.
Restricted cash and cash equivalents at end of year (884) (1,556)
Financial assets at amortised cost 1,586 156 1,742 1,420 85 1,505
Forward purchases Forward sales Interest rate swaps Interest rate swaps Forward sales nominal fair value nominal fair value nominal fair value nominal fair value nominal fair value nominal 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. ** Gains/(losses) through profit or loss refer to any ineffective components of hedges, recognised in other income and other expenses from financial activities.
Derivative financial instruments 64. These are Contingent Convertible Notes with an original value of €75 million, a twenty-year term to maturity and issued by Midco SpA, which in turn owns 51% of the airline Alitalia SAI SpA. The Notes were subscribed for by Poste Italiane SpA on 23 December 2014, in connection with the strategic transaction that resulted in Etihad Airways’ acquisition of an equity interest in Alitalia SAI, without giving rise to any involvement on the part of Poste Italiane in the management of the issuer or its subsidiary. Interest and principal payments were provided for in the relevant terms and conditions if, and to the extent that, there was available liquidity. On the fulfilment of certain negative pledge conditions, in 2017 the loan was converted into equity instruments (as defined by art. 2346, paragraph 6 of the Italian Civil Code), carrying the same rights associated with the Notes.
Specifically66: � Amounts due from Ministries and Public Administration entities refer mainly to the following services: – Integrated Notification and mailroom services rendered to central and local government bodies, amounting to €177 million.
� Other trade receivables include mainly: €84 million related to Postepay SpA, primarily for sales of terminals, subscriptions for telecommunications services, services rendered to other operators and for the sale of top-ups through other channels in addition to receivables accrued for commercial payments to third-party partners, €45 million for the Posta Time service, €24 million for referrals to the Posta Target service, €22 million for receivables relating to the Posta Contest service, €17 millions receivables for non-universal mailing services, €12 million relating to the Notification of Legal Process service and €11 million for telegraphic services.
Provisions for doubtful debts relating to the Parent Company are described in note 7 – Risk management.
The current service cost is recognised in personnel expenses, whilst the interest component is recognised in finance costs.
The item refers to a loan recognised at an amortised cost of €50 million issued by Poste Italiane under the EMTN – Euro Medium Term Note programme of €2 billion listed by the Company in 2013 on the Luxembourg Stock Exchange. The loan was issued through a private placement in 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; the fair value71 of this borrowing at 31 December 2019 is €51 million.
Domestic and international money transfers - 668 668 - 688 688
The increase in the item Other personnel items is due to the allocation of one-off provisions to cover the 2019 contractual vacancy defined by an agreement with the labour unions signed on 18 February 2020.
Revenue from Insurance Services after movements in technical provisions and other claims expenses [C4] 1,669 1,471
Total movement in technical provisions for insurance business and other claims expenses: P&C 65 35
Raw, ancillary and consumable materials and goods for resale 124 120
The cost of goods and services is down €56 million compared with 2018, due primarily to a reduction in lease expense (following the application of IFRS 16 – Leases from 1 January 2019), partially offset by an increase in variable costs linked to the growth in turnover, above all in the parcels business.
For the purposes of reconciliation with the statement of cash flows, in 2019 finance costs after foreign exchange losses amounted to €68 million (€66 million in 2018).
(Impairment loss)/reversal on debt instruments, receivables and other assets (46) - - - - (46)
Liabilities related to assets held for sale - - - - - -
The remuneration paid to members of the Parent Company’s Supervisory Board for 2019 amounts to approximately €84 thousand at 31 December 2019. 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.
Cash and deposits attributable to BancoPosta [A10] 4,302,784,484 - 3,318,398,871 -
Cash generated by/(used for) financial assets and liabilities attributable to BancoPosta [c] (844,036) 829,059
A3 – Intangible assets (€562 million) The following table shows movements in intangible assets: tab. A3 - Movements in intangible assets
Changes in fair value through profit or loss - - 1,902 1,902
Sales, redemptions and settlement of accrued income (65,785) (2,065) (2,314) (68,099)
Changes in fair value through profit or loss - 25 25
Derivative liabilities * Increases/(decreases) refer to the nominal value of new transactions and changes in the fair value of the overall portfolio during the period. ** Gains/(losses) through profit or loss refer to any ineffective components of hedges, recognised in other income and other expenses from financial activities. *** Transactions settled include forward transactions settled, accrued differentials and the settlement of interest rate swaps linked to securities sold.
There were no transfers of the related financial instruments measured at fair value on a recurring basis between level 1 and level 2 in 2019.
Financial assets at fair value through profit or loss This item consists of equity instruments (as defined by art. 2346, paragraph 6 of the Italian Civil Code) resulting from the conversion of Contingent Convertible Notes93 whose value at 31 December 2019 is zero.
Amounts due for other BancoPosta services - 104 104 - 82 82 of which attributable to BancoPosta RFC - 576 576 - 600 600
In general, there are delays in collecting amounts due from central and local government entities due primarily to the fact that no provision has been made in the related budgets or to the execution of contracts or agreements. In this regard, actions continue aimed at renewing expired agreements96 and soliciting requests for appropriations.
� Amounts due from staff under fixed-term contract settlements consist of salaries to be recovered following the agreements of 13 January 2006, 10 July 2008, 27 July 2010, 18 May 2012, 21 March 2013, 30 July 2015 and 19 June 2018 between Poste Italiane SpA and the labour unions, regarding the re-employment by court order of staff previously employed on fixed-term contracts. This item refers to receivables with a present value of €148 million from staff, from INPS and pension funds recoverable in the form of variable instalments, the last of which is due in 2042. A breakdown of the receivables by individual agreement is provided below: Annual Report 2019 Poste Italiane Group
Receivables due from staff under agreement of 2006 - 1 1 1 1 1 2 3 due from staff under agreement of 2008 14 10 24 26 21 12 33 35 due from staff under agreement of 2010 25 6 31 37 28 7 35 42 due from staff under agreement of 2012 19 5 24 30 22 6 28 34 due from staff under agreement of 2013 2 1 3 3 2 1 3 4 due from staff under agreement of 2015 2 1 3 3 3 1 4 4 due from staff under agreement of 2018 1 - 1 1 1 - 1 1 due from INPS (former IPOST) - 42 42 42 - 42 42 42 due from INPS (Social security) 3 11 14 14 4 10 14 15
� Amounts due from subsidiaries include €242 million in amounts receivable from subsidiaries by Poste Italiane SpA, as the consolidating entity in the tax consolidation arrangement (note 2.3 – Summary of significant accounting policies and measurement criteria). The related amounts are mainly due from the subsidiaries, Poste Vita SpA and PostePay SpA.
During the year, dividends were distributed using retained earnings for a total of €774 million, based on the following resolutions: � on 28 May 2019, the General Meeting approved a dividend distribution of €574 million (dividend per share equal to €0.441) on 26 June 2019; � On 5 November 2019, the Board of Directors of Poste Italiane resolved to advance part of the ordinary dividend for 2019 as an interim dividend. The interim dividend of €200 million was distributed on 20 November 2019 (unit dividend of €0.154).
� Other provisions for risks and charges are likely to cover liabilities of various kinds, including the claim of prior rentals on assets used free of charge by the Company, the recognition of interest expense accrued in favour of certain suppliers, fraud, estimated risks that specific legal action to be taken for the release of certain foreclosures suffered by the Company is insufficient to recover the amounts and charges to be incurred for reclamation work on owned land. Provisions of €12 million for the year primarily regard the last two types.
The balance of cash flows for advances, represents the net amount payable as a result of advances from the MEF to meet the cash requirements of BancoPosta. These break down as follows: tab. B6.1.1 - Balance of cash flows for advances
Amounts payable due to thefts from Post Offices of €158 million regard the Company’s liability to the MEF on behalf of the Italian Treasury for losses resulting from theft and fraud. This liability derives from cash withdrawals from the Treasury to make up for the losses resulting from these criminal acts, in order to ensure that Post Offices can continue to operate.
Financial liabilities due to subsidiaries - 505 505 - 112 112 * In terms of fair value hierarchy, which reflects the relevance of the sources used to measure assets, this amount qualifies for level 2.
Overseas counterparties* 110 110 of which attributable to BancoPosta RFC 13 18 * The amount due to overseas counterparties relates to fees payable to overseas postal operators and companies in return for postal and telegraphic services received.
Amounts due to subsidiaries and joint ventures tab. B8.2 - Amounts due to subsidiaries and joint ventures
Total 418 281 of which attributable to BancoPosta RFC 89 108
Raw, ancillary and consumable materials and goods for resale 102 94
The personnel expenses decreased by a total of €245 million compared to 2018, mainly due to lower costs for early retirement incentives and higher recovery of personnel costs due to changes in estimates made in previous years. The ordinary component of the personnel expenses reflects the reduction in the average number of staff employed (more than 5 thousand FTE less than 2018), which almost entirely offset the increase in the cost per capita linked to the effect of the latest contract renewal (2016-2018 National Collective Labour Contract), as well as the recognition of an all-inclusive amount to cover the entire year 2019 established by an agreement with the labour unions signed on 18 February 2020.
Traditional Life policies, classified under Class I and V, primarily include products whose benefits are revaluated based on the return generated through the management of pools of financial assets, which are separately identifiable in accounting terms only, within the company’s assets (so-called separately managed accounts). In the case of policies sold in previous years, the company has guaranteed a minimum return payable at maturity on such products (at 31 December 2019, this minimum return on existing policies ranged between 0% and 1.5%). Gains and losses resulting from measurement are attributed in full to policyholders and accounted for in specific technical provisions under the shadow accounting method. The calculation technique used by the Group in applying this method is based on the prospective yield on each separately managed account, considering a hypothetical realisation of unrealised gains and losses over a period of time that matches the assets and liabilities held in the portfolio (see note 2.3 in relation to “Insurance contracts”). The impact of financial risk on investment performance can be absorbed in full or in part by the insurance provisions based on the level and structure of the guaranteed minimum returns and the profit-sharing mechanisms of the “separate portfolio” for the policyholder. The company determines the sustainability of minimum returns through periodic analyses using an internal financial -actuarial (Asset-Liability Management) model which simulates, for each separate portfolio, the change in value of the financial assets and the expected returns under a “central scenario” (based on current financial and commercial assumptions) and under stress and other scenarios based on different sets of assumptions. This model makes it possible to manage the risks assumed by Poste Vita SpA on a quantitative basis, thereby fostering reduced earnings volatility and optimal allocation of financial resources. Unit-linked products, relating to Class III insurance products, regard policies where the premium is invested in mutual investment funds. The Company constantly monitors the evolution of the risk profile of individual products.
Financial assets at fair value through profit or loss, which are recognised at risk, are held almost entirely by Poste Vita SpA and are primarily used to cover commitments to policyholders. These relate to a portion of investments in fixed income instruments totalling €1,499 million and the position in Other investments consisting mainly of units in mutual funds amounting to €938 million.
The internal model estimate used a definition of default based on the following approach: � Government financial instruments – payment delays, including also for one day, or debt renegotiation; � Corporate and Banking financial instruments – 90-day payment delays.
113. In particular, the use of such approach is limited to situations where, actually, the available data are deemed to be no longer representative of the counterparty’s risk.
At 31 December 2019, estimated expected losses on financial instruments measured at fair value through other comprehensive income amount to approximately €12 million, substantially in line with the provision made at 1 January 2019.
Other receivables and assets Movements in the credit loss provisions for other receivables and assets are shown below.
Poste Italiane Group - Movements in Provisions for doubtful debts due from others
In order to minimise this risk, the Poste Italiane Group applies a financial policy based on diversification of the various forms of short-term and long-term borrowings and counterparties; availability of relevant lines of credit in terms of amounts and the number of banks; gradual and consistent distribution of the maturities of medium/long-term borrowings; and use of dedicated analytical models to monitor the maturities of assets and liabilities.
Financial assets at amortised cost 142 173 - - - - - -
Carrying amount - Fair value at 31 December 2019 - - 36,798 - - - - - 36,798 2018 effects
Reversal of securities / receivables held at the beginning of the period
Between 2009 and 2011, the Regional Tax Office for Large Taxpayers (Agenzia delle Entrate - Direzione Regionale del Lazio - Ufficio Grandi Contribuenti) notified Poste Vita of a number of alleged violations of the VAT regulations in the 2004, 2005 and 2006 tax years, resulting in fines of approximately €2.3 million for the alleged failure to pay VAT on invoices for service commissions. With regard to these disputes, currently pending before the Supreme Court of Cassation, the company, bearing in mind the Court’s by now consistent approach with regard to such matters, decided to take advantage of the option granted by Law Decree 119 of 23 October 2018. This involved settlement of the existing disputes in return for concessions via the payment of a sum amounting to €0.35 million, equal to 15% of the total penalties imposed in relation to the three alleged violations. The evaluation of adhering to the faculty granted by the aforementioned Law Decree 119/2018 is supported by the participation in the collaborative compliance regime with the tax authorities provided for by Law Decree 128 of 5 August 2015 (Cooperative Compliance). Considering that the decision to turn down the request for a settlement may be notified to the company at any time up to 31 July 2020 and that the case will be discharged if a request for a hearing is not presented by 31 December 2020, the company has deemed it appropriate to continue to reflect the likely outcome of the dispute in determining provisions for risks and charges.
Following transposition into Italian law of the third European postal services directive (Directive 2008/6/EC), the so-called “net avoided cost” method has been applied in quantifying the cost of the universal service”124. In this regard: i. AGCom Resolution 214/19/CONS regarding “Assessment of the net cost of the universal postal service for 2015 and 2016” was published on 2 July 2019. In addition to acknowledging that the cost is unfair, the Resolution quantified the cost of providing the Universal Postal Service in 2015 and 2016, respectively, as €389 million and €356 million, compared with compensation of €329 million and €262 million provided for in the Contratto di Programma. AGCom did not establish a Compensation Fund for 2015 and 2016, so it has not been possible to recover the difference between compensation provided by the state and the costs quantified by AGCom. On the same date, the regulator announced that it had initiated an assessment of the net cost for 2017 and 2018. On 2 October 2019, the Company challenged this resolution by filing an appeal before the Lazio Regional Administrative Court (TAR).
In January 2020, the CONSOB launched an inspection of a general nature pursuant to article 6-ter, paragraph 1, of Legislative Decree 58 of 24 February 1998, aimed at ascertaining the state of adaptation to the new MiFID 2 legislation.
MEF account, held at the Treasury - - 3,649 - - 3,649 3,649
Financial assets at fair value through profit or loss - (58) - (58) -
Spain 1,159 1,780 1,781 1,167 1,440 1,440 Financial assets at amortised cost 3 3 4 3 3 3 Financial assets at FVTOCI 1,156 1,777 1,777 1,164 1,437 1,437 Financial assets at FVTPL - - - - - -
Investment in "core" and "core plus" real estate assets for retail use, located in the Eurozone and euro-denominated
Vesting of the Phantom Stocks is subject to achievement of the Performance Hurdle, designed to ensure sustainability of the Plan at Group level. The Performance Hurdle corresponds with achievement of a certain target for the Group’s cumulative
First Cycle 2016-2018 The total number of phantom stocks awarded to the 6 Beneficiaries of the First Cycle of the Plan outstanding at 31 December 2019 amounted to 92,293. The cost recognised for 2019 is approximately €0.7 million, whilst the liability recognised in amounts due to staff is approximately €0.9 million. Following the accrual of rights by certain Poste Italiane Group managers, other than the BancoPosta RFC’s Risk Takers and the Poste Vita Insurance Group’s personnel, payments of €2.1 million were made during 2019.
Plan terms and conditions The Performance Targets, common to all Beneficiaries, to which the vesting of the Rights and, therefore, the allocation of the Shares is conditioned, are highlighted below: � a profitability indicator identified in the Group’s three-year cumulative EBIT used to recognise the continuity and sustainability of profitability results over the long term; � an indicator of shareholder value creation, based on the relative Total Shareholder Return, used to measure performance based on the value created for Poste Italiane’s shareholders compared with the FTSE MIB Index127.
a) recognition and classification Derivative hedges are initially recognised on conclusion of the relevant contract. There are two types of hedge: � fair value hedges: hedge of the exposure to a change in fair value of a recognised asset or liability or of an unrecognised firm commitment attributable to a particular risk, and that could have an impact on profit or loss; � cash flow hedges: a hedge of the exposure to the variability of cash flows attributable to a particular risk associated with a recognised asset or liability or with a highly probable forecast transaction, and that could have an impact on profit or loss.
12 – Financial liabilities held for trading a) classification and recognition Financial liabilities held for trading consist of derivatives which do not qualify for classification as hedging instruments in accordance with accounting standards, or originally obtained as a hedge which was subsequently discontinued. Financial liabilities held for trading are recognised on the derivative contract date.
In accordance with IFRS 15, revenue is recognised on the basis of a 5-step framework, which consists of the following: 1. identify the contract with the customer (sales contracts except lease contracts, insurance contracts, financial instruments and non-monetary exchanges); 2. identify the performance obligations, which can be defined as the explicit or implicit promise to transfer a distinct good or service to the customer; 3. determine the transaction price; 4. in the case of bundles of goods or services involving different performance obligations, allocate the transaction price to the performance obligation; to that end, it is necessary to estimate the stand-alone selling price of each component; 5. recognise revenue when or as the entity fulfils the performance obligation, that is upon delivery of the good or service to the customer. Performance obligations can be fulfilled: – “at a point in time”: in the case of obligations fulfilled at a point in time, revenue is recognised only as control over the good or service is passed to the customer. In that respect, consideration is given not only to the significant exposure to the risks and benefits related to the good or service but also physical possession, customer’s acceptance, the existence of legal rights, etc.; – “over time”: in the case of obligations fulfilled over time, the measurement and recognition of revenue reflect, virtually, the progress of the customer’s satisfaction. An appropriate approach is defined to measure progress of the performance obligation (the output method).
Section 2 – Financial assets measured at fair value through profit or loss – Item 20 2.1 Financial assets held for trading: breakdown by type BancoPosta RFC had no financial instruments in the trading book either at 31 December 2019 or 31 December 2018.
Fair Value Carrying amount of which: purchased or originated credit impaired
Current tax assets receivable from Poste Italiane SpA outside the ring-fence 77 2
The sub-item “Items in process” includes: � amounts due from the commercial partners for providing PostePay top-ups for €95 million; � €67 million in withdrawals from BancoPosta ATMs yet to be debited to customer accounts or awaiting settlement; � amounts to be charged to PostePay SpA for €50 million (mainly in the first few days of 2020).
Assets/ (Liabilities) due from and to Poste Italiane outside the ring-fence payments on account for the current year 192 38 230 156 39 195 balance payable for the previous year 14 - 14 - - -
Repurchase agreements are classified as fair value Level 2 loans, whereas the fair value of other types of transaction included in this line item approximates to their carrying amounts and they are classified as Level 3.
Section 16 – Profits/(losses) on fair value measurement of property, plant and equipment and intangible assets – Item 230 Nothing to report.
142. The standardized approach entails risk weightings in accordance with the nature of the exposure and the identity of the counterparty and the counterparty’s external credit rating.
A.1.1 Distribution of financial assets by portfolio and credit quality (carrying amount)
A.1.8 bis On-balance sheet credit exposures to banks: trends in gross forborne exposures granted by credit quality
A.1.11 On-balance-sheet non-performing credit exposures to customers: trends in overall impairment losses/reversals
B.3 Geographical distribution of on and off-balance sheet credit exposures to banks
E.1 Financial assets sold recognised in full and associated financial liabilities: carrying amounts
Type/ Residual term to maturity (€m) Demand 3 months or less 3 - 6 months 6 months - 1 year 1 - 5 years 5 - 10 years Over 10 years
152. For sensitivity purposes, the swap rate curve and the BTP curve were used (10-year swap rate of 21 bps and the spread of the BTP compared to the 10-year swap rate of 120 bps).
The sensitivity to cash flow interest rate risk at 31 December 2018 and 31 December 2019 is summarised in the table below and was computed assuming a +/- 100 bps parallel shift in the market forward interest rate curve.
BancoPosta RFC enters into: � forward purchases of government bonds, to limit the exposure to interest rate risk deriving from the need to reinvest the cash generated by maturing bonds held in portfolio; � forward sales of government bonds to pursue the stabilisation of returns.
154. IAS 39 requires two effectiveness tests: • prospective effectiveness test: attests that the hedging relationship is expected to be highly effective in future periods; • retrospective effectiveness test: attests that the hedging relationship has been effective from inception to the reporting date. For a hedge to be effective, the prospective effectiveness test must show that the hedge is highly effective in offsetting fair value or cash flow movements attributable to the hedged instrument during the designation period, while the result of the retrospective test must show offset ratios ranging from 80% to 125%.
157. Calculated by assuming a parallel shift of + / - 100 bps of the yield curves. 158. The notional amount of the forward contract must be set, at the settlement date, as equal to the nominal amount of the instrument in case of purchase, and equal or lower than the nominal amount of the instrument in case of sale. The underlying of the forward contract must coincide with the instrument that must be purchased or sold (in this case it must be an instrument in the portfolio) at the settlement date. The settlement date must be the same as the date on which the cash flow to be hedged is expected, in case of forward purchase, or must be related to the year in which the total return must be stabilised, in case of forward sale.
Poste Tributi ScpA (in liquidation) - 2 - - - 1 -
Other related parties external to the Group - - - - - - (4) - * On 26 September 2018, PosteMobile was entered in the Register of electronic money institutions (article 114–quater of the Consolidated Banking Act) and, as of 1 October 2018, changed its name to PostePay SpA.
Board to issue a detailed and reasoned opinion on the overall adequacy of the procedures in relation to meeting the objectives set out in the supervisory standards.
ONE ERP accounting system implemented from January 2020. To this end, the Manager responsible for financial reporting launched an assessment of the impact on administrative processes in this area. A new risk and control assessment will be carried out in the first half of 2020, in order to identify and formalise the new controls on procedures pursuant to Law 262.
specific reporting pursuant to art. 155, paragraph 2, of Legislative Decree 58/1998
The Board acknowledges that it received a further complaint on 27 February 2020, with respect to which it opened an investigation and will report back to shareholders at the next
Protection Regulation (GDPR), consisting of the Poste Italiane Group’s Data Protection
During the various meetings held with the Board of Statutory Auditors, the head of the
Statutory Auditors of the principal Group Companies. In particular, the Board has noted the
The Board of Statutory Auditors also periodically reviewed the structure of the Guidelines governing the relations concerning functions outsourced by BancoPosta to Poste Italiane in order to oversee the criteria applied for the allocation of costs associated with Poste’s activities for the management of RFC, since such costs must be allocated in accordance with criteria that reflect the real contribution of the various management activities to BancoPosta
Board of Statutory Auditors, as well as the Company Functions with specific duties in this regard; • information flows and coordination methods between the parties involved in the internal control and risk management system; • governance mechanisms.
RFC”; xii) update of the “BancoPosta Anti-Money Laundering Guidelines”; xiii) update of the “Guideline on Governance and Management of Counterparty Risk and Risk
Governance standards and the management of business continuity and the IT security aspects of financial services), cash management and occupational health and safety, acknowledged that: - in the area of investment services (i) the fine-tuning interventions of the process of adaptation to the MIFID2 Directive were completed, the evolution of the platform’s functionalities was completed (strengthening of controls for adequacy assessment and integration with the execution phase), and the client profiling controls were strengthened
Risk Management function during 2019 and the actions planned for the year 2020.
At 31 December 2019, indicators of capital adequacy show a high capital ratio (CET1 of 18.3%) and a high level of own funds, which are double the Pillar 2 free capital requirement
In the 2020 RAF, the new target level for the leverage ratio is 3%, given the reduced need to maintain a prudential capital buffer in relation to the decrease in regulatory risk associated with the new IRRBB regulations.
18. and 19. Final considerations on the audit procedures performed and indication of any proposals to be presented to the Annual General Meeting pursuant to art. 153, paragraph 2 of Legislative Decree 58/1998.
As part of our audit activity, we paid particular attention to the analysis of the measurement techniques and methods of financial instruments that are unquoted on regulated markets and measured at fair value in the financial statements as of 31 December 2019. In particular, the use of estimates mainly concerns specific types of structured securities and derivatives classified in levels 2 and 3 of the fair value hierarchy in compliance with IFRS9 “Financial instruments” and IFRS13 “Fair value measurement”.
the Group audit. We remain solely responsible for our audit opinion on the consolidated financial statements.
The directors of Poste Italiane SpA are responsible for preparing a report on operations and a report on the corporate governance and ownership structure of Poste Italiane SpA as of 31 December 2019, including their consistency with the relevant financial statements and their compliance with the law.
Moreover, for material information, considering the activities and characteristics of the Group: • at the level of the parent company Poste Italiane SpA: a) with reference to the qualitative information included in the NFS, and in particular to the business model, the policies adopted and the main risks, we carried out interviews and acquired supporting documentation to verify their consistency with available evidence; b) with reference to quantitative information, we performed analytical procedures as well as limited tests, in order to assess, on a sample basis, the accuracy of consolidation of the information; • for the parent company and the following companies, Postel SpA, Poste Vita SpA, BancoPosta Fondi SpA SGR, Poste Air Cargo Srl, which were selected on the basis of their activities and their contribution to the performance indicators at a consolidated level, we held meetings during which we met local management and gathered supporting documentation regarding the correct application of the procedures and calculation methods used for the key performance indicators.