Poste Italiane

Quarterly Report • Aug 2, 2017

2 August 2017

Investor Relations

(€m)

Key Numbers

	1H 2016	1H 2017	Var. €m	Var. %
Revenues	17,682	18,029	347	2%
EBIT	843	847	4	0.5%
Net Profit	565	510	-55	-10%

: FIGURES HIGHLIGHTS 1H 2017

1. Including other segments (Poste Mobile and 'Consorzio Telefonia Mobile')

TOTAL ASSETS UNDER MANAGEMENT/ADMINISTRATION

FOCUS ON FINANCIAL SERVICES (1/3) REVENUES EVOLUTION

(€m)

1. Current accounts/Active Portfolio Management includes interests income, realized capital gain and income from financial assets at FVTPL (Fair Value through profit or loss)

2. Transaction banking includes: payment slips, F24, money transfers, pension cheques and other revenues from current accounts. Net of intercompany values

FOCUS ON FINANCIAL SERVICES (2/3) REVENUES BREAKDOWN

(€m)		1H 2017 vs 1H 2017 1H 2016	Rationale (var.%)
	Return on Current Account Deposits	1,265 +10.7%	Increase mainly due to higher capital gains and average deposits
	Fees from Postal Savings Collection	771 +0.1%	Substantially stable
	Fees from Transaction Banking	504 -3.1%	Reduction mostly attributable to lower revenues from payments slips
	Distribution Fees	162 -2.4%	Lower revenues from Banca del Mezzogiorno and other distribution fees, partially offset by a better performance on personal loans
	Distribution Fees Payment Card Fees Payment Card Fees	138 -40.0%	Lower revenues due to the one-off capital gain from VISA Europe booked in the 1H2016. However we recorded higher revenues both from Postepay, above-all Postepay Evolution, and debt cards

Total Revenues	2,840
	+0.4%

FOCUS ON FINANCIAL SERVICES (3/3)

ACTIVE PORTFOLIO MANAGEMENT

	1H 2016	FY 2016	1H 2017
3 Average return (%)	3.97%	4.00%	3.67%
Unrealized gains (€m)	4,179	2,881	1,424
Portfolio duration (years)	5.5	5.5	5.3

1. Including current accounts, time deposits and repurchase agreements

2. Including interest income and realized capital gains

3. Average yield calculated as interest income and realized capital gains on total financial assets (1H2016 and 1H2017 pro rata temporis)

BANCOPOSTA REGULATORY FRAMEWORK AND CAPITAL POSITION

1. Min. CET1 ratio required to distribute earnings will increase to 10.50% from January 1, 2019 2. Min. leverage ratio required to distribute earnings is 3%

2. ROE defined as net earnings/CET1 capital (excluding valuation reserves)

FOCUS ON INSURANCE & ASSET MANAGEMENT (1/2)

GROUP GWP AND TECHNICAL RESERVES EVOLUTION

1. Including non-life technical reserves and net of re-insurance reserves

Govies Corporate Bonds Multiassets Funds

FOCUS ON INSURANCE & ASSET MANAGEMENT (2/2)

NON-LIFE BUSINESS AND ASSET MANAGEMENT

FOCUS ON MAIL & PARCELS (1/2) VOLUMES EVOLUTION

VOLUMES - MAIL (m) VOLUMES - PARCELS (m)

FOCUS ON MAIL & PARCELS (2/2) TOTAL REVENUES AND COST STRUCTURE

TOTAL REVENUES OPERATING COSTS (€m)

-1.4% -59

Mail Revenues Parcel Revenues Other Market Revenues Infrasegement Revenues

TOTAL GROUP OPERATING COSTS EVOLUTION

GROUP OPERATING COSTS

Depreciation and Amortization Costs of Goods Sold Total Labour Costs

COST STRUCTURE AT CONSOLIDATED LEVEL FOCUS ON LABOUR COSTS

FROM GROUP EBIT TO NET INCOME 1H 2017

GROUP CAPITAL EXPENDITURES

Investor Relations 16

IT Real Estate Other

INDUSTRIAL NET FINANCIAL POSITION

CLOSING REMARKS

OUR FOCUS NOW

APPENDIX

€m	1H 2016	1H 2017	Var.%
Revenue from sales and services	4,316	4,237	(1.8%)
Insurance premium revenue	10,551	11,098	5.2%
Other income from financial and insurance activities	2,781	2,665	(4.2%)
Other operating income	34	29	(14.7%)
Sales	17,682	18,029	2.0%
Personnel costs	(2,985)	(2,934)	(1.7%)
Other operating expenses	(1,610)	(1,797)	11.6%
Net change in technical provisions for insurance business and other claims expenses	(11,944)	(12,171)	1.9%
Depreciation & amortization	(299)	(281)	(6.0%)
EBIT	843	847	0.5%
Net interest income / (Expense)	15	(75)	(625.3%)
Profit before tax	858	772	(10.0%)
Tax	(293)	(262)	(10.6%)
Net income	565	510	(9.7%)

€m	FY 2016	1H 2017	Var.%
Cash & Equivalents	3,902	3,481	(10.8%)
BancoPosta related Cash	2,494	3,236	29.8%
Receivables & Inventory	2,073	2,157	4.1%
Financial Assets	174,362	180,664	3.6%
Tangible and Intangible Assets	2,649	2,549	(3.8%)
Other	5,005	5,886	17.6%
Non-current assets and groups of assets held for sale	2,720	2,591	(4.7%)
Total Assets	193,205	200,564	3.8%
Trade Payables	1,506	1,403	(6.8%)
Financial liabilities	60,921	64,515	5.9%
Technical Reserves	113,678	118,658	4.4%
Other	6,906	6,597	(4.5%)
Liabilities related to assets held for sale	2,060	2,084	1.2%
Total Liabilities	185,071	193,257	4.4%
Shareholders capital	1,306	1,306	-
Reserves	6,828	6,001	(12.1%)
Totale Equity	8,134	7,307	(10.2%)
Total Liabilities & Equity	193,205	200,564	3,8%

€m	1H 2016	1H 2017	Var.%
Net income	565	510	(9.7%)
Depreciation and amortization	299	281	(6.0%)
Net provisions for risks and charges	263	422	60.5%
(Use of Provisions for risks and charges)	(291)	(308)	5.8%
Net change in employee termination benefits and pension plans	(45)	(66)	46.7%
Other	34	35	2.9%
FFO	825	874	5.9%
Change in working capital	(455)	(782)	71.9%
Effect related to net assets held for sale	0	145	n.m.
Cash flow from operations	370	237	(35.9%)
Capital expenditures	(151)	(183)	21.2%
Net change in subsidiaries and associates	0	(284)	n,m,
Disposals	5	3	(40.0%)
Cash flow from investments	(146)	(464)	n.m.
Dividend paid	(444)	(509)	14.6%
Cash Flow from financial assets and liabilities	(1,179)	315	n.m.
Cash flow from financing	(1,623)	(194)	(88.0%)
Net change in cash	(1,399)	(421)	(69.9%)

€m	FY 2016	1H 2017	Var.%
Working Capital
Trade receivables	2,172	2,283	5.1%
Inventories	137	137	-
Other receivables and assets	3,671	3,949	7.6%
Current tax receivables	15	189	n.m.
Trade payables	(1,506)	(1,403)	(6.8%)
Other liabilities	(3,218)	(2,946)	(8.5%)
Current tax liabilities	(88)	(275)	n.m.
Working Capital	1,183	1,934	63.5%
Deferred tax asset	799	911	14.0%
Deferred tax liabilities	(746)	(508)	(31.9%)
Working Capital and deferred taxes	1,236	2,337	89.1%

€m	1H 2016	1H 2017	Var.%
Trade receivables	46	(111)	n.m.
Inventories	(3)	0	n.m.
Other receivables and assets	(392)	(278)	(29.1%)
Current tax receivables	(103)	(174)	68.9%
Trade payables	(160)	(103)	(35.6%)
Other liabilities	(88)	(272)	n.m.
Current tax liabilities	228	187	(18.0%)
Deferred tax assets	(105)	(112)	6.7%
Deferred tax liabilities	(265)	(238)	(10.2%)
Total Change in Working capital and deferred taxes	(842)	(1,101)	30.8%
Financial Income on discounted receivables	3	3	-
Net write-downs and loss on receivables	(18)	(22)	n.m.
Deferred tax on fair value changes and TFR actuarial income	402	338	(15.9%)
Adjustments (non monetary items and shareholders' transactions)	387	319	(17.6%)
Change in Working Capital and deferred taxes as per cash flow statement	(455)	(782)	71.9%

€m

Total Assets	9,954	Totale Equity and Liabilities	9,954
Total Current assets	3,946	Total Current liabilities	5,362
Cash and cash equivalents	1,003
Financial assets	150	Financial liabilities	1,679
Other receivables and assets	441	Other liabilities	1,372
Current tax assets	169	Current tax liabilities	182
Trade receivables	2,049	Trade payables	1,281
Inventories	134	Provisions for risks and charges	848
Total Non-current assets	6,008	Total Non-current liabilities	1,873
Other receivables and assets	129
Deferred tax assets	455	Other liabilities	68
Trade receivables	5	Deffered tax liabilities	26
Financial assets	813	Financial liabilities	290
Investments*	2,157	Employee termination benefits and pension plans	1,230
Intangible assets	419	Provisions for risks and charges	259
Investment property	54
Property, plant and equipment	1,976	Totale Equity	2,719

Assets Equity and Liabilities

Totale Equity	2,719
Provisions for risks and charges	259
Employee termination benefits and pension plans	1,230
Financial liabilities	290
Deffered tax liabilities	26
Other liabilities	68

Total Non-current liabilities	1,873
Provisions for risks and charges	848
Trade payables	1,281
Current tax liabilities	182
Other liabilities	1,372
Financial liabilities	1.679

Total Current liabilities	5.362
Totale Equity and Liabilities	9.954

* It includes investments accounted for at cost in financial and insurance sectors

MAIL & PARCELS AND OTHER SERVICES NET DEBT BREAKDOWN 1H 2017

€m	FY 2016	1H 2017	Var.%
Cash and Cash Equivalents	1,577	1,018	(35.4%)
Current Financial Assets	63	57	(9.5%)
Short term debt	(2)	(201)	n.m.
Current part of long term debt	(14)	(750)	n.m.
Other current financial liabilities	(22)	(35)	59.1%
Current Financial Position	(38)	(986)	n.m.
Current Net Financial Position	1,602	89	(94.4%)
Long term debt	(400)	(200)	(50.0%)
Bonds	(798)	(50)	(93.7%)
Other non current financial liabilities	(50)	(41)	(18.0%)
Non Current Financial Position	(1,248)	(291)	(76.7%)
Net Financial Position	354	(202)	n.m.
Non current financial assets	651	563	(13.5%)
Net Financial Position - Mail & Parcel and Other Sercvices	1,005	361	(64.1%)
Intersegment financial receivables	522	343	(34.3%)
Intersegment financial payables	(634)	(650)	2.5%
Net Financial Position (net of intersegments) *	893	54	(94.0%)

* Including a Net Financial Position of Other Services (€57 for the first half 2017 and € 48m in 2016)

€m	1H 2016 1H 2017		Var.%
Total revenues	3,110	3,141	1.0%
o/w Market revenues	2,830	2,840	0.4%
o/w Intercompany revenues	280	301	7.5%
Personnel costs	(64)	(65)	1.6%
Other operating expenses	(2,561)	(2,685)	4.8%
EBITDA	485	390	(19.6%)
EBITDA margin	15.6%	12.4%
Depreciation and amortisation	(0,3)	(0,6)	106.6%
EBIT	485	390	(19.6%)
EBIT margin	15.6%	12.4%

€m	1H 2016	1H 2017
Total revenues	12,854	13,274	3.3%
o/w Market revenues	12,854	13,274	3.3%
o/w Intercompany revenues	0	0	n.s.
Personnel costs	(19)	(21)	7.4%
Other operating expenses	(12,558)	(12,874)	2.5%
EBITDA	276	379	37.2%
EBITDA margin	2.2%	2.9%
Depreciation and amortisation	(7)	(9)	35.7%
EBIT	270	370	37.0%
EBIT margin	2.1%	2.8%

€m	1H 2016 1H 2017		Var.%
Total revenues	4,324	4,265	(1.4%)
o/w Market revenues	1,884	1,812	(3.8%)
o/w Intercompany revenues	2,440	2,453	0.5%
Personnel costs	(2,893)	(2,841)	(1.8%)
Other operating expenses	(1,083)	(1,089)	0.6%
EBITDA	348	335	(3.7%)
EBITDA margin	8.1%	7.9%
Depreciation and amortisation	(274)	(260)	(5.1%)
EBIT	74	75	1.4%
EBIT margin	1.7%	1.8%

€m	1H 2016	1H 2017	Var.%
P&L
Total revenue	147	115	(21.6%)
o/w Market revenue	114	103	(9.6%)
o/w Intercompany revenue	32	12	(63.7%)
Personnel costs	(10)	(8)	(20.5%)
Other operating expenses	(105)	(84)	(19.9%)
EBITDA	32	23	(27.4%)
EBITDA margin	21.6%	20.0%
Depreciation and amortisation	(17)	(11)	(34.5%)
EBIT	15	12	(19.1%)
EBIT margin	9.9%	10.2%
Non-operating income/(expenses)	(0)	(0)	(38.2%)
Profit before taxes	14	11	(18.4%)
Taxes	(5)	(3)	(32.9%)
Profit after taxes	9	8	(10.8%)

€m	1H 2016	1H 2017	Var.%
Cash flow statement
FFO	24,6	19,2	(22.0%)
Cash flow from investments	25,0	(13,3)	(153.1%)
Net change in cash	(4,8)	(6,0)	(24.5%)
1
Other key data
Average number of users (sim cards -#k)	3,619	3,652	0.9%
ARPU (€) 1	4,8	4,3	(9.4%)

1. Calculated on total sim cards (active and non active sim cards)

FINANCIAL SERVICES COST STRUCTURE AND PROFITABILITY AT DIVISIONAL LEVEL

FOCUS ON INSURANCE AND ASSET MANAGEMENT REVENUES BREAKDOWN

INSURANCE AND ASSET MANAGEMENT COST STRUCTURE AND PROFITABILITY AT DIVISIONAL LEVEL

1. Includes intersegment revenues

(€m)

	Mail & Parcels Including Network	Financial Services	Insurance and Asset Management	Poste Italiane Group2
Market Revenues	1,812	2,840	13,274	18,029
Intersegment Revenues	2,453	301	-	-
Totale Revenues	4,265	3,141	13,274	18,029
Personnel Costs	(2,841)	(65)	(21)	(2,934)
Other operating costs1	(1,319)	(252)	(420)	(2,078)
Net change in Technical Provisions	-	-	(12,171)	(12,171)
Intersegment Costs	(31)	(2,434)	(292)	-
Operating Costs	(4,190)	(2,751)	(12,904)	(17,182)
Operating Profit (Loss)	75	390	370	847

1. Including external costs, and D&A

2. Including Other Services (Poste Mobile)

DISCLAIMER

This presentation contains certain forward-looking statements that reflect the Company's management's current views with respect to future events and financial and operational performance of the Company and its subsidiaries. These forward-looking statements are based on Poste Italiane S.p.A.'s current expectations and projections about future events. Because these forward-looking statements are subject to risks and uncertainties, actual future results or performance may differ materially from those expressed in or implied by these statements due to any number of different factors, many of which are beyond the ability of Poste Italiane S.p.A. to control or estimate precisely, including changes in the regulatory environment, future market developments, fluctuations in the price and availability of fuel and other risks. You are cautioned not to place undue reliance on the forward-looking statements contained herein, which are made only as of the date of this presentation. Poste Italiane S.p.A. does not undertake any obligation to publicly release any updates or revisions to any forward-looking statements to reflect events or circumstances after the date of this presentation. This presentation does not constitute a recommendation regarding the securities of the Company. This presentation does not contain an offer to sell or a solicitation of any offer to buy any securities issued by Poste Italiane S.p.A. or any of its subsidiaries. Pursuant to art. 154-BIS, par. 2, of the Unified Financial Act of February 24, 1998, the executive in charge of preparing the corporate accounting documents at Poste Italiane S.p.A., Luciano Loiodice, declares that the accounting information contained herein corresponds to document results, books and accounting records.

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