Annual / Quarterly Financial Statement • Jul 27, 2022
Annual / Quarterly Financial Statement
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| 1. | INTRODUCTION TO CTT | 3 |
|---|---|---|
| 1.1 Key Figures |
4 | |
| 1.2 External Awards and Distinctions |
7 | |
| 2. | STRATEGIC BACKGROUND | 10 |
| 2.1 Regulatory Framework |
10 | |
| 2.2 Strategic Lines |
13 | |
| 2.3 Sustainable Development Goals |
14 | |
| 2.4 Corporate Ethics |
15 | |
| 2.5 Risk Management |
16 | |
| 3. | CTT BUSINESS UNITS | 21 |
| 3.1 |
21 | |
| 3.2 Express & Parcels |
24 | |
| 3.3 Banco CTT |
25 | |
| 3.4 Financial Services & Retail |
26 | |
| 3.5 Future Perspectives |
27 | |
| 4. | PERFORMANCE | 29 |
| 4.1 Financial Capital |
29 | |
| 4.2 Human Capital |
35 | |
| 4.3 Intellectual Capital |
41 | |
| 4.4 Social Capital |
46 | |
| 4.5 Natural Capital |
49 | |
| 5. | CORPORATE GOVERNANCE | 56 |
| 6. | CONSOLIDATED AND INDIVIDUAL FINANCIAL STATEMENTS | 68 |
| 7. | DECLARATION OF CONFORMITY | 153 |
| 8. | AUDIT REPORT | 157 |
| 9. | INVESTOR SUPPORT | 160 |
| CONTACTS | 164 |
€ thousand or %, except where otherwise indicated
| 1H21 | 1H22 | Δ 22/21 | |
|---|---|---|---|
| Revenues1 | 412,784 | 446,429 | 8.2% |
| Operating costs EBITDA2 | 355,476 | 395,983 | 11.4% |
| EBITDA3 | 57,307 | 50,446 | -12.0% |
| Depreciation & amortization4 | 28,613 | 31,802 | 11.1% |
| Recurring operating costs | 384,089 | 427,785 | 11.4% |
| Recurring EBIT | 28,694 | 18,644 | -35.0% |
| Specific items | (2,316) | (2,070) | 10.6% |
| Operating costs | 381,773 | 425,715 | 11.5% |
| EBIT | 31,011 | 20,714 | -33.2% |
| EBT | 25,660 | 16,063 | -37.4% |
| Net profit before non-controlling interests | 17,255 | 14,564 | -15.6% |
| Net profit for the period5 | 17,187 | 14,549 | -15.3% |
| Earnings per share (euro)6 | 0.11 | 0.10 | -9.1% |
| EBITDA margin | 13.9% | 11.3% | p.p. |
| Recurring EBIT margin | 7.0% | 4.2% | p.p. |
| EBIT margin | 7.5% | 4.6% | p.p. |
| Net profit margin | 4.2% | 3.3% | p.p. |
| Capex | 11,734 | 11,972 | 2.0% |
| Operating cash flow | 37,829 | 18,973 | -49.8% |
| Free Cash flow | 31,298 | 3,840 | -87.7% |
| '31.12.21 | '30.06.22 | Δ 22/21 | |
| Cash and cash equivalents | 877,873 | 847,268 | -3.5% |
| Own cash | 142,265 | 104,920 | -26.3% |
| Assets | 3,585,199 | 3,873,408 | 8.0% |
| Equity | 174,546 | 191,625 | 9.8% |
| Liabilities | 3,410,653 | 3,681,783 | 7.9% |
| Share capital | 75,000 | 75,000 | 0.0% |
| Number of shares | 150,000,000 | 150,000,000 | 0.0% |
1 Excluding specific items.
2 In 2021, operating costs (EBITDA) include impairments and provisions; also, the impact of the leases covered by IFRS 16 is presented pursuant to this standard.
3 Excluding depreciation & amortization and specific items.
4 Depreciation & amortization were positively impacted in 2021 by the revision of the useful life of some assets.
5 Attributable to equity holders.
6 Considering the average number of ordinary shares that make up CTT's capital excluding the average number of own shares held by the Group on 30 June 2022. On that date the number of own shares held was 5,707,722, and the average number in the period ended 30 June 2022 is 1,372,343, reflecting the fact that there were acquisitions in that period.
| 1H21 | 1H22 | Δ 22/21 | ||
|---|---|---|---|---|
| Addressed mail volumes (million items) | 249.8 | 240.0 | -3.9% | |
| Transactional mail | 216.0 | 206.6 | -4.4% | |
| Editorial mail | 14.7 | 13.9 | -5.4% | |
| Advertising mail | 19.1 | 19.5 | 2.1% | |
| Unaddressed mail volumes (million items) | 222.1 | 208.1 | -6.3% | |
| Express & Parcels | ||||
| Portugal (million items) | 16.2 | 15.2 | -6.2% | |
| Spain (million items) | 20.4 | 19.7 | -3.4% | |
| Financial Services | ||||
| Payments (number of transactions; millions) | 854.6 | 789.9 | -7.6% | |
| Savings and insurance (subscriptions; €m) | 2,342.7 | 2,155.2 | -8.0% | |
| Banco CTT | ||||
| Number of current accounts | 543,230 | 580,722 | 6.9% | |
| Customer deposits (€k) | 1,906,651.6 | 2,259,584.9 | 18.5% | |
| Savings book, net (off balance sheet) | 549,457.3 | 840,458.2 | 53.0% | |
| Mortgage loans book, net (€k) | 564,048.5 | 629,289.1 | 11.6% | |
| Auto loans and leasing book, net (€k) | 602,346.8 | 702,824.7 | 16.7% | |
| Universo credit card book, net (€k) | 185,496.7 | 324,116.1 | 74.7% | |
| Off balance consumer credit production (€k) | 19,247.0 | 23,812.7 | 23.7% | |
| Payments (number of transactions; millions) | 20.0 | 22.2 | 11.0% | |
| LTD (including 321 Crédito) | 70.7 % | 73.4 % | 2,7p.p. | |
| Number of branches | 212 | 212 | 0.0% | |
| Cost of risk | 110.0 bp | 132.8 bp | 22.8 bp | |
| Staff | ||||
| Staff as at 30 June | 12,261 | 12,803 | 4.4% | |
| FTE | 12,164 | 12,598 | 3.6% | |
| Retail, Transport and Distribution Networks | ||||
| CTT access points | 2,374 | 2,381 | 0.3% | |
| Retail network (post offices) | 566 | 570 | 0.7% | |
| Postal agencies | 1,808 | 1,811 | 0.2% | |
| Payshop agents | 5,241 | 5,314 | 1.4% | |
| Postal delivery offices | 223 | 220 | -1.3% | |
| Postal delivery routes | 4,576 | 4,246 | -7.2% | |
| Fleet (number of vehicles) | 3,925 | 3,974 | 1.2% |
| 1H21 | 1H22 | Δ 22/21 | |
|---|---|---|---|
| Customers | |||
| Customer satisfaction (%) | 84.5 | 84.8 | 0.3 pp |
| Staff | |||
| Number of accidents | 380 | 346 | -8.9% |
| Training (hours) | 104,364.0 | 83,569.0 | -19.9% |
| Women in management positions (1st level) (%) | 13.0 | 14.6 | 1.6 pp |
| Community/Environment | |||
| Value chain - contracts with environmental criteria (%) | 98.6 | 98.6 | 0.0 pp |
| Total CO2 emissions, scopes 1 and 2 (kton.) 7 | 8.0 | 7.9 | -1.6% |
| Energy consumption (TJ)8 | 179.2 | 180.1 | 0.5% |
| Eco-friendly vehicles | 336 | 497 | 48.0% |
| Weight of Eco product range in Direct Mail line (%)9 | 44.3 | 42.5 | -1.8 pp |
| Environmental investment (€k)10 | 2,364.6 | 3,145.4 | 33.0% |
| Investment in the community (€k) | 273.0 | 325.0 | 19.0% |
7 Update of 2021 data. Provisional 2022 figures. Including green energy and energy production by solar panels.
8 Update of 2021 data. Provisional 2022 figures. Including green energy and energy production by solar panels.
9 Volumes.
10 Estimated data of 2021.
Banco CTT was considered "Five Stars" by the Portuguese, in the category "Banking – Customer Service". This award was given by U-Scoot Lda, which evaluated Banco CTT together with five other banking institutions.
CTT Contact Center maintained the APCC Quality Seal for 2022, after a follow-up audit in April of this year. The APCC Quality Seal, established in 2010, distinguishes the best contact centre services operating in Portugal. The Portuguese Association of Contact Centres aims to encourage companies in the sector to adopt good management practices, to contribute to improving the image and credibility of the sector, and to promote their self-regulation.
APCC, the Portuguese Contact Center Association awarded CTT Contact Center with the silver medal for the CTT Support Line for Companies and bronze for the CTT Support Line for Private Customers, in the Distribution and Logistics category. The award was announced during the APCC Best Awards 2021 International Conference. This distinction recognises good practices, both in terms of strategic, operational and technological management and in terms of human capital.
During the 19th APCC Best Awards 2022 International Conference, the APCC also distinguished Newspring Services, a company recently acquired by the CTT Group, with the "Gold" awards, in Multicare (health insurance), and "Silver", in Fidelidade (insurance company).
The pilot project CTT Reusable ECO Packaging, launched in 2021, was distinguished with an honourable mention in the ceremony of the 3rd edition of the National Sustainability Award, promoted by Jornal de Negócios. This is the largest editorial initiative in Portugal and rewards organisations that stand out for their performance and good sustainability practices in the environmental, social and governance areas.
CTT was distinguished as "Equity Champion - SME" in the Euronext Lisbon Awards. The award recognised the Portuguese company with market capitalisation below one billion euros that provided the highest return to its investors during 2021.
CTT was ranked as one of the brands with the best reputation in the RepScore Study referring to 2021. On a scale of 100 points, this study by the consultancy firm OnStrategy, highlighted the CTT brand, with 73.3 points, as the brand with the highest relevance and emotional reputation among the Portuguese in the Professional Services category.
CTT was for the 15th time distinguished as a Trusted Brand by the Portuguese, in a study carried out by Reader's Digest magazine, being 1st in the "Mail and Logistics Services" category, with 89% of the votes. This study also found a very positive result in the brand attributes analysed: quality, social commitment and environmental concern.
The Portuguese Academy of History awarded CTT the Collar of Honour for Meritorious Entity, in recognition of the partnership that has existed between the two institutions for many years.
CTT won 1st place in the category "Most Attractive Company to Work for in the Transport Sector", in the Randstad Employer Brand Research 2022 survey. The Randstad Employer Brand Research is a survey that analyses the population's perception of the 150 largest employers in 31 countries. In addition to revealing the ranking of the most attractive companies and sectors to work for, it allows the identification of the most relevant criteria in an employment decision and the best strategies for employer branding management.
Nuno Teiga Vieira, CTT's Investor Relations Director, won the Best Investor Relations Officer award in the Investor Relations and Governance Awards (IRGAwards), in recognition for the work carried out in the company. The IRGAwards are an initiative promoted by the consultancy firm Deloitte, which awards the people and organisations that have contributed the most and best to making the capital market more efficient, transparent, socially responsible and useful to the Portuguese economy and society.
On 23 December 2021, the Council of Ministers communicated the approval on that date of the decree amending the legal framework applicable to the provision of postal services in Portugal. The corresponding decree was promulgated on 5 February 2022 and Decree-Law no. 22-A/2022 was published on 7 February 2022. The new concession agreement thus came into force and will have a duration of approximately seven years – until 31 December 2028.
This framework improves the decision-making mechanisms and provides clear criteria to guarantee the provision of the universal postal service under sustainable economic conditions, promoting a better balance between the continuity of the postal service provision and the reinforcement of the Company's capacity to face the challenges of digital transition, pursuing the consistent implementation of its transformation process. For reasons of general interest, only the following activities and services have remained reserved to the concessionaire: sitting of letter boxes on the public highway intended for the deposit of postal items, issue and sale of postage stamps bearing the word Portugal and the registered mail service used in court or administrative proceedings.
The concession agreement sets out that, for the year 2022, which will be the transition period, the prices of the services included in the universal postal service offer to be implemented by CTT shall respect a maximum annual average variation of 6.80%, which considers the decline in mail volumes observed in the first nine months of 2021 and the variation of the Consumer Price Index for the Transport expense category, as communicated by the National Statistics Institute for the month of October 2021. The pricing proposal was submitted to ANACOM on 28 February and the new prices entered into force on 7 March 2022, without prejudice to the evaluation to be carried out by ANACOM, in accordance with the provisions of said agreement.
The special prices of the postal services included in the universal postal service offer applicable to bulk mail senders were also updated on 7 March 2022 following the information sent to ANACOM on 28 February 2022.
The aforementioned updates correspond to an average annual price variation of 5.84% for the year 2022.
While some impacts of the pandemic still persist in 2022, CTT continued to periodically report the status of the postal network to the Government, as a counterparty in the agreement, and to ANACOM, the regulatory authority responsible for overseeing the provision of the universal postal service until 21 February 2022.
By deliberations dated 6 May 2022 and 6 July 2022, ANACOM granted CTT's requests regarding the deduction of the records of mail items in all national flows directly affected by the COVID-19 pandemic in the 2nd half of 2021, for the purposes of calculating the Quality of Service Indicators (QSI) of the year 2021, and in the months of January and February 2022, for the purposes of calculating the QSI of the year 2022.
In the 1st half of 2022, work was carried out leading to the definition of the criteria to be followed in the pricing of the postal services within the basket of the universal postal service the for the three-year period 2023-2025, in accordance with the provisions of Article 14(4) of Law 17/2012 of 26 April (Postal Law), as amended by Decree-Law 22-A/2022 of 7 February.
Pursuant to the law, the pricing criteria for the USO are defined by agreement between the regulator of the sector (ANACOM), the Consumer Directorate-General (DGC) and the universal service provider (CTT) for periods of three years. In case of agreement, the convention must be concluded, signed by the parties and notified to the member of Government responsible for the area of communications by 30 July of the year preceding that to which the criteria are to apply.
Following the negotiation process conducted by the parties (ANACOM, DGC and CTT), agreement was reached in principle on a draft text for the Convention to be concluded for the period 2023-2025, which was under public consultation until 15 July 2022. Subsequently, the Convention in its final wording was signed by the parties and is to be notified to the Government by the deadline set for this purpose.
The Convention covers the same services which in the previous legal framework were the subject of ANACOM's decisions on the pricing criteria for the universal postal service, thus covering letter mail, parcels and newspapers and periodicals services which are part of the USO offer, including registered mail services used in legal or administrative proceedings, and not applying to special prices of postal services for bulk mail senders (subject to the specific regime provided for in article 14-A of the Postal Law).
The highlights of the pricing regime of the services covered by the Convention are:
• The set-up of a maximum annual variation of the prices of the basket of services covered by the Convention, which will be ascertained as per the following formula: CPI - ∆Volumes * (1 - VC) - E + K.
The referred maximum annual price variation thus takes into consideration historical figures relative to the inflation rate (CPI) in the last 12 months, the variation in volumes (∆Volumes) excluding an indicator of the weight of variable costs (VC) in total costs associated to the SPU (value defined at 16% for each year) and an efficiency factor (E) associated to CTT's activity within the USO (value defined at 0.5 percentage points for each year). In the event of significant contextual changes related to the conditions for the provision of the universal postal service, the application of an additional factor (K) is foreseen, the value of which shall be determined by agreement, upon proposal of any of the parties that integrate the Convention.
On 28 June 2022, CTT was notified of ANACOM's decision which granted CTT's application deferring the date for the entry into force of ANACOM's decision of 29 April 2021 on the delivery of postal items at premises other than the domicile to 1 January 2023.
Two years after the start of the COVID-19 pandemic crisis, the European and national regulatory agenda is no longer marked by the issuing of diplomas to address the pandemic context.
At national level, Banco de Portugal began by issuing a macro-prudential measure in the form of a recommendation on the convergence of the average maturity of new housing credit contracts to 30 years. With this recommendation, limits were set on the maximum maturity of new mortgage operations according to the age of the borrowers.
Given the existing geopolitical and economic context, Banco de Portugal issued a Circular Letter regarding expectations and recommendations on cybersecurity and operational resilience, reinforcing the need for all supervised institutions to have solid internal governance structures and adequate processes for monitoring the risks to which they are or may be exposed, including cyber risks, and listing a set of requirements that institutions must adopt to ensure operational resilience.
Later, with the outbreak of the armed conflict in Ukraine, the European Banking Authority (EBA) issued a notice to credit institutions to provide payment accounts with basic features to displaced Ukrainian citizens. Following this, the Banco de Portugal has communicated to credit institutions operating in national territory that they should provide these citizens with minimum bank services accounts as a first alternative when applying for an account. In addition, the adoption of simplified measures of identification and diligence in the opening of current accounts for these citizens was recommended.
Finally, the first half of 2022 ended with the publication by the Insurance and Pension Funds Supervisory Authority (ASF) of Regulatory Standard No. 6/2022-R on the security and governance of information and communication technology and outsourcing to cloud computing service providers, following the publication by the European Insurance and Occupational Pensions Authority (EIOPA) of Guidelines in the same direction. This regulatory standard reinforces the need to prepare institutions, in the provision of insurance services, against possible security incidents. The ASF thus establishes requirements and general principles that should govern the development of governance and security mechanisms in this area.
The United Nations Sustainable Development Goals (SDG) reflect 17 priority topics, at a global level, for the preservation of the planet and the dignity of human beings.
In addition to aligning its environmental management strategy with the SDG considered priority for the sector in an IPC – International Post Corporation survey, CTT has mapped and prioritised the eight SDG for its value chain, using the SDG Compass methodology developed by the WBCSD, UN Global Compact and GRI.
CTT also endorses the Ten Principles of the United Nations Global Compact concerning Human Rights, Labour Practices, Environmental Practices and Anti-Corruption, expressing its intention to support and disseminate these principles in its sphere of influence and to ensure that the Ten Principles are reflected in the strategy, culture and daily operations of the organisation.
In addition to its internal operations, CTT is committed to engaging in cooperative projects that promote the most far-reaching development goals.
At the beginning of each chapter in this report, there is a list of the SDGs that are addressed in responding to the specific challenges covered in that chapter. The table below presents the level of performance in the 1st half of 2022 in relation to the eight goals prioritised by CTT.
CTT decarbonisation programme and SBT targets aligned with the ambition to limit global warming to 1.5ºC.
Banco CTT has a policy of Prevention of Money Laundering and Terrorist Financing. No significant risks related to corruption were identified in the assessments carried out.
14
The CTT Group's operating principles include a set of ethical values that are reflected in its Code of Conduct, comprising the individual conduct rules to be observed within the CTT Group in the relationships established both in-house and with external stakeholders.
Noteworthy is also the "Code of Good Conduct for the Prevention and Combat of Harassment", which recognises the importance of the measures therein to promote a healthy working environment that raises the dignity of all employees.
The Ethics Committee is responsible for monitoring and supervising the application of those rules, as well as assessing any reports of irregularities relating to situations of non-compliance with standards of conduct. In the first half of 2022, only one communication was analysed, which concluded that there was no conduct in breach of the standards invoked.
In the field of anti-corruption, CTT has procedures in place for the identification of active and passive perpetrators of situations of bribery and corruption with a view to their legal and criminal framing, whereby whistleblowing and complaints are investigated, as well as procedures and practices that cause or configure irregular and corrupt behaviours are analysed. A programme of regulatory compliance is being implemented, with a view to preventing, detecting and punishing acts of Corruption and Related Infractions, in accordance with the General Regime for the Prevention of Corruption (RGPC), approved by DL 109-E/2021 of 9 December.
In alignment with the legislation and regulations preventing money laundering and the financing of terrorism, a set of preventive procedures are in place, and in the 1st half of 2022, 24 communications were reported to the competent authorities (the Central Department of Investigation and Penal Action of the Attorney General's Office and the Financial Intelligence Unit of the Judicial Police), involving financial operations amounting to around €2.3 million.
Following investigative actions, two employment contract terminations occurred (a permanent employee for appropriation of client's money and a fixed-term contract employee for theft/tampering of items).
All the operations of Banco CTT are submitted to risk assessment. The customers and transactions made are analysed according to the risk they might represent in terms of use of the Bank for purposes of money laundering or terrorist financing (which includes the crime of corruption).
The relevant relations with financial and non-financial counterparts are also subject to a due diligence process which seeks to prevent the conduct of business with entities that show risks of money laundering or might represent reputation risks, due to being involved in financial crimes or associated to practices of corruption.
Banco CTT has an Anti-Money Laundering and Terrorist Financing policy and a series of processes and procedures aimed at assuring compliance with the legal requirements and mitigating the risks of the Bank being used for these purposes. Annually, a team of external auditors conducts an assessment of these processes and procedures and efficacy tests. No significant risks related to corruption were identified in the assessments made.
The risks arising from the activity of CTT and its subsidiaries are managed pursuant to the manner described in the Regulations of the Risk Management System approved by the Board of Directors. This document, in addition to establishing guiding standards, principles and procedures for Risk Management, defines duties, responsibilities and governance model, ensuring the implementation of a framework supporting the decision making process, taking into consideration the risks to which CTT is exposed.
As far as the banking activity is concerned, Banco CTT has an independent risk management system, based on a set of concepts, principles, rules and on an organizational model applicable and adjusted to the specific features and the regulatory framework of its activity. However, a model has been established for articulation between the areas responsible for the Risk Management of CTT and Banco CTT, to ensure an alignment relative to the main interdependent risks.
The risk profile is viewed as the main output of the process, reflecting the vision of a given moment on events that, should they occur, could adversely affect the achievement of the strategic objectives, compromising CTT's sustainability. The review and continuous updating of the Risk Profile is, therefore, fundamental, and is based on a dynamic process consisting of four sequential and interrelated phases, fed by a series of inputs, as illustrated in the figure below:
Risk management Integrated Risk Management System
The risks identified during Stage I are assessed in Stage II according to qualitative and quantitative criteria in terms of probability of occurrence, impact and speed of materialization of the effect, pursuant to the guidelines established in the Regulations of the Risk Management System.
The level of exposure to risk arises from the combination of its probability and impact. During Stage III, if the level of exposure to a particular risk is higher than the stipulated appetite, corrective or mitigating actions are defined and implemented, aimed at reducing the exposure, by lowering the probability and/or impact. The risk appetite thus translates into the maximum level of exposure that CTT consciously assumes and is willing to accept in pursuing its strategy considering its business principles, policies and procedures as well as the fact that they operate in tightly regulated markets. The risk appetite is reviewed annually and is defined by risk typology, according to the approved taxonomy.
The evolution of CTT's main risks (those with higher level of exposure) is monitored in Stage IV through Key Risk Indicators (KRI). The KRI operate as a barometer of CTT's current level of exposure to risks, warning of possible changes of the probability of occurrence and/or impact of the risk event, thus allowing timely action in order to reduce the level of exposure to comfort values within the defined risk appetite.
At CTT, risk management and control are undertaken by the entire organizational structure, involving top management down to the more operational levels, through a model of "3 lines of defence" based on good practices of Audit and Internal Control:
The Board of Directors approves CTT's main risk policies and guidelines, defining its profile and objectives on risk-taking matters and creating systems for their control. Additionally, it carries out the assessment of the effectiveness of the Risk Management system, with a view to ensuring that the risks incurred are consistent with the defined objectives.
The Audit Committee supervises and appraises the Risk Management policies and system and may propose measures to the Executive Committee aimed at improving their functioning. It also monitors and appraises the profile and objectives on matters of risk-taking, the levels of exposure to risk and the mitigation measures in this context.
The Executive Committee approves CTT's risk profile and levels of exposure to risk, as well as the models, processes and procedures for risk management, in addition to the proposed mitigation initiatives, ensuring their implementation and considering the terms and objectives defined and approved by the Board of Directors.
The Risk Management Committee supports the Executive Committee in the process of preparation and approval of Risk Management strategies and policies, monitoring their implementation.
The Risk Management Function, performed by the Risk Management division of the Audit & Quality department, is responsible for the centralized coordination of the CTT Risk Management System and the planning and implementation of risk management programs supported by the Company's Regulations of the Risk Management System.
The Internal Audit Function, performed by the Internal Audit division of the Audit & Quality department, assesses the quality and efficacy of the Risk Management system, and identifies and characterizes risk events under the audit activities carried out.
All the remaining Corporate Departments and Business Units put in place the approved Risk Management policies and procedures and propose mitigation actions for the main risks identified.
During the 1st half of 2022, CTT paid special attention to the evolution of its level of exposure to the following risks:
| Risk and CTT response | Business affected |
|---|---|
| Cyber incidents Category: Business interruption risk |
|
| Cybercrime is one of the most serious economic and national security challenges facing governments around the world. In view of the increasingly stronger dependence on information technologies in CTT's business lines, the security and protection of information is, therefore, an issue of enormous relevance. The growth in volume and sophistication of cyber attacks is of particular concern today. In this connection, CTT continued to focus on strengthening technological security controls and on training its employees on good teleworking practices and cybercrime awareness. |
|
| ESG (environmental, social and governance) performance Category: Sustainability risk |
|
| ESG (environmental, social and governance) performance is increasingly an essential factor for the sustainable development, success and survival of companies these days. CTT assumes a solid position in each of the ESG dimensions, this being one of the fundamental pillars of the current internal transformation process. In terms of ambition, CTT is committed to achieving carbon neutrality by 2030, to continuing to promote a positive social impact in local communities, to becoming a reference employer in Portugal and to launching a series of ESG incentives within the organisation. |
|
| Slowdown of economic recovery Category: Demand risk |
|
| Although the Portuguese economy maintained a growth rate above that expected at the beginning of 2022, expectations of a rapid and total economic recovery after the pandemic crisis were shaken by the start of the conflict in Ukraine, which intensified the inflationary pressures that had already been occurring, with particular reflection on the price of energy goods. The drop in households' real income will tend to affect the recovery of consumption with potential impacts also on the demand for CTT's goods and services. In case a recession scenario materialises, CTT has several tools and strategies that aim to ensure the necessary flexibility to manage the respective impacts. |
|
| Regulatory changes Category: Regulatory risk |
|
| As the Universal Postal Service provider, CTT operates in a regulated environment and is subject to a significant number of legal and regulatory requirements concerning pricing, the parameters of the provision of the USP and quality of service. The change of these requirements, their application or their interpretation may determine a significant reduction of the margin associated with products and services under the Universal Postal Service and the consequent adverse effect on CTT's results. The new Universal Postal Service |
of the margin associated with products and services under the Universal Postal Service and the consequent adverse effect on CTT's results. The new Universal Postal Service concession agreement entered into force in February. In the following months, a negotiation process took place between CTT, ANACOM (Portuguese authority for communications) and DGC (Competition Directorate-General), which resulted in an agreement in principle regarding the draft pricing convention of the Universal Postal Service.
Health and safety Category: Human capital risk
Work accidents constitute a significant risk in such a vast universe of workers as CTT's. Operating one of the largest fleets in Portugal, CTT is particularly exposed to the risk of road accidents. On the other hand, the pandemic had an impact on the workers' access to health care (a situation that is still being normalised) and has uncovered the problem of mental health, which has been made worse by the interruption of normal working routines and conditions. CTT is aware of these and other problems and is committed to ensuring its employees safety conditions in all aspects of their work, in order to prevent injuries as well as promoting a healthy working environment.
The intensification of the phenomenon of digitalization and substitution of physical mail by other forms of digital communication have led to a continuous decline of postal volumes over the last decade. The effects of the pandemic on the economy further accelerated this trend, with demand for mail services reaching historic lows. Regardless of the uncertainty that may still exist as to the pace of mail volume decline in the post-pandemic context, CTT is already rethinking the current operational models in order to adapt them to substantially lower volumes, always keeping in mind a logic of business sustainability.
Over the past two years, global supply chains have been pushed to the limit, revealing the weaknesses of complex systems that can affect any company anywhere in the world. With demand levels returning to pre-pandemic levels, supply chains were again under enormous pressure, a fact aggravated by the beginning of the conflict in Ukraine (which made certain types of raw materials scarce) as well as by the adoption of the zero-Covid policy in China. CTT has been very attentive to this situation, seeking whenever possible to diversify its suppliers and managing in a more conservative manner the stock levels of the most critical materials.
Mail & Other revenues amounted to €241.6m in 1H22, which corresponded to a year-on-year growth of €24.0m (+11.0% y.o.y).
The growth registered in this business unit was catalyzed by the business solutions segment (+€34.6m) reflecting the integration of NewSpring Services in CTT's Business Solutions base offer in September 2021 (+€11.9m) and the €22.7m growth of the business solutions base largely explained by the revenue related to a laptop sale project started in the last quarter of 2021 (+€21.5m).
In 1H22, mail service revenues registered a variation of -5.0% (-€10.4m) compared with 1H21, penalized by the strong decrease in the revenues of international inbound mail (-€10.8m; -53.5%).
It should be noted that in 1H22 addressed mail volumes, excluding international inbound mail, declined only by 2.2% in comparison with 1H21, which had never occurred in the last 5 years. The associated revenues grew by 1.0%. This situation resulted from the good performance of the business channel, which mitigated the decline in activity in the retail channel due to the reduced demand for e-commerce small packets, which resulted in pressure on the average price due to the mix effect between the business channel and the retail channel, with a higher unit value.
The growth in the revenues of registered mail (+€4.0m; +6.6% y.o.y), priority mail (+€0.2m; +5.8% y.o.y) and international outbound mail (+€2.9m; +14.7% y.o.y) should be highlighted, although without the additional revenue in the month of February due to the rerun of the legislative elections in the European constituency, they would have slightly decreased by €0.6m (-3.2%).
The remaining business lines posted decreases: ordinary mail (-€3.9m; -5.3% y.o.y), green mail (-€1.0m; -19.8% y.o.y), editorial mail (-€0.4m; -6.6% y.o.y), advertising mail (-€0.3m; -3.7% y.o.y), parcels (-€0.4m; -11.1% y.o.y), philately (-€0.3m; -10.3% y.o.y) and other mail products and services (-€0.1m; -8.7% y.o.y).
Business solutions recorded revenues of €41.8m (+€34.6m) due to the consolidation of NewSpring Services (+€11.9m) and the revenues related to the laptop sales project (+€21.5m) in 1Q22. Excluding these effects, the revenues have grown by 17.4% y.o.y, as a result of the continued focus on diversifying the offer and strengthening existing skills.
Also noteworthy within the business solutions segment are: (1) the growth of the document management business, with the attraction of new clients, namely utilities, banking and services and new municipalities for the solution of management of administrative offences; (2) the launch at the end of May of a new version of the e-Carta hybrid mail product, which allows small and medium-sized enterprises to digitalise their mail dispatch processes; and (3) the reinforcement of the IT equipment offer and the launch of a new stationery catalogue, consolidating CTT's strategy of becoming the partner of reference, in a "one-stop-shop" logic, for national companies.
On 7 March, the new 2022 prices for postal services provided in the scope of the universal service came into force, set out in accordance with Law 17/2012, of 26 April, as amended by Decree-Law 22- A/2022, of 7 February (Postal Law).
In 1H22, the average variation in prices of the universal postal service11 was 4.93% y.o.y.
11 Including letter mail, editorial mail and parcels of the universal postal service, excluding international inbound mail.
In 1H22, addressed mail volumes posted a decline of 3.9% compared to1H21.
| Million items | ||||||
|---|---|---|---|---|---|---|
| 1H21 | 1H22 | ∆ | 2Q21 | 2Q22 | ∆ | |
| Transactional mail | 216.0 | 206.6 | -4.4% | 108.9 | 102.1 | -6.2% |
| Advertising mail | 19.1 | 19.5 | 2.1% | 9.0 | 11.2 | 24.4% |
| Editorial mail | 14.7 | 13.9 | -5.4% | 7.5 | 7.0 | -6.7% |
| Addressed mail | 249.8 | 240.0 | -3.9 % | 125.4 | 120.3 | -4.1 % |
| Unaddressed mail | 222.1 | 208.1 | -6.3% | 130.1 | 98.2 | -24.5% |
Transactional mail volumes declined by 4.3% y.o.y, due to more marked declines in international inbound mail (-36.3% y.o.y). This downward trend has been observed since 2H21 due to the entry into force as of 1 July 2021 of the abolition of the VAT exemption on postal items below €22 ("de minimis"), leading to the need for customs clearance of all items of extra-EU origin containing goods, which resulted in an increase in customs transit times.
In the opposite direction, registered mail grew (+8.7% y.o.y), driven by the dynamics of contractual customers, especially the government and services sector, as did international outbound mail (+7.7% y.o.y), impacted by the effect of the rerun of the elections in the European constituency. Excluding this effect, there would have been a decrease of 4.4% y.o.y.
In 1H22, addressed advertising mail volumes increased by 2.4% and unaddressed advertising mail decreased by 6.3%.
A new CTT Ads Creativity solution was launched, in partnership with the Milford agency, for the strategic and creative development of communication campaigns. The "CTT Ads Success Stories" campaign continued, with the aim of boosting the advertising offer among clients with online businesses, to promote trial of advertising solutions.
CTT has been noticing a continued adherence by its customers to the use of mail products that incorporate environmental protection features, demonstrating the customers' growing awareness of these arguments, to a large extent driven by the visibility of their environmental and carbon attributes.
Green mail is a 100% ecological offer leveraged on its convenience combined with environmental protection, ensuring the carbon neutrality of direct emission resulting from the handling, transport and distribution of its products through the offsetting of unavoidable direct emissions, without extra costs to the customers. In spite of the decline in absolute terms, the eco range of "green mail" recorded nearly 3 million items sold.
The range of eco direct marketing services provides a distinctive symbol for the campaigns which stand out positively due to their environmental performance, through compliance with various ecological criteria. This measure sought to project the use of the channel of mail with ecological merit, through the use of ecological raw materials, responsible production processes and appropriate end-of-life cycle
management. In the 1st half of 2022, the eco range maintained its relative weight (42.5%) in the domestic volume of Direct Mail, involving around 8.3 million items.
In the 1st half of 2022, the following philatelic issues stand out:
| Commemorative philatelic issues 2022 | |
|---|---|
| • Portuguese Faces at the UN |
|
| • 100 Years of the First South Atlantic Air Crossing |
|
| • Figures from Portuguese History and Culture |
|
| • 175 Years of the Grémio Literário |
National and International |
| 250th Anniversary of the Pombaline Reform of the University of Coimbra • |
Events |
| • Europa - Stories and Myths |
|
| • Blessed Charles - Emperor of Austria, King of Hungary and Bohemia |
|
| Hunting in Portugal (2nd group) • |
|
| • The Seahorses from Ria Formosa |
Environment and Sustainability |
| • Epic Fishing Campaigns |
|
| • International Year of Basic Sciences for Sustainable Development |
|
| Numismatics Self-adhesive stamps (3rd group) • |
|
| • Personalized Stamps |
Self-adhesive |
| ◦ Fantastic Beasts |
|
| Benfica - 60 Years of the European Champions Cup (2nd group) ◦ Friday 13th – Witches Night ◦ |
More information on the plan of philatelic issues of CTT at: https://www.ctt.pt/particulares/filatelia/plano-emissoes/
Express & Parcels revenues amounted to €122.7m in 1H22, a year-on-year decrease of €3.1m (-2.5%).
It should be noted that 1Q22 was impacted by a difficult year-on-year comparison, as 1Q21 was a quarter affected by the effect of the restrictions associated with the COVID-19 pandemic, particularly the second lockdown, which strongly boosted the e-commerce activity.
In Portugal in 2Q22, the CEP activity resumed the path of growth in volumes per working day by 3.5%, supported essentially by e-commerce (B2C) customers, with a particular focus on large global marketplaces.
In 1H22, the logistics product line, which is a pillar of the development of vertical integration with the CEP business, continued its double-digit growth (+19.4% y.o.y), based on attracting new customers, which in 1Q22 enabled the complete logistical operation of the supply of computers and peripherals to Portuguese schools to be carried out.
Revenues of the cargo product line amounted to €2.6m in 1H22, decreasing by 44.9% compared to 1H21, a reduction related to the change in the operating strategy, which aimed to find a solution to position this product line at positive margin levels.
The banking documents delivery product line closed the semester with revenues of €2.1m (-9.1% y.o.y) and remained under pressure in a context of continued reduction of the capillarity of banking networks, as well as of lower collection/delivery frequency.
CTT continued to roll out its 24-hour Locker strategy to both the general public and private premises (both residential and corporate), as well as Click&Collect. These allow clients to pick up their parcels with maximum convenience, 24 hours a day, every day of the week (24/7). As at the end of June 2022, CTT's parcel locker network comprised 350 lockers in various locations around the country, namely in hospitals, intermodal transport platforms, shopping centres, university campuses, physical retail networks, parking lots, gas stations or, in the case of private lockers, in condominiums and in office/ business areas.
In late 2021, CTT entered into a partnership with YunExpress, of the Zongteng Group, and created the Open Lockers joint venture to manage and develop the 24-hour Lockers business in the Iberian Peninsula, aimed at deploying a wide locker network in Portugal by the end of 2022.
Revenues in Spain stood at €59.5m in 1H22, corresponding to 4.0% above 1H21 and a 32.7% growth of the contribution margin12, anchored on an increase in the average price, which was higher than the evolution of unit costs, allowing this quarter to present again a positive recurring EBIT13. The implementation of a new commercial model and expansion of the offer will allow for the consolidation of the growth trajectory in the second half of 2022.
The Company maintains its strategy of investing in technology and innovation, as well as the start-up of new own delivery offices during this year that will allow the Company to move forward in its commitment to Iberian growth.
Revenues in Mozambique in 1H22 stood at €1.7m, 13.0% above 1H21. The growth achieved was supported by the partnership with a freight forwarder in Africa.
12 Revenues less direct operating costs (excludes overheads, essentially buildings and fleet).
13 Individual accounts.
The direct emissions associated with CTT's domestic express & parcels offer are fully offset through carbon offsetting projects, chosen by the public and which promote positive impacts on biodiversity and on the development of the local communities where they are developed.
CTT launched an innovative pilot project in 2021, aimed at the use of reusable packaging for online purchases. The new Reusable Eco Packaging has a stipulated resistance capacity for sending it up to 50 times, enabling reduction of waste associated with the single-use packaging solutions used in the ecommerce market, reduction of the carbon footprint associated with its production, and promoting a more circular economy through reuse.
Simultaneously, in Spain, CTT Express continues to invest in new packaging formats that incorporate recycled plastic and are recyclable. This packaging possesses the Blue Angel stamp, a German certification that testifies to the endorsement of good ecological practices applied to the manufacture and functioning of a product or service.
The Green Deliveries offer continues to arouse the curiosity of CTT customers in 2022. This offer is available for corporate customers and enables all deliveries in the contracted places, currently in Lisbon and Porto, to be made exclusively with electric vehicles. This service fosters an improvement in the quality of the air in urban centres, as these vehicles do not imply emissions of pollutant particulates. Since its launch in mid-2020, over 173k items have been delivered, representing a revenue of approximately €251k. It should be noted that CTT also acquires 100% of the electricity it consumes through renewable sources, which positively affects the carbon footprint associated with this offer.
Banco CTT revenues reached €57.9m in 1H22, an increase of €12.3m (+26.8% y.o.y).
Revenue growth was due to the positive performance of net interest income, which totalled €34.4m in 1H22, €8.7m above 1H21 (+33.7% y.o.y).
The Cartão Universo consumer credit portfolio generated revenues of €10.3m in 1H22, with a net balance sheet volume of €324.1m as at June 2022, a growth of €32.0m (+11.0%) compared to December 2021.
Interest from consumer credit amounted to €21.5m in 1H22, growing by €3.4m (+18.8% y.o.y) and auto loans reached a loan portfolio net of impairments of €698.8m (+7.7% vs. December 2021). Auto loans production stood at €125.5m in 1H22 (+37.3% y.o.y).
Interest from mortgage loans recorded a year-on-year increase of 11.9%, with a €629.3m mortgage loan portfolio net of impairments (+5.8% vs. December 2021). Mortgage loan production amounted to €72.0m, a year-on-year growth of €2.7m (+3.9% y.o.y).
Commissions received in this business unit reached €21.6m, up €3.5m vis-à-vis 1H21 (+19.1% y.o.y). Worthy of note are the positive contributions of (i) commissions received regarding accounts and cards, which amounted to €5.8m (+€0.9m; +19.2% y.o.y), (ii) savings products (off-balance sheet), which totalled €2.3m (+€0.7m; +42.1% y.o.y) as a result of a net volume off-balance sheet of €840.5m, 18.6% above December 2021, (iii) consumer credit (off-balance sheet) amounting to €1.4m (+€0.5m; +64.6% y.o.y), and (iv) payments, which totalled €8.8m (+€0.7m; +9.0% y.o.y).
Banco CTT's good commercial performance continued to allow for growth in customer deposits to €2,259.6m (+6.4% vs. December 2021) and in the number of accounts to 581k (8k more than in December 2021).
The loan-to-deposit ratio reached 73.4% as at the end of June 2022.
Committed to expanding the offer of savings and investment solutions, the product Banco CTT Sustainable Mortgage Loans was launched, which gives a discount on the spread associated with the credit contract depending on the energy certification level of the home.
Banco CTT, in an association with the Eco-Schools Programme of the European Blue Flag Association, continues to support the BIO Vegetable Gardens project, contributing to the creation of vegetable gardens in national schools. The objective is that these vegetable gardens should be used to create awareness and educate the school and local communities on the topic of sustainability, in particular by encouraging the students to create and maintain school vegetable gardens, cultivated in a biological manner, deepening knowledge related to biological agricultural practices and healthy and sustainable eating habits.
In an eco-friendly attitude, the new Banco CTT debit cards sent to the customers are 100% produced using recycled plastic.
Financial Services & Retail revenues amounted to €24.2m in 1H22, representing a year-on-year increase of €0.5m (+2.2% y.o.y).
There was a positive evolution in revenues in 2Q22, with a growth of €0.7m (+6.3% y.o.y) compared to 2Q21, as in 1Q22 these had fallen (-€0.2m; -1.7% y.o.y) compared to 1Q21.
Financial services (excluding other revenues) obtained revenues of €15.4m, a decrease of €0.8m (-4.7% y.o.y), broken down as follows:
Retail products and services (excluding other revenues) reached revenues of €8.4m in 1H22, an increase of €0.9m (+11.9% y.o.y), driven by the distribution of social gambling (+20.7%). Sales in this business line have been boosted, focusing on good commercial practices, namely with regard to the factors of exposure and commercial approach in customer service.
CTT has been reinforcing its positioning in the retail segment through a more robust, more regular and more comprehensive offer in the Retail network and CTT outlets, promoting recurrent and impulse buying, and boosting the sale of specific products, particularly convenience technology.
Within the context of increased macro-economic and persistent geopolitical risks, the 2022 guidance is confirmed as follows:
The risk outlook is maintained as follows: (1) macro risks are relevant and persistent, namely, geopolitical uncertainty, inflation, cost of energy and raw materials and de minimis; (2) the COVID-19 pandemic continues to represent a relevant risk factor; and (3) there are also severe risks in the functioning of logistics chains, namely originated in Asia.
The revenue and recurring EBIT guidance reflect continued growth and transformation, notwithstanding a challenging environment.
It should be noted that 1H22 was negatively marked by several factors, such as the international economic environment associated with the Russia/Ukraine military conflict, causing constraints in the global supply chain of goods, and the long-term effects of the COVID-19 pandemic.
CTT's consolidated revenues grew by 8.2% to €446.4m in 1H22, an increase of €33.6m compared to 1H21 that reflects the performance of the Mail & Other business unit (+€24.0m; +11.0% y.o.y), Banco CTT's growth (+€12.3m; +26.8% y.o.y) and Financial Services & Retail (+€0.5m; +2.2% y.o.y). Revenues of the Express & Parcels business unit declined (-€3.1m; -2.5% y.o.y).
| € million | ||||||||
|---|---|---|---|---|---|---|---|---|
| 1H21 | 1H22 | ∆ | ∆% | 2Q21 | 2Q22 | ∆ | ∆% | |
| Revenues | 412.8 | 446.4 | 33.6 | 8.2% | 207.5 | 211.7 | 4.2 | 2.0% |
| Mail & Other | 217.6 | 241.6 | 24.0 | 11.0% | 109.0 | 108.1 | -0.8 | -0.8% |
| Express & Parcels | 125.8 | 122.7 | -3.1 | -2.5% | 62.4 | 61.3 | -1.1 | -1.7% |
| Banco CTT | 45.7 | 57.9 | 12.3 | 26.8% | 24.5 | 29.9 | 5.4 | 22.0% |
| Financial Services & Retail | 23.7 | 24.2 | 0.5 | 2.2% | 11.6 | 12.3 | 0.7 | 6.3% |
Operating costs totalled €425.7m in 1H22, a year-on-year growth of €43.9m (+11.5% y.o.y).
| 1H21 | 1H22 | ∆ | ∆% | 2Q21 | 2Q22 | ∆ | ∆% | |
|---|---|---|---|---|---|---|---|---|
| Staff costs | 177.3 | 178.5 | 1.2 | 0.7% | 88.1 | 86.7 | -1.4 | -1.6% |
| ES&S | 154.6 | 165.4 | 10.8 | 7.0% | 78.9 | 80.1 | 1.1 | 1.5% |
| Impairments & provisions | 5.8 | 13.2 | 7.4 | 127.8% | 3.4 | 7.4 | 4.0 | 117.9% |
| Other costs | 17.8 | 38.9 | 21.1 | 118.5% | 8.8 | 9.0 | 0.3 | 3.1% |
| Operating costs (EBITDA)14 | 355.5 | 396.0 | 40.5 | 11.4% | 179.2 | 183.3 | 4.1 | 2.3% |
| Depreciation & amortization | 28.6 | 31.8 | 3.2 | 11.1% | 14.6 | 16.4 | 1.8 | 12.4% |
| Specific items | -2.3 | -2.1 | 0.2 | 10.6% | -1.5 | 0.6 | 2.1 | 142.9% |
| Corporate restructuring costs and strategic projects |
9.4 | 3.6 | -5.8 | -61.7% | 8.9 | 2.9 | -5.9 | -66.7% |
| Other non-recurring revenues and costs |
-11.7 | -5.7 | 6.1 | 51.6% | -10.3 | -2.3 | 8.0 | 77.6% |
| Operating costs | 381.8 | 425.7 | 43.9 | 11.5% | 192.3 | 200.3 | 8.0 | 4.2% |
Staff costs increased by €1.2m (+0.7% y.o.y) in 1H22, essentially in the Mail & Other business unit (+ €1.9m y.o.y), due to the acquisition of NewSpring Services (+€6.4m), and in Banco CTT (+€0.3m y.o.y) due to increased commercial activity and team reinforcement in the wake of the partnership with Sonae Financial Services. This growth was partly offset by the remaining business units (-€1.0m y.o.y).
€ million
14 From 2021 onwards, operating costs (EBITDA) include impairments and provisions as well as the impact of the leases covered by IFRS 16 and presented pursuant to this standard
Excluding the change in the consolidation perimeter, these costs would have declined by €5.2m, as a result of the measures taken to increase productivity and the focus on operating efficiency.
External supplies & services costs increased by €10.8m (+7.0% y.o.y), both due to the inorganic effect of the acquisition of NewSpring Services (+€3.9m y.o.y), and to business growth, with emphasis on: direct costs, impacted by the effect of legislative elections (+€3.3m), and the growth in business solutions (+€0.6m y.o.y), temporary work (+€1.5m y.o.y), as well as physical and technological resources (+€1.5m y.o.y).
Impairments and provisions increased by €7.4m in 1H22 (+127.8% y.o.y), as a result of the growth in the auto loan portfolio and the Universo credit card.
Other costs grew by €21.1m (+118.5% y.o.y), mainly in the Mail & Other business unit due to the growth of business solutions (+€20.7m y.o.y in connection with the laptop sale project referred to above).
Depreciation & amortization increased by €3.2m (+11.1% y.o.y), as a result of investment carried out in IT systems (+€1.5m y.o.y) and postal equipment (+€0.3m y.o.y) partially offset by new building and vehicle lease contracts which impacted amortization (+€1.3m y.o.y), due to the IFRS 16 accounting standard.
Specific items amounted to -€2.1m, due to: (i) other non-recurring revenues and costs (-€5.7m y.o.y), which include gross gains and losses arising from the valuation of contracted derivatives (-€5.0m y.o.y); (iii) restructuring costs (+€2.4m y.o.y), including suspension agreements of employment contracts; and (iv) strategic projects (+€1.2m y.o.y).
The valuation of the derivative structure in the amount of €5.0m, as mentioned above, is the result of the MTM (Mark to Market) of the interest rate derivative in the form of a Cap Agreement and Interest Rate Swap, associated with the Ulisses 2 and 3 securitization operations.
Recurring EBIT stood at €18.6m in 1H22, decreasing by €10.1m (-35.0% y.o.y), with a margin of 4.2% (7.0% in 1H21).
This performance was due to the decline in EBIT in the various business units, except Banco CTT (+€3.1m; +128.9% y.o.y), with greater expression in Mail & Other (-€11.3m; -118.1% y.o.y) due to the decline in higher-value and higher-margin mail volumes.
However, it should be noted that the recurring EBIT reached €12.0m in 2Q22 (-€1.7m; -12.2% y.o.y), reflecting the expected improvement in the trend in 2Q22. In effect, the recurring EBIT in 2Q22 stood in at the middle of the range that was guided in the Capital Markets Day held in the past June.
The growth in Financial Services & Retail revenues in 2Q22 was accompanied by a significant improvement in recurring EBIT in that period, corresponding to +17.2% compared to 2Q21, and to a recovery regarding 1Q22 (-15.3% y.o.y).
| € million | ||||||||
|---|---|---|---|---|---|---|---|---|
| 1H21 | 1H22 | ∆ | ∆% | 2Q21 | 2Q22 | ∆ | ∆% | |
| EBIT by business unit | 28.7 | 18.6 | -10.1 | -35.0% | 13.6 | 12.0 | -1.7 | -12.2% |
| Mail & Other | 9.6 | - 1.7 | -11.3 | -118.1% | 4.7 | 1.6 | -3.1 | -66.6% |
| Express & Parcels | 5.4 | 3.7 | -1.7 | -31.7% | 2.9 | 2.4 | -0.5 | -18.1% |
| Banco CTT | 2.4 | 5.5 | 3.1 | 128.9% | 1.0 | 2.1 | 1.1 | 109.6% |
| Financial Services & Retail | 11.3 | 11.2 | -0.1 | -0.6% | 5.1 | 6.0 | 0.9 | 17.2% |
The consolidated financial results amounted to -€4.7m, an improvement of €0.7m (+13.1% y.o.y).
| € million | ||||||||
|---|---|---|---|---|---|---|---|---|
| 1H21 | 1H22 | ∆ | ∆% | 2Q21 | 2Q22 | ∆ | ∆% | |
| Financial results | -5.4 | -4.7 | 0.7 | 13.1% | -2.7 | -2.5 | 0.2 | 7.2% |
| Financial income, net | -4.2 | -4.6 | -0.3 | -7.1% | -2.1 | -2.5 | -0.4 | -16.8% |
| Financial costs and losses | -4.3 | -4.6 | -0.3 | -6.8% | -2.1 | -2.4 | -0.2 | -11.1% |
| Financial income | 0.0 | 0.0 | -0.0 | -51.8% | 0.0 | -0.1 | -0.1 | « |
| Gains/losses in subsidiaries, associated companies and joint ventures |
-1.1 | -0.1 | 1.0 | 90.9% | -0.6 | -0.1 | 0.5 | 90.1% |
Financial costs and losses incurred amounted to €4.6m, mainly incorporating financial costs related to post-employment and long-term employee benefits of €2.0m, interest expense associated to finance leases liabilities linked to the implementation of IFRS 16 for an amount of €1.6m and interest expense on bank loans for an amount of €0.8m.
In 1H22, CTT obtained a consolidated net profit attributable to equity holders of €14.5m, which is €2.6m below 1H21, negatively impacted by the evolution of EBIT (-€10.3m y.o.y) and positively by financial results (+€0.7m y.o.y) and by the corporate income tax for the period (-€6.9m y.o.y).
Capex stood at €12.0m in 1H22, up 2.0% (+€0.2m y.o.y) compared to 1H21.
Although the same level of investment was achieved in this semester, the Company increased its investment in IT systems to support the Bank's business (+€0.6m y.o.y) and in the implementation of a physical-digital omnichannel strategy for the private customers segment (+€1.0m y.o.y). On the other hand, there was a decrease in other areas (-€1.3m y.o.y).
In 1H22, the Company generated an operating cash flow of €19.0m, a year-on-year decrease of €18.9m (-49.8% y.o.y).
| Cash flow | ||||||||
|---|---|---|---|---|---|---|---|---|
| € million | ||||||||
| 1H21 | 1H22 | ∆ | ∆% | 2Q21 | 2Q22 | ∆ | ∆% | |
| EBITDA | 57,3 | 50,4 | -6,9 | -12,0% | 28,3 | 28,4 | 0,1 | 0,5% |
| Non-cash items* | -9,3 | -3,4 | 6,0 | 63,9% | -4,3 | -1,1 | 3,2 | 74,0% |
| Specific items** | 2,3 | 2,1 | -0,2 | -10,6% | 1,5 | -0,6 | -2,1 | -142,9% |
| Capex | -11,7 | -12,0 | -0,2 | -2,0% | -5,9 | -6,1 | -0,2 | -3,3% |
| Δ Working capital | -0,7 | -18,2 | -17,5 | « | 5,4 | -12,0 | -17,4 | « |
| Operating cash flow | 37,8 | 19,0 | -18,9 | -49,8% | 25,0 | 8,6 | -16,4 | -65,6% |
| Employee benefits | -6,6 | -7,5 | -1,0 | -14,7% | -3,4 | -3,4 | 0,1 | 2,6% |
| Tax | 0,0 | -7,6 | -7.6 | « | -0,2 | -7,6 | -7,4 | « |
| Free cash flow | 31,3 | 3,8 | -27,5 | -87,7% | 21,4 | -2,4 | -23,7 | -111,2% |
| Debt (principal + interest) | -2,8 | -8,0 | -5,2 | -187,3% | -2,6 | -4,1 | -1,5 | -59,6% |
| Dividends | -12,8 | -17,7 | -4,9 | -38,5% | -12,8 | -17,7 | -4,9 | -38,5% |
| Acquisition of own shares | -6,4 | -15,4 | -9,0 | -139,8% | -6,4 | -13,7 | -7,3 | -114,4% |
| Disposal of buildings | 0,0 | 0.0 | 0,0 | - | 0,0 | 0.0 | 0,0 | - |
| Financial investments | -0,8 | -0,2 | 0,6 | 80,5% | -0,8 | -0,2 | 0,6 | 80,5% |
| Change in adjusted cash | 8,6 | -37,3 | -45,9 | « | -1,1 | -38,0 | -36,8 | « |
| Δ Liabilities related to Financial Serv. & others and |
||||||||
| Banco CTT, net915 | 128.0 | -6.0 | -134.0 -104,7% | 96.6 | 112.2 | 15.6 | 16,1% | |
| Δ Other1016 | -0,1 | 12,7 | 12,8 | » | 0,7 | 6,9 | 6,2 | » |
| Net change in cash | 136.6 | -30.6 | -167.2 -122,4% | 96.1 | 81.1 | -15.1 | -15,7% |
*Impairments, Provisions and IFRS 16 affecting EBITDA.
**Specific items affecting EBITDA.
The negative evolution of the operating cash flow in 1H22 resulted mainly from the negative performance of EBITDA and pressure on working capital as a result of a one-off increase in the average collection period.
In addition to the effects mentioned above, the €19.0m operating cash flow in 1H22 continues to be negatively impacted the payments occurred in this semester still related to the investment made in 4Q21.
15 The change in net liabilities of Financial Services and Banco CTT reflects the evolution of credit balances with third parties, depositors or other banking financial liabilities, net of the amounts invested in credit or investments in securities/banking financial assets, of entities of the CTT Group providing financial services, namely the financial services of CTT, Payshop, Banco CTT and 321 Crédito.
16 The change in other cash items reflects the evolution of Banco CTT's sight deposits at Banco de Portugal, outstanding cheques/ clearing of Banco CTT cheques, and impairment of sight and term deposits and bank applications.
| € million | |||||
|---|---|---|---|---|---|
| 31.12.2020 | 30.06.2022 | ∆ | ∆% | ||
| Non-current assets | 1,970.3 | 2,136.4 | 166.1 | 8.4% | |
| Current assets | 1,614.9 | 1,737.0 | 122.1 | 7.6% | |
| Assets | 3,585.2 | 3,873.4 | 288.2 | 8.0% | |
| Equity | 174.5 | 191.6 | 17.1 | 9.8% | |
| Liabilities | 3,410.7 | 3,681.8 | 271.1 | 7.9% | |
| Non-current liabilities | 705.3 | 853.1 | 147.8 | 21.0% | |
| Current liabilities | 2,705.4 | 2,828.7 | 123.3 | 4.6% | |
| Equity and consolidated liabilities | 3,585.2 | 3,873.4 | 288.2 | 8.0% |
The key aspects of the comparison between the consolidated balance sheet as at 30.06.2022 and that as at 31.12.2021 are as follows:
The real estate assets of CTT are comprised of two portfolios with different characteristics:
As disclosed in the press release to the market on 19 June 2022, CTT has entered into exclusive negotiations with a third party (Third Party) aimed at creating a vehicle ("Vehicle") to own and manage this portfolio, which essentially comprises (1) CTT's points of presence, particularly own retail stores that normally are located in the centre of municipalities, throughout Portugal and (2) the warehouses and logistics / distribution centres that are core part of CTT's logistics network in Portugal.
This new entity, which will incorporate the assets considered in the scope of the Yield Portfolio, will be managed externally, by a specialized and independent asset manager, and will be majority owned by CTT (~75%) New investor(s), both institutional and family offices, will take a minority position in the vehicle.
The management of this Yield Portfolio is aimed at yield generation, both internally and with third parties, of properties that are part of CTT's current and future network and that do not currently have relevant real estate development opportunities.
With regard to the Development Portfolio, this comprises, among others, properties that may become, in the near future, non-essential for CTT's logistics networks and which have a potential for real estate development and promotion in specific projects.
The CTT Group consolidated balance sheet excluding Banco CTT from the full consolidation perimeter and accounting it as a financial investment measured by the equity method would be as follows:
| € million | ||||
|---|---|---|---|---|
| 31.12.2020 | 30.06.2022 | ∆ | ∆% | |
| Non-current assets | 680.2 | 682.5 | 2.4 | 0.4% |
| Current assets | 454.9 | 416.9 | -37.9 | -8.3% |
| Assets | 1,135.0 | 1,099.5 | -35.5 | -3.1% |
| Equity | 173.9 | 191.9 | 18.0 | 10.3% |
| Liabilities | 961.1 | 907.6 | -53.5 | -5.6% |
| Non-current liabilities | 422.5 | 376.7 | -45.8 | -10.8% |
| Current liabilities | 538.6 | 530.9 | -7.7 | -1.4% |
| Equity and consolidated liabilities | 1,135.0 | 1,099.5 | -35.5 | -3.1% |
Liabilities related to employee benefits (post-employment and long-term benefits) stood at €235.6m in June 2022, down €47.6m compared to December 2021, broken down as specified in the table below:
| € million | ||||
|---|---|---|---|---|
| 31.12.2021 | 30.06.2022 | ∆ | ∆% | |
| Total liabilities | 283.1 | 235.6 | -47.6 | -16.8% |
| Healthcare | 263.5 | 215.0 | -48.5 | -18.4% |
| Healthcare (321 Crédito) | 1.5 | 1.1 | -0.4 | -28.1% |
| Suspension agreements | 9.5 | 10.8 | 1.3 | 13.9% |
| Other long-term employee benefits | 6.5 | 5.5 | -1.0 | -15.2% |
| Other long-term benefits (321 Crédito) | 0.2 | 0.2 | -0.0 | -13.2% |
| Pension plan | 0.3 | 0.2 | -0.0 | -13.4% |
| Other benefits | 1.6 | 2.7 | 1.1 | 66.7% |
| Deferred tax assets | -78.6 | -65.7 | 12.8 | 16.3% |
| Current amount of after-tax liabilities | 204.5 | 169.8 | -34.7 | -17.0% |
The decrease in the Healthcare item (-€48.5m) results from the recalculation of the liabilities following the upward revision of the discount rates used to calculate them.
These liabilities related to employee benefits are associated with deferred tax assets amounting to €65.7m, which brings the current amount of liabilities related to employee benefits net of deferred tax assets associated with them to €169.8m.
| € million | ||||
|---|---|---|---|---|
| 31.12.2021 | 30.06.2022 | ∆ | ∆% | |
| Net debt | 58.9 | 97.2 | 38.4 | 65.2% |
| ST & LT debt | 201.1 | 202.2 | 1.0 | 0.5% |
| of which Finance leases (IFRS16) | 115.3 | 125.0 | 9.7 | 8.4% |
| Adjusted cash (I+II) | 142.3 | 104.9 | -37.3 | -26.3% |
| Cash & cash equivalents | 877.9 | 847.3 | -30.6 | -3.5% |
| Cash & cash equivalents at the end of the period (I) | 857.0 | 813.6 | -43.3 | -5.1% |
| Other cash items | 20.9 | 33.6 | 12.7 | 60.8% |
| Other Financial Services liabilities, net (II) | -714.7 | -708.7 | 6.0 | 0.8 % |
The key aspects of the comparison between the consolidated net debt as at 30.06.2022 and that as at 31.12.2021, are as follows:
CTT Group net debt excluding Banco CTT from the full consolidation perimeter and accounting it as a financial investment measured by the equity method would be as follows:
| € million | ||||
|---|---|---|---|---|
| 31.12.2021 | 30.06.2022 | ∆ | ∆% | |
| Net debt with Banco CTT under equity method | 182.4 | 227.9 | 45.5 | 25.0% |
| ST & LT debt | 198.5 | 200.1 | 1.6 | 0.8% |
| of which Finance leases (IFRS16) | 112.6 | 122.9 | 10.3 | 9.1% |
| Adjusted cash (I+II) | 16.1 | -27.8 | -43.9 | -272.6% |
| Cash & cash equivalents | 215.2 | 170.5 | -44.6 | -20.7% |
| Cash & cash equivalents at the end of the period (I) | 215.2 | 170.6 | -44.6 | -20.7% |
| Other cash items | 0.0 | 0.0 | 0.0 | 81.2% |
| Other Financial Services liabilities, net (II) | -199.1 | -198.4 | 0.7 | 0.3 % |
The management of human resources is guided by the following priorities: definition and implementation of policies for human capital development that enable boosting skills, awarding performance and fostering the agility of the organization; maintenance of a good social environment; continuous investment in training and qualification; optimization and adjustment of the staff, taking into account the need to respond to market evolution and its challenges.
As at 30 June 2022, the CTT headcount (permanent and fixed-term staff) consisted of 12,803 employees, corresponding to 542 more (+4.4%) than as at 30 June 2021. These figures include the inorganic effect of NewSpring Services, with an impact of +846 workers. Without this effect, the number of employees would be 11,957, down by 302 (-2.5%) compared to 30 June 2021.
| 30.06.2021 | 30.06.2022 | Δ 2021/2020 | ||
|---|---|---|---|---|
| Mail & other17 | 10,412 | 10,993 | 581 | 5.6% |
| Express & Parcels18 | 1,361 | 1,299 | -62 | -4.6% |
| Banco CTT19 | 453 | 480 | 27 | 6.0% |
| Financial Services & Retail | 35 | 31 | -4 | -11.4% |
| Total, of which: | 12,261 | 12,803 | 542 | 4.4% |
| Permanent | 10,867 | 11,315 | 448 | 4.1% |
| Fixed-term contracts | 1,394 | 1,488 | 94 | 6.7% |
| Portugal | 11,607 | 12,122 | 515 | 4.4% |
| Other geographies | 654 | 681 | 27 | 4.1% |
Excluding the inorganic effect, there was a decrease in the number of employees in almost all business units, with a special focus on the Mail business unit and Others (-279), where projects to increase the productivity of operations have been underway, which have adapted the network to the new profile of the mail flows and reduced the need for additional hiring, as well as the HR optimization program underway mainly in the central structure.
Together, the areas of operations and distribution within the mail network (5,534 employees, of whom 4,190 are delivery postmen and women) and the retail network (2,312 employees) represented circa 69.3% of CTT's permanent staff. Excluding the integration of NewSpring Services, this staff would represent 71.7%.
The overall absenteeism rate increased to 9.3% (+1.4 p.p.). The reasons that most contributed to absences were: illness (5.2%), COVID-19 illness (1.5%), accidents (0.6%), maternity/paternity leave (0.5%), other reasons (0.9%) and union activity (0.4%).
Academia CTT pursued its activity according to the strategic focus on the development of the skills of CTT's employees based on the following methodological approach:
17 Includes NewSpring Services and HCCM.
18 CTT Expresso, Corre and CTT Express (Spain).
19 Includes Payshop and 321 Crédito.
A new process focused on the self-development of each employee was also launched. The systematisation of this programme to support the self-development of skills involved the offer of short training opportunities, webinars on demand, massive open online courses and other self-study resources on a free access platform.
In the context of Academia CTT, 14 programmes incorporating the Strategic Development and Training Plan were carried out.
The highlights of the 1st half of 2022 were the following actions:
Customer experience in the post offices In the weeks preceding the opening of the new Concept retail outlets, the entire team was involved in specific training. The contents involved an introduction to the Buzz project, the products, on customer service excellence, segmented customer service, new services, equipment and the MUDAR programme. At the end, there was a tour of the outlet.
CTT Outlets – It was a refresh of procedures, such as simplified practical guides – GPS, mail classification, weights and dimensions, additional services of mail and express, cash-ondelivery items – delivery and acceptance, control in the reception of mail, daily procedures, closing accounts, returns of items with customs duties, acceptance of contractual mail with multi-product guides.
The beginning of 2022 was marked by the pandemic, and CTT continued its prevention policy to mitigate contagion by COVID-19 in the workplace in articulation with Health Delegates, namely through a series of preventive measures such as such as the spraying and disinfection of workplaces, the purchase and distribution of individual protection material, hand and surface disinfectants, reinforcement of cleanliness, timetable mismatch, limitation of space capacity, and dissemination of information on individual prevention behaviours.
After the 1st quarter, and taking into consideration the positive evolution of the epidemiological situation caused by the pandemic disease COVID-19, CTT proceeded in alignment with the DGS (Directorate General for Health) to gradually lift the measures always with prudence and evaluating the context at each moment.
With the purpose of being active in the maintenance of health, acting in advance and avoiding work accidents and illness situations and, on the other hand, promoting health, with actions to improve the well-being and quality of life of employees, the 3 transversal action programmes designed in 2021 were pursued:
Within the scope of accident prevention and ergonomics, and awareness-raising actions, 72 interventions were carried out in the 1st half of the year to assess working conditions (risk assessment visits and monitoring visits) at various CTT establishments.
In the 1st half of 2022, there were 346 accidents at work, 8.9% less than in the same period of the previous year. The reasons that most contributed to the occurrence of accidents were road accidents, wrong movements and slips/tripping.
With regard to occupational medicine, the policy of periodic, admission and occasional evaluations continued, and in the case of female workers and workers with more complex conditioned aptitude, detailed examinations are being carried out with the aim of increasing well-being. 3,142 examinations of occupational medicine were carried out given that this activity was affected by the pandemic context in the first months of the year.
Within the scope of the Health Plan, CTT has focused on improving the health services and care available to its Beneficiaries, through access to a wide network of providers, specialisations and other quality health care. Additionally, the intervention of the social service in terms of monitoring employees, retirees and family members in need of psycho-social support and other shortcomings, as well as monitoring employees who are absent from work, with serious conditions and illnesses should be mentioned.
The CTT People management strategy aims to improve the experience of the employee, his/her level of satisfaction, his/her involvement in the organisation, the sense of belonging and pride in the brand, in order to increase everyone's commitment, making each employee an ambassador of the CTT brand, consequently improving customer experience.
In order to improve the worker's experience, two major projects with high impact on the Organization and its People stand out: the commitment to obtain the certification as Family-Responsible Entity (EFR); and the new CTT employee portal.
Pursuing the CTT People management strategy and believing that conciliation between professional, personal and family life is fundamental for the balance of each one of us and of the organisation, CTT applied, in this context, to obtain efr certification for the companies CTT, CTT Expresso and CTT Contacto.
During the 1 st half of 2022, the various stages necessary to obtain certification continued: many of the conciliation practices and measures already existing in the company were systematised and disseminated; the "Voice of the Employee" stage was carried out, which consisted of conducting surveys and focus groups in order to listen to the opinion of all employees; the "Voice of the Management" was also carried out, consisting of several interviews conducted with the Top Management and whose main objective was to assess the management style, vision, strategy and commitment to the efr management system; all the documentation required in this area was produced and internal and external audits were conducted.
CTT has obtained the certification of family-responsible entity awarded by the Fundación Másfamilia, in partnership with ACEGE, and certified by APCER.
Considering the challenges faced in the sector where CTT operates, it is essential to provide technological tools that facilitate and streamline the relationship between the company and its People. Based on this premise, My CTT, the new CTT Employee Portal was developed.
My CTT essentially aims to promote:
In the first semester, the "Performance & Goals" module was successfully implemented, allowing the Annual Performance Assessment 2021 process to be fully carried out on the Portal.
In addition to these initiatives and in order to bring the company closer to its People and their families, the Summer Internship Programme 2022, taking place in the months of July and August, reserved 50% of the vacancies for workers' children who match the requirements and profile of the functions. This initiative aims to involve the families and give workers' children the opportunity to develop skills in a business context.
Of note is also the evolution of project of the telephone support line TOU CTT 800 210 010. With a view to improving the experience of the employee, as regards inquiries and requests within the scope of the employment relationship with CTT, an email channel for support: [email protected] was created and associated to the telephone support line.
The publication of the internal communication newsletter "Somos CTT" (We are CTT) and the CTT magazine continued, in order to promote everyone's involvement and knowledge about the organisation. A new section was created, "The Success of Our Sharing", which aims to introduce the new businesses obtained by CTT's Customer Managers and share the best practices followed by them, in order to transform a sale into a success story.
More partnerships and protocols were established with companies with benefits for the employees and the 10% discount to CTT employees on products purchased in the CTT Retail Network was maintained.
Health actions were promoted, with emphasis on the prevention of lung cancer and well-being (for example, training in mindfulness), thinking of all the workers.
The "Deixa comigo!" (Leave it to me!) service continued, a service to be used exclusively by employees who need help or have received requests for help or clarification about CTT products and services from their friends and acquaintances.
In order to measure employee satisfaction, as well as the quality of their experience and the impact of policies/actions, and in line with the 1st place awarded in the category "Most Attractive Company to Work for in the Transport Sector", by Randstad (according to the chapter Awards and Recognition), the first NPS (Net Promoter Score) measurement survey for 2022 was launched in March.
Within the scope of equal opportunities and with the changes caused by the evolution of the pandemic, CTT focused on reinforcing the guarantees that all its employees felt safe, not only during the most difficult context of the pandemic, but also at the beginning of the post-pandemic period, in the return to a "new-normal" situation. Although the worst phase of the pandemic seems to have been overcome, useful information and recommendations were continuously disseminated and measures to mitigate the
main risks were promoted, always preserving the integrity of the front-line workers and of those who were able to provide their services through teleworking.
With regard to diversity in management positions, the Board of Directors continues to meet the objective established in the CTT Equality Plan and in Law 62/2017, integrating 33.3% women in the Board of Directors and Supervisory bodies.
The employees and their families were encouraged to participate in internal pastimes with prizes for family enjoyment and were invited to practical online initiatives/classes for health protection and wellbeing. The SOU CTT partnership programme with various entities continued to be promoted and to offer preferential prices for employees in various areas, with special focus on health, sport and family.
Within the scope of the activities with Fórum iGen – Organisations Forum for Equality, and the involvement with CITE – Commission for Equality in Labour and Employment, CTT once again participated in the actions of the Working Groups (WG), having become part of WG2, aimed at designing and further developing the equality measures to be implemented by the Forum members. To that extent, on 18 May, CTT renewed its commitments, once again signing the Accession Agreement.
The Company's Plan for Equality 2022 was published internally and externally, whereby ten measures to be implemented by the end of the year were presented. These measures cover the following aspects:
As mentioned in section 4.2.4 above, the pursuit of this last axis of action, as well as of the CTT People management strategy, and in the conviction that reconciling professional, personal and family life is fundamental for the balance of each one of us and of the organisation, CTT aimed at obtaining certification as a Family-Responsible Entity (EFR), for the companies CTT, CTT Expresso and CTT Contacto. As detailed above, CTT has obtained the certification of family-responsible entity awarded by the Fundación Másfamilia, in partnership with ACEGE, and certified by APCER.
Banco CTT's diversity policy was once again reinforced with the implementation of a professional internship adapted to a female employee with intellectual limitations, which began during the 1st half of 2022. The objective is to train her for her possible continuity in the bank's team.
One of the highlights of this semester was the presentation of Locky, the new locker company of the CTT Group, which already has an offer of over 350 lockers, located in various parts of the country, namely in retail chains, supermarkets, shopping centres, university campuses, intermodal transport platforms, car parks, hospitals and also gas stations. Locky lockers allow worry-free, simple reception of parcels, in lockers of different sizes and with different compartments so that customers can receive the most varied objects, always in convenient locations.
The entire use of the locker network is simple and intuitive. The addressees decide when they are buying online whether they want to receive the item in a Locker by identifying what is most convenient for them and, after the item has been deposited, they decide when they will pick it up. The interface with the recipient is based on sending, via SMS and email, the secret code that allows them to interact with
the locker and receive their parcel. This entire journey was designed and implemented with the support of CTT's Digital Factory.
In addition to all the advantages they offer customers, Locky lockers also bring environmental advantages, since final distribution has a consolidating effect that reduces the number of delivery vehicles dispersed in an urban environment. As a single locker enables delivery to several addressees, travel to different homes is avoided and, the more deliveries to lockers, the greater the reduction in travel, generating fewer carbon emissions associated with the last mile.
Locky has established partnerships with various entities for the installation of lockers, such as Galp, with the installation of about 90 lockers in various gas stations, from north to south of the country. Thus, Locky and Galp now offer an exclusive service to its customers and employees, as well as the local community.
CTT has extended its shipping plugin service to online shops created on the ePages, ECWID and OpenCart platforms.
CTT's recent e-commerce service, which allows customers to automate their shipments, was launched in April 2021 but until this launch, only shops created on Prestashop, Shopify, Magento and Woocommerce could integrate shipping services.
With this extension, the online shops created on these platforms benefit, free of charge, from various functionalities, such as the automatic import of parcels and generation of transport documentation, the updating of the item code and status of the parcel in the online shop, and the request for complementary services, such as cash-on-delivery or the delivery time window.
This is a service that also allows the client to present in its shop the 1700 CTT delivery points as a delivery option for clients, where the lockers solution and its expanding network in the country are included.
In parallel, CTT, AMEN and Dominios.pt established a partnership in order to allow the latter's clients to benefit from the shipping plug-ins to automate the shipping of their online shops, thus contributing to the development of the e-commerce ecosystem in Portugal.
CTT launched a new version of the 'e-letter' portal, with the purpose of further simplifying the sending of mail by customers.
The portal is now more accessible and intuitive, bringing numerous advantages in its use, including: faster interface, no limits on simultaneous mailings, improved user experience and greater search capabilities. The 'e-letter' solution is an online mail production service that enables sending from a given company's computer, as CTT is the one that ensures printing, enveloping and dispatch, therefore there is no need to go to a CTT Post Office or letter-box.
In this way, while CTT helps make the entire process of sending mail simpler, the client reduces time and resources by digitally processing documents, printing and enveloping at the lowest cost. Mail management becomes more efficient, allowing to define approval mechanisms, generate usage reports and track the status of mail/documents from production to delivery. With the new 'e-letter' portal you can also consult the history of your mailings for a year.
In addition to the advantages for customers, the 'e-letter' also has an environmental aspect, reducing the ecological footprint in the creation and transport of mail.
CTT is committed to pursuing developments within the scope of the digital transformation of the customer experience and journey, with emphasis on:
This is an interaction programme with startups, whose main objective is to support and accelerate ideas or business solutions aligned with the needs and strategic objectives of the CTT Group, making the innovation process more agile and reducing uncertainty in the development of new products, services or business models.
Since its creation, the programme has mapped more than 1800 companies, with 29 projects currently underway: 12 in business partnerships, 17 in co-creation projects (4 in technical pilot and 13 in production) and one acquisition – Recibos Online.
During the first half of 2022, partnerships with LACS, Monday and Microsoft for Startups were signed and operationalised to strengthen the 1520 network. Between CTT and LACS, the agreement aims to take advantage of complementary features and synergies in three main areas of collaboration that can jointly leverage entrepreneurship in Portugal, namely: the installation of the CTT 1520 StartUProgram in LACS spaces; and the strategic partnership for reflection on the use of CTT spaces.
The publication of the 1520 newsletter continued and the first CTT 1520 StartUProgram Let's Talk event was organised. The theme of this CTT Session was "How can partnership networks add value to the startup ecosystem" and included the participation of the partners of 1520, namely Microsoft, Portugal Ventures, LACS, Iberis and Monday, as well as a moment for startups to pitch.
CTT started to participate in the Open Innovation Mobility Booster programme, promoted by the startup accelerator BGI and supported by the European Institute of Innovation & Technology – EIT Urban Mobility. CTT was invited to present a challenge in the mobility area, for which BGI will carry out a process of identification and selection of startups with potentially suitable solutions. The selected startup will develop a pilot with CTT during 2022. With this initiative, CTT becomes part of the EIT Urban Mobility international network and gains access to network partners, thus creating another startup identification channel for the 1520 programme and also for the TechTree investment fund.
The TechTree investment fund, launched by CTT to support innovation activities in small and mediumsized companies and startups, has invested in two Portuguese startups with solutions in the Operations and Logistics area, thus reinforcing the connection and support to the national business fabric and boosting the development of innovation in companies. The investment was made in the startup KIT-AR, in the area of augmented reality (augmented work) for industrial production, and in Sensefinity, in the area of logistics, with CTT's investment fund having participated in the funding round for KIT-AR.
KIT-AR promotes a platform that reduces production errors in industry by using augmented reality and artificial intelligence to expand the capabilities and outcomes of workers on the factory floor and make them more efficient.
Sensefinity is developing an Internet of Things platform focused on providing real-time critical commodity and asset metrics to companies to provide visibility into their supply chain.
KIT-AR and Sensefinity are recognised by the National Innovation Agency as suitable entities to practice research and development activities, which allowed the investment of the TechTree fund under the SIFIDE II programme.
The CTT Group has awarded GAM (BME: GALQ), a Spanish multinational company, specialised in providing integral bespoke machinery solutions, with the supply of over 200 machines – including pallet trucks and maintenance equipment. The new Iberian-wide collaboration agreement, worth 4 million euros, will have a total duration of 5 years and involves both CTT's facilities and activities in Portugal, and those of CTT Express in Spain. Within the scope of this partnership, GAM will also provide training to the workers of the express delivery company.
The agreement is part of the investment that has been made to improve the distribution process, which is supported by new facilities, a high level of automation and a uniformly equipped network, for the benefit of e-commerce customers.
Implementation of a new Mobility App to support Express Distribution in partnership with the CTT Express team. Following its implementation in Spain, the Operations/IT team in Portugal adjusted it to the reality of Portugal (for example, banking services or collection processes), and now there is an Iberian app that allows for synergies between the two geographies. The app is currently available in 270 Express delivery rounds, with its expansion to the remaining express delivery rounds planned for the beginning of the second half of the year.
E-commerce distribution is an extremely competitive environment, where new services and customer interactions are constantly improving, creating constant pressure on operations and, on many occasions, the only way to comply with distribution adjustments is manual package sorting until all the sorting plans can be adjusted or the machine supplier can update its SW. In order to avoid dependence on the equipment suppliers, whenever it is necessary to change/add new criteria for the sorting of items, the Decision Server project was developed, which gave CTT autonomy to manage the business rules that support the Express parcel handling process.
The sorting decisions for each package, in this innovative model, are changed in real time and new rules can be set or removed in minutes, without any dependence on machines or supplier costs. Every day, over 200 thousand parcels are managed by the Decision Server in CTT's seven high capacity sorters, deployed throughout the country and for all different types of operation (national, regional and delivery). The Decision Server also facilitates the transition from the postal network to the express network. With the decrease in mail volumes it is now easier to increase the number of parcels that can be sent automatically to each delivery post office to compensate for this reduction.
CTT, Banco CTT and CTT Express have prepared applications to the SIFIDE programme.
Three Mobilising Agendas, in whose applications CTT participated, were approved in Phase II of Call C5 – Business Innovation of the Recovery and Resilience Plan – PRR. In these agendas, CTT participated in consortium with several relevant entities of the national scientific and technological system, as well as with other players from different industries.
The execution of the Productive Innovation project dedicated to the modernisation of CTT Expresso's operations, whose application was approved in early 2021 under Portugal 2020, continued.
CTT obtained the COTEC 2022 INNOVATIVE STATUS, awarded by the Business Association for Innovation, COTEC Portugal, for the second consecutive year. This status was awarded for achieving high standards of financial soundness, innovation and economic performance, and is a seal of reputation and prestige that recognises the quality of the company's leadership, management and performance.
There was also the launch of the 6th edition of the PostEurop Innovation Award, an initiative of the Innovation Forum, a PostEurop working group, whose chairmanship is ensured by CTT. This association, which has brought together and represented European postal operators since 1992, promotes cooperation, sustainable growth and innovation, and is a Restricted Union of the Universal Postal Union (UPU).
CTT published the Trends Report 2022, a document that aims to identify the main drivers of change and the trends that will impact in the short, medium and long term, the sectors where CTT operates, namely Mail, Express, Parcels and Logistics, Banking and Financial Services and Retail. It counted on the contributions and testimonies of several international experts in the sector.
The session "What's Next?" was also held, on Web 3.0, where topics such as the metaverse, cryptocurrencies and NFT were addressed. The objective of these sessions was to share knowledge with those who work at CTT on frontier innovation topics, with the contribution of several international and national experts.
As part of the dynamics of the corporate platform for idea management, INOV+, a PitchDay was held for selected ideas from the 11th cycle. The production of the internal newsletter, Postal 360, continued, with the publication of innovation news.
It should be noted that one of the ideas presented on the Inov+ platform, that of reusing printed and discarded paper, gave rise to the "Paper Strips" project, whose implementation took place during this semester, as indicated in the chapter on Natural Capital.
CTT's social and environmental patronage policy has placed strong emphasis on the themes of culture, language, sports and health.This semester, this support represented a total investment of €324,965.20, corresponding to a 19% increase compared to the same period of last year.
The first half of the year was indelibly marked by the war in Ukraine and CTT joined many other solidarity initiatives carried out by companies and civil society organisations. The solidarity campaign "Help the people of Ukraine" was available to CTT customers, between 2 and 8 March, in all CTT post offices, from north to south of the country, including the Autonomous Regions of Madeira and Azores. Anyone could come to our post offices and leave a package with their goods:
CTT once again used its retail network covering the entire national territory to collect donations from everyone and used its transport logistics to concentrate and ship them to their final destination. As a result, 40 tonnes of donated goods were sent to Ukraine, in 240 pallets of materials, which loaded eight trucks and one plane. The participation of several partners should be highlighted: TAP, Transportes Bernardo Marques, Transportes Pascoal and Transportes Figueiredo e Figueiredo, as well as Galp and, above all, almost 50 internal volunteers from CTT, who dedicated themselves to the heavy logistics work of preparing these shipments.
As for the preservation of the environment and biodiversity, plantings related to the "A Tree for the Forest" project, which had been suspended or carried out with no participation of volunteers due to the pandemic restrictions, were resumed. A few weeks before the beginning of spring, Quercus and CTT joined efforts to plant about 6,000 trees of native species, corresponding to the kits sold in the previous edition of the project. The action took place at Mata da Machada, in Barreiro, during 4 days.
CTT once again launched the "Let's Support Culture" project, with some developments that deepened the experience of the project started in 2021. This time, the purpose is to support three institutions: the National Culture Centre (the organisation that had already been supported in 2021), the Audiovisual Union and the Casa do Artista. Thus, for each philatelic book sold by CTT, one euro reverts to each of these institutions and another two euros will be proportionally attributed, according to the choice of the Portuguese, in a vote open to all.
CTT continued to promote the volunteer mentoring and tutoring project in partnership with EPIS. We supported 16 young people at risk of school failure in the municipalities of Amadora and Moita, mostly through electronic means but, with the easing of the lockdown measures, increasingly through physical meetings. That was what happened on April 8, with a visit to the Oceanarium, preceded by a workshop dedicated to the theme of marine plasticology. Closer to the end of the school year, on June 9, the students mentored were invited to visit the Southern Logistics Production Centre, in Cabo Ruivo, where they also had the opportunity to present the videos made with the mentors, in compliance with one of the dynamic aspects of this project. It is possible to report that 88% of the EPIS-CTT students covered in the programme successfully completed the school year.
The internal volunteer actions that require physical presence gradually returned. A first attempt to perform a blood collection, at the CTT Building, with the Portuguese Institute of Blood and Transplantation, was not possible in February, due to the restrictions imposed by the pandemic at the time. But on 21 June, 48 volunteers came forward to donate their blood. Of these, after medical screening, 29 were able to make their donation and a new action of this kind is already planned for October.
The actions were not restricted to the CTT Building. In this context, two outdoor actions were promoted, namely the cleaning of two beaches: one in Canidelo, municipality of Vila Nova de Gaia, and the other in Algés, municipality of Oeiras. In this action, which took place on 28 May, we had the participation of 42 volunteers, who collected 1726 cigarette butts and about 24 kg of waste, including plastic, glass, textiles, processed wood, paper and cardboard, and metals (soft drink cans).
A team of Banco CTT volunteers carried out actions for the distribution of food baskets, in partnership with Crevide, which is responsible for coordinating the distribution of food baskets in Loures and is a mediator in Moscavide, supporting 536 users. This action took place four days per month and had the participation of nine volunteers in the period under review.
The customers' opinion on quality of service, expressed through daily satisfaction surveys, shows that 84.8% of the respondents perceive CTT's overall quality as good or very good and consider CTT as a trustworthy company.
Some subsidiaries carried out specific surveys to their customers. This is the case of CTT Express, in Spain, whose final clients are satisfied with the brand in 81.63% of cases and which expanded the survey to the branches it works with, which were satisfied with the brand in 87.5% of cases. Similarly, Banco CTT, in a survey conducted monthly among its clients, had a 78.8% percentage of clients who said they were "very satisfied with the Bank" (this survey was conducted between January and May 2022).
CTT has been making a significant investment in the implementation of certified management systems in various fields. As regards the 1st half of 2022, 520 CTT retail outlets were externally certified, which already means an increase compared to the 400 outlets certified in 2021. As mentioned in the chapter on Human Capital, the audit for obtaining the Certification as Family-Responsible Company is at the final stage.
During the first months of 2022, CTT continued to be attentive to the social and economic consequences of the COVID-19 pandemic and maintained various proximity initiatives with the most affected populations. In this sense, CTT expanded the coverage of self-service lockers, including to Spain. These now have a new designation: Locky. The Criar Lojas Online (Create Online Stores) product was also an important investment in connecting CTT to small and medium-sized enterprises, strengthening the e-Commerce ecosystem in Portugal, this time with a partnership with PHC Software to simplify management by entrepreneurs. In the Azores, CTT signed an agreement with a supermarkets company, INSCO – Insular de Hipermercados, to deliver products from its online shop to the islands where there is no physical offer.
Aligned with its mission and business, these initiatives assume a strong social responsibility aspect and reflect CTT's engagement with the community.
Claims are an opportunity for the continuous improvement of internal processes, as well as in the detection of anomalies verified in the use of products and services in the CTT group. Customer Support is responsible for disseminating the voice of the customer throughout the organisation, seeking new solutions to increase our customers' satisfaction.
In the 1st half of 2022, 191,288 complaints were filed regarding the Mail and Express areas, a decrease of 3% compared to the same period of the previous year. This decrease in claims was mainly due to the improvement of internal processes with the introduction of new tools that allowed an increase in the resolution capacity in the first line of contact.
In the Mail business unit, 73,514 processes related to customer claims on commercialised services and products were registered in the application of support for the handling of claims, corresponding to an increase of 6% compared to the same period of the previous year. The main reasons for claims are related to delays in the delivery of items, and lost items.
With regard to the Express business unit, 111,738 claims were registered, translating into decrease of 8%. The reasons with the greatest impact on Express claims are loss and late delivery of items.
In relation to compensations, during the 1st half of 2022, 10,369 were processed in the Mail business unit in the amount of €396,300, having stabilised when compared to the same period of the previous year. The compensations of the international service accounted for 85% of the total amount. The most frequent causes of the compensations are lost items and lack of response from the destination postal operator, service error.
Regarding the services covered by the Universal Postal Service (SPU), the number of complaints received registered a decline of 33.8% in the 1st quarter of 2022 compared to the same period of the previous year, with a significant reduction in the number of claims received both in the scope of the domestic service (-34%) and the international service (-33.7%).
The most common reasons for complaints in the SPU are related to delays in delivery and problems in the distribution of items and are mainly due to the increase in the volumes of bulky items and to operational constraints due to the worsening of the epidemiological situation, derived from the increase in active cases associated with the COVID-19 pandemic in the first two months of the year.
With the creation of a new Social Network Management Model, it was possible to provide the self-care functionality through chatbots to support customers on Facebook, WhatsApp and on the Customs Clearance Portal. The possibility of contacting a human assistant was maintained, in case the information provided does not meet the customer's needs. In the CTT Support Line for Private Customers, a voicebot was introduced in the "Track items" option, which allows the customer to know the status of his/her item and, if the customer needs more information, there is the possibility of being referred to the Customer Support. Internal processes have also been improved to provide better Customer Support which is also closer to their needs.
Communication was thus simplified and the Company's positioning in terms of innovation and proximity with its customers strengthened.
20 Data relative only to the 1st quarter of 2022, as communicated to ANACOM.
In the 1st half of 2022, a total of 1,479,780 contacts were received through the Customer Support channels, representing an overall decrease of 14% compared to the same period of the previous year. In the voice channel 1,014,381 calls were received, representing 69% of the total contacts received and registering a year-on-year decline of 18%. With regard to the written channel, we received 344,370 contacts, representing 23% of the total contacts received, corresponding to a decrease of 27% compared to 2021. In the social media, contacts received totalled 121,780, representing 8% of the overall contacts received.
CTT sustainability strategy is aligned with the global ambition of limiting global warming to 1.5ºC until 2030 and also with the interests and priorities of stakeholders in matters of environmental and social responsibility, such as the protection of biodiversity and the national forest, and the support for the development of underprivileged populations.
The continuous and intense use of fossil fuels - a non-renewable energy resource - is one of the main causes for the growing emission of Greenhouse Gases (GHG) into the atmosphere and, currently, their concentrations are the highest ever. This has innumerable consequences, such as the increase in the Earth's average temperature - which has seen very rapid growth in recent decades - extreme climates and climate disasters.Thus, the management and valorisation of energy sources and energy itself are one of the greatest challenges of our time and require the utmost attention.
The gradual opening of the society following the lockdown measures for the safety of workers adopted to tackle the COVID-19 pandemic in 2020, as well as the consolidation of the e-commerce growth trend, propelled an increase in energy consumption by CTT in the 1st half 2021 versus the same period of the previous year. With regard to the comparison of 1st half of 2022 with the same period of 2021, the performance shows greater homogeneity, with an estimated variation of only 0.5%. Contributing to this is the network's electricity consumption with an estimated increase of 1.2%, largely due to the installation of more mechanised parcel handling equipment by CTT Express in Spain to accompany market growth, as well as the higher number of km travelled by CTT's alternative fleet. Also, the consumption of thermal energy for air conditioning the CTT headquarters building increased, due to a higher occupancy rate compared to the 1st half of 2021.
| GJ | 1H21 | 1H22 | Δ 1H22/1H21 |
|---|---|---|---|
| Total green electricity consumption | 64,082.8 | 64,860.4 | 1.2% |
| Solar panel power consumption | 63.6 | 1,193.4 | 1776.4% |
| Thermal power consumption | 2,305.6 | 3,169.9 | 37.5% |
| Total fuel consumption | 112,191.7 | 110,326.2 | -1.7% |
| Total gas consumption | 512.3 | 540.5 | 5.5% |
| Total | 179,156.0 | 180,090.4 | 0.5% |
Fuel continues to be the main source of CTT's energy consumption (61%). Despite an improvement of 0.1 litres/100 km in heavy vehicles, this was offset by a degradation in the consumption of light passenger and goods vehicles. This degradation is closely related to the increase in the average age of the fleet and to the variation in the activity profile, that is, an increase in the use of vehicles of greater volume in response to greater volumes of express mail and parcels transported. The lower total consumption of litres of fuel is mainly the result of fewer kilometres travelled by the heavy vehicle fleet, associated with transport network optimisation processes, and the increase in kilometres travelled by the electric fleet.
In the 1st half of the year, Guarantee of Origin certificates were purchased for CTT's electricity consumption in 2021. This mechanism is used by CTT since 2015 and guarantees that the electricity consumed by CTT in 2021 was produced, in an equal amount, through 100% renewable sources.
Energy efficiency measures have been implemented in CTT buildings, mainly in the post offices and postal delivery offices, with the installation of more efficient lighting, renewal of air conditioning equipment, the improvement of electrical boards, the installation of infrastructures for charging electric vehicles and interventions in lifts, reinforcing the commitment to optimize energy consumption. Followup was also ensured of the legal obligations applicable to CTT's building stock, in terms of energy certification and energy audits. A total of 562 interventions were carried out, with an investment amount of €367k. The legal obligations applicable to CTT's real estate were also followed up, in terms of energy certification and energy audits.
Additionally, an energy efficiency project for CTT facilities for the 2020-2022 period continued. This project consists of monitoring energy consumptions of up to 72 relevant facilities, covering 93% of the overall consumption of the CTT buildings, identifying the technical details of each facility and opportunities of energy efficiency improvement and proposals for actions. Since the beginning of the project energy savings of around 16% and monetary savings of €92k have been achieved in all the facilities involved. The main measures are in terms of lighting (management/adjustment of lighting to operation, power reduction, lighting switch-off, readjustment of movement sensors and replacement by LED lamps) and air conditioning (adjustment of operating hours and reduction of fan speed). At the beginning of this year, we highlight the wisemeter installations in Évora (MARE) and in the CTT Expresso logistics centre in Viseu.
CTT has invested in the installation of a UPAC - Production Unit for Self-Consumption – at CTT Expresso's warehouse in MARL (Lisbon Region Supply Market). The installed power is 410 kWp and allowed a production of 314 MWh in the 1st half of 2022, which represents 2% of the site's consumption during the past year. The energy produced is destined for CTT consumption and, if there is a surplus, it is injected into the network.
CTT has also regularly invested in the renewal of its conventional fleet, according to the multi-annual renovation plans, which has an average of 4.2 years and remains one of the largest and newest in Portugal.
CTT operates one of the largest and most modern fleets of national companies, composed of 3,974 vehicles under direct operation, with transport services also being outsourced to third parties. CTT's fleet includes 497 alternative vehicles, predominantly electric vehicles, corresponding to 12.5% of the total fleet. During the period under analysis, 71 more light goods vehicles and 44 motorbikes entered into operation and the charging infrastructure was reinforced with the installation of 63 22kW AC chargers on the mainland Portugal and in the autonomous regions. Electric vehicles do not emit particles and NOx during their use and, as CTT acquires 100% of electricity from renewable sources, the carbon impact of these electric vehicles is zero, contributing to better air quality in cities. Also noteworthy during the reporting period is the entry into operation of 5 Delivery Offices equiped exclusively with electric vehicles: 1000 Lisboa, 1300 Lisboa, 2750 Cascais, 9880 Santa Cruz da Graciosa (Azores) and 9400 Porto Santo (Madeira).
The kilometres travelled by CTT's fleet of alternative vehicles increased by 124% in relation to 2021, not only due to the increased number of this type of vehicle but also due to the optimisation and expansion of its activity.
As a pioneer company in the incorporation of electric vehicles in its vehicle fleet and in the permanent innovation of its products and services, CTT tested several electric vehicles in an operational context: Citroen AMI Cargo, Maxus and eDeliver 3 and 9 vans and Arrival vehicles. All these vehicles, being electric, are characterised by the fact that they do not emit greenhouse gases during their use, are silent and also easier to drive (no gearbox). They contribute to reducing CTT's ecological footprint and mitigate the risk of circulation restrictions in urban/historic areas to conventional vehicles. This assessment is essential for future options to increase CTT's electric fleet.
As energy transition is an unavoidable trend nowadays, CTT intends to continue its path promoting efficiency in terms of fossil fuel consumption and electricity consumption from renewable sources and supporting the transition to a sustained and increasing incorporation of electric vehicles and/or vehicles powered by alternative fuels in the fleet. For about a decade, electric vehicles have been gradually incorporated into CTT's fleet, from electric bicycles, cargo vehicles especially adapted to postal distribution, light goods vehicles and, in the last few years, light passenger vehicles.
After the launch in 2020 of the CTT Green Deliveries service, in response to the search for less pollutant and more carbon neutral solutions by its business customers, in the first semester the number of vehicles and clients of this services grew again. The Green Deliveries service allows the end customers to receive their parcels by CTT electric vehicles in the cities of Lisbon and Oporto, for the contracted locations. CTT's electricity comes from 100% renewable sources, which makes this delivery carbon neutral. In addition, the project includes the collection of coffee capsules for recycling purposes, taking advantage of the return trips made for parcel delivery.
Raising awareness on safe driving has been a usual topic of focus and importance for CTT, in view of the size of the fleet and the large number of employees who travel the country's roads on a daily basis. CTT's Road Prevention Programme covers all aspects in which human intervention can exert a positive influence, paying special attention to the training and awareness-raising of all the employees. In this regard, inhouse training and awareness-raising actions were promoted, involving a total of more than 30,000 participations, including all kinds of actions (awareness-raising, practical training of driving and training for senior managers). Preliminary accident data indicate a slight reduction in work-related accidents with a road cause and a small increase in material damage accidents.
The creation of the CTT Road Safety Plan 2022-2030, aligned with the objectives of the Road Safety Decade 2021-2030, is underway. It should be noted that CTT was recently invited to chair the Road Safety Expert Group of the UPU - Universal Postal Union.
Also within the scope of the fleet, several training/awareness-raising actions were carried out: Zero Rate Driving, Cinto-me vivo (action to raise awareness to the need to use safety belt held in conjunction with ANSR - National Authority for Road Safety), CTT electric vehicles, two-wheeled vehicles and road accidents, Mobile Phone and Driving, and eco-defensive driving.
In the 1st half of 2022, CTT continued to develop the actions foreseen to be undertaken within the scope of the Lisbon Green Capital Commitment 2020 – Lisbon 2030 Climate Action, and the Corporate Mobility Pact for the City of Lisbon was concluded. The Lisbon Green Capital Commitment 2020 seeks to ensure the contribution of the different economic agents in the achievement of the goals and targets defined under the Action Plan for Sustainable Energies and the Climate, and fosters a new vision of the city of Lisbon with a view to carbon neutrality by 2050. To this end, CTT submitted 14 measures in the following categories, aimed at improving the company's environmental performance: energy, mobility, water, circular economy, and citizenship and participation. The Corporate Mobility Pact for the City of Lisbon was a public, voluntary, free of charge and collaborative agreement between the Lisbon City Council and a group of 55 companies and institutions, aimed at actively improving mobility in the city of Lisbon, through the development of more ecological, safe and efficient mobility actions. The endorsement of this agreement publicly reinforced CTT's commitment to sustainable mobility and carbon management, in a continuous attitude of engagement, transparency and commitment. According to the Lisbon City Council, this pact identified, in terms of the promotion of electric vehicles, potential savings of approximately 10k tons of CO2, to which CTT will have contributed with approximately 380 tons.
In order to meet the expectations of its customers, CTT continues to develop its network of parcel lockers. These lockers allow CTT e-commerce customers to pick up their parcels more conveniently and within more extended operating times. At the end of the 1st half of the year, the locker network was made up of 350 units nationwide, with its expansion planned until the end of the year. On an operational level, lockers allow CTT to optimise distribution operations by delivering more parcels per km travelled, with the consequent associated environmental gains.
In the 1st half of 2022, there was a decrease of 1.6% in CTT's total CO2 emissions of scopes 1 and 2 (scope 1 - fuel consumption by the fleet and gas consumption in buildings, scope 2 - power and air conditioning consumption), in relation to the same period of the previous year, primarily derived from the slight decrease of 2% in fuel consumption. The reasons for this decrease are presented above under the topic "Energy".
Indirect emissions (scope 3) result from indirect consumption along the value chain, which includes outsourced road, air and maritime transport, delivery made by vehicles owned by the postmen and women, and travelling on Company business and commuting, the latter two not covered in the data presented below:
| 21 t CO2 |
1H21 | 1H22 | Δ 1H22/1H21 |
|---|---|---|---|
| Direct emissions – Scope 1 | 7,990.8 | 7,858.9 | -1.7% |
| Indirect emissions – Scope 2 | 4.6 | 6.3 | 37.0% |
| Indirect emissions – Scope 3 | 23,675.8 | 24,762.6 | 4.6% |
| Total emissions (Scopes 1, 2 and 3) | 31,671.2 | 32,627.8 | 3.0% |
The activity of the outsourced road fleet increased (1% of the distance travelled), with direct impact on the associated carbon emissions. However, a significant part of CTT's cargo activity was outsourced during 2021, a component that is not reflected in the reported carbon emissions performance. It is worth highlighting that CTT has been investing and implementing dynamic routing systems, which enhance the optimization of routes and, consequently, the energy efficiency associated with transporting and distributing mail, parcels and express items. With regard to the km travelled by the vehicles belonging to the postmen and women, there was a high reduction in the km travelled in light goods vehicles.
The emissions resulting from the air transport of mail, express and parcels products registered an increase compared to the same semester of the previous year. In domestic air transport, there was a 27% increase in the weight of EMS (express) transported and 35% in postal parcels, because, since flights were resumed, this allowed for the preferential use of this mode of transporting postal items. International air transport increased by 39.5% in total weight transported, especially in EMS with a 76.3% increase, although difficulties remain in the offer and operation of international flights.
Emissions resulting from sea transport of mail, express and parcels decreased by 5%, due to the fact that air transport was preferred as a result of the greater number of flights available.
| t CO2 | 1H21 | 1H22 | Δ 1H22/1H21 |
|---|---|---|---|
| Air transport | 6,734.8 | 7,545.9 | 12.0 % |
| Sea transport | 58.4 | 55.6 | -4.8 % |
| Road transport by outsourced fleet | 16,136.5 | 16,601.6 | 2.9 % |
| Delivery by postmen on motorcycles | 746.1 | 559.6 | -25.0 % |
| Air and rail travel on company business | nc | nc | nc |
| Commuting | nc | nc | nc |
| Total outsourced transport (Scope 3) | 23,675.8 | 24,762.7 | 4.6 % |
CTT considers that the combat of climate change is an increasingly important topic for society and for companies and has been pursuing a long journey of promoting and supporting energy transition.
CTT has been experiencing increasing pressure from customers to seek less polluting or carbon-neutral solutions. CTT anticipated this trend with the launch of "green mail" in 2010 and currently the express
21 Scope 1 Fleet: value estimated based on the emission factors published by the Portuguese Environment Agency (APA) (https:// apambiente.pt/sites/default/files/_Clima/Inventarios/NIR20210415.pdf) and the Global Warming Potential Values - IPCC Fifth Assessment Report (AR5), by converting pollutant emissions to CO2, and based on emission factors for CH4 and N2O. Excluding CORRE, NNS and HCCM. Scope 1 Gas: value estimated based on Order 6476-H/2021 and the WRI GHG Emission Factors Compilation, by converting pollutant emissions to CO2, and based on emission factors for CH4 and N2O. Excluding CORRE, NNS and HCCM fleets. Scope 2 Thermal energy: 2020 value estimated based on the WRI GHG Emission Factors Compilation; 2021 value estimated based on Order 4343/2019 and https://www.sce.pt/relatorio-dgeg-factor-energia-primaria-da-rede-da-climaespaco-v0/. Scope 3, excluding travelling on Company business and Commuting: value estimated based on the WRI methodology of the Greenhouse Gas Protocol tool for mobile consumption version 2.6, by means of the conversion factors in the Compilation of emission factors used in the cross-sector tools for the various fuels used by the fleets and applied to their consumptions. Excluding travelling on Company business, commuting, CORRE, NNS and HCCM.
offer in Portugal is also carbon neutral, with no added costs for customers. Overall, the carbon neutral offer represents 16.2% of CTT's total revenues.
Keeping the focus on the proper management of resources and extending the useful life of products, CTT has been developing projects in the circular economy field. In this sense, we continued the partnership with To Be Green, a spin-off from the University of Minho, which consists of recycling used COVID-19 masks, through their chemical transformation into polymeric polypropylene plates, allowing the creation of new products. From the point of view of waste recovery and the circular economy, this initiative generates a positive impact, since this waste, usually disposed of in ordinary bins, gains a new value. In December 2021, as the first fruits of this project, around 6,000 masks used in CTT's operational areas were collected, which contributed to the production of around 3,200 small Christmas decorations delivered to the employees in these areas. Given the good reception by CTT employees, in 2022, this action was extended to more buildings, including the CTT Headquarters in Lisbon.
Also in this context, the Paper Strips pilot project includes the use of 100% paper waste from CTT buildings, providing customers with strips of paper to package their parcels free of charge. This is also an initiative that promotes the circular economy and waste recovery, since paper goes from being waste to being a filling resource, thus reducing its production as waste. A survey was conducted to assess the receptiveness of customers and post office employees, and the evaluation was "Very Positive" and "Positive" for 100% of customers surveyed.
As part of the eco portfolio, CTT Reusable ECO Packaging was launched in 2021, in partnership with Sanjo and Naz. This is aimed at e-commerce clients, being an alternative to single-use packaging and designed to be used up to 50 times, thus bringing numerous advantages at environmental level: reduction of waste inherent to single-use packaging options, reduction of the carbon footprint related to their production and also the promotion of the circular economy through reuse. In this context, a partnership was recently established with Decathlon, which, as an e-seller, may now pack its online shipments in reusable packaging and, in turn, e-buyers may choose to receive their products in this type of packaging (for now, only in Lisbon). By choosing to receive a parcel in a CTT Reusable ECO Packaging, the buyer must return it to CTT shops, in selected mailboxes or directly to the distributor upon delivery of the parcel, so that the purpose of this product is fulfilled and its useful life is extended.
Also with the aim of contributing to proper waste management, but also wanting to reduce impacts on biodiversity, CTT carried out an environmental volunteering action with its employees and their families, which consisted in the removal of marine litter from two Portuguese beaches. The waste was collected by category of the materials (plastic, glass, paper and cardboard, textiles and cigarette butts, among others), with a view to their subsequent recycling. A total of 10.7 kg of plastic and 1,726 cigarette butts were collected.
Although the impacts on biodiversity are considered to be indirect, CTT dedicates special attention to their mitigation. The "A Tree for the Forest" initiative was again held for the 8th consecutive year, in partnership with Quercus, which aims to reforest with native species some areas of the country, namely protected areas, Classified Areas and National Forests with high fire risk or more affected by forest fires, having already enabled the planting of more than 100 thousand trees. In this edition, 6,700 kits were sold, which represented the number of trees planted – this time at Mata da Machada, in Barreiro – 6,000 of which by more than 500 volunteers.
As awareness and the availability of information are truly crucial points in the promotion of environmental sustainability, CTT regularly undertakes, internally and externally, numerous initiatives
that promote awareness on the subject, the dissemination of good practices and also alert to certain environmental aspects, such as the conservation of resources and the protection of nature, among others.
To this end, several articles and content of an environmental and social nature were published in the CTT magazine, for internal dissemination, with a view to raising employees' awareness. Similarly, environmental content was also broadcast on the internal CTT TV channel, in the head office building. There were also themed days, such as the International Recycling Day, where, with a view to promoting environmental literacy, information was made available about the sustainability pyramid, as well as useful tips for rethinking and reducing the waste that each of us produces every day; the World Environment Day, with the sharing of some interesting facts and proposals of environmental practices that can be carried out with the family; the World Oceans Day, when, in partnership with LPN - Liga para a Proteção da Natureza (Nature Protection League), an internal webinar was held on "Marine Debris", raising awareness of the problem of ocean pollution, culminating with a volunteer beachcleaning action; and the World Earth Day, which involved a competition for the children of the workers to share their vision of the planet on which they will live.
E-newsletters with sustainability content are also distributed to the employees in the operational areas.
CTT also transmitted information in this scope through the social media and the TV channel of the retail network nationwide, for the digital audience and for customers.
| Board of Directors 23 | |
|---|---|
| Chairman: | Raul Catarino Galamba de Oliveira |
| Executive Chairman: | João Afonso Ramalho Sopas Pereira Bento (CEO) |
| Members: | António Pedro Ferreira Vaz da Silva |
| Guy Patrick Guimarães de Goyri Pacheco (CFO) | |
| João Carlos Ventura Sousa | |
| João Miguel Gaspar da Silva (COO) | |
| Maria Luísa Coutinho Ferreira Leite de Castro Anacoreta Correia | |
| Steven Duncan Wood | |
| Duarte Palma Leal Champalimaud | |
| Isabel Maria Pereira Aníbal Vaz | |
| Jürgen Schröder | |
| Margarida Maria Correia de Barros Couto | |
| María del Carmen Gil Marín | |
| Susanne Ruoff | |
| Board of the General Meeting 24 | |
| Chairman: | Pedro Miguel Duarte Rebelo de Sousa |
| Vice-Chairwoman: | Teresa Sapiro Anselmo Vaz Ferreira Soares |
| Remuneration Committee25 | |
| Chairman: | Fernando Paulo de Abreu Neves de Almeida |
| Members: | Manuel Carlos de Melo Champalimaud |
| Christopher James Torino | |
| Executive Committee26 | |
| Chairman: | João Afonso Ramalho Sopas Pereira Bento (CEO) |
| Members: | António Pedro Ferreira Vaz da Silva |
| Guy Patrick Guimarães de Goyri Pacheco (CFO) | |
| João Carlos Ventura Sousa | |
| João Miguel Gaspar da Silva (COO) | |
| Audit Committee27 | |
| Chairwoman: | Maria Luísa Coutinho Ferreira Leite de Castro Anacoreta Correia |
| Members: | Steven Duncan Wood |
| María del Carmen Gil Marín | |
22 As of the date of approval of this Interim Integrated Report of the 1st Half of 2022.
23 Members elected at the Annual General Meeting of CTT - Correios de Portugal, S.A. (CTT) held on 29 April 2020 for the term of office 2020/2022.
24 Members elected at the Annual General Meeting of CTT - Correios de Portugal, S.A. (CTT) held on 29 April 2020 for the term of office 2020/2022.
25 Members elected at the Annual General Meeting of CTT - Correios de Portugal, S.A. (CTT) held on 29 April 2020 for the term of office 2020/2022.
26 Appointed by resolution of the Board of Directors of 29 April 2020 for the term of office 2020/2022.
27 Members elected at the Annual General Meeting of CTT - Correios de Portugal, S.A. (CTT) held on 29 April 2020 for the term of office 2020/2022.
| Corporate Governance, Evaluation and Nominating Committee28 | |||
|---|---|---|---|
| Chairman: | Raul Catarino Galamba de Oliveira | ||
| Members: | Isabel Maria Pereira Aníbal Vaz | ||
| Duarte Palma Leal Champalimaud | |||
Statutory Auditor: Ernst & Young Audit & Associados – SROC, S.A., represented by Luís Pedro Magalhães Varela Mendes or by Rui Abel Serra Martins
Alternate Statutory Auditor: João Carlos Miguel Alves
Statutory Auditor29
The Company has developed internal control mechanisms which are defined in the Regulation on Assessment and Monitoring of Transactions with Related Parties and Prevention of Situations of
28 Appointed by resolution of the Board of Directors of 29 April 2020 for the term of office 2020/2022.
29 Elected at the Annual General Meeting of CTT - Correios de Portugal, S.A. (CTT) held on 29 April 2020 for the term of office 2021/2023.
Conflicts of Interest (the "Regulation on Related Parties"), available at www.ctt.pt, aiming at reinforcing the mechanisms for the prevention, identification and resolution of conflicts of interest and thus increase the degree of transparency and objectivity in the management of this kind of transactions.
Pursuant to the Regulation on Related Parties, all significant transactions with related parties must be approved by resolution of the Board of Directors, preceded by a prior opinion of the Audit Committee. Significant transactions are those for an amount greater than one million euros and / or carried out outside the Company's current activity and / or outside market conditions. Related parties include CTT qualified Shareholders, Senior officers, Directors of subsidiary companies and third parties related to any of these through relevant commercial or personal interests (pursuant to the terms of IAS 24), and also CTT subsidiaries, associated companies and joint ventures. The remaining transactions with related parties are communicated to the Audit Committee for subsequent assessment.
Pursuant to the aforementioned internal control procedures in place, and for the purposes of articles 66(5)(e) and 397 of the Portuguese Companies Code, in the 1st half of 2022 no business transactions were carried out between CTT and its Directors, either directly or through an intermediary.
For the purposes of reporting as provided for in article 398 of the Portuguese Companies Code, none of the Directors of CTT have exercised, during the 1st half of 2022, in the Company or in companies related to it through a control or group relationship, any temporary or permanent positions under an employment contract, whether subordinate or autonomous.
The list below indicates the internal and external positions held by members of the management and supervisory bodies at the Company as at the date of approval of this Interim Integrated Report:
| Members of the Board of Directors |
Internal Appointments | External Appointments |
|---|---|---|
| Raul Catarino Galamba de Oliveira |
• Chairman of the Selection and Remuneration Committee of Banco CTT, S.A. • Chairman of the Selection Committee of Payshop (Portugal), S.A. • Chairman of the Selection Committee of 321 Crédito – Instituição Financeira de Crédito, S.A. • Member of the Ethics Committee of CTT • Chairman (non-executive) of the Board of Directors of CTT • Chairman of the Corporate Governance, Evaluation and Nominating Committee of CTT |
• Non-executive Member of the Board of Directors of Banco Bilbao Vizcaya Argentaria, S.A. • Non-executive Member of the Board of Directors of José de Mello Capital, S.A. • Non-executive Member of the Board of Directors of CUF, S.A. • Chairman of the Board of Directors of Fundação Manuel Violante |
| Members of the Board of Directors |
Internal Appointments | External Appointments |
|---|---|---|
| João Afonso Ramalho Sopas Pereira Bento |
• Chairman of the Board of Directors of CTT IMO – Sociedade Imobiliária, S.A. • Chairman of the Board of Directors of CTT Soluções Empresariais, S.A. • Chairman of the Board of Directors of CTT Expresso – Serviços Postais e Logística, S.A. • Member of the Board of Directors and Chief Executive Officer of CTT • Member of the Selection and Remuneration Committee of Banco CTT, S.A. • Member of the Selection Committee of Payshop (Portugal), S.A. • Member of the Selection Committee of 321 Crédito - Instituição Financeira de Crédito, S.A. • Chairman of the Board of the General Meeting of Correio Expresso de Moçambique, S.A. (CORRE) |
• Member of the Board of Directors of International Post Corporation (IPC) • Managing Partner of QPDM Consulting, Lda. • Member of the Board of Trustees of Fundação Alfredo de Sousa • Member of the Advisory Council of Reshape • Member of the Board of ICF – Inclusive Community Forum – Nova SBE • Member of the Strategic Innovation Council of VdA - Vieira de Almeida & Associados, Sociedade de Advogados, RL • Member of the General Council of IPCG (Portuguese Institute of Corporate Governance) in an individual capacity • Permanent member of the Advisory Council of AICEP (Agency for Investment and External Trade of Portugal) • Vice-President and Acting President of Academia de Engenharia |
| António Pedro Ferreira Vaz da Silva |
• Member of the Board of Directors of Medspring, S.A. • Member of the Board of Directors of CTT IMO – Sociedade Imobiliária, S.A • Member of the Board of Directors of CTT Soluções Empresariais, S.A. • Member of the Board of Directors of Payshop (Portugal), S.A. • Member of the Board of Directors and of the Executive Committee of CTT • Member of the Board of Directors of CTT Expresso – Serviços Postais e Logística, S.A. • Non-executive Member of the Board of Directors of Banco CTT, S.A. |
|
| Guy Patrick Guimarães de Goyri Pacheco |
• Member of the Board of Directors of Medspring, S.A. • Member of the Board of Directors of CTT IMO – Sociedade Imobiliária, S.A. • Member of the Board of Directors of Newspring Services, S.A. • Member of the Board of Directors of CTT Soluções Empresariais, S.A. • Non-executive Member of the Board of Directors of Banco CTT, S.A. • Member of the Board of Directors and Chief Financial Officer (CFO) of CTT • Member of the Board of Directors of CTT Expresso - Serviços Postais e Logística, S.A. |
• Member of the Board of Directors of Finerge, S.A. • Member of the Board of AEM (Portuguese Issuers Association) |
| Members of the Board of Directors |
Internal Appointments | External Appointments |
|---|---|---|
| João Carlos Ventura Sousa | • Chairman of the Board of Directors of Medspring, S.A. • Member of the Board of Directors of CTT IMO – Sociedade Imobiliária, S.A. • Chairman of the Board of Directors of Newspring Services, S.A. • Member of the Board of Directors of CTT Soluções Empresariais, S.A. • Chairman of the Board of Directors of CTT Contacto, S.A. • Member of the Board of Directors of Correio Expresso de Moçambique, S.A. (CORRE) • Member of the Board of Directors and of the Executive Committee of CTT • Member of the Board of Directors of CTT Expresso - Serviços Postais e Logística, S.A. |
• Vice-Chairman of the Board of APOE - Associação Portuguesa de Operadores Expresso |
| João Miguel Gaspar da Silva | • Member of the Board of Directors of Medspring, S.A • Member of the Board of Directors of CTT IMO – Sociedade Imobiliária, S.A. • Member of the Board of Directors of Newspring Services, S.A. • Member of the Board of Directors of CTT Soluções Empresariais, S.A. • Member of the Board of Directors of CTT Expresso - Serviços Postais e Logística, S.A. • Member of the Board of Directors and of the Executive Committee of CTT • Member of the Board of Directors of CTT Contacto, S.A. |
|
| Maria Luísa Coutinho Ferreira Leite de Castro Anacoreta Correia |
• Non-executive Member of the Board of Directors of CTT • Chairwoman of the Audit Committee of CTT |
• Non-executive Member of the Board of Directors and Member of the Audit Committee of Banco Português de Fomento, S.A. • Member of the Board of Associação De Promoção E Defesa Da Vida E Família - Vida Norte • Non-executive Member of the Board of Directors of SFS – Gestão de Fundos, SGOIC, S.A. • Chairwoman of the Fiscal Board of Sogrape, SGPS, S.A. • Non-executive Member of the Board of Directors and Member of the Audit Committee of Impresa, SGPS, S.A. • Invited Member of the Executive Committee of Portuguese Commission of Accounting Standards • Managing Partner of Novais, Anacoreta & Associado, SROC • Member of the Scientific Council of Associação Fiscal Portuguesa • Tax Arbitrator at CAAD (Portuguese Administrative Arbitration Centre) • Assistant Professor at Católica Porto Business School |
| Steven Duncan Wood | • Member of the Audit Committee of CTT • Non-executive Member of the Board of Directors of CTT |
• Founder and Managing Member of the Builders Institute, Inc. • Managing Member of GreenWood Performance Investors, LLC • Founder and Managing Member of GreenWood Investors, LLC • Advisory Board Member of Cortland Associates, Inc. |
| Members of the Board of Directors |
Internal Appointments | External Appointments |
|---|---|---|
| Duarte Palma Leal Champalimaud | • Non-executive Member of the Board of Directors of CTT • Member of the Corporate Governance, Evaluation and Nominating Committee of CTT |
• Chairman of the Board of Directors of Pentapack – Sistema de Embalagem, S.A. • Manager of Star Swan Unipessoal, Lda. • Manager of Sotaque – Assessoria de Comunicação e Traduções, Lda. • Vice-Chairman of the Board of Directors of Manuel Champalimaud, SGPS, S.A. • Chairman of the Strategy and Investment Committee of Manuel Champalimaud Group • Chairman of the Board of the General Meeting of APIP (Portuguese Plastics Industry Association) |
| Isabel Maria Pereira Aníbal Vaz | • Non-executive Member of the Board of Directors of CTT • Member of the Corporate Governance, Evaluation and Nominating Committee of CTT |
• Member of the Board of Directors of Mota-Engil, SGPS, S.A. • Chairwoman of the Board of Directors of Capital Criativo HealthCare Investments II, S.A. • Chairwoman of the Board of Directors of Hospital da Luz - Coimbra S.A. • Chairwoman of the Board of Directors of H.M.E. – Gestão Hospitalar, S.A. • Member of the Board of Directors of Hospital da Luz Funchal, S.A. • Chairwoman of the Board of Directors of Hospital da Luz - Guimarães, S.A. • Chairwoman of the Board of Directors of GLSMED Learning Health, S.A. • Chairwoman of the Board of Directors of Luz Saúde – Serviços, A.C.E. • Chairwoman of the Board of Directors of Hospital da Luz – Centro Clínico da Amadora, S.A. • Chairwoman of the Board of Directors of SGHL – Sociedade Gestora do Hospital de Loures, S.A. • Chairwoman of the Board of Directors of Casas da Cidade – Residências Sénior, S.A. • Chairwoman of the Board of Directors of CRB – Clube Residencial da Boavista, S.A. • Chairwoman of the Board of Directors of Hospital da Luz - Oeiras, S.A. • Chairwoman of the Board of Directors of Hospital da Luz, S.A. (LISBOA) • Chairwoman of the Board of Directors of Surgicare – Unidades de Saúde, S.A. • Chairwoman of the Board of Directors of Vila Lusitano – Unidades de Saúde, S.A. • Chairwoman of the Board of Directors of Hospital Residencial do Mar, S.A. • Chairwoman of the Board of Directors of Hospor – Hospitais Portugueses, S.A. • Chairwoman of the Board of Directors of Casas da Cidade – Residências Sénior de Carnaxide, S.A. • Chairwoman of the Board of Directors of RML – Residência Medicalizada de Loures, SGPS, S.A. • Chairwoman of the Board of Directors of Hospital da Luz Arrábida, S.A. • Chairwoman of the Board of Directors of Luz Saúde – Unidades de Saúde e de Apoio à Terceira Idade, S.A. • Chairwoman of the Board of Directors of Hospital da Luz - Aveiro, S.A. • Vice -Chairwoman of the Board of Directors and Chairwoman of the Executive Committee of Luz Saúde, S.A. • Member of the International Advisory Board of The Lisbon MBA of Nova School of Business and Economics of Universidade Nova de Lisboa |
| Jürgen Schröder | • Non-executive Member of the Board of Directors of CTT |
• Executive Partner of JS-Rat &Tat GmbH • Board Member of ISR (International School on the Rhine) (Germany) • Board Member of Marketing Club Düsseldorf (Germany) |
| Members of the Board of Directors |
Internal Appointments | External Appointments |
|---|---|---|
| Margarida Maria Correia de Barros Couto |
• Chairwoman of the Ethics Committee of CTT • Non-executive Member of the Board of Directors of CTT |
• Chairwoman of GRACE – Empresas Responsáveis - Associação • Member of the Board of Directors and Chief Executive Officer (CEO) of Fundação Vasco Vieira de Almeida • Secretary of the General Assembly of Fórum Oceano – Associação da Economia do Mar • Secretary of the General Assembly of BCSD Portugal – Business Council for Sustainable Development • Chairwoman of the Board of the Associação VdA Academia |
| María del Carmen Gil Marín | • Non-executive Member of the Board of Directors of CTT • Member of the Audit Committee of CTT |
• Non-executive Member of the Board of Directors and Member of the Audit Committee and the Appointments, Assessment and Remunerations Committee of Caixa Geral de Depósitos, S.A. • Member of the Board of Directors of Novabase, SGPS, S.A. • Board Member in companies of the Novabase Group, namely Chairwoman of the Board of Directors of Novabase Capital, Sociedade de Capital de Risco, S.A., and Member of the Board of Directors of Celfocus -Soluções Informáticas para Telecomunicações, S.A. • Member of the General Board of AEM (Portuguese Issuers Association) • Chairwoman of the Board of the General Meeting of Novabase Enterprise Applications - Sistemas de Informação de Gestão Empresarial, S.A. • Chairwoman of the Board of the General Meeting of GLOBALEDA - Telecomunicações e Sistemas de Informação, S.A. • Member of the Advisory Committee of FCR ISTART I |
| Susanne Ruoff | • Non-executive Member of the Board of Directors of CTT |
• Member of the Board and of the Organization and Remuneration Committee of Eldora AG (Switzerland) • Chief Executive Officer (CEO) of Ruoff Advisory GmbH (Switzerland) • Board Advisor of Emirates Post, Dubai (UAE) • Member of the Strategic Advisory Board of EPFL - • École Polytechnique Fédérale de Lausanne (Switzerland) |
At the end of the 1st half of 2022, CTT's share capital is €75,000,000.00, fully paid-up and underwritten, being represented by 150,000,000 ordinary (there are no different categories), registered, book-entry shares with nominal value of €0.50 each, listed for trading on the regulated market managed by Euronext Lisbon - Sociedade Gestora de Mercados Regulamentados, S.A. ("Euronext Lisbon").
As at 30 June 2022, based on the communications made to the Company, the qualifying holdings in CTT were as follows:
| Shareholders | Number of Shares |
% Share Capital |
% Voting Rights |
|
|---|---|---|---|---|
| Manuel Champalimaud SGPS, S.A. (1) | 19,330,084 | 12.887% | 12.887% | |
| Manuel Carlos de Melo Champalimaud | 353,185 | 0.235% | 0.235% | |
| Manuel Carlos de Melo Champalimaud (1) | Total | 19,683,269 | 13.122% | 13.122% |
| Global Portfolio Investments, S.L. (2) | 15,057,937 | 10.039% | 10.039% | |
| Indumenta Pueri, S.L. (2) | Total | 15,057,937 | 10.039% | 10.039% |
| GreenWood Builders Fund I, LP (3) | 10,025,000 | 6.683% | 6.683% | |
| GreenWood Investors LLC (3) | Total | 10,025,000 | 6.683% | 6.683% |
| Green Frog Investments Inc | Total | 7,730,000 | 5.153% | 5.153% |
| Norges Bank | Total | 3,105,287 | 2.070% | 2.070% |
| Bestinver Gestión S.A. SGIIC (4) | Total | 3,024,366 | 2.016% | 2.016% |
| CTT, S.A. (own shares) (5) | Total | 5,707,722 | 3.805% | 3.805% |
| Remaining shareholders | Total | 85,666,419 | 57.111% | 57.111% |
| TOTAL | 150,000,000 | 100.000% | 100.000% |
(1) Includes 19,246,815 shares held by Manuel Champalimaud SGPS, S.A. and 83,269 shares held by the members of its Board of Directors of which Duarte Palma Leal Champalimaud, Non-Executive Director of CTT, is Vice-Chairman. Qualified shareholding directly and indirectly attributable to Manuel Carlos de Melo Champalimaud.
(2) Global Portfolio Investments, S.L. is controlled by Indumenta Pueri, S.L.
(3) GreenWood Investors, LLC, of which Steven Duncan Wood, Non-Executive Director of CTT, is Managing Member, exercises the voting rights not in its own name but on behalf of GreenWood Builders Fund I, LP as its management company. The full chain of controlled undertakings through which the voting rights are held includes GreenWood Investors, LLC and GreenWood Performance Investors, LLC.
(4) Bestinver Gestión S.A. SGIIC is a Spanish fund management company. As such, it exercises the voting rights attached to the shares property of the investment institutions it manages and represents. Additionally, Bestinver Gestión, S.A. SGIIC has been granted a power of attorney to exercise the voting rights attached to the shares under the property of the pension funds managed by Bestinver Pensiones EGFP, S.A..
(5) Shares held by CTT as at 30 June 2022, following the acquisition of 4,207,721 shares in the context of the share buy-back program announced on 16 March 2022 (see press release available on CTT website, at https://www.ctt.pt/contentAsset/rawdata/bc3dfe33-dfdf-47c9-8178-a65ed5878ae6/ficheiroPdf/20220316_Programa%20recompra%20ações%20EN.pdf? byInode=true). As a consequence, on 30 June 2022, the Company held, as a result of the transactions indicated herein, an aggregated total of 5,707,722 own shares, representing 3.81% of its share capital, including 1,500,001 own shares previously acquired.
On 18 March 2022, CTT started trading in the context of the share buy-back programme of the Company ("Buy-back Program") pursuant to the terms and limitations set forth in (i) the resolution adopted under item 5 of the Agenda of the General Shareholders' Meeting of CTT held on 21 April 2021 granting authorization for the acquisition and transfer of own shares by the Company and its subsidiaries, as set forth in such shareholders' resolution and subject to a decision of the Company's Board of Directors, and (ii) the resolution of the Board of Directors of CTT, of 16 March 2022, under which a share buy-back program was approved, the main terms and conditions of which may be found in the announcement regarding the start of trading within the Buy-back Program disclosed to the market on 16 March 2022.
In the context of said Buy-back Program, and as the financial intermediary in charge of the execution of said program, JB Capital Markets, S.V., S.A.U. acquired 4,207,721 shares representing CTT's share capital, in Euronext Lisbon regulated market, in the period from 18 March to 30 June 2022 (inclusive), as detailed in the table below (aggregated information).
| Date of the transaction |
Aggregated Volume (shares) |
Weighted Average Price (€) |
% Session's Total Volume |
% Share Capital |
|---|---|---|---|---|
| 18.03.2022 | 52,000 | 4.5336 | 3.80 % | 0.03 % |
| 21.03.2022 | 60,000 | 4.4606 | 7.61 % | 0.04 % |
| 22.03.2022 | 46,000 | 4.5297 | 5.58 % | 0.03 % |
| 23.03.2022 | 40,000 | 4.5138 | 10.54 % | 0.03 % |
| 24.03.2022 | 40,000 | 4.4584 | 8.12 % | 0.03 % |
| 25.03.2022 | 40,000 | 4.4796 | 13.69 % | 0.03 % |
| 28.03.2022 | 37,858 | 4.5439 | 9.39 % | 0.03 % |
| 29.03.2022 | 45,000 | 4.5986 | 9.06 % | 0.03 % |
| 30.03.2022 | 45,000 | 4.5367 | 6.59 % | 0.03 % |
| 31.03.2022 | 45,000 | 4.5349 | 10.23 % | 0.03 % |
| 01.04.2022 | 30,000 | 4.4979 | 7.18 % | 0.02 % |
| 04.04.2022 | 20,000 | 4.4416 | 5.04 % | 0.01 % |
| 05.04.2022 | 20,000 | 4.4081 | 3.18 % | 0.01 % |
| 06.04.2022 | 20,000 | 4.3360 | 2.79 % | 0.01 % |
| 07.04.2022 | 20,000 | 4.3594 | 4.33 % | 0.01 % |
| 08.04.2022 | 20,000 | 4.3720 | 8.14 % | 0.01 % |
| 11.04.2022 | 20,000 | 4.3325 | 5.27 % | 0.01 % |
| 12.04.2022 | 20,000 | 4.3613 | 5.74 % | 0.01 % |
| 13.04.2022 | 20,000 | 4.3322 | 8.56 % | 0.01 % |
| 14.04.2022 | 20,000 | 4.3960 | 5.60 % | 0.01 % |
| 19.04.2022 | 20,000 | 4.3976 | 10.93 % | 0.01 % |
| 20.04.2022 | 20,000 | 4.4434 | 5.04 % | 0.01 % |
| 21.04.2022 | 20,000 | 4.5194 | 3.89 % | 0.01 % |
| 22.04.2022 | 20,000 | 4.4074 | 6.19 % | 0.01 % |
| 25.04.2022 | 20,000 | 4.3246 | 4.26 % | 0.01 % |
| 26.04.2022 | 20,000 | 4.3078 | 5.01 % | 0.01 % |
| 27.04.2022 | 20,000 | 4.1995 | 7.11 % | 0.01 % |
| Date of the transaction |
Aggregated Volume (shares) |
Weighted Average Price (€) |
% Session's Total Volume |
% Share Capital |
|---|---|---|---|---|
| 28.04.2022 | 20,000 | 4.2711 | 5.50 % | 0.01 % |
| 29.04.2022 | 20,000 | 4.2943 | 6.83 % | 0.01 % |
| 02.05.2022 | 20,000 | 4.3150 | 8.02 % | 0.01 % |
| 03.05.2022 | 20,000 | 4.2790 | 4.33 % | 0.01 % |
| 04.05.2022 | 20,000 | 4.2907 | 7.87 % | 0.01 % |
| 05.05.2022 | 25,000 | 4.2889 | 3.71 % | 0.02 % |
| 06.05.2022 | 45,000 | 4.0051 | 1.89 % | 0.03 % |
| 09.05.2022 | 50,000 | 3.9028 | 3.57 % | 0.03 % |
| 10.05.2022 | 45,000 | 3.8178 | 4.44 % | 0.03 % |
| 11.05.2022 | 35,000 | 3.7107 | 2.91 % | 0.02 % |
| 12.05.2022 | 30,000 | 3.6050 | 3.42 % | 0.02 % |
| 13.05.2022 | 77,131 | 3.6800 | 12.27 % | 0.05 % |
| 16.05.2022 | 75,000 | 3.7261 | 12.33 % | 0.05 % |
| 17.05.2022 | 80,000 | 3.7709 | 7.09 % | 0.05 % |
| 18.05.2022 | 80,000 | 3.6997 | 10.15 % | 0.05 % |
| 19.05.2022 | 70,278 | 3.6301 | 9.90 % | 0.05 % |
| 20.05.2022 | 70,000 | 3.6900 | 10.72 % | 0.05 % |
| 23.05.2022 | 70,000 | 3.7158 | 9.06 % | 0.05 % |
| 24.05.2022 | 75,000 | 3.7173 | 9.36 % | 0.05 % |
| 25.05.2022 | 80,000 | 3.6813 | 10.31 % | 0.05 % |
| 26.05.2022 | 80,000 | 3.7438 | 6.25 % | 0.05 % |
| 27.05.2022 | 65,000 | 3.7840 | 9.04 % | 0.04 % |
| 30.05.2022 | 60,000 | 3.8181 | 11.77 % | 0.04 % |
| 31.05.2022 | 80,000 | 3.7772 | 6.47 % | 0.05 % |
| 01.06.2022 | 65,000 | 3.7535 | 8.74 % | 0.04 % |
| 02.06.2022 | 60,000 | 3.7183 | 7.85 % | 0.04 % |
| 03.06.2022 | 50,000 | 3.7367 | 15.36 % | 0.03 % |
| 06.06.2022 | 55,000 | 3.7700 | 7.94 % | 0.04 % |
| 07.06.2022 | 50,000 | 3.7700 | 6.86 % | 0.03 % |
| 08.06.2022 | 55,000 | 3.7527 | 6.95 % | 0.04 % |
| 09.06.2022 | 60,000 | 3.6954 | 4.14 % | 0.04 % |
| 10.06.2022 | 150,000 | 3.5361 | 7.40 % | 0.10 % |
| 13.06.2022 | 175,000 | 3.3076 | 10.15 % | 0.12 % |
| 14.06.2022 | 150,000 | 3.2533 | 10.77 % | 0.10 % |
| 15.06.2022 | 175,000 | 3.1625 | 9.84 % | 0.12 % |
| 16.06.2022 | 240,000 | 3.0270 | 10.96 % | 0.16 % |
| 17.06.2022 | 194,454 | 3.0688 | 13.27 % | 0.13 % |
| 20.06.2022 | 120,000 | 3.1500 | 11.11 % | 0.08 % |
| 21.06.2022 | 120,000 | 3.1463 | 11.78 % | 0.08 % |
| 22.06.2022 | 75,000 | 3.0830 | 11.82 % | 0.05 % |
| 23.06.2022 | 100,000 | 3.1025 | 9.76 % | 0.07 % |
| 24.06.2022 | 100,000 | 3.1519 | 5.98 % | 0.07 % |
| 27.06.2022 | 50,000 | 3.1830 | 5.63 % | 0.03 % |
| 28.06.2022 | 50,000 | 3.2030 | 6.71 % | 0.03 % |
| 29.06.2022 | 10,000 | 3.1240 | 0.90 % | 0.01 % |
| 30.06.2022 | 10,000 | 3.0870 | 1.37 % | 0.01 % |
As a result of the transactions indicated above, as at 30 June 2022, CTT held an aggregated total of 5,707,722 own shares, with the nominal value of €0.50 each, representing 3.81% of its share capital, including 1,500,001 own shares previously acquired, the inherent voting rights being suspended as prescribed in article 324(1)(a) of the Portuguese Companies Code, except for the right to receive new shares in the event of a share capital increase by incorporation of reserves.
During the period from 1 to 21 July 2022 (inclusive), date of the communication to the market of the last Interim report on the transactions carried out in the context of the share buy-back program (available on CTT website, at https://www.ctt.pt/grupo-ctt/investidores/comunicados/index?language_id=1), the Company, with JB Capital Markets, S.V., S.A.U. as intermediary, made the acquisitions detailed in the table below, with an aggregate total of 4,359,721 shares (acquired from 18 March to 21 July 2022). As a consequence, on 21 July 2022, the Company held, as a result of the transactions carried out in the context of the aforementioned share buy-back program, an aggregated total of 5,859,722 own shares, representing 3.91% of its share capital, including 1,500,001 own shares previously acquired.
| Date of the transaction |
Aggregated Volume (shares) |
Weighted Average Price (€) |
% Session's Total Volume |
% Share Capital |
|---|---|---|---|---|
| 01.07.2022 | 12,000 | 3.1050 | 1.70 % | 0.01 % |
| 04.07.2022 | 10,000 | 3.0900 | 1.79 % | 0.01 % |
| 05.07.2022 | 10,000 | 3.0700 | 1.28 % | 0.01 % |
| 06.07.2022 | 10,000 | 3.0350 | 1.39 % | 0.01 % |
| 07.07.2022 | 10,000 | 3.0250 | 1.46 % | 0.01 % |
| 08.07.2022 | 10,000 | 3.1050 | 1.26 % | 0.01 % |
| 11.07.2022 | 10,000 | 3.0950 | 1.29 % | 0.01 % |
| 12.07.2022 | 10,000 | 3.0300 | 1.67 % | 0.01 % |
| 13.07.2022 | 10,000 | 3.0300 | 1.65 % | 0.01 % |
| 14.07.2022 | 10,000 | 3.0100 | 2.31 % | 0.01 % |
| 15.07.2022 | 10,000 | 3.0500 | 1.70 % | 0.01 % |
| 18.07.2022 | 10,000 | 3.1470 | 1.32 % | 0.01 % |
| 19.07.2022 | 10,000 | 3.1513 | 1.72 % | 0.01 % |
| 20.07.2022 | 10,000 | 3.1950 | 1.76 % | 0.01 % |
| 21.07.2022 | 10,000 | 3.2260 | 1.56 % | 0.01 % |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2021 AND 30 JUNE 2022 (Euros)
| Unuaudited | |||
|---|---|---|---|
| ASSETS | NOTES | 31.12.2021 | 30.06.2022 |
| Non-current assets | |||
| Tangible fixed assets | 4 | 296,287,578 | 301,318,331 |
| Investment properties | 6 | 6,327,424 | 6,221,365 |
| Intangible assets | 5 | 63,507,247 | 65,211,263 |
| Goodwill | 81,471,314 | 80,256,739 | |
| Investments in associated companies | 481 | 481 | |
| Investments in joint ventures | 17,992 | — | |
| Other investments | 311,684 | 461,684 | |
| Financial assets at fair value through profit or loss | 2,261,947 | 10,579,161 | |
| Debt securities at fair value through other comprehensive income | 8 | 4,906,841 | — |
| Debt securities at amortized cost | 8 | 294,986,658 | 392,392,454 |
| Other non-current assets | 1,772,136 | 1,335,233 | |
| Credit to banking clients | 10 | 1,125,984,322 | 1,201,402,163 |
| Other banking financial assets Deferred tax assets |
9 26 |
5,237,710 87,255,087 |
2,934,339 74,320,224 |
| Total non-current assets | 1,970,328,421 | 2,136,433,437 | |
| Current assets | |||
| Inventories | 6,872,274 | 8,861,915 | |
| Accounts receivable | 160,930,050 | 176,379,700 | |
| Credit to banking clients | 10 | 415,924,171 | 456,185,249 |
| Income taxes receivable | 8,268 | 8,268 | |
| Prepayments | 11 | 8,725,934 | 11,275,884 |
| Financial assets at fair value through profit or loss | 24,999,138 | 25,891,746 | |
| Debt securities at fair value through other comprehensive income | 8 | 1,188,069 | 4,119,749 |
| Debt securities at amortized cost | 8 | 39,173,861 | 129,006,542 |
| Other current assets | 68,848,382 | 64,780,003 | |
| Other banking financial assets | 9 | 9,721,536 | 13,094,364 |
| Cash and cash equivalents | 12 | 877,872,696 | 847,268,355 |
| 1,614,264,378 | 1,736,871,775 | ||
| Non-current assets held for sale | 605,798 | 102,693 | |
| Total current assets Total assets |
1,614,870,176 3,585,198,598 |
1,736,974,468 3,873,407,905 |
|
| EQUITY AND LIABILITIES | |||
| Equity | |||
| Share capital | 14 | 75,000,000 | 75,000,000 |
| Own shares | 15 | (6,404,963) | (21,826,988) |
| Reserves | 15 | 67,078,351 | 67,880,211 |
| Retained earnings | 15 | 43,904,074 | 64,695,130 |
| Other changes in equity | 15 | (43,998,612) | (9,957,085) |
| Net profit | 38,404,113 | 14,549,183 | |
| Equity attributable to equity holders | 173,982,963 | 190,340,451 | |
| Non-controlling interests | 563,106 | 1,284,157 | |
| Total equity Liabilities |
174,546,069 | 191,624,608 | |
| Non-current liabilities | |||
| Medium and long term debt | 18 | 149,336,438 | 150,746,661 |
| Employee benefits | 19 | 260,805,742 | 213,098,330 |
| Provisions | 20 | 14,679,520 | 14,376,468 |
| Prepayments | 11 | 272,088 | 266,487 |
| Other banking financial liabilities | 9 | 277,760,616 | 469,879,618 |
| Deferred tax liabilities | 26 | 2,427,513 | 4,756,045 |
| Total non-current liabilities | 705,281,916 | 853,123,609 | |
| Current liabilities | |||
| Accounts payable | 21 | 350,304,332 | 341,800,704 |
| Banking clients' deposits and other loans | 22 | 2,121,511,345 | 2,243,800,254 |
| Employee benefits | 19 | 21,090,144 | 20,429,057 |
| Income taxes payable | 23 | 11,611,897 | 3,927,988 |
| Short term debt | 18 | 51,783,012 | 51,406,076 |
| Prepayments | 11 | 3,452,240 | 5,676,237 |
| Other current liabilities | 118,594,781 | 123,662,049 | |
| Other banking financial liabilities | 9 | 27,022,862 | 37,957,323 |
| Total current liabilities | 2,705,370,613 | 2,828,659,688 | |
| Total liabilities Total equity and liabilities |
3,410,652,529 3,585,198,598 |
3,681,783,297 3,873,407,905 |
CONSOLIDATED INCOME STATEMENT FOR THE SIX MONTH PERIODS ENDED 30 JUNE 2021 AND 30 JUNE 2022 Euros
| Six months ended | Three months ended | ||||
|---|---|---|---|---|---|
| NOTES | Unaudited | Unaudited | Unaudited | Unaudited | |
| 30.06.2021 | 30.06.2022 | 30.06.2021 | 30.06.2022 | ||
| Sales and services rendered | 3 | 372,191,809 | 394,230,817 | 185,909,613 | 184,033,580 |
| Financial margin | 25,741,101 | 34,420,500 | 14,182,696 | 18,013,104 | |
| Other operating income | 14,850,803 | 17,777,828 | 7,364,452 | 8,573,353 | |
| 412,783,714 | 446,429,145 | 207,456,762 | 210,620,036 | ||
| Cost of sales | (9,234,154) | (29,815,397) | (4,269,659) | (4,341,527) | |
| External supplies and services | (156,967,538) | (166,691,283) | (80,190,884) | (80,751,966) | |
| Staff costs | 24 | (185,492,787) | (180,074,236) | (96,155,579) | (88,055,431) |
| Impairment of accounts receivable, net | (813,720) | (1,323,526) | 38,177 | (42,278) | |
| Impairment of other financial banking assets | (6,300,651) | (10,754,114) | (4,883,624) | (6,973,499) | |
| Provisions, net | 20 | (28,708) | (1,087,346) | 64,889 | (429,044) |
| Depreciation/amortization and impairment of investments, net | (28,612,839) | (31,802,203) | (14,609,604) | (16,422,541) | |
| Net gains/(losses) of assets and liabilities at fair value through profit or loss |
— | 5,937,974 | — | 2,132,382 | |
| Net gains/(losses) of other financial assets at fair value through other comprehensive income |
12,171,894 | — | 12,171,894 | — | |
| Gains / (losses) on derecognition of financial assets and liabilities at amortized cost |
2,210,811 | — | — | — | |
| Other operating costs | (8,720,484) | (10,127,367) | (4,505,242) | (5,431,514) | |
| Gains/losses on disposal of assets | 15,121 | 22,467 | (1,316) | (21,925) | |
| (381,773,054) | (425,715,031) | (192,340,947) | (200,337,341) | ||
| 31,010,660 | 20,714,116 | 15,115,815 | 10,282,695 | ||
| Interest expenses | 25 | (4,273,952) | (4,562,688) | (2,127,277) | (2,363,357) |
| Interest income Gains/losses in subsidiary, associated companies and joint | 25 | 26,282 | 12,679 | 20,296 | (98,435) |
| ventures | (1,102,769) | (100,855) | (610,188) | (60,207) | |
| (5,350,439) | (4,650,864) | (2,717,169) | (2,521,999) | ||
| Earnings before taxes | 25,660,221 | 16,063,252 | 12,398,646 | 7,760,696 | |
| Income tax for the period | 26 | (8,404,833) | (1,499,328) | (3,876,808) | 326,989 |
| Net profit for the period | 17,255,388 | 14,563,924 | 8,521,838 | 8,087,685 | |
| Net profit for the period attributable to: | |||||
| Equity holders | 17,186,714 | 14,549,183 | 8,486,290 | 8,096,796 | |
| Non-controlling interests | 68,674 | 14,741 | 35,547 | (9,110) | |
| Earnings per share: | 17 | 0.11 | 0.10 | 0.06 | 0.05 |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTH PERIODS ENDED 30 JUNE 2021 AND 30 JUNE 2022 Euros
| Six months ended | Three months ended | ||||
|---|---|---|---|---|---|
| NOTES | Unaudited | Unaudited | Unaudited | Unaudited | |
| 30.06.2021 | 30.06.2022 | 30.06.2021 | 30.06.2022 | ||
| Net profit for the period | 17,255,388 | 14,563,924 | 8,521,837 | 8,087,686 | |
| Adjustments from application of the equity method (non re classifiable adjustment to profit and loss) |
15 | 12,347 | 43,385 | 7,158 | 23,993 |
| Changes to fair value reserves | 15 | (18,716) | (8,140) | (18,961) | (6,742) |
| Employee benefits (non re-classifiable adjustment to profit and loss) | 15 | — | 47,275,716 | — | 47,275,716 |
| Deferred tax/Employee benefits (non re-classifiable adjustment to profit and loss) |
15 | — | (13,234,189) | — | (13,234,189) |
| Other changes in equity | 12,347 | 706,309 | 7,158 | 686,917 | |
| Other comprehensive income for the period after taxes | 5,978 | 34,783,081 | (4,645) | 34,745,695 | |
| Comprehensive income for the period | 17,261,366 | 49,347,005 | 8,517,192 | 42,833,381 | |
| Attributable to non-controlling interests | 81,020 | 721,051 | 42,705 | 677,808 | |
| Attributable to shareholders of CTT | 17,180,346 | 48,625,954 | 8,474,487 | 42,155,573 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AS AT 31 DECEMBER 2021 AND 30 JUNE 2022
Euros
| NOTES | Share capital | Own Shares | Reserves | Other changes in equity |
Retained earnings |
Net profit for the year |
Non controlling interests |
Total | |
|---|---|---|---|---|---|---|---|---|---|
| Balance on 31 December 2020 | 75,000,000 | (8) | 65,919,935 | (47,600,236) | 39,962,419 | 16,669,309 | 323,675 | 150,275,094 | |
| Appropriation of net profit for the year of 2020 | — | — | — | — | 16,669,309 | (16,669,309) | — | — | |
| Dividends | — | — | — | — | (12,750,000) | — | — | (12,750,000) | |
| Acquisition of own shares | 15 | (6,404,954) | — | — | — | — | — | (6,404,954) | |
| Share plan | 15 | — | — | 1,215,000 | — | — | — | — | 1,215,000 |
| — | (6,404,954) | 1,215,000 | — | 3,919,309 | (16,669,309) | — | (17,939,954) | ||
| Other movements | 15 | — | — | — | — | — | — | 52,242 | 52,242 |
| Actuarial gains/losses - Health Care, net from deferred taxes | 15 | — | — | — | 3,601,623 | — | — | — | 3,601,623 |
| Changes to fair value reserves | 15 | — | — | (56,584) | — | — | — | — | (56,584) |
| Adjustments from the application of the equity method | 15 | — | — | — | — | 22,345 | — | — | 22,345 |
| Net profit for the period | — | — | — | — | — | 38,404,113 | 187,190 | 38,591,303 | |
| Comprehensive income for the period | — | — | (56,584) | 3,601,623 | 22,345 | 38,404,113 | 239,431 | 42,210,930 | |
| Balance on 31 December 2021 | 75,000,000 | (6,404,963) | 67,078,351 | (43,998,612) | 43,904,074 | 38,404,113 | 563,106 | 174,546,069 | |
| Appropriation of net profit for the year of 2021 | — | — | — | — | 38,404,113 | (38,404,113) | — | — | |
| Dividends | — | — | — | — | (17,656,441) | — | — | (17,656,441) | |
| Acquisition of own shares | 15 | — | (15,422,025) | — | — | — | — | — | (15,422,025) |
| Share plan | 15 | — | — | 810,000 | — | — | — | — | 810,000 |
| — | (15,422,025) | 810,000 | — | 20,747,672 | (38,404,113) | — | (32,268,466) | ||
| Other movements | 15 | — | — | — | — | — | — | 706,309 | 706,309 |
| Actuarial gains/losses - Health Care, net from deferred taxes | — | — | — | 34,041,527 | — | — | — | 34,041,527 | |
| Changes to fair value reserves | 15 | — | — | (8,140) | — | — | — | — | (8,140) |
| Adjustments from the application of the equity method | 15 | — | — | — | — | 43,385 | — | — | 43,385 |
| Net profit for the period | — | — | — | — | — | 14,549,183 | 14,741 | 14,563,925 | |
| Comprehensive income for the period | — | — | (8,140) | 34,041,527 | 43,385 | 14,549,183 | 721,050 | 49,347,006 | |
| Balance on 30 June 2022 | 75,000,000 | (21,826,988) | 67,880,211 | (9,957,085) | 64,695,130 | 14,549,183 | 1,284,157 | 191,624,608 |
CONSOLIDATED CASH FLOW STATEMENT FOR THE SIX MONTH PERIODS ENDED 30 JUNE 2021 AND 30 JUNE 2022
Euro
| Unaudited | Unaudited | ||
|---|---|---|---|
| NOTES | 30.06.2021 | 30.06.2022 | |
| Cash flow from operating activities | |||
| Collections from customers | 361,228,416 | 395,596,279 | |
| Payments to suppliers | (184,032,120) | (233,878,290) | |
| Payments to employees | (152,211,607) | (158,261,044) | |
| Banking customer deposits | 217,229,275 | 122,298,391 | |
| Credit to bank clients | (284,670,550) | (118,575,174) | |
| Cash flow generated by operations | (42,456,586) | 7,180,162 | |
| Payments/receivables of income taxes | 32,736 | (7,603,946) | |
| Other receivables/payments | (22,461,767) | 18,136,247 | |
| Cash flow from operating activities (1) | (64,885,617) | 17,712,463 | |
| Cash flow from Investing activities | |||
| Receivables resulting from: | |||
| Tangible fixed assets | 188,750 | 28,720 | |
| Financial investments | — | 2 | |
| Investment in securities at fair value through other comprehensive income | 8 | 187,841,317 | 2,798,356 |
| Investment in securities at amortized cost | 8 | 83,326,365 | 297,988,491 |
| Other banking financial assets | 9 | 86,590,000 | 4,055,000 |
| Interest income | 16,774 | 38,850 | |
| Payments resulting from: | |||
| Tangible fixed assets | (8,981,233) | (9,209,743) | |
| Intangible assets | (6,716,194) | (9,758,197) | |
| Financial investments | (767,956) | (150,000) | |
| Investment in securities at fair value through other comprehensive income | 8 | — | (1,146,911) |
| Investment in securities at amortized cost | 8 | (221,420,854) | (476,967,862) |
| Demand deposits at Bank of Portugal | (2,262,500) | (2,078,600) | |
| Other banking financial assets | 9 | (64,800,000) | (3,250,000) |
| Cash flow from investing activities (2) | 53,014,469 | (197,651,894) | |
| Cash flow from financing activities | |||
| Receivables resulting from: | |||
| Loans obtained | 18 | 61,116,764 | 58,217,607 |
| Capital realizations and other equity instruments | — | 663,000 | |
| Other credit institutions' deposits | — | 1,074,936 | |
| Other banking financial liabilities | 169,070,854 | 201,500,000 | |
| Payments resulting from: | |||
| Loans repaid | 18 | (35,881,158) | (66,098,731) |
| Other credit institutions' deposits | — | (1,084,308) | |
| Interest expenses | (776,459) | (204,375) | |
| Lease liabilities | 18 | (15,159,693) | (16,597,114) |
| Other banking financial liabilities | 9 | (10,721,757) | (7,837,685) |
| Acquisition of own shares | (6,404,954) | (15,359,915) | |
| Dividends | (12,750,000) | (17,656,441) | |
| Cash flow from financing activities (3) | 148,493,595 | 136,616,973 | |
| Net change in cash and cash equivalents (1+2+3) | 136,622,448 | (43,322,458) | |
| Cash and equivalents at the beginning of the period | 498,826,782 | 856,957,546 | |
| Cash and cash equivalents at the end of the period | 12 | 635,449,230 | 813,635,088 |
| Cash and cash equivalents at the end of the period | 635,449,230 | 813,635,088 | |
| Sight deposits at Bank of Portugal | 18,058,100 | 22,016,400 | |
| Outstanding checks of Banco CTT / Checks clearing of Banco CTT | 1,258,786 | 11,621,728 | |
| Impairment of slight and term deposits | (23,378) | (4,861) | |
| Cash and cash equivalents (Balance sheet) | 654,742,738 | 847,268,355 |
Notes to the interim condensed consolidated financial statements (Amounts expressed in Euros)
| INTERIM CONSOLIDATED FINANCIAL STATEMENTS | 68 |
|---|---|
| 1. INTRODUCTION |
75 |
| 2. SIGNIFICANT ACCOUNTING POLICIES |
76 |
| 2.1 New standards or amendments adopted by the Group | 76 |
| 2.2 Basis of Presentation |
77 |
| 3. SEGMENT REPORTING |
77 |
| 4. TANGIBLE FIXED ASSETS |
85 |
| 5. INTANGIBLE ASSETS |
91 |
| 6. INVESTMENT PROPERTIES |
93 |
| 7. COMPANIES INCLUDED IN THE CONSOLIDATION |
95 |
| 8. DEBT SECURITIES |
101 |
| 20. CREDIT TO BANKING CLIENTS | 112 |
| 11. PREPAYMENTS | 119 |
| 12. CASH AND CASH EQUIVALENTS | 120 |
| 13. ACCUMULATED IMPAIRMENT LOSSES | 121 |
| 14. EQUITY | 122 |
| 15. OWN SHARES, RESERVES, OTHER CHANGES IN EQUITY AND RETAINED | 122 |
| EARNINGS | |
| 16. DIVIDENDS | 125 |
| 17. EARNINGS PER SHARE | 125 |
| 18. DEBT | 126 |
| 19. EMPLOYEE BENEFITS | 128 |
| 20. PROVISIONS, GUARANTEES PROVIDED, CONTINGENT LIABILITIES AND | 134 |
| COMMITMENTS | |
| 21. ACCOUNTS PAYABLE | 138 |
| 22. BANKING CLIENTS' DEPOSITS AND OTHER LOANS | 139 |
| 23. INCOME TAXES RECEIVABLE /PAYABLE | 140 |
| 24. STAFF COSTS | 140 |
| 25. INTEREST EXPENSES AND INTEREST INCOME | 143 |
| 26. INCOME TAX FOR THE PERIOD | 143 |
| 27. RELATED PARTIES | 148 |
| 28. OTHER INFORMATION | 149 |
| 29. SUBSEQUENT EVENTS | 152 |
CTT – Correios de Portugal, S.A. ("CTT" or "Company"), with head office at Avenida D. João II, no. 13, 1999-001 in Lisbon, had its origin in the "Administração Geral dos Correios Telégrafos e Telefones" government department and its legal form is the result of successive re-organizations carried out by the Portuguese state business sector in the communications area.
Decree-Law no. 49.368, of 10 November 1969 founded the state-owned company CTT - Correios e Telecomunicações de Portugal, E. P., which started operating on 1 January 1970. By Decree-Law no. 87/92, of 14 May, CTT – Correios e Telecomunicações de Portugal, E. P., was transformed into a legal entity governed by private law, with the status of a state-owned public limited company. Finally, with the foundation of the former Telecom Portugal, S.A. by spin-off from Correios e Telecomunicações de Portugal, S.A. under Decree-Law no. 277/92, of 15 December, the Company's name was changed to the current CTT – Correios de Portugal, S.A..
On 31 January 2013, the Portuguese State through the Order 2468/12 – SETF, of 28 December, determined the transfer of the investment owned by the Portuguese State in CTT to Parpública – Participações Públicas, SGPS, S.A.
At the General Meeting held on 30 October 2013, the registered capital of CTT was reduced to 75,000,000 Euros, being from that date onward represented by 150,000,000 shares, as a result of a stock split which was accomplished through the reduction of the nominal value from 4.99 Euros to 0.50 Euros.
During the financial year ended 31 December 2013, CTT's capital was opened to the private sector. Supported by Decree-Law no. 129/2013, of 6 September and the Resolution of the Council of Ministers ("RCM") no. 62-A/2013, of 10 October, the RCM no. 62-B/2013, of 10 October and RCM no. 72-B/2013, of 14 November, the first phase of privatization of the capital of CTT took place on 5 December 2013. From this date, 63.64% of the shares of CTT (95.5 million shares) were owned by the private sector, of which 14% (21 million shares) were sold in a Public Offering and 49.64% (74.5 million shares) by Institutional Direct Selling. On 31 December 2013 the Portuguese State, through Parpública - Participações Públicas, SGPS, S.A. held 36.36% of the shares of CTT, 30.00% by holding and 6.36% by allocation.
On 5 September 2014, the second phase of the privatization of CTT took place. The shares held by Parpública - Participações Públicas, SGPS, S.A., which on that date represented 31.503% of CTT's capital, were subject to a private offering of Shares ("Equity Offering") via an accelerated book building process. The Equity Offering was addressed exclusively to institutional investors.
The shares of CTT are listed on Euronext Lisbon.
The financial statements attached herewith are expressed in Euros, as this is the main currency of the Group's operations.
These financial statements were approved by the Board of Directors and authorized for issue on 27 July 2022.
The accounting policies adopted, including financial risk management policies, are consistent with those followed in the preparation of the consolidated financial statements for the year ended 31 December 2021, except for the new standards and amendments effective from 1 January 2022.
The standards and amendments recently issued, already effective and adopted by the Group in the preparation of these financial statements, are as follows:
• Amendments to IAS 41 – Taxation and fair value measurement (included in the annual improvements for the 2018-2020 cycle) - This improvement eliminates the requirement to exclude tax cash flows when measuring the fair value of biological assets, ensuring consistency with the principles of IFRS 13 – Fair value.
The Group did not register significant changes with the adoption of these standards and interpretations.
The interim condensed consolidated financial statements have been prepared using accounting policies consistent with International Financial Reporting Standards ("IAS / IFRS") as adopted by the European Union as at 1 January 2022, and in accordance with IAS 34 - Interim Financial Reporting.
The consolidated financial statements were prepared under the assumption of going concern and are prepared under the historical cost convention, except for the financial assets and liabilities accounted at fair value.
In accordance with IFRS 8, the Group discloses the segment financial reporting.
The Board of Directors regularly reviews segmental reports, using them to assess and communicate each segment performance, as well as to decide on how to allocate resources.
Since 2021, in the segment reporting, the calculation of EBITDA was simplified with the inclusion of impairments and provisions and with the leases impact covered by IFRS 16. Accordingly, the only difference between EBITDA and EBIT is depreciation and amortization and specific items.
The business of CTT is organized in the following segments:
The business segregation by segment is based on management information produced internally and presented to the "chief operating decision maker".
The segments cover the three CTT business areas, as follows:
The amounts reported in each business segment result from the aggregation of the subsidiaries and business units defined in each segment perimeter and the elimination of transactions between companies of the same segment.
The statement of financial position of each subsidiary and business unit is determined based on the amounts booked directly in the companies that compose the segment, including the elimination of balances between companies of the same segment, and excluding the allocation in the segments of the adjustments between segments.
The income statement for each business segment is based on the amounts booked directly in the companies' financial statements and related business units, adjusted by the elimination of transactions between companies of the same segment.
However, as CTT, S.A. has assets in more than one segment it was necessary to split its income and costs by the several operating segments. The Internal Services Rendered refer to services provided across the different CTT, S.A. business areas, and the income is calculated according to standard activities valued through internally set transfer prices. The Mail segment provides internal services essentially related to the retail network (included in the Mail segment). Additionally, the Financial Services Segment uses the Retail network to sell its products. The use of the Retail network by other segments, as Express & Parcels and CTT Bank is, equally, presented in the line "Internal Services Rendered".
Initially, CTT, S.A. operating costs are allocated to the different segments by charging the internal transactions for the services mentioned above. After this initial allocation, costs relating to corporate and support areas (CTT Central Structure) are allocated by nature to the Mail segment and others.
The consolidated income statement by nature and segment of the 1st half of 2021 and 2022 are as follows:
| 30.06.2021 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Thousand Euros | Express & Parcels |
Financial Services & Retail |
Bank | Total | ||||
| Revenues | 217,591 | 125,847 | 23,666 | 45,680 | 412,784 | |||
| Sales and services rendered | 215,452 | 125,536 | 23,464 | 7,740 | 372,192 | |||
| Sales | 4,413 | 139 | 6,031 | — | 10,583 | |||
| Services rendered | 211,039 | 125,397 | 17,434 | 7,740 | 361,609 | |||
| Financial Margin | — | — | — | 25,741 | 25,741 | |||
| Other operating income | 2,139 | 311 | 201 | 12,199 | 14,851 | |||
| Operating costs - EBITDA | 188,654 | 114,991 | 12,357 | 39,473 | 355,476 | |||
| Staff costs | 147,813 | 15,675 | 601 | 13,200 | 177,288 | |||
| External supplies and services | 37,855 | 99,310 | 1,313 | 16,128 | 154,607 | |||
| Other costs | 7,230 | 792 | 5,453 | 4,328 | 17,802 | |||
| Impairment and provisions | 536 | 269 | — | 4,975 | 5,779 | |||
| Internal services rendered | (4,779) | (1,054) | 4,991 | 842 | — | |||
| EBITDA | 28,937 | 10,855 | 11,308 | 6,207 | 57,307 | |||
| Depreciation/amortization and impairment of investments, net |
19,326 | 5,425 | 54 | 3,807 | 28,613 | |||
| EBIT recurring | 9,611 | 5,430 | 11,254 | 2,399 | 28,694 | |||
| Specific itens | 9,278 | 424 | 1 | (12,019) | (2,316) | |||
| Business restructurings | 8,015 | 174 | — | — | 8,189 | |||
| Strategic estudies and projects costs | 843 | — | — | 380 | 1,223 | |||
| Other non-recurring income and expenses | 420 | 250 | 1 | (12,399) | (11,729) | |||
| EBIT | 333 | 5,006 | 11,253 | 14,419 | 31,011 | |||
| Financial results | (5,350) | |||||||
| Net Financial Income | (4,248) | |||||||
| Interest expenses | (4,274) | |||||||
| Interest income | 26 | |||||||
| Gains/losses in subsidiary, associated companies and joint ventures |
(1,103) | |||||||
| Earnings before taxes (EBT) | 25,660 | |||||||
| Income tax for the period | 8,405 | |||||||
| Net profit for the period | 17,255 | |||||||
| Non-controlling interests | 69 | |||||||
| Equity holders of parent company | 17,186 |
| 30.06.2022 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Thousand Euros | Express & Parcels |
Financial Services & Retail |
Bank | Total | ||||
| Revenues | 241,608 | 122,698 | 24,182 | 57,942 | 446,429 | |||
| Sales and services rendered | 239,730 | 122,459 | 23,485 | 8,557 | 394,231 | |||
| Sales | 24,994 | 62 | 6,549 | — | 31,604 | |||
| Services rendered | 214,737 | 122,397 | 16,936 | 8,557 | 362,627 | |||
| Financial Margin | — | — | — | 34,421 | 34,421 | |||
| Other operating income | 1,877 | 239 | 697 | 14,965 | 17,778 | |||
| Operating costs - EBITDA | 222,754 | 111,849 | 12,946 | 48,434 | 395,983 | |||
| Staff costs | 149,738 | 14,785 | 491 | 13,492 | 178,506 | |||
| External supplies and services | 48,881 | 96,876 | 1,215 | 18,439 | 165,411 | |||
| Other costs | 27,194 | 1,205 | 6,169 | 4,333 | 38,900 | |||
| Impairment and provisions | 1,204 | (64) | 720 | 11,305 | 13,165 | |||
| Internal services rendered | (4,262) | (954) | 4,352 | 865 | — | |||
| EBITDA | 18,853 | 10,849 | 11,237 | 9,508 | 50,446 | |||
| Depreciation/amortization and impairment of investments, net |
20,592 | 7,142 | 52 | 4,017 | 31,802 | |||
| EBIT recurring | (1,738) | 3,707 | 11,185 | 5,491 | 18,644 | |||
| Specific itens | 2,266 | 676 | — | (5,011) | (2,070) | |||
| Business restructurings | 1,912 | 503 | — | — | 2,415 | |||
| Strategic estudies and projects costs | 1,003 | 144 | — | 39 | 1,186 | |||
| Other non-recurring income and expenses | (649) | 29 | — | (5,051) | (5,671) | |||
| EBIT | (4,004) | 3,031 | 11,185 | 10,503 | 20,714 | |||
| Financial results | (4,651) | |||||||
| Interest expenses | (4,563) | |||||||
| Interest income | 13 | |||||||
| Gains/losses in subsidiary, associated companies and joint ventures |
(101) | |||||||
| Earnings before taxes (EBT) | 16,063 | |||||||
| Income tax for the period | 1,499 | |||||||
| Net profit for the period | 14,564 | |||||||
| Non-controlling interests | 15 | |||||||
| Equity holders of parent company | 14,549 |
As at 30 June 2022, the specific items mounted to -2.1 million euros, due to: (i) other non-recurring revenues and costs (-5.7 million euros), which include gross gains and losses arising from the valuation of contracted derivatives (-5 million euros); (iii) restructuring costs (+2.4 million euros), including suspension agreements of employment contracts; and (iv) strategic projects (+1.2 million euros).
The valuation of the derivatives structure in the amount of 5.0 million euros, as mentioned above, is the result of the MTM (Mark to Market) of interest rate derivatives in the form of Cap Agreement and Interest Rate Swap associated with the securitization operation Ulisses 2 and 3.
| Thousand Euros | 30.06.2021 | 30.06.2022 |
|---|---|---|
| 217,591 | 241,608 | |
| Transactional mail | 185,430 | 176,600 |
| Editorial mail | 6,617 | 6,181 |
| Parcels (USO) | 3,876 | 3,447 |
| Advertising mail | 9,116 | 8,783 |
| Philately | 2,441 | 2,189 |
| Business Solutions | 7,124 | 41,765 |
| Other | 2,988 | 2,643 |
| Express & Parcels | 125,847 | 122,698 |
| Portugal | 67,121 | 61,476 |
| Parcels | 58,555 | 55,074 |
| Cargo | 4,649 | 2,561 |
| Banking network | 2,301 | 2,092 |
| Logistics | 1,215 | 1,451 |
| Other | 400 | 298 |
| Spain | 57,223 | 59,523 |
| Mozambique | 1,503 | 1,698 |
| Financial Services & Retail | 23,666 | 24,182 |
| Savings & Insurance | 12,390 | 11,458 |
| Money orders | 2,819 | 2,970 |
| Payments | 872 | 806 |
| Retail | 7,469 | 8,356 |
| Other | 116 | 593 |
| Bank | 45,680 | 57,942 |
| Net interest income | 25,741 | 34,420 |
| Interest income (+) | 26,197 | 36,650 |
| Interest expense (-) | (456) | (2,230) |
| Fees & commissions income (+) | 18,135 | 21,607 |
| Credits | 1,910 | 2,640 |
| Savings & Insurance | 2,768 | 3,731 |
| Accounts and Cards | 5,392 | 6,411 |
| Payments | 8,048 | 8,770 |
| Other comissions received | 17 | 54 |
| Other | 1,804 | 1,915 |
| 412,784 | 446,429 |
The revenue detail, related to sales and services rendered and financial margin, for the year ended 31 June 2021 and 30 June 2022, by the revenue's sources, are detailed as follows:
| 30.06.2021 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Nature | Express & Parcels |
Financial Services & Retail |
Bank | Total | ||||
| Postal Services | 196,520,639 | — | — | — 196,520,639 | ||||
| Express services | — 125,535,616 | — | — 125,535,616 | |||||
| Merchandising products sales | — | — | 1,128,937 | — | 1,128,937 | |||
| PO Boxes | — | — | 817,933 | — | 817,933 | |||
| International mail services (*) | 18,931,329 | — | — | — | 18,931,329 | |||
| Financial Services fees | — | — | 21,517,394 | 33,481,063 | 54,998,457 | |||
| "Sales and Services rendered" and "Financial Margin" total |
215,451,968 125,535,616 | 23,464,264 | 33,481,063 397,932,910 |
(*) Inbound Mail
| 30.06.2022 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Nature | Express & Parcels |
Financial Services & Retail |
Bank | Total | ||||
| Postal Services | 231,453,338 | — | — | — 231,453,338 | ||||
| Express services | — 122,458,776 | — | — 122,458,776 | |||||
| Merchandising products sales | — | — | 839,624 | — | 839,624 | |||
| PO Boxes | — | — | 756,792 | — | 756,792 | |||
| International mail services (*) | 8,277,102 | — | — | — | 8,277,102 | |||
| Financial Services fees | — | — | 21,888,527 | 42,977,157 | 64,865,684 | |||
| "Sales and Services rendered" and "Financial Margin" total |
239,730,441 122,458,776 | 23,484,944 | 42,977,157 428,651,317 |
(*) Inbound Mail
The assets by segment are detailed as follows:
| 31.12.2021 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Assets (Euros) | Express & Parcels |
Financial Services & Retail |
Bank | Non allocated assets |
Total | ||||
| Intangible assets | 21,289,971 | 6,849,250 | 174,038 | 26,927,847 | 8,266,141 | 63,507,247 | |||
| Tangible fixed assets | 227,402,730 | 62,708,795 | 64,571 | 4,227,555 | 1,883,926 | 296,287,578 | |||
| Investment properties | — | — | — | — | 6,327,424 | 6,327,424 | |||
| Goodwill | 17,430,813 | 2,955,753 | — | 61,084,749 | — | 81,471,314 | |||
| Deferred tax assets | — | — | — | — | 87,255,087 | 87,255,087 | |||
| Accounts receivable | — | — | — | — 160,930,050 | 160,930,050 | ||||
| Credit to bank clients | — | — | — 1,541,908,493 | — | 1,541,908,493 | ||||
| Financial assets at fair value through profit or loss |
— | — | — | 27,261,085 | — | 27,261,085 | |||
| Debt securities at fair value through other comprehensive income |
— | — | — | 6,094,910 | — | 6,094,910 | |||
| Debt securities at amortized cost |
334,160,519 | 334,160,519 | |||||||
| Other banking financial assets |
— | — | — | 14,959,246 | — | 14,959,246 | |||
| Other assets | 14,891,188 | 17,690,710 34,608,628 | 6,739,026 | 12,627,597 | 86,557,151 | ||||
| Cash and cash equivalents | — | 15,590,602 | — | 662,721,068 199,561,026 | 877,872,696 | ||||
| Non-current assets held for sale |
— | — | — | 605,798 | — | 605,798 | |||
| 281,014,703 105,795,111 34,847,237 2,686,690,296 476,851,252 | 3,585,198,598 |
| 30.06.2022 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Assets (Euros) | Express & Parcels |
Financial Services & Retail |
Bank | Non allocated assets |
Total | ||||
| Intangible assets | 26,344,891 | 6,963,041 | 227,056 | 26,003,745 | 5,672,529 | 65,211,263 | |||
| Tangible fixed assets | 219,304,206 | 77,285,302 | 50,723 | 3,437,143 | 1,240,956 | 301,318,331 | |||
| Investment properties | — | — | — | — | 6,221,365 | 6,221,365 | |||
| Goodwill | 16,216,237 | 2,955,753 | — | 61,084,749 | — | 80,256,739 | |||
| Deferred tax assets | — | — | — | — | 74,320,224 | 74,320,224 | |||
| Accounts receivable | — | — | — | — 176,379,700 | 176,379,700 | ||||
| Credit to bank clients | — | — | — 1,657,587,412 | — | 1,657,587,412 | ||||
| Financial assets at fair value through profit or loss |
— | — | — | 36,470,907 | — | 36,470,907 | |||
| Debt securities at fair value through other comprehensive income |
— | — | — | 4,119,749 | — | 4,119,749 | |||
| Debt securities at amortized cost |
— | — | — | 521,398,996 | — | 521,398,996 | |||
| Other banking financial assets |
— | — | — | 16,028,703 | — | 16,028,703 | |||
| Other assets | 11,081,929 | 25,840,987 21,632,800 | 15,391,326 | 12,776,426 | 86,723,468 | ||||
| Cash and cash equivalents | — | 21,526,938 | — | 691,585,824 134,155,593 | 847,268,355 | ||||
| Non-current assets held for sale |
— | — | — | 102,694 | 102,694 | ||||
| 272,947,263 134,572,022 21,910,579 3,033,211,248 410,766,794 | 3,873,407,905 |
The non-current assets acquisitions by segment, are detailed as follows:
| 31.12.2021 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Express & Parcels |
Financial Services & Retail |
Bank | Non allocated assets |
Total | |||||
| Intagible assets | 10,687,971 | 3,967,727 | 125,669 | 3,897,385 | — | 18,678,753 | |||
| Tangible fixed assets | 20,153,598 | 23,903,875 | — | 1,561,666 | 458,948 | 46,078,087 | |||
| 30,841,569 | 27,871,602 | 125,669 | 5,459,051 | 458,948 | 64,756,839 |
| 30.06.2022 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Express & Parcels |
Financial Services & Retail |
Bank | Non allocated assets |
Total | |||||
| Intagible assets | 3,870,452 | 1,904,815 | 93,751 | 1,875,937 | — | 7,744,955 | |||
| Tangible fixed assets | 8,951,633 | 20,489,482 | — | 104,716 | — | 29,545,830 | |||
| 12,822,085 | 22,394,297 | 93,751 | 1,980,653 | — | 37,290,786 |
The detail of the underlying reasons to the non-allocation of the following assets to any segment, is as follows:
most relevant amount, as detailed in note 26 - Income tax for the period. CTT, S.A. is allocated to different segments, as already mentioned, the allocation of these assets to the different segments does not seem possible to be carried out reliably;
Debt by segment is detailed as follows:
| 31.12.2021 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Other information (Euros) | Express & Parcels |
Financial Services & Retail |
Bank | Total | ||||||
| Non-current debt | 114,127,927 | 33,250,570 | 34,807 | 1,923,133 | 149,336,438 | |||||
| Bank loans | 62,161,852 | — | — | — | 62,161,852 | |||||
| Lease liabilities | 51,966,076 | 33,250,570 | 34,807 | 1,923,133 | 87,174,586 | |||||
| Current debt | 35,785,578 | 15,240,151 | 27,024 | 730,259 | 51,783,012 | |||||
| Bank loans | 14,436,742 | 7,732,258 | — | — | 22,169,000 | |||||
| Confirming | — | 1,500,152 | — | — | 1,500,152 | |||||
| Lease liabilities | 21,348,836 | 6,007,741 | 27,024 | 730,259 | 28,113,860 | |||||
| 149,913,506 | 48,490,722 | 61,831 | 2,653,392 | 201,119,450 |
| 30.06.2022 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Other information (Euros) | Express & Parcels |
Financial Services & Retail |
Bank | Total | ||||||
| Non-current debt | 103,994,075 | 45,322,887 | 22,186 | 1,407,513 | 150,746,661 | |||||
| Bank loans | 55,166,706 | — | — | — | 55,166,706 | |||||
| Lease liabilities | 48,827,369 | 45,322,887 | 22,186 | 1,407,513 | 95,579,955 | |||||
| Current debt | 35,682,698 | 15,042,611 | 9,194 | 671,573 | 51,406,076 | |||||
| Bank loans | 14,234,561 | 7,749,470 | — | — | 21,984,031 | |||||
| Confirming | ||||||||||
| Lease liabilities | 21,448,138 | 7,293,141 | 9,194 | 671,573 | 29,422,045 | |||||
| 139,676,773 | 60,365,498 | 31,380 | 2,079,086 | 202,152,737 |
The Group is domiciled in Portugal. The result of its Sales and services rendered by geographical segment is disclosed below:
| Thousand Euros | 30.06.2021 | 30.06.2022 |
|---|---|---|
| Revenue - Portugal | 281,254 | 309,068 |
| Revenue - other countries | 90,938 | 85,163 |
| 372,192 | 394,231 |
The revenue rendered in other countries, includes the revenue from the Express & Parcels rendered in Spain by CTT Expresso branch in this country, in the amount of 57,534 thousand Euros.
During the year ended 31 December 2021 and the six-months period ended 30 June 2022, the movements occurred in Tangible fixed assets, as well as the respective accumulated depreciation, were as follows:
| 31.12.2021 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Land and natural resources |
Buildings and other constructions |
Basic equipment |
Transport equipment |
Office equipment |
Other tangible fixed assets |
Tangible fixed assets in progress |
Advance payments to suppliers |
Rights of use |
Total | |
| Tangible fixed assets | ||||||||||
| Opening balance | 35,479,827 | 339,115,881 | 168,452,024 | 3,602,903 | 70,641,110 | 26,092,908 | 6,019,646 | 1,237,818 | 231,178,507 | 881,820,624 |
| Acquisitions | 90,151 | 1,147,764 | 4,148,073 | 13,168 | 1,139,994 | 1,524,618 | 5,878,872 | 3,525,258 | — | 17,467,898 |
| New contracts | — | — | — | — | — | — | — | — | 28,610,189 | 28,610,189 |
| Disposals | (222,547) | (7,914,602) | (7,094,964) | (21,041) | (1,742) | — | — | — | — | (15,254,896) |
| Transfers and write-offs |
275,780 | 7,653,725 | 2,551,680 | — | (126,872) | (311,937) | (8,287,534) | — | (6,528,059) | (4,773,218) |
| Remeasurements | — | — | — | — | — | — | — | — | 1,179,139 | 1,179,139 |
| Adjustments | — | 4,652 | 158,587 | 8,868 | 9,590 | 5,727 | 1,918 | — | (558,663) | (369,322) |
| Remeasurements lease terms |
— | — | — | — | — | — | — | — | 600,570 | 600,570 |
| Change in the consolidation perimeter |
— | 469,081 | 868,215 | 3,500 | 393,551 | 58,375 | — | — | 2,189,935 | 3,982,657 |
| Closing balance | 35,623,210 | 340,476,500 | 169,083,615 | 3,607,398 | 72,055,630 | 27,369,691 | 3,612,902 | 4,763,076 | 256,671,618 | 913,263,640 |
| Accumulated depreciation | ||||||||||
| Opening balance | 3,723,758 | 227,546,379 | 138,324,288 | 3,395,091 | 64,977,312 | 20,231,064 | — | — | 128,613,895 | 586,811,787 |
| Depreciation for the period |
— | 8,880,869 | 6,507,580 | 60,416 | 1,685,243 | 1,310,469 | — | — | 26,397,955 | 44,842,534 |
| Disposals | (203,240) | (8,423,387) | (6,925,351) | (20,498) | (1,465) | — | — | — | — | (15,573,941) |
| Transfers and write-offs |
42,108 | 1,588,052 | 7,155 | — | (126,338) | (285,824) | — | — | (2,996,447) | (1,771,295) |
| Adjustments | — | 1,640 | 79,391 | 4,395 | 7,848 | 5,347 | — | — | — | 98,621 |
| Change in the consolidation perimeter |
— | 264,751 | 859,406 | 2,139 | 247,118 | 5,949 | — | — | 1,169,535 | 2,548,897 |
| Closing balance | 3,562,627 | 229,858,304 | 138,852,469 | 3,441,543 | 66,789,717 | 21,267,005 | — | — | 153,184,938 | 616,956,602 |
| Accumulated impairment | ||||||||||
| Opening balance | — | — | — | — | — | 19,460 | — | — | — | 19,460 |
| Closing balance | — | — | — | — | — | 19,460 | — | — | — | 19,460 |
| Net Tangible fixed assets |
32,060,584 | 110,618,196 | 30,231,146 | 165,855 | 5,265,913 | 6,083,227 | 3,612,902 | 4,763,076 | 103,486,680 | 296,287,578 |
| 30.06.2022 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Land and natural resources |
Buildings and other constructions |
Basic equipment |
Transport equipment |
Office equipment |
Other tangible fixed assets |
Tangible fixed assets in progress |
Advance payments to suppliers |
Rights of use |
Total | |
| Tangible fixed assets | ||||||||||
| Opening balance | 35,623,210 | 340,476,500 | 169,083,615 | 3,607,398 | 72,055,630 | 27,369,691 | 3,612,902 | 4,763,076 | 256,671,618 | 913,263,640 |
| Acquisitions | — | 246,828 | 438,859 | 15,667 | 245,786 | 212,579 | 2,399,174 | 668,366 | — | 4,227,260 |
| New contracts | — | — | — | — | — | — | — | — | 25,318,571 | 25,318,571 |
| Disposals | — | (50,779) | (445,223) | — | (27,931) | — | — | — | — | (523,933) |
| Transfers and write-offs |
— | 546,590 | 3,432,176 | — | (6,537) | (4,824) | (945,570) | (3,230,905) | (2,406,858) | (2,615,927) |
| Remeasurements | — | — | — | — | — | — | — | 45,482 | 45,482 | |
| Adjustments | — | 9,716 | 90,149 | 3,234 | 14,813 | 159,187 | 41,271 | — | (8,612) | 309,758 |
| Closing balance | 35,623,210 | 341,228,855 | 172,599,575 | 3,626,299 | 72,281,762 | 27,736,632 | 5,107,777 | 2,200,538 | 279,620,201 | 940,024,849 |
| Accumulated depreciation | ||||||||||
| Opening balance | 3,562,627 | 229,858,304 | 138,852,469 | 3,441,543 | 66,789,717 | 21,267,005 | — | — | 153,184,938 | 616,956,602 |
| Depreciation for the period |
— | 4,549,273 | 3,327,489 | 30,474 | 823,107 | 680,687 | — | — | 14,379,056 | 23,790,086 |
| Disposals | — | (43,028) | (444,103) | — | (17,192) | — | — | — | — | (504,323) |
| Transfers and write-offs |
— | (40,693) | (4,289) | — | (3,268) | (5,941) | — | — | (1,647,089) | (1,701,281) |
| Adjustments | — | 873 | 46,917 | 2,456 | 3,482 | 2,305 | — | — | 89,941 | 145,975 |
| Closing balance | 3,562,627 | 234,324,729 | 141,778,483 | 3,474,473 | 67,595,847 | 21,944,056 | — | — | 166,006,845 | 638,687,058 |
| Opening balance | — | — | — | — | — | 19,460 | — | — | — | 19,460 |
|---|---|---|---|---|---|---|---|---|---|---|
| Closing balance | — | — | — | — | — | 19,460 | — | — | — | 19,460 |
| Net Tangible fixed assets |
32,060,584 | 106,904,126 | 30,821,093 | 151,827 | 4,685,915 | 5,773,117 | 5,107,777 | 2,200,538 | 113,613,355 | 301,318,331 |
The depreciation recorded in the Group amounting to 23,790,086 Euros (22,309,433 Euros on 30 June 2021), is booked under the caption Depreciation/amortization and impairment of investments, net.
In the period ended 31 December 2021, the caption "Changes in the consolidation perimeter" refers to the balances of the companies HCCM - Outsourcing Investment, S.A. and NewSpring Services, S.A. on the date of its acquisition.
As at 30 June 2022, Land and natural resources and Buildings and other constructions include 474,489 Euros (490,537 Euros as at 31 December 2021), related to land and property in co-ownership with the company MEO – Serviços de Comunicações e Multimédia, S.A..
According to the concession contract in force, at the end of the concession, the assets included in the public and private domain of the State revert automatically, at no cost, to the conceding entity. As the postal network belongs exclusively to CTT, not being a public domain asset, only the assets that belong to the State revert to it, and as such, at the end of the concession CTT will continue to own its assets. The Board of Directors, supported by CTT's accounting records and the statement of Directorate General of Treasury and Finance ("Direção Geral do Tesouro e Finanças"), the entity responsible for the Information System of Public Buildings ("Sistema de Informação de Imóveis do Estado" – SIIE) concludes that CTT's assets do not include any public or private domain assets of the Portuguese State.
As under the concession contract, the grantor does not control any significant residual interest in CTT's postal network and CTT being free to dispose of, replace or encumber the assets that integrate the postal network, IFRIC 12 - Service Concession Agreements is not applicable to the universal postal service concession contract.
During the six-months period ended 30 June 2022, the most significant movements in Tangible Fixed Assets were the following:
The movements associated to acquisitions and transfers relate mostly to the capitalization of repairs in own and third parties' buildings of CTT and CTT Expresso.
The amount related to acquisitions is mainly related with the upgrade of mail handling machines in the amount of 79 thousand euros, the acquisition of several postal equipment in the amount of 75 thousand euros by CTT Expresso and the acquisition of goods vehicles in the amount of 191 thousand euros by CORRE.
The amount relating to acquisitions mainly concerns to the acquisition of several microcomputer equipment in the amount of 52 thousand Euros and the acquisition of furniture in the amount of 28 thousand Euros, at CTT and the acquisition of several microcomputer equipment in the amount of 70 thousand Euros and the acquisition of furniture in the amount of 17 thousand Euros at CTT Expresso.
The acquisitions caption essentially includes prevention and safety equipment in the amount of approximately 68 thousand Euros and the acquisition of air conditioning equipment for an approximate amount of 73 thousand Euros at CTT.
Under the acquisitions of tangible fixed assets in progress and advances payments to suppliers caption are, essentially, booked works in progress at CTT in the amount of 583 thousand euros, the sorters construction by CTT Expresso (Spain) in the amount of 1,702 thousand euros and the acquisition of treatment machines in the approximate amount of 668 thousand euros by CTT Expresso.
The rights of use recognized are detailed as follows, by type of underlying asset:
| 31.12.2021 | ||||
|---|---|---|---|---|
| Buildings | Vehicles | Other assets |
Total | |
| Tangible fixed assets | ||||
| Opening balance | 198,020,167 | 31,683,313 | 1,475,027 231,178,507 | |
| New contracts | 25,753,442 | 2,720,633 | 136,114 | 28,610,189 |
| Transfers and write-offs | (5,941,969) | (586,090) | — | (6,528,059) |
| Remeasurements | 1,779,709 | — | — | 1,779,709 |
| Regularizations | (557,788) | (876) | — | (558,663) |
| Changes in the consolidation perimeter | 2,096,605 | 93,330 | — | 2,189,935 |
| Closing balance | 221,150,166 | 33,910,310 | 1,611,141 256,671,618 | |
| Accumulated depreciation | ||||
| Opening balance | 117,290,196 | 10,510,125 | 813,574 128,613,895 | |
| Depreciation for the period | 19,348,499 | 6,835,484 | 213,973 | 26,397,955 |
| Transfers and write-offs | (2,614,116) | (382,331) | — | (2,996,447) |
| Changes in the consolidation perimeter | 1,117,563 | 51,971 | — | 1,169,535 |
| Closing balance | 135,142,142 | 17,015,249 | 1,027,547 153,184,938 | |
| Net Tangible fixed assets | 86,008,024 | 16,895,061 | 583,595 103,486,680 |
| 30.06.2022 | ||||||
|---|---|---|---|---|---|---|
| Buildings | Vehicles | Other assets |
Total | |||
| Tangible fixed assets | ||||||
| Opening balance | 221,150,166 | 33,910,310 | 1,611,141 256,671,618 | |||
| New contracts | 21,334,368 | 3,145,631 | 838,572 | 25,318,571 | ||
| Transfers and write-offs | (2,247,871) | (158,986) | — | (2,406,858) | ||
| Remeasurements | 45,482 | — | — | 45,482 | ||
| Regularizations | (10,692) | 2,080 | — | (8,612) | ||
| Closing balance | 240,271,453 | 36,899,035 | 2,449,713 279,620,201 | |||
| Accumulated depreciation | ||||||
| Opening balance | 135,142,142 | 17,015,249 | 1,027,547 153,184,938 | |||
| Depreciation for the period | 10,548,341 | 3,642,730 | 187,985 | 14,379,056 | ||
| Transfers and write-offs | (1,542,065) | (105,024) | — | (1,647,089) | ||
| Regularizations | 89,522 | 419 | — | 89,941 | ||
| Closing balance | 144,237,940 | 20,553,374 | 1,215,531 166,006,845 | |||
| Net Tangible fixed assets | 96,033,512 | 16,345,660 | 1,234,182 113,613,355 |
The depreciation recorded, in the amount of 14,379,056 Euros (13,123,139 Euros on 30 June 2021), is booked under the caption "Depreciation/amortization and impairment of investments, net."
As at 31 December 2021, the amounts related to changes in the consolidation perimeter refer to the incorporation of New Spring Services and HCCM - Outsourcing Investment.
The information on the liabilities associated with these leases as well as the interest expenses can be found disclosed on Debt (Note 18) and Interest expenses and income (Note 25), respectively.
For the six-months period ended 30 June 2022, no interest on loans was capitalized, as no loans were directly identified attributable to the acquisition or construction of an asset that requires a substantial period of time (greater than one year) to reach its status of use.
According to the analysis of impairment signs as at 30 June 2022, no events or circumstances were identified that indicate that the amount for which the Group's tangible fixed assets are recorded may not be recovered.
The real estate assets of CTT are comprised of two portfolios with different characteristics:
As disclosed in the press release to the market on 19 June 2022, CTT has entered into exclusive negotiations with a third party ("Third Party") aimed at creating a vehicle ("Vehicle") to own and manage this portfolio which essentially comprises (1) CTT's points of presence, particularly own retail stores and (2) the warehouses and logistics / distribution centers that are core part of CTT's operational network in Portugal.
The management of this Yield Portfolio aims at the onerous exploitation, internally and with third parties, of properties that are part of CTT's current and future network and which currently do not have relevant real estate development opportunities.
Regarding to the Development Portfolio, this comprises, among others, properties that may become, in the near future, non-essential for CTT's logistics networks and which have a potential for real estate development and promotion in specific projects.
There are no tangible fixed assets with restricted ownership or any carrying value relative to any tangible fixed assets which have been given as a guarantee of liabilities.
The contractual commitments related to Tangible fixed assets at 30 June 2022, amount to 551,012 Euros.
During the year ended 31 December 2021 and the six-months period ended 30 June 2022, the movements which occurred in the main categories of the Intangible assets, as well as the respective accumulated amortization, were as follows:
| 31.12.2021 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Development projects |
Computer Software |
Industrial property |
Other intangible assets |
Intangible assets in progress |
Total | |||
| Intangible assets | ||||||||
| Opening balance | 4,380,552 133,716,151 | 17,275,736 | 444,739 | 9,208,639 165,025,816 | ||||
| Acquisitions | — | 2,269,684 | 1,129,377 | — | 15,279,692 | 18,678,753 | ||
| Disposals | — | (255,750) | — | — | — | (255,750) | ||
| Transfers and write-offs | — | 12,620,694 | (102,919) | — | (12,621,044) | (103,269) | ||
| Adjustments | — | — | 85,168 | — | — | 85,168 | ||
| Changes in the consolidation perimeter | — | — | 432,868 | 1,053,154 | — | 1,486,022 | ||
| Closing balance | 4,380,552 148,350,779 | 18,820,229 | 1,497,893 | 11,867,286 184,916,739 | ||||
| Accumulated amortization Opening balance |
4,378,267 | 90,676,717 | 11,509,131 | 444,739 | — 107,008,855 | |||
| Amortization for the period | 1,272 | 11,694,901 | 1,366,535 | — | — | 13,062,708 | ||
| Transfers and write-offs | — | (59) | (102,919) | — | — | (102,978) | ||
| Adjustments | — | — | 45,958 | — | — | 45,958 | ||
| Changes in the consolidation perimeter | — | — | 281,178 | 1,053,154 | — | 1,334,332 | ||
| Closing balance | 4,379,539 102,371,559 | 13,099,884 | 1,497,893 | — 121,348,875 | ||||
| Accumulated impairment | ||||||||
| Opening balance | — | — | — | — | — | — | ||
| Impairment losses for the period | — | — | — | — | 60,617 | 60,617 | ||
| Closing balance | — | — | — | — | 60,617 | 60,617 | ||
| Net intangible assets | 1,013 | 45,979,220 | 5,720,345 | — | 11,806,669 | 63,507,247 |
| 30.06.2022 | ||||||
|---|---|---|---|---|---|---|
| Development projects |
Computer Software |
Industrial property |
Other intangible assets |
Intangible assets in progress |
Total | |
| Intangible assets | ||||||
| Opening balance | 4,380,552 148,350,779 | 18,820,229 | 1,497,893 | 11,867,286 184,916,739 | ||
| Acquisitions | — | 1,282,855 | 259,562 | — | 6,202,538 | 7,744,955 |
| Transfers and write-offs | — | 8,540,241 | (54,584) | (1,053,154) | (8,540,241) | (1,107,738) |
| Adjustments | — | — | 38,476 | — | (19,000) | 19,476 |
| Othe movements - PPA NewSpring Services |
— | — | — | 1,864,330 | — | 1,864,330 |
| Closing balance | 4,380,552 158,173,875 | 19,063,683 | 2,309,070 | 9,510,583 193,437,762 | ||
| Accumulated amortization | ||||||
| Opening balance | 4,379,539 102,371,559 | 13,099,884 | 1,497,893 | — 121,348,875 | ||
| Amortization for the period | 637 | 6,815,918 | 786,273 | 300,698 | — | 7,903,527 |
| Transfers and write-offs | — | — | (54,514) | (1,053,154) | — | (1,107,668) |
| Adjustments | — | — | 21,148 | — | — | 21,148 |
| Closing balance | 4,380,176 109,187,477 | 13,852,792 | 745,438 | — 128,165,883 | ||
| Accumulated impairment | ||||||
| Opening balance | — | — | — | — | 60,617 | 60,617 |
| Closing balance | — | — | — | — | 60,617 | 60,617 |
| Net intangible assets | 376 | 48,986,398 | 5,210,892 | 1,563,632 | 9,449,966 | 65,211,263 |
The amortization for the period ended 30 June 2022, amounting to 7,903,527 Euros (6,142,816 Euros as at 30 June 2021) was recorded under Depreciation / amortization and impairment of investments, net.
In the period ended 31 December 2021, the caption "Changes in the consolidation perimeter" refers to the balances of the companies HCCM - Outsourcing Investment, S.A. and NewSpring Services, S.A. . on the date of its acquisition.
In the period ended 30 June 2022, the caption "Other movements - PPA NewSpring Services" refers to the customer contracts portfolio acquired as part of the NewSpring Services' shares acquisition transaction, and determined within the PPA scope (note 7).
The caption Industrial property in the includes the license of the trademark "Payshop International" of CTT Contacto, S.A., in the amount of 1,200,000 Euros. This license has an indefinite useful life, therefore it is not amortized, being subject to impairment tests on a minimum annual basis or when there are indications of impairment.
The transfers occurred in the period ended 30 June 2022 from Intangible assets in progress to Computer software refer to IT projects, which were completed during the year.
The amounts of 1,186,512 Euros and 1,464,346 Euros were capitalized in computer software and in Intangible assets in progress as at 31 December 2021 and 30 June 2022, respectively, related to staff costs incurred in the development of these projects.
During the period ended 30 June 2022, the most significant movements in Intangible assets were the following:
The acquisitions caption essentially includes the acquisitions, by CTT Expresso, of the "Minerva" software in the amount of 208 thousand Euros, the CRM software in the amount of 100 thousand Euros and of the "Supplier Portal" software in the amount of 172 thousand Euros, and "Accipiens" software for a value of 313 thousand Euros at 321 Crédito.
The acquisitions caption essentially includes the acquisitions, by CTT, of "Storage and Backup" licenses in the amount of 80 thousand Euros and "Desk Management" licenses in the amount of 162 thousand Euros.
The intangible assets in progress as at 30 June 2022 refer to IT projects that are being developed, the most significant being the following:
| 30.06.2022 | |
|---|---|
| OneBiller Solution | 854,287 |
| Centralized Settlement Collections - software | 642,936 |
| New Mobile App for Field Force | 383,050 |
| SAP Hana & Hybris Billing | 358,055 |
| OnBoarding Digital | 309,562 |
| New Ecosystem Operations - Software | 306,952 |
| Client Area B2B - Software | 282,761 |
| Mailmanager - software | 269,958 |
| Lockers Tuga - Software | 263,854 |
| Demiminis | 241,367 |
| Gateway | 238,023 |
| Client Area B2C - Software | 226,908 |
| Productivity Increase in Distribution - Software | 215,421 |
| 4,593,134 |
The Group has not identified any relevant uncertainties regarding the conclusion of ongoing projects, nor about their recoverability.
Most of the projects are expected to be completed in 2022.
The amount of research and development expenses incurred by the Group in 2021, in the amount of 6,474,190 Euros was disclosed in Note 26.
There are no Intangible assets with restricted ownership or any carrying value relative to any Intangible assets which have been given as a guarantee of liabilities.
In the six-months period ended 30 June 2022, no interest on loans was capitalized, as no loans were directly identified attributable to the acquisition or construction of an asset that requires a substantial period of time (greater than one year) to reach its status of use.
Contractual commitments related intangible assets at 30 June 2022, amount to 4,242,057 Euros.
During the year ended 31 December 2021 and the six-months period ended 30 June 2022, the Group has the following assets classified as properties:
| 31.12.2021 | ||||
|---|---|---|---|---|
| Land and natural resources |
Buildings and other constructions |
Total | ||
| Investment properties | ||||
| Opening balance | 3,192,033 | 13,282,551 | 16,474,584 | |
| Disposals | (26,832) | (126,599) | (153,431) | |
| Transfers and write-offs | (275,780) | (1,925,784) | (2,201,564) | |
| Closing balance | 2,889,422 | 11,230,168 | 14,119,589 | |
| Accumulated depreciation | ||||
| Opening balance | 202,509 | 8,745,858 | 8,948,368 | |
| Depreciation for the period | — | 216,293 | 216,293 | |
| Disposals | (1,752) | (96,754) | (98,505) | |
| Transfers and write-offs | (42,108) | (1,624,817) | (1,666,925) | |
| Closing balance | 158,649 | 7,240,580 | 7,399,229 | |
| Accumulated impairment | ||||
| Opening balance | — | 450,308 | 450,308 | |
| Impairment for the period | — | (57,372) | (57,372) | |
| Closing balance | — | 392,936 | 392,936 | |
| Net Investment properties | 2,730,773 | 3,596,652 | 6,327,424 | |
| 30.06.2022 | ||||
| Land and natural |
Buildings and other | Total | ||
| resources | constructions | |||
| Investment properties | ||||
| Opening balance | 2,889,422 | 11,230,168 | 14,119,589 | |
| Closing balance | 2,889,422 | 11,230,168 | 14,119,589 | |
| Accumulated depreciation | |||
|---|---|---|---|
| Opening balance | 158,649 | 7,240,580 | 7,399,229 |
| Depreciation for the period | — | 106,059 | 106,059 |
| Closing balance | 158,649 | 7,346,640 | 7,505,289 |
| Accumulated impairment | |||
| Opening balance | — | 392,936 | 392,936 |
| Closing balance | — | 392,936 | 392,936 |
These assets are not allocated to the Group operating activities, being in the market available for lease.
The market value of these assets, which are classified as investment property, in accordance with the valuations obtained at the end of the fiscal year 2021 which were conducted by independent entities, amounts to 10,345,517 Euros.
On 31 December 2021, the caption Transfers and Write-offs includes the amount of 2,201,564 Euros related to the transfer from Investment Properties, as well as the corresponding accumulated depreciations of 1,666,925 Euros of a group of properties that were again assigned to the operational activity of the Group.
The depreciation for the six-months period ended 30 June 2022, of 106,059 Euros (113,939 Euros on 30 June 2021) was recorded in the caption Depreciation/amortization and impairment of investments, net.
For the six-months period ended 30 June 2022, the rents amount charged by the Group for properties and equipment leases classified as investment properties was 19,538 Euros (30 June 2021: 11,045 Euros).
For the period ended 31 December 2021, impairment losses, amounting to (57,372) Euros, were recorded in the caption "Depreciation/amortization and impairment of investments, net" and are explained by the properties transferred to tangible fixed assets.
As at 31 December 2021 and 30 June 2022, the parent company, CTT - Correios de Portugal, S.A. and the following subsidiaries were included in the consolidation:
| 31.12.2021 | 30.06.2022 | |||||||
|---|---|---|---|---|---|---|---|---|
| Company name | Place of business |
Head office | Percentage of ownership | Percentage of ownership | ||||
| Direct | Indirect | Total | Direct | Indirect | Total | |||
| Parent company: | ||||||||
| CTT - Correios de Portugal, S.A. | Portugal | Av. D. João II N.º 13 1999-001 Lisboa |
— | — | — | — | — | — |
| Subsidiaries: | ||||||||
| CTT Expresso - Serviços Postais e Logística, S.A. ("CTT Expresso") |
Portugal | Av. D. João II N.º 13 1999-001 Lisboa |
100 | — | 100 | 100 | — | 100 |
| Payshop Portugal, S.A. ("Payshop") | Portugal | Av. D. João II N.º 13 1999-001 Lisboa |
— | 100 | 100 | — | 100 | 100 |
| CTT Contacto, S.A. ("CTT Con") |
Portugal | Av. D. João II N.º 13 1999-001 Lisboa |
100 | — | 100 | 100 | — | 100 |
| CTT Soluções Empresariais, S.A. ("CTT Sol") |
Portugal | Av. D. João II N.º 13 1999-001 Lisboa |
100 | — | 100 | 100 | — | 100 |
| Correio Expresso de Moçambique, S.A. ("CORRE") |
Mozambique | Av. 24 de Julho, Edificio 24, n.º 1097, 3.º Piso, Bairro da Polana Maputo - Moçambique |
50 | — | 50 | 50 | — | 50 |
| Banco CTT, S.A. ("BancoCTT") | Portugal | Av. D. João II N.º 13 1999-001 Lisboa |
100 | — | 100 | 100 | — | 100 |
| Fundo Inovação TechTree ("TechTree") |
Portugal | Av Conselheiro Fernando de Sousa, 19 13º Esq 1070-072 Lisboa |
60 | 40 | 100 | 60 | 40 | 100 |
| 321 Crédito - Instituição Financeira de Crédito, S.A. ("321 Crédito") |
Portugal | Av. Duque d'Ávila, 46, 7º B 1050-083 Lisboa |
— | 100 | 100 | — | 100 | 100 |
| HCCM - Outsourcing Investiment, S.A. ("HCCM") |
Portugal | Av. D. João II N.º 13 1999-001 Lisboa |
— | 100 | 100 | — | — | — |
| NewSpring Services, S.A. ("NSS") |
Portugal | Av. D. João II N.º 13 1999-001 Lisboa |
— | 100 | 100 | — | 100 | 100 |
| CTT IMO - Sociedade Imobiliária, S.A. ("CTTi") |
Portugal | Av. D. João II N.º 13 1999-001 Lisboa |
100 | — | 100 | 100 | — | 100 |
| Open Lockers, S.A. ("Lock") |
Portugal | Av. D. João II N.º 13 1999-001 Lisboa |
26 | 41 | 66 | — | 66 | 66 |
| MedSpring, S.A. ("Med") |
Portugal | Av. D. João II N.º 13 1999-001 Lisboa |
— | — | — | — | 100 | 100 |
In relation to the company CORRE, as the Group has the right to variable returns arising from its involvement and the ability to affect those returns, it is included in the consolidation.
On 25 January 2021, CTT - Correios de Portugal, S.A. subscribed a share capital increase in the subsidiary Banco CTT, S.A., with a cash contribution in the amount of 10,000,000 Euros and with the issue of 10,000,000 new shares with no par value, ordinary, nominative and with an issue value of 1 Euro each. Banco CTT, S.A.'s share capital amounting to 286,400,000 Euros increased to 296,400,000 Euros.
On 30 August 2021, the total share capital of NewSpring Services, S.A. ("NewSpring Services") and its holding HCCM - Outsourcing Investment, S.A. ("HCCM – Outsourcing Investment"), companies operating in the Business Process Outsourcing (BPO) and Contact Center market were acquired for an amount of 10,701,086 Euros, which amount was fully satisfied by financial settlement on that date.
On 22 December 2021, the entity CTT IMO - Sociedade Imobiliária, S.A., was established with the purpose of the purchase, exchange, sale and lease of real estate, and resale of the acquired assets for this purpose.
On 30 December 2021, the company Open Lockers, S.A was established. This company was the result of a partnership agreement between CTT and YunExpress, the logistics business unit of the Chinese company Zongteng Group, which resulted in the creation of this partnership that aims to manage the business of a locker network for parcel pick-up in Portugal and Spain. CTT holds a 66% majority stake in the new company and YunExpress holds a 34% stake.
On 9 March 2022, the entity MedSpring, S.A., owned by NewSpring Services, was established, whose corporate purpose is insurance mediation in the category of insurance agent.
As of 31 March 2022, CTT - Correios de Portugal, S.A. and CTT - Soluções Empresariais - S.A. proceeded with the sale of their investments in Open Lockers, S.A., of 25.5% and 15%, respectively, to CTT Expresso - Serviços Postais e Logística, S.A., which now concentrates the CTT Group's investments in the entity. Therefore, this operation did not result in a change in the equity interests held by the Group.
On 20 April 2022, CTT Expresso subscribed for a share capital increase in the subsidiary Open Lockers, through a contribution in kind, in the amount of 492,232 Euros. The capital increase was subscribed in proportion to the shareholding held by each of the shareholders, CTT Expresso and Yun Express, and with the issuance of 750,000 new shares with no par value, ordinary, nominative and with an issue value of 1 euro each .
On 27 June 2022, the company HCCM - Outsourcing Investiment, S.A. was subject to a merger by incorporation into the company CTT Soluções Empresariais, S.A., through the global transfer of the assets of the merged company to the acquiring company, and subsequent dissolution of the merged company. The present merger operation is part of the simplification process of the CTT Group's corporate structure. The merger took effect on 1 January 2022.
On 30 June 2022, Open Lockers was subject to a capital increase in the form of supplementary capital in the amount of 396,000 Euros.
As part of a corporate reorganization in the Group, on 8 July 2022 the Board of Directors of Banco CTT approved the sale of its subsidiary Payshop Portugal, and its terms, to CTT - Correios de Portugal, S.A., with its implementation is still dependent on the signing of the contract with the buyer and the nonopposition of the regulator, which is expected to occur within 1 year. Therefore, as at 30 June 2022, at the level of the individual and consolidated accounts of Banco CTT, Payshop's assets and liabilities were reclassified as discontinued assets and liabilities. This reclassification did not, however, have an impact on the consolidated accounts of the CTT group.
As at 31 December 2021 and 30 June 2022, the Group held the following interests in joint ventures, registered through the equity method:
| 31.12.2021 | 30.06.2022 | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Company name | Place of business |
Head office | Percentage of ownership | Percentage of ownership | |||||
| Direct | Indirect Total |
Direct | Indirect | Total | |||||
| NewPost, ACE | Portugal | Av. Fontes Pereira de Melo, 40 Lisboa |
49 | — | 49 | 49 | — | 49 | |
| PTP & F, ACE | Portugal | Estrada Casal do Canas Amadora |
51 | — | 51 | 51 | — | 51 | |
| Wolfspring, ACE | Portugal | Urbanização do Passil, nº100- A 2890-852 Alcochete |
— | 50 | 50 | — | 50 | 50 | |
| MKTPlace - Comércio Eletrónico, S.A ("MKTP") |
Portugal | Rua Eng.º Ferreira Dias 924 Esc. 5 Porto |
50 | — | 50 | — | — | — |
The entity Mktplace - Comércio Eletrónico, S.A., a partnership with Sonae - SGPS, S.A., corresponds to an e-commerce platform that provides integrated services for the intermediation of commercial relations between sellers and consumers. Each shareholder, CTT and Sonae, as at 31 December 2021, owned 50% of the share capital of the referred entity.
On 13 January 2022, the investment in Mktplace - Comércio Eletrónico, SA, (Dott) was sold to Worten - Equipamentos para o Lar, SA. The sale of the investment in Dott, created as an e-commerce benefit with the purpose of promoting the digitization of companies and entry into e-commerce, arise in the context of strengthening the partnership between CTT and Worten in the area of e-commerce. As two logistics companies working to deepen their partnership at the Iberian level, in areas such as instant delivery, several distribution flows for e-commerce and business orders, including fulfilment for sellers on the Worten marketplace, in order to maximize the of the respective businesses.
As at 31 December 2021 and 30 June 2022, the Group held the following interests in associated companies accounted for by the equity method:
| Company name | 31.12.2021 | 30.06.2022 | ||||||
|---|---|---|---|---|---|---|---|---|
| Place of business |
Head office | Percentage of ownership | Percentage of ownership | |||||
| Direct | Indirect | Total | Direct | Indirect | Total | |||
| Mafelosa, SL (a) | Espanha | Castellon - Espanha | — | 25 | 25 | — | 25 | 25 |
| Urpacksur, SL (a) | Espanha | Málaga - Espanha | — | 30 | 30 | — | 30 | 30 |
(a) Company held by CTT Expresso - Serviços Postais e Logística, S.A., branch in Spain (until 2018 was held by Tourline Mensajeria, SLU), which currently has no activity.
Additionally, considering the requirements of IFRS 10, the Group's consolidation perimeter includes the following structured entities:
| Name | Constitution Year | Place of issue | % Economic Interest |
Consolidation Method |
|---|---|---|---|---|
| Ulisses Finance No.1 (*) | 2017 | Portugal | 38,2% | Full |
| Ulisses Finance No.2 (*) | 2021 | Portugal | 0.0004 % | Full |
| Ulisses Finance No.3 (*) | 2022 | Portugal | 0,9% | Full |
| Chaves Funding No.8 (*) | 2019 | Portugal | 100 % | Full |
| Next Funding No.1 (*) | 2021 | Portugal | 100 % | Full |
(*) Entities incorporated in the scope of securitisation operations, recorded in the consolidated financial statements in accordance with the Group's continued involvement, determined based on the percentage held in the residual interests (equity piece) of the respective vehicles and to the extent that the Group substantially owns the risks and rewards associated with the underlying assets and has the ability to affect these same risks and rewards
In the consolidated financial statements at 31 December 2021, was included the structured entity Next Funding No.1. This entity was the result of a partnership between Banco CTT and Sonae Financial
Services for the financing of the Universo card and the related management of credit risk exposure. The underlying assets of the Next Funding No.1 operation were consolidated and recognized in Banco CTT's consolidated accounts, considering that Banco CTT is i) responsible for all relevant activities inherent to the management of the underlying assets, ii) has exposure to variable income and iii) has the ability to affect its variable returns through the power to manage the relevant activities.
Also in 2021, the CTT Bank Group issued a new securitization operation (Ulisses Finance No. 2) related to the auto loan portfolio originated by 321 Crédito in the amount of 250 million Euros. Considering IFRS10, this operation became part of the Group's consolidation perimeter.
On 1 June 2022, the Group issued a new securitization operation named Ulisses Finance nº 3, through its subsidiary 321 Crédito. This operation aimed to finance the growth of Banco CTT's activity, optimizing its capital and diversifying its sources of liquidity, through the securitization of 200 million euros of car loans. Considering the provisions of IFRS10, this operation became part of the Group's consolidation perimeter.
The main impacts of the consolidation of these structured entities on the Group's accounts are the following:
| 31.12.2021 | 30.06.2022 | |
|---|---|---|
| Cash and cash equivalents | 20,092,235 | 33,408,478 |
| Financial assets at fair value through profit and loss (Derivatives) |
2,261,947 | 10,579,161 |
| Financial assets at amortized cost - Credit to Banking clients (Note 10) |
298,716,076 | 324,116,083 |
| Other banking financial liabilities (Debt securities issued) - note 9 |
277,795,753 | 470,072,904 |
As of 31 December 2021, the structured entities Next Funding No.1 and Ulisses Finance No.2 was included in the consolidation perimeter.
During the period ended 31 December 2021, the consolidation perimeter was also changed following the acquisition of NewSpring Services and its holding HCCM - Outsourcing Investment. On 16 June 2021, CTT through its subsidiary CTT Soluções Empresariais, S.A. entered into a purchase agreement for the acquisition of the total share capital of these companies, operating in the Business Process Outsourcing (BPO) and Contact Center market.
The acquisition was carried out on 30 August 2021 (transaction closing date), for an initial fixed price of 7,000,000 Euros, subject to adjustments, based on the accounts prepared at the transaction close, related to the net financial debt and working capital of the acquired companies, with the acquisition price of 10,701,086 Euros. Additionally, earnouts were agreed depending on the company's activity over the 2 years following the closing date, based on the achievement of pre-defined objectives for NewSpring Services, including EBITDA targets.
The Group incurred, in 2021, in expenses related to the acquisition of NewSpring Services of 190,716 Euros related to the transaction, namely financial advice and legal costs. These expenses were recorded in the External Supplies and Services item.
Recognition and measurement of identifiable assets acquired and liabilities assumed according with IFRS:
The Goodwill recognition on the acquisition date of HCCM - Outsourcing Investment and NewSpring Services is as follows:
| Amount | |
|---|---|
| Assets acquired (HCCM) | 5,887,230 |
| Liabilities acquired (HCCM) | 50,992 |
| Net assets acquired (HCCM) | 5,836,238 |
| Assets acquired (NSS) | 9,875,561 |
| Assets acquired (NSS) | 6,995,252 |
| Net assets acquired (NSS) | 2,880,309 |
| Net assets acquired (NSS) - CTT-SE Participation (*) | 139,292 |
| Fair Value Adjustments: | |
| Intangible Assets | 1,864,330 |
| Deferred Taxes Liabilities | (522,013) |
| Fair Value of the acquired assets (HCCM e NSS) | 7,317,847 |
| Fair Value of contingent components | 4,500,000 |
| Acquisition Price | 10,701,086 |
| Goodwill | 7,883,238 |
(*) Acquistion by CTT-SE of 4,84% of the share capital of NSS, with the remaining 95,16% belonging to HCCM.
The contingent components are related to the earnouts described above, and their fair value was determined based on the best estimate at the operation closing date, subject to revaluation at each reporting date. As at 30 June 2022, a part of the contingent components, in the amount of 1,500,000 Euros, has been materialized, and no differences from the initial estimate was found.
The goodwill is mainly attributable to the NewSpring Services' human capital skills and the synergies expected to be obtained from the company's integration into the Group's existing businesses. It should be noted that the calculated Goodwill, was fully allocated to the NewSpring Services Cash Generating Unit, since HCCM – Outsourcing investment has as its sole activity the shareholding management in this entity.
The fair value measurement methods applied by the Group are detailed as follows:
The assets acquired from HCCM – Outsourcing investment and NewSpring Services, as at 30 August 2021, was detailed as follows:
| HCCM – Outsourcing investment | Initial recognition | ||
|---|---|---|---|
| Non current assets | |||
| Tangible fixed assets | 54,118 | ||
| Goodwill | 2,171,673 | ||
| Intangible assets | 70 | ||
| Investments in subsidiaries | 2,736,914 | ||
| Other investments | 4,121 | ||
| Non current assets | 4,966,896 | ||
| Current assets | |||
| Income tax receivables | 7,498 | ||
| Other current assets | 1,091 | ||
| Prepayments | 3,798 | ||
| Cash and cash equivalents | 907,947 | ||
| Current assets | 920,334 | ||
| Assets acquired (HCCM) | 5,887,230 |
| NewSpring Services | Initial recognition |
|---|---|
| Non current assets | |
| Tangible fixed assets | 1,337,688 |
| Intangible assets | 151,620 |
| Investments in joint ventures | 54,045 |
| Other investments | 221,726 |
| Non current assets | 1,765,079 |
| Current assets | |
| Account receivables | 2,487,856 |
| Other current assets | 1,488,112 |
| Prepayments | 126,647 |
| Cash and cash equivalents | 4,007,867 |
| Current assets | 8,110,482 |
| Assets acquired (NSS) | 9,875,561 |
The detail of accounts receivable from NewSpring Services, as at 30 August 2021, was detailed as follows:
| Initial Recognition | |
|---|---|
| Accounts receivables - National | 2,487,856 |
| Doubtful debts | 51,648 |
| Accumulated Impairment Losses | (51,648) |
| Total | 2,487,856 |
The net book value of accounts receivable on the acquisition date amounts to 2,487,856 Euros, with no differences in relation to their fair value within the scope of IFRS 3.
On 22 December 2021, the entity CTT IMO - Sociedade Imobiliária, SA was established and on 30 December 2021 the company Open Lockers, S.A was established, which results from a partnership agreement between the Group and YunExpress, in which the Group holds a 66% majority stake in the new company and YunExpress, a 34% participation.
During six-months period ended 30 June 2022, the entity MedSpring, S.A. was established and the structured entity Ulisses Finance no.3 was created, having both integrated the consolidation perimeter.
As at 31 December 2021 and 30 June 2022, the caption Debt securities, showed the following composition:
| 31.12.2021 | 30.06.2022 | |
|---|---|---|
| Non-current | ||
| Financial assets at fair value through other comprehensive income (1) |
||
| Government bonds | — | — |
| Bonds issued by other entities | 4,906,841 | — |
| 4,906,841 | — | |
| Financial assets at amortized cost | ||
| Government bonds | 295,098,611 392,529,319 | |
| Bonds issued by other entities | — | — |
| Impairment | (111,953) | (136,865) |
| 294,986,658 392,392,454 | ||
| 299,893,499 392,392,454 | ||
| Current | ||
| Financial assets at fair value through other comprehensive income (1) |
||
| Government bonds | 849,374 | 535,121 |
| Bonds issued by other entities | 338,695 | 3,584,628 |
| 1,188,069 | 4,119,749 | |
| Financial assets at amortized cost | ||
| Government bonds | 38,795,904 129,017,538 | |
| Bonds issued by other entities | 386,509 | — |
| Impairment | (8,552) | (10,995) |
| 39,173,861 129,006,542 | ||
| 40,361,930 133,126,291 | ||
| 340,255,429 525,518,745 |
(1) As at 31 December 2021 and 30 June 2022 includes the amount of 9,429 Euros and 1,257 Euros, respectively, regarding Accumulated impairment losses.
During 2021, there were carried out sales of debt securities at amortized cost in the amount of 204 million Euros (nominal value) which resulted in a gain of 17,777 thousand Euros. As at 30 June 2022, the increase in debt securities essentially refers to investment in Portuguese, Spanish, Italian and French debt securities.
For "Financial assets at fair value through other comprehensive income", the changes in fair value are reflected in other comprehensive income.
The analysis of the Financial assets at fair Value through other comprehensive income and the Financial assets at amortized cost, by remaining maturity, as at 31 December 2021 and 30 June 2022 is detailed as follows:
| 31.12.2021 | |||||||
|---|---|---|---|---|---|---|---|
| Current | Non-current | ||||||
| Due within 3 months |
Over 3 months and less than 1 year |
Total | Over 1 year and less than 3 years |
Over 3 years | Total | Total | |
| Financial assets at fair value through other comprehensive income (1) |
|||||||
| Government bonds | |||||||
| National | 4,384 | 844,990 | 849,374 | — | — | — | 849,374 |
| Bonds issued by other entities |
|||||||
| National | 338,695 | — | 338,695 | 4,906,841 | — | 4,906,841 | 5,245,536 |
| 343,079 | 844,990 | 1,188,069 | 4,906,841 | — | 4,906,841 | 6,094,910 |
(1) As at 31 December 2021 includes the amount of 3,194 Euros regarding Accumulated impairment losses.
| 30.06.2022 | |||||||
|---|---|---|---|---|---|---|---|
| Current | Non-current | ||||||
| Due within 3 months |
Over 3 months and less than 1 year |
Total | Over 1 year and less than 3 years |
Over 3 years | Total | Total | |
| Financial assets at fair value through other comprehensive income (1) |
|||||||
| Government bonds | |||||||
| National | 447,875 | 87,246 | 535,121 | — | — | — | 535,121 |
| Bonds issued by other entities |
|||||||
| National | 2,066 | 3,582,562 | 3,584,628 | — | — | — | 3,584,628 |
| 449,941 | 3,669,808 | 4,119,749 | — | — | — | 4,119,749 |
(1) As at 30 June 2022 includes the amount of 1,257 Euros regarding Accumulated impairment losses.
| 31.12.2021 | |||||||
|---|---|---|---|---|---|---|---|
| Current | Non-current | ||||||
| Due within 3 months |
Over 3 months and less than 1 year |
Total | Over 1 year and less than 3 years |
Over 3 years | Total | Total | |
| Financial assets at amortized cost |
|||||||
| Government bonds | |||||||
| National | 2,521,147 | 22,264,251 | 24,785,398 | 38,565,156 | 122,194,456 | 160,759,612 | 185,545,010 |
| Foreign | 1,013,181 | 12,997,325 | 14,010,506 | 11,098,271 | 123,240,728 | 134,338,999 | 148,349,505 |
| Bonds issued by other entities | |||||||
| National | 386,509 | — | 386,509 | — | — | — | 386,509 |
| 3,920,837 | 35,261,576 | 39,182,413 | 49,663,427 | 245,435,184 | 295,098,611 | 334,281,023 |
| 30.06.2022 | |||||||
|---|---|---|---|---|---|---|---|
| Current | Non-current | ||||||
| Due within 3 months |
Over 3 months and less than 1 year |
Total | Over 1 year and less than 3 years |
Over 3 years | Total | Total | |
| Financial assets at amortized cost |
|||||||
| Government bonds | |||||||
| National | 2,994,575 | 22,098,678 | 25,093,253 | 37,928,478 | 162,728,138 | 200,656,616 | 225,749,868 |
| Foreign | 4,165,458 | 99,758,827 | 103,924,285 | 13,059,545 | 178,813,159 | 191,872,703 | 295,796,988 |
| 7,160,033 | 121,857,505 | 129,017,538 | 50,988,023 | 341,541,296 | 392,529,319 | 521,546,856 |
The impairment losses, for the year ended 31 December 2021 and six-months period ended 30 June 2022, are detailed as follows:
| 31.12.2021 | |||||||
|---|---|---|---|---|---|---|---|
| Opening balance |
Increases | Reversals | Utilizations | Transfers | Closing balance |
||
| Non-current assets | |||||||
| Financial assets at fair value through other comprehensive income |
5,918 | — | (5,019) | — | 1,673 | 2,572 | |
| Financial assets at amortized cost | 175,486 | 32,617 | (89,741) | — | (6,410) | 111,952 | |
| 181,404 | 32,617 | (94,760) | — | (4,737) | 114,524 | ||
| Current assets | |||||||
| Financial assets at fair value through other comprehensive income |
3,511 | — | (1,215) | — | (1,673) | 623 | |
| Financial assets at amortized cost | 6,505 | 2,492 | (6,855) | — | 6,410 | 8,552 | |
| 10,016 | 2,492 | (8,070) | — | 4,737 | 9,175 | ||
| Financial assets at fair value through other comprehensive income |
9,429 | — | (6,235) | — | — | 3,194 | |
| Financial assets at amortized cost | 181,991 | 35,109 | (96,595) | — | — | 120,505 | |
| 191,420 | 35,109 | (102,830) | — | — | 123,699 |
| 30.06.2022 | |||||||
|---|---|---|---|---|---|---|---|
| Opening balance |
Increases | Reversals | Utilizations | Transfers | Closing balance |
||
| Non-current assets | |||||||
| Financial assets at fair value through other comprehensive income |
2,572 | — | — | — | (2,572) | — | |
| Financial assets at amortized cost | 111,952 | 36,126 | (10,804) | — | (409) | 136,865 | |
| 114,524 | 36,126 | (10,804) | — | (2,981) | 136,865 | ||
| Current assets | |||||||
| Financial assets at fair value through other comprehensive income |
623 | 263 | (2,201) | — | 2,572 | 1,257 | |
| Financial assets at amortized cost | 8,552 | 2,902 | (868) | — | 409 | 10,995 | |
| 9,175 | 3,165 | (3,069) | — | 2,981 | 12,252 | ||
| Financial assets at fair value through other comprehensive income |
3,194 | 263 | (2,201) | — | — | 1,257 | |
| Financial assets at amortized cost | 120,505 | 39,028 | (11,672) | — | — | 147,860 | |
| 123,699 | 39,291 | (13,873) | — | — | 149,117 |
The impairment of "Financial assets at fair value against other comprehensive income" is reflected in other comprehensive income.
Regarding the movements in impairment losses of Financial assets at fair value through other comprehensive income by stages, for the year ended 31 December 2021 and six-months period ended 30 June 2022, they are detailed as follows:
| 31.12.2021 | 30.06.2022 | |
|---|---|---|
| Stage 1 | Stage 1 | |
| Opening balance | 9,429 | 3,194 |
| Change in period: | ||
| Increases due to origination and acquisition | — | 263 |
| Changes due to change in credit risk | (4,090) | (2,140) |
| Decrease due to derecognition repayments and disposals | (2,145) | (61) |
| Impairment - Financial assets at fair value through other comprehensive income |
3,194 | 1,257 |
The reconciliation of accounting movements related to impairment losses is presented below:
| 31.12.2021 | 30.06.2022 | |
|---|---|---|
| Stage 1 | Stage 1 | |
| Opening balance | 9,429 | 3,194 |
| Change in period: | ||
| ECL income statement change for the period | (6,235) | (1,938) |
| Impairment - Financial assets at fair value through other comprehensive income |
3,194 | 1,257 |
For the impairment losses of Financial assets at amortized cost, the movements by stages, in the year ended 31 December 2021 and six-months period ended 30 June 2022, they are detailed as follows:
| 31.12.2021 | 30.06.2022 | |
|---|---|---|
| Stage 1 | Stage 1 | |
| Opening balance | 181,991 | 120,505 |
| Change in period: | ||
| Increases due to origination and acquisition | 35,109 | 26,806 |
| Changes due to change in credit risk | (78,141) | 1,089 |
| Decrease due to derecognition repayments and disposals | (18,455) | (539) |
| Impairment - Financial assets at amortized cost | 120,505 | 147,860 |
The reconciliation of accounting movements related to impairment losses is presented below:
| 31.12.2021 | 30.06.2022 | |
|---|---|---|
| Stage 1 | Stage 1 | |
| Opening balance | 181,991 | 120,505 |
| Change in period: | ||
| ECL income statement change for the period | (61,487) | 27,356 |
| Impairment - Financial assets at amortized cost | 120,505 | 147,860 |
According to the accounting policy in force, the Group regularly assesses whether there is objective evidence of impairment in its financial asset portfolios at fair value through other comprehensive income and other financial assets at amortized cost.
As at 31 December 2021 and 30 June 2022, the caption "Other banking financial assets" and "Other banking financial liabilities" showed the following composition:
| 31.12.2021 | 30.06.2022 | |
|---|---|---|
| Non-current assets | ||
| Loans to credit institutions | 5,239,419 | 2,935,177 |
| Impairment | (1,709) | (838) |
| 5,237,710 | 2,934,339 | |
| Current assets | ||
| Investments in credit institutions | 2,350,000 | 4,700,000 |
| Loans to credit institutions | 6,185,069 | 5,328,929 |
| Impairment | (2,197) | (3,181) |
| Other | 2,988,970 | 4,881,307 |
| Impairment | (1,800,306) | (1,812,691) |
| 9,721,536 | 13,094,364 | |
| 14,959,246 | 16,028,703 | |
| Non-current liabilities | ||
| Debt securities issued | 277,760,616 | 469,879,618 |
| 277,760,616 | 469,879,618 | |
| Current liabilities | ||
| Debt securities issued | 35,137 | 193,286 |
| Other | 26,987,725 | 37,764,037 |
| 27,022,862 | 37,957,323 | |
| 304,783,478 | 507,836,941 |
Investments in credit institutions and Loans to credit institutions
Regarding the above-mentioned captions, the scheduling by maturity is as follows:
| 31.12.2021 | 30.06.2022 | |
|---|---|---|
| Up to 3 months | 2,337,172 | 1,942,359 |
| From 3 to 12 months | 6,197,897 | 8,086,570 |
| From 1 to 3 years | 5,239,419 | 2,935,177 |
| Over 3 years | — | — |
| 13,774,489 | 12,964,106 |
The caption "Investments at credit institutions" showed an annual average return of 1.418% (31 December 2021: 1.191%).
The impairment losses, in the year ended 31 December 2021 and six-months period ended 30 June 2022, are detailed as follows:
| 31.12.2021 | ||||||
|---|---|---|---|---|---|---|
| Opening balance |
Increases | Reversals | Utilizations | Transfers | Closing balance |
|
| Non-current assets | ||||||
| Investments and loans in credit institutions | 3,712 | 555 | (10,964) | — | 8,406 | 1,709 |
| 3,712 | 555 | (10,964) | — | 8,406 | 1,709 | |
| Current assets | ||||||
| Investments and loans in credit institutions | 23,980 | 713 | (14,090) | — | (8,406) | 2,197 |
| Other | 3,238,971 | 30,268 | (22,533) | (1,446,399) | — | 1,800,307 |
| 3,262,951 | 30,981 | (36,623) | (1,446,399) | (8,406) | 1,802,504 | |
| 3,266,663 | 31,536 | (47,587) | (1,446,399) | — | 1,804,213 |
| 30.06.2022 | ||||||
|---|---|---|---|---|---|---|
| Opening balance |
Increases | Reversals | Utilizations | Transfers | Closing balance |
|
| Non-current assets | ||||||
| Investments and loans in credit institutions | 1,709 | 444 | (421) | — | (895) | 838 |
| 1,709 | 444 | (421) | — | (895) | 838 | |
| Current assets | ||||||
| Investments and loans in credit institutions | 2,197 | 1,687 | (1,598) | — | 895 | 3,181 |
| Other | 1,800,306 | 26,312 | — | (13,927) | — | 1,812,691 |
| 1,802,503 | 27,998 | (1,598) | (13,927) | 895 | 1,815,872 | |
| 1,804,213 | 28,443 | (2,019) | (13,927) | — | 1,816,710 |
Regarding the movements in impairment losses on investments and loans to credit institutions by stages, in the periods ended on 31 December 2021 and six-months period ended 30 June 2022, they are detailed as follows:
| 31.12.2021 | 30.06.2022 | |
|---|---|---|
| Stage 1 | Stage 1 | |
| Opening balance | 27,692 | 3,906 |
| Change in period: | ||
| Increases due to origination and acquisition | 1,261 | 2,131 |
| Changes due to change in credit risk | (1,067) | (1,733) |
| Decrease due to derecognition repayments and disposals | (23,980) | (286) |
| Impairment | 3,906 | 4,018 |
The reconciliation of accounting movements related to impairment losses is presented below:
| 31.12.2021 | 30.06.2022 | |
|---|---|---|
| Stage 1 | Stage 1 | |
| Opening balance | 27,692 | 3,906 |
| Change in period: | ||
| ECL income statement change for the period | (23,786) | 112 |
| Impairment | 3,906 | 4,018 |
This caption showed the following composition:
| 31.12.2021 | 30.06.2022 | |
|---|---|---|
| Securitizations | 277,795,753 | 470,072,904 |
| 277,795,753 | 470,072,904 |
| 31.12.2021 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Issue | Issue date | Maturity date |
Remuneration | Nominal value |
Book value | |||||
| Ulisses Finance No.1 – Class A | July 2017 | March 2033 | Euribor 1M + 85 b.p. | 10,421,009 | 10,424,113 | |||||
| Ulisses Finance No.1 – Class B | July 2017 | March 2033 | Euribor 1M + 160 b.p. |
7,000,000 | 7,001,507 | |||||
| Ulisses Finance No.1 – Class C | July 2017 | March 2033 | Euribor 1M + 375 b.p. |
7,100,000 | 7,106,617 | |||||
| Ulisses Finance No.2 – Class A | September 2021 |
September 2038 |
Euribor 1M + 70 b.p. 203,700,000 | 205,737,929 | ||||||
| Ulisses Finance No.2 – Class B | September 2021 |
September 2038 |
Euribor 1M + 80 b.p. | 10,000,000 | 9,986,657 | |||||
| Ulisses Finance No.2 – Class C | September 2021 |
September 2038 |
Euribor 1M + 135 b.p. |
20,000,000 | 19,976,063 | |||||
| Ulisses Finance No.2 – Class D | September 2021 |
September 2038 |
Euribor 1M + 285 b.p. |
11,300,000 | 11,290,713 | |||||
| Ulisses Finance No.2 – Class E | September 2021 |
September 2038 |
Euribor 1M + 368 b.p. |
3,700,000 | 3,697,727 | |||||
| Ulisses Finance No.2 – Class F | September 2021 |
September 2038 |
Euribor 1M + 549 b.p. |
1,300,000 | 1,299,790 | |||||
| Ulisses Finance No.2 – Class G | September 2021 |
September 2038 |
Euribor 1M + 500 b.p. |
1,275,000 | 1,274,637 | |||||
| 275,796,009 | 277,795,753 |
As at 31 December 2021 and 30 June 2022, the Debt securities issued are analyzed as follows:
| 30.06.2022 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Issue | Issue date | Maturity date |
Remuneration | Nominal value |
Book value | ||||
| Ulisses Finance No.1 – Class A | July 2017 | July 2033 | Euribor 1M + 85 b.p. | 3,033,325 | 3,033,799 | ||||
| Ulisses Finance No.1 – Class B | July 2017 | July 2033 | Euribor 1M + 160 b.p. |
7,000,000 | 7,002,152 | ||||
| Ulisses Finance No.1 – Class C | July 2017 | July 2033 | Euribor 1M + 375 b.p. |
7,100,000 | 7,106,847 | ||||
| Ulisses Finance No.2 – Class A | September 2021 |
September 2038 |
Euribor 1M + 70 b.p. | 203,700,000 | 205,419,747 | ||||
| Ulisses Finance No.2 – Class B | September 2021 |
September 2038 |
Euribor 1M + 80 b.p. | 10,000,000 | 9,988,703 | ||||
| Ulisses Finance No.2 – Class C | September 2021 |
September 2038 |
Euribor 1M + 135 b.p. |
20,000,000 | 19,979,851 | ||||
| Ulisses Finance No.2 – Class D | September 2021 |
September 2038 |
Euribor 1M + 285 b.p. |
11,300,000 | 11,292,382 | ||||
| Ulisses Finance No.2 – Class E | September 2021 |
September 2038 |
Euribor 1M + 368 b.p. |
3,700,000 | 3,698,188 | ||||
| Ulisses Finance No.2 – Class F | September 2021 |
September 2038 |
Euribor 1M + 549 b.p. |
1,300,000 | 1,299,886 | ||||
| Ulisses Finance No.2 – Class G | September 2021 |
September 2038 |
Euribor 1M + 500 b.p. |
825,000 | 824,838 | ||||
| Ulisses Finance No.3 - Class A | June 2022 | June 2039 | Euribor 1M + 90 bps | 168,000,000 | 168,067,540 | ||||
| Ulisses Finance No.3 - Class B | June 2022 | June 2039 | Euribor 1M + 200 bps |
8,000,000 | 7,813,147 | ||||
| Ulisses Finance No.3 - Class C | June 2022 | June 2039 | Euribor 1M + 370 bps |
12,000,000 | 11,727,971 | ||||
| Ulisses Finance No.3 - Class D | June 2022 | June 2039 | Euribor 1M + 525 bps |
6,000,000 | 5,623,081 | ||||
| Ulisses Finance No.3 - Class E | June 2022 | June 2039 | Euribor 1M + 650 bps |
5,000,000 | 4,733,796 | ||||
| Ulisses Finance No.3 - Class F | June 2022 | June 2039 | Euribor 1M + 850 bps |
1,000,000 | 964,248 | ||||
| Ulisses Finance No.3 - Class G | June 2022 | June 2039 | Euribor 1M + 785 bps |
1,500,000 | 1,496,727 | ||||
| 469,458,325 | 470,072,903 |
During the year ended on 31 December 2021 and six-months period ended 30 June 2022, the movement of this item is as follows:
| 31.12.2021 | |||||||
|---|---|---|---|---|---|---|---|
| Opening balance |
Issues | Repayments | Other movements |
Closing balance |
|||
| Ulisses Finance No.1 44,517,924 | — | (19,980,815) | (4,872) 24,532,237 | ||||
| Ulisses Finance No.2 | — 251,500,000 | (225,000) | 1,988,517 253,263,517 | ||||
| 44,517,924 251,500,000 | (20,205,815) | 1,983,644 277,795,753 |
During the period ended 31 December 2021, the movements recorded in "Issues" caption are related with a new securitization operation (Ulisses Finance No. 2) on the auto loan portfolio originated by 321 Crédito. The caption "other movements" includes an amount of 2,314,824 Euros related to the issue premium of Note Class A of Ulisses Finance No.2 and an amount of 350,486 Euros of assembly cost at the amortized cost of Ulisses Finance No.2.
| 30.06.2022 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Opening balance |
Issues | Repayments | Other movements |
Closing balance |
||||
| Ulisses Finance No.1 | 24,532,237 | — | (7,387,684) | (1,754) 17,142,799 | ||||
| Ulisses Finance No.2 | 253,263,517 | — | (450,000) | (309,920) 252,503,597 | ||||
| Ulisses Finance No.3 | — 201,500,000 | — | (1,073,491) 200,426,509 | |||||
| 277,795,753 201,500,000 | (7,837,684) | (1,385,164) 470,072,904 |
In six-months period ended 30 June 2022, the movements booked in "Issues" is related to the issuance of a new credit securitization operation called Ulisses Finance nº 3, carried out through 321 Crédito.
The scheduling by maturity regarding this caption is as follows:
| 31.12.2021 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Current | Non-current | |||||||
| Due within 3 months |
Over 3 months and less than 1 year |
Total | Over 1 year and Over 3 less than 3 years years |
Total | Total | |||
| Securitizations | 35,137 | — | 35,137 | — 277,760,616 | 277,760,616 | 277,795,753 | ||
| 35,137 | — | 35,137 | — 277,760,616 | 277,760,616 | 277,795,753 |
| Current | Non-current | ||||||
|---|---|---|---|---|---|---|---|
| Due within 3 months |
Over 3 months and less than 1 year |
Total | Over 1 year and less than 3 years |
Over 3 Total years |
Total | ||
| Securitizations 193,286 | — | 193,286 | — 469,879,618 | 469,879,618 | 470,072,904 | ||
| 193,286 | — | 193,286 | — 469,879,618 | 469,879,618 | 470,072,904 |
This securitization operation was originated in July 2017 and issued by Sagres - Sociedade de Titularização de Créditos, S.A. and corresponds to a public credit securitization program (Ulysses) with the Ulisses Finance No.1 operation being placed on the market. The operation was set up with the collaboration of the banks Citibank and Deutsche Bank, and included a Consumer Credit portfolio created by 321 Crédito. The structure of the Transaction includes five Tranches from A to E. Tranches A to C are dispersed in the market and Tranches D and E have been retained. This operation obtained ratings from DBRS and Moody's for the tranches placed on the market, Tranches A, B and C.
This transaction includes an optional early repayment clause that allows the Issuer to redeem the notes of all Classes issued, when the residual value of the credits represents 10% or less of the value of the Credit Portfolio on the date of setting up the securitization transaction.
The operation has incorporated an interest rate cap, an interest rate risk mitigation mechanism for the operation and its investors, including the Group, but which was not contracted directly by the Group, but by the issuer. of the securitization operation (Sagres – STC, S.A.).
The Group guarantees the debt service (servicer) of traditional securitization operations, taking over the collection of assigned credits and channelling the amounts received, through the respective deposit to the credit securitization company.
The underlying assets of Ulisses Finance No.1 operations were not derecognised from the Consolidated Statement of Financial Position as the Group substantially maintained the risks and rewards associated with their holding.
This private securitization operation was issued in November 2019 by Tagus, Sociedade de Titularização de Créditos, S.A.. It included a Consumer Credit portfolio originated by 321 Crédito. The operation was set up with the collaboration of Sociedade de Advogados PLMJ and Deutsche Bank. The operation's structure includes a Tranche A and a Tranche B in the notes issued, both of which are fully owned by the Group.
This operation includes an optional early amortization clause that allows the Issuer to redeem the Notes of all Classes issued, when the residual value of the credits represents 10% or less of the value of the Credit Portfolio on the date of setting up the securitization operation.
The underlying assets of Chaves Funding No.8 operation were not derecognised from the Statement of Financial Position, as the Group substantially maintained the risks and benefits associated with their holding.
This securitization operation was created in September 2021 and issued by Tagus - Sociedade de Titularização de Créditos, S.A. and corresponds to a public credit securitization program (Ulysses) with the Ulisses Finance No.2 operation being placed on the market. The operation was set up with the collaboration of Sociedade de Advogados PLMJ and Banco Deutsche Bank, and included a consumer credit portfolio originated by 321 Crédito, whose initial total amount was 250,000 thousand euros, to be maintained over the 12 months of revolving period.
The structure of the transaction includes six collateralized Tranches from A to F and additionally tranches G and Z. All tranches are dispersed in the capital market, with the exception of class Z, whose initial value was 1.5 million euros and which presents the 30 June 2022 a value of 1,000 euros.
This operation obtained ratings from DBRS and Moody's for the tranches placed on the market, that is, Tranches A to G.
The Ulisses Finance No.2 operation has the characteristics of STS (simple, transparent and standardized) and SRT (significant risk transfer).
For the purposes of calculating the capital ratio, as the Ulisses Finance No.2 operation complies with article 244.1 (b) of European Regulation 575/2013 (full capital deduct approched), the company reduced its "Risk Weight Assets" with regard to the contracts securitized within the scope of this operation.
The operation has incorporated an interest rate cap, an interest rate risk mitigation mechanism for the operation and its investors, including the Group, but which was not contracted directly by the Group, but by the issuer. of the securitization operation (Tagus – STC, S.A.).
The underlying assets of the Ulisses Finance No.2 operation were not derecognised from the Consolidated Statement of Financial Position, as the Group substantially maintained the risks and benefits associated with their holding.
The Next Funding No.1 operation, issued by Tagus – STC, SA in April 2021 and in which Banco CTT is a single investor, has as its underlying asset the credit card balances originated by the Universo credit card issued by Sonae Financial Services. Additionally, Banco CTT grants the operation an overdraft facility (Liquidity Facility) with the sole purpose of acquiring receivables (credit card balances) between the interest payment dates. On each interest payment date (IPD) the balance of the Liquidity Facility will be settled by converting it into the note value.
In the consolidated accounts, taking into account the conditions set out in IFRS 10 (Consolidated Financial Statements), the securitization operation is consolidated, insofar as the Group substantially holds the risks and benefits associated with the underlying assets and is able to affect these same risks and benefits.
This securitization operation was created in June 2022 and issued by Tagus - Sociedade de Titularização de Créditos, S.A. and corresponds to a public credit securitization program (Ulisses) with the Ulisses Finance No.3 operation being placed on the market. The operation was set up with the collaboration of "Sociedade de Advogados PLMJ" and "Banco Deutsche Bank", and included a consumer credit portfolio originated by 321 Crédito, whose initial total amount was 200,000 thousand euros, to be maintained over the 12 months of revolving period.
The structure of the Transaction includes six collateralized Tranches from A to F and additionally tranches G and Z. All tranches are dispersed in the capital market, with the exception of class Z, whose initial value was 1.8 million euros.
This operation obtained ratings from DBRS and Moody's for the tranches placed on the market, that is, Tranches A to G.
The Ulisses Finance No.3 operation has the characteristics of STS (simple, transparent and standardized) and SRT (significant risk transfer).
For the purposes of calculating the capital ratio, as the Ulisses Finance No.3 operation complies with article 244.1 (b) of European Regulation 575/2013 (full capital deduct approched), the company reduced its "Risk Weight Assets" regarding to the contracts securitized within the scope of this operation.
The operation incorporates an interest rate swap, an interest rate risk mitigation mechanism for the operation and its investors, including the Group, but which was not contracted directly by the Group, but by the issuer. of the securitization operation (Tagus – STC, S.A.).
The underlying assets of the Ulisses Finance No.3 operation were not derecognised from the Consolidated Statement of Financial Position, as the Group substantially maintained the risks and rewards associated with their holding.
The caption other current liabilities primarily record the banking operations' balances pending of financial settlement.
As at 31 December 2021 and 30 June 2022, the caption Credit to banking clients was detailed as follows:
| 31.12.2021 | 30.06.2022 | |
|---|---|---|
| Performing loans | 1,560,653,792 | 1,682,841,279 |
| Mortgage Loans | 595,419,629 | 630,034,362 |
| Auto Loans | 660,982,844 | 713,720,861 |
| Credit Cards | 297,943,534 | 333,878,758 |
| Leasings | 4,975,252 | 4,016,436 |
| Overdrafts | 1,332,534 | 1,190,862 |
| Other credits | — | — |
| Overdue loans | 12,345,092 | 16,064,573 |
| Overdue loans - less than 90 days | 1,165,016 | 1,915,869 |
| Overdue loans - more than 90 days | 11,180,076 | 14,148,704 |
| 1,572,998,883 | 1,698,905,851 | |
| Credit risk impairment | (31,090,390) | (41,318,440) |
| 1,541,908,493 | 1,657,587,411 |
The maturity analysis of the Credit to bank clients as at 31 December 2021 and 30 June 2022 is detailed as follows:
| 31.12.2021 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Current | Non-current | |||||||||
| At sight | Due within 3 months |
>3 months - < 1 year |
Overdue Loans |
Total | > 1 year - > 3 years |
Over 3 years |
Total | Total | ||
| Mortgage loans |
— | 4,529,387 | 13,058,049 | — | 17,587,436 | 35,360,412 542,471,779 577,832,191 | 595,419,626 | |||
| Auto Loans | — | 27,206,248 | 73,256,613 | 9,611,208 110,074,069 | 188,259,391 372,260,592 560,519,983 | 670,594,052 | ||||
| Credit Cards | — 297,943,534 | — | 772,542 298,716,076 | — | — | — | 298,716,076 | |||
| Leasings | — | 460,233 | 1,281,167 | 76,935 | 1,818,335 | 2,717,445 | 516,407 | 3,233,852 | 5,052,187 | |
| Overdraft | 1,332,534 | — | — | 1,278,857 | 2,611,391 | — | — | — | 2,611,391 | |
| Other credits | — | — | — | 605,550 | 605,550 | — | — | — | 605,550 | |
| 1,332,534 330,139,402 | 87,595,829 | 12,345,092 431,412,857 | 226,337,248 915,248,778 1,141,586,026 1,572,998,883 |
As of 31 December 2021, the Credit Cards caption represents a portfolio of credit cards acquired within the scope of the Universo Partnership with Sonae Financial Services. This portfolio was recognized in the Group's financial statements to the extent that the Group is a sole investor in the Next Funding No.1 securitization operation and, therefore, in compliance with the conditions set out in IFRS 10 - Consolidated Financial Statements, the securitization operation is consolidated.
| 30.06.2022 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Current | Non-current | ||||||||
| At sight | Due within 3 months |
>3 months - < 1 year |
Overdue Loans |
Total | > 1 year - > 3 years |
Over 3 years |
Total | Total | |
| Mortgage loans |
— | 4,770,310 | 13,630,164 | 1,157 | 18,401,631 | 37,228,318 574,405,570 611,633,888 | 630,035,519 | ||
| Auto Loans | — | 29,376,960 | 79,101,558 | 12,223,436 120,701,954 | 203,280,094 401,962,249 605,242,343 | 725,944,297 | |||
| Credit Cards | — 333,878,758 | — | 2,426,550 336,305,308 | — | — | — | 336,305,308 | ||
| Leasings | — | 371,538 | 1,034,264 | 132,895 | 1,538,697 | 2,193,747 | 416,886 | 2,610,634 | 4,149,331 |
| Overdraft | 1,190,862 | — | — | 1,280,534 | 2,471,397 | — | — | — | 2,471,397 |
| 1,190,862 368,397,566 | 93,765,986 | 16,064,572 479,418,987 | 242,702,160 976,784,705 1,219,486,865 1,698,905,851 |
The breakdown of this heading by type of rate is as follows:
| 31.12.2021 | 30.06.2022 | |
|---|---|---|
| Fixed rate | 926,351,787 | 1,020,405,429 |
| Floating rate | 646,647,096 | 678,500,423 |
| 1,572,998,883 | 1,698,905,851 | |
| Credit risk impairment | (31,090,390) | (41,318,440) |
| 1,541,908,493 | 1,657,587,412 |
As at 31 December 2021 and 30 June 2022, the analysis of this caption by type of collateral, is presented as follows:
| 31.12.2021 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Performing Loans |
Overdue Loans | Gross amount | Impairment | Net amount | ||||
| Asset-backed Loans | 600,433,555 | 1,510,327 | 601,943,882 | (2,409,164) | 599,534,718 | |||
| Other guaranteed Loans |
645,072,323 | 4,775,730 | 649,848,053 | (17,150,161) | 632,697,892 | |||
| Unsecured Loans | 315,147,914 | 6,059,034 | 321,206,948 | (11,531,064) | 309,675,884 | |||
| 1,560,653,792 | 12,345,092 | 1,572,998,883 | (31,090,389) | 1,541,908,494 |
| 30.06.2022 | |||||||
|---|---|---|---|---|---|---|---|
| Performing | |||||||
| Loans | Overdue Loans | Gross amount | Impairment | Net amount | |||
| Asset-backed Loans | 634,082,548 | 40,526 | 634,123,074 | (902,045) | 633,221,029 | ||
| Other guaranteed Loans |
696,141,692 | 5,790,790 | 701,932,482 | (21,576,141) | 680,356,341 | ||
| Unsecured Loans | 352,617,039 | 10,233,257 | 362,850,295 | (18,840,254) | 344,010,042 | ||
| 1,682,841,279 | 16,064,572 | 1,698,905,851 | (41,318,440) | 1,657,587,412 |
The credit type analysis of the caption, as at 31 December 2021 and 30 June 2022 is detailed as follows:
| 31.12.2021 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Performing Loans |
Overdue Loans | Gross amount | Impairment | Net amount | ||||
| Mortgage Loans | 595,419,629 | — | 595,419,629 | (596,281) | 594,823,348 | |||
| Auto Loans | 660,982,844 | 9,611,208 | 670,594,052 | (22,024,094) | 648,569,958 | |||
| Credit Cards | 297,943,534 | 772,542 | 298,716,076 | (6,617,578) | 292,098,498 | |||
| Leasings | 4,975,252 | 76,935 | 5,052,186 | (98,307) | 4,953,880 | |||
| Overdrafts | 1,332,534 | 1,278,857 | 2,611,391 | (1,148,581) | 1,462,810 | |||
| Other credits | — | 605,550 | 605,550 | (605,550) | — | |||
| 1,560,653,792 | 12,345,091 | 1,572,998,883 | (31,090,390) | 1,541,908,493 |
| 30.06.2022 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Performing Loans |
Overdue Loans | Gross amount | Impairment | Net amount | |||||
| Mortgage Loans | 630,034,362 | 1,157 | 630,035,519 | (746,435) | 629,289,084 | ||||
| Auto Loans | 713,720,861 | 12,223,436 | 725,944,297 | (27,193,676) | 698,750,621 | ||||
| Credit Cards | 333,878,758 | 2,426,550 | 336,305,308 | (12,189,225) | 324,116,083 | ||||
| Leasings | 4,016,436 | 132,895 | 4,149,331 | (87,501) | 4,061,830 | ||||
| Overdrafts | 1,190,862 | 1,280,534 | 2,471,397 | (1,101,603) | 1,369,794 | ||||
| 1,682,841,279 | 16,064,572 | 1,698,905,851 | (41,318,440) | 1,657,587,412 |
The analysis of credit to bank clients as at 31 December 2021 and 30 June 2022, by sector of activity, is as follows:
| 31.12.2021 | ||||||
|---|---|---|---|---|---|---|
| Performing | Overdue | |||||
| Loans | Loans | Gross amount | Impairment | Net amount | ||
| Companies | 56,009,899 | 1,584,427 | 57,594,325 | (2,227,312) | 55,367,014 | |
| Agriculture, forestry and fishing | 4,233,937 | 38,988 | 4,272,925 | (131,975) | 4,140,950 | |
| Mining and quarrying | 694,899 | 211 | 695,109 | (4,777) | 690,333 | |
| Manufacturing | 6,007,208 | 137,158 | 6,144,366 | (173,610) | 5,970,756 | |
| Water supply | 123,735 | — | 123,735 | (230) | 123,506 | |
| Construction | 9,894,287 | 300,665 | 10,194,952 | (386,725) | 9,808,227 | |
| Wholesale and retail trade | 10,126,222 | 428,000 | 10,554,222 | (530,948) | 10,023,274 | |
| Transport and storage | 4,168,460 | 87,594 | 4,256,054 | (115,008) | 4,141,046 | |
| Accommodation and food service activities |
4,182,495 | 90,792 | 4,273,288 | (146,261) | 4,127,027 | |
| Information and communication | 644,625 | 421 | 645,046 | (4,991) | 640,054 | |
| Financial and insurance activities | 307,998 | 2,231 | 310,229 | (3,766) | 306,463 | |
| Real estate activities | 1,706,577 | 2,052 | 1,708,628 | (21,028) | 1,687,600 | |
| Professional, scientific and technical activities |
1,657,181 | 8,011 | 1,665,192 | (45,590) | 1,619,602 | |
| Administrative and support service activities |
3,471,167 | 329,223 | 3,800,390 | (379,908) | 3,420,482 | |
| Education | 721,135 | 575 | 721,711 | (9,691) | 712,019 | |
| Human health services and social work activities |
1,305,341 | 14,931 | 1,320,271 | (23,464) | 1,296,808 | |
| Arts, entertainment and recreation | 897,261 | 73,013 | 970,274 | (65,933) | 904,342 | |
| Other services | 5,867,371 | 70,562 | 5,937,933 | (183,407) | 5,754,525 | |
| Individuals | 1,504,643,890 | 10,760,664 | 1,515,404,554 | (28,863,077) | 1,486,541,477 | |
| Mortgage Loans | 595,515,589 | — | 595,515,589 | (598,198) | 594,917,391 | |
| Consumer Loans | 909,128,301 | 10,760,664 | 919,888,965 | (28,264,879) | 891,624,086 | |
| 1,560,653,792 | 12,345,091 | 1,572,998,883 | (31,090,390) | 1,541,908,493 |
| 30.06.2022 | ||||||
|---|---|---|---|---|---|---|
| Performing Loans |
Overdue Loans |
Gross amount | Impairment | Net amount | ||
| Companies | 61,847,889 | 1,377,087 | 63,224,978 | (2,177,209) | 61,047,765 | |
| Agriculture, forestry and fishing | 5,812,880 | 96,321 | 5,909,201 | (168,544) | 5,740,657 | |
| Mining and quarrying | 998,909 | 1,380 | 1,000,288 | (14,042) | 986,246 | |
| Manufacturing | 6,026,691 | 220,461 | 6,247,153 | (227,038) | 6,020,114 | |
| Water supply | 106,064 | — | 106,064 | (175) | 105,889 | |
| Construction | 10,926,462 | 343,495 | 11,269,957 | (497,004) | 10,772,953 | |
| Wholesale and retail trade | 10,140,350 | 154,021 | 10,294,372 | (224,423) | 10,069,949 | |
| Transport and storage | 5,242,315 | 143,500 | 5,385,815 | (197,155) | 5,188,660 | |
| Accommodation and food service activities |
4,713,373 | 96,755 | 4,810,128 | (219,795) | 4,590,333 | |
| Information and communication | 681,616 | 540 | 682,156 | (3,283) | 678,873 | |
| Financial and insurance activities | 227,133 | 4,566 | 231,699 | (12,637) | 219,062 | |
| Real estate activities | 1,576,379 | 3,453 | 1,579,833 | (48,594) | 1,531,239 | |
| Professional, scientific and technical activities |
1,787,311 | 20,868 | 1,808,180 | (60,240) | 1,747,939 | |
| Administrative and support service activities |
3,641,987 | 82,585 | 3,724,572 | (150,729) | 3,573,843 | |
| Public administration and defence, compulsory social security |
16,704 | — | 16,704 | (68) | 16,635 | |
| Education | 722,051 | 1,156 | 723,206 | (11,278) | 711,928 | |
| Human health services and social work activities |
1,328,491 | 15,680 | 1,344,172 | (30,237) | 1,313,935 | |
| Arts, entertainment and recreation | 946,592 | 93,821 | 1,040,413 | (84,423) | 955,989 | |
| Other services | 6,952,581 | 98,485 | 7,051,065 | (227,544) | 6,823,521 | |
| Individuals | 1,620,993,390 | 14,687,484 | 1,635,680,874 | (39,141,230) | 1,596,539,645 | |
| Mortgage Loans | 630,127,041 | 1,157 | 630,128,198 | (748,078) | 629,380,120 | |
| Consumer Loans | 990,866,349 | 14,686,327 | 1,005,552,676 | (38,393,152) | 967,159,525 | |
| 1,682,841,279 | 16,064,571 | 1,698,905,852 | (41,318,440) | 1,657,587,412 |
The total credit portfolio, split by stage according to IFRS 9, is analysed as follows:
| 31.12.2021 | 30.06.2022 | |
|---|---|---|
| Stage 1 | 1,428,289,210 | 1,553,491,551 |
| Gross amount | 1,434,762,828 | 1,559,784,057 |
| Impairment | (6,473,618) | (6,292,506) |
| Stage 2 | 82,564,071 | 71,993,623 |
| Gross amount | 87,166,648 | 77,365,059 |
| Impairment | (4,602,577) | (5,371,436) |
| Stage 3 | 31,055,213 | 32,102,238 |
| Gross amount | 51,069,407 | 61,756,736 |
| Impairment | (20,014,194) | (29,654,498) |
| 1,541,908,493 | 1,657,587,411 |
The caption "credit to bank clients" includes the effect of traditional securitization transactions, carried out through securitization vehicles, consolidated pursuant to IFRS 10.
The caption credit to bank clients includes the following amounts related to finance leases contracts:
| 31.12.2021 | 30.06.2022 | |
|---|---|---|
| Amount of future minimum payments | 5,352,218 | 4,359,018 |
| Interest not yet due | (376,966) | (342,582) |
| Present value | 4,975,252 | 4,016,436 |
The amount of future minimum payments of lease contracts, by maturity terms, is analyzed as follows:
| 31.12.2021 | 30.06.2022 | |
|---|---|---|
| Due within 1 year | 2,106,914 | 1,829,190 |
| Due between 1 to 5 years | 2,727,068 | 2,114,287 |
| Over 5 years | 518,236 | 415,541 |
| Amount of future minimum payments | 5,352,218 | 4,359,018 |
The analysis of financial leases contracts, by type of client, is presented as follows:
| 31.12.2021 | 30.06.2022 | |
|---|---|---|
| Individuals | 622,998 | 516,630 |
| Home | 91,154 | 87,445 |
| Others | 531,844 | 429,185 |
| Companies | 4,352,254 | 3,499,806 |
| Equipment | 198,954 | 188,153 |
| Real Estate | 4,153,300 | 3,311,653 |
| 4,975,252 | 4,016,436 |
During year ended on 31 December 2021 and six-months period ended 30 June 2022, the movement under the Accumulated impairment losses caption (Note 13) was as follows:
| 31.12.2021 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Opening balance |
Increases | Reversals | Utilizations | Transfers | Other adjustments |
Closing balance |
||
| Non-current assets | ||||||||
| Credit to banking clients |
11,245,242 | 14,707,276 | (7,614,585) | (343,835) | (2,967,630) | 575,237 | 15,601,705 | |
| 11,245,242 | 14,707,276 | (7,614,585) | (343,835) | (2,967,630) | 575,237 | 15,601,705 | ||
| Current assets | ||||||||
| Credit to banking clients |
5,419,841 | 14,600,735 | (7,559,425) | (341,345) | 2,797,807 | 571,071 | 15,488,685 | |
| 5,419,841 | 14,600,735 | (7,559,425) | (341,345) | 2,797,807 | 571,071 | 15,488,685 | ||
| 16,665,083 | 29,308,011 | (15,174,010) | (685,180) | (169,822) | 1,146,308 | 31,090,390 |
| 30.06.2022 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Opening balance |
Increases | Reversals | Utilizations | Transfers | Other adjustments |
Closing balance |
||
| Non-current assets | ||||||||
| Credit to banking clients |
15,601,705 | 9,340,584 | (4,656,297) | (269,439) | (1,993,726) | 61,875 | 18,084,702 | |
| 15,601,706 | 9,340,584 | (4,656,297) | (269,439) | (1,993,726) | 61,875 | 18,084,702 | ||
| Current assets | ||||||||
| Credit to banking clients |
15,488,685 | 12,000,013 | (5,982,028) | (346,153) | 1,993,726 | 79,493 | 23,233,738 | |
| 15,488,685 | 12,000,013 | (5,982,028) | (346,153) | 1,993,726 | 79,493 | 23,233,738 | ||
| 31,090,390 | 21,340,597 | (10,638,325) | (615,591) | — | 141,368 | 41,318,440 |
The impairment losses of Credit to banking clients (net of reversals) for the period ended 30 June 2022 amounted to 10,702,272 Euros (6,419,314 Euros as of 30 June 2021) was booked in the caption "Impairment of other financial banking assets."
The movements in impairment losses by stages, in the year ended on 31 December 2021 and sixmonths period ended 30 June 2022, they are detailed as follows:
| 31.12.2021 | ||||||
|---|---|---|---|---|---|---|
| Stage 1 | Stage 2 | Stage 3 | Total | |||
| Opening balance | 4,161,745 | 2,224,575 | 10,278,763 | 16,665,083 | ||
| Change in period: | ||||||
| Increases due to origination and acquisition |
3,754,079 | 2,937,210 | 2,506,799 | 9,198,088 | ||
| Changes due to change in credit risk | (1,623,295) | (369,984) | 8,187,354 | 6,194,075 | ||
| Decrease due to derecognition repayments and disposals |
(407,088) | (154,824) | (696,251) | (1,258,163) | ||
| Write-offs | — | — | (685,180) | (685,180) | ||
| Transfers to: | ||||||
| Stage 1 | 1,011,657 | (360,513) | (651,144) | — | ||
| Stage 2 | (203,586) | 1,686,749 | (1,483,163) | — | ||
| Stage 3 | (164,668) | (1,481,613) | 1,646,281 | — | ||
| Foreign exchange and other | (55,226) | 120,976 | 910,736 | 976,486 | ||
| Impairment | 6,473,618 | 4,602,577 | 20,014,195 | 31,090,390 | ||
| Of which: POCI | — | — | 1,462,841 | 1,462,841 |
Changes due to changes in exposure or risk parameters verified in the period ended 31 December 2021 are fundamentally due to the entry into force of the new definition of Default by EBA.
| 30.06.2022 | ||||||
|---|---|---|---|---|---|---|
| Stage 1 | Stage 2 | Stage 3 | Total | |||
| Opening balance | 6,473,619 | 4,602,577 | 20,014,195 | 31,090,390 | ||
| Change in period: | ||||||
| Increases due to origination and acquisition |
1,064,401 | 374,464 | 215,770 | 1,654,635 | ||
| Changes due to change in credit risk | (2,589,468) | 1,957,408 | 10,391,923 | 9,759,864 | ||
| Changes due to modifications without derecognition |
(199,694) | (78,320) | (390,133) | (668,147) | ||
| Decrease due to derecognition repayments and disposals |
(30,856) | (2,112) | (11,112) | (44,080) | ||
| Write-offs | — | — | (615,591) | (615,591) | ||
| Changes due to update in the institution's methodology for estimation |
— | — | — | — | ||
| Transfers to: | ||||||
| Stage 1 | 2,033,850 | (1,267,294) | (766,556) | — | ||
| Stage 2 | (387,362) | 1,340,446 | (953,084) | — | ||
| Stage 3 | (85,054) | (1,478,201) | 1,563,255 | — | ||
| Foreign exchange and other | 13,070 | (77,532) | 205,830 | 141,368 | ||
| Impairment | 6,292,506 | 5,371,436 | 29,654,498 | 41,318,440 | ||
| Of which: POCI | — | — | 1,213,865 | 1,213,865 |
| 31.12.2021 | ||||||
|---|---|---|---|---|---|---|
| Stage 1 | Stage 2 | Stage 3 | Total | |||
| Opening balance | 4,161,745 | 2,224,575 | 10,278,763 | 16,665,083 | ||
| Change in period: | ||||||
| ECL income statement change for the period |
1,723,696 | 2,412,403 | 9,997,902 | 14,134,001 | ||
| Stage transfers (net) | 643,403 | (155,377) | (488,026) | — | ||
| Write-offs | — | — | (685,180) | (685,180) | ||
| Foreign exchange and other | (55,226) | 120,976 | 910,736 | 976,486 | ||
| Impairment | 6,473,619 | 4,602,577 | 20,014,194 | 31,090,390 |
| 30.06.2022 | ||||
|---|---|---|---|---|
| Stage 1 | Stage 2 | Stage 3 | Total | |
| Opening balance | 6,473,619 | 4,602,577 | 20,014,194 | 31,090,390 |
| Change in period: | ||||
| ECL income statement change for the period |
(1,755,616) | 2,251,440 | 10,206,448 | 10,702,272 |
| Stage transfers (net) | 1,561,434 | (1,405,049) | (156,385) | — |
| Write-offs | — | — | (615,591) | (615,591) |
| Foreign exchange and other | 13,070 | (77,532) | 205,830 | 141,368 |
| Impairment | 6,292,506 | 5,371,436 | 29,654,498 | 41,318,440 |
Given the high uncertainty of macroeconomic projections and considering that deviations from the presented scenarios may have an impact on the value of estimated expected losses, sensitivity analyzes were carried out on the distribution of the portfolio by stage and the respective impact on impairment.
The Group considers that the most sensitive parameters assumed, as they are based on benchmarks, dependent on methodological options or because they are more susceptible to changes in the economic cycle, are the Probability of Default (PD) for most portfolios and the Loss Given Default (LGD) for the credit card case.
In this context, a sensitivity analysis was carried out to determine what would be the impairment of the global portfolio if those parameters suffered a relative deterioration of 10%, having concluded that the increase in impairment would be 1,738 thousand euros, corresponding to 4% .
As at 31 December 2021 and 30 June 2022, the Prepayments included in current assets and current and non-current liabilities showed the following composition:
| 31.12.2021 | 30.06.2022 | |
|---|---|---|
| Prepaid Assets | ||
| Current | ||
| Rents payable | 1,469,876 | 1,614,455 |
| Meal allowances | 1,402,305 | 1,385,093 |
| Other | 5,853,753 | 8,276,336 |
| 8,725,934 | 11,275,884 | |
| Prepaid Liabilities | ||
| Non-current | ||
| Investment subsidy | 272,088 | 266,487 |
| 272,088 | 266,487 | |
| Current | ||
| Investment subsidy | 11,201 | 11,201 |
| Contratual liabilities | 1,360,862 | 2,730,185 |
| Other | 2,080,178 | 2,934,851 |
| 3,452,241 | 5,676,237 | |
| 3,724,329 | 5,942,724 |
The change in the caption Other assets prepayments essentially results from the renewal of software license contracts and insurance contracts.
The caption "Contractual liabilities" results from the application of IFRS 15 - Revenue from Contracts with Customers and stands for the amount already invoiced, but not yet recognized as revenue because the performance obligations have not yet been met as recommended by the standard.
The "Contractual liabilities" essentially refer to amounts related to stamps and prepaid postage of priority mail in the amount of 1,944,116 Euros (151,948 Euros on 31 December 2021), whose revenue is expected to be recognized in July 2022 (estimate of 80% of the item's value) and the remaining during 2022, and to objects invoiced and not delivered on 30 June 2022 in the express segment, in the amount of 786,069 Euros (1,208,914 Euros as of 31 December 2021), whose revenue is recognized upon delivery in the following month.
The revenue recognized in the period, included in the balance of Contractual liabilities at the beginning of the period amounted to 1,360,862 Euros.
No "Assets resulting from contracts" associated with the application of IFRS 15 - Revenue from contracts with customers were recognized.
As at 31 December 2021 and 30 June 2022, cash and cash equivalents correspond to the amount of cash, sight deposits, term deposits and cash investments on the monetary market, net of bank overdrafts and equivalent short-term bank financing, and is detailed as follows:
| 31.12.2021 | 30.06.2022 | |
|---|---|---|
| Cash | 95,963,001 | 54,907,444 |
| Slight deposits | 86,975,064 | 56,239,913 |
| Demand deposits at Bank of Portugal | 593,160,283 | 589,798,657 |
| Deposits in other credit institutions | 34,251,584 | 67,905,279 |
| Term deposits | 67,522,764 | 78,417,061 |
| Cash and cash equivalents (Balance sheet) | 877,872,696 | 847,268,355 |
| Sight deposits at Bank of Portugal | (19,937,800) | (22,016,400) |
| Outstanding checks / Checks clearing | (1,002,263) | (11,621,728) |
| Impairment of slight and term deposits | 24,913 | 4,861 |
| Cash and cash equivalents (Cash flow statement) | 856,957,546 | 813,635,088 |
The caption "Sight deposits at Bank of Portugal" includes mandatory deposits in order to meet the legal requirements to maintain a minimum cash reserve in accordance with the provisions of Regulation (EU) No. 1358/2011 of European Central Bank of 14 December 2011, which states that the minimum cash requirements kept as demand deposits at Bank of Portugal amounts to 1% of deposits and other liabilities. As of the reserve counting period started on 30 October 2019, the ECB introduced the tiering regime, in which the balance with the Central Bank in excess of the minimum cash reserves, up to a calculated maximum of 6 times the reserves, is remunerated at the central bank lending rate.
Therefore, the item Demand deposits at Bank of Portugal includes, as at 30 June 2022, a total amount of demand deposits of 589,798,657 Euros (31 December 2021: 593,160,283 Euros), of which 22,016,400 Euros (31 December 2021: 19,937,800 Euros) were allocated to the fulfilment of the above mentioned mandatory minimum cash requirements at Banco de Portugal.
The caption "Outstanding checks/ Checks clearing" represents checks drawn by third parties on other credit institutions, which are in collection.
In the year ended on 31 December 2021 and six-months period ended 30 June 2022, the movement recorded under the caption "Impairment of sight and term deposits" (Note 13) related to the Group is detail as follows:
| 31.12.2021 | |||||
|---|---|---|---|---|---|
| Group | Opening balance |
Increases | Reversals | Utilizations | Closing balance |
| Sight and term deposits | 17,510 | 11,433 | (4,028) | — | 24,913 |
| 17,510 | 11,433 | (4,028) | — | 24,913 |
| 30.06.2022 | |||||
|---|---|---|---|---|---|
| Group | Opening balance |
Increases | Reversals | Utilizations | Closing balance |
| Sight and term deposits | 24,913 | 32 | (20,084) | — | 4,861 |
| 24,913 | 32 | (20,084) | — | 4,861 |
The Impairment losses (increases net of reversals) for the period ended 30 June 2022 in the amount of (20,052) Euros (5,868 Euros as of 30 June 2021) were recorded under the caption "Impairment of accounts receivable (losses/reversals)" ".
During the year ended on 31 December 2021 and six-months period ended 30 June 2022, the following movements occurred in the impairment losses:
| 31.12.2021 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Group | Opening balance |
Increases | Reversals | Utilizations | Transfers | Changes in the consolidation perimeter |
Other movements |
Closing balance |
| Non-current assets | ||||||||
| Tangible fixed assets | 19,460 | — | — | — | — | — | — | 19,460 |
| Investment properties | 450,308 | — | (57,372) | — | — | — | — | 392,936 |
| Intangible assets | — | 60,617 | — | — | — | — | — | 60,617 |
| 469,768 | 60,617 | (57,372) | — | — | — | — | 473,013 | |
| Debt securities at fair value through other comprehensive income |
5,918 | — | (5,019) | — | 1,673 | — | — | 2,572 |
| Debt securities at amortised cost |
175,485 | 32,617 | (89,741) | — | (6,410) | — | — | 111,953 |
| Other non-current assets |
2,538,985 | — | — | — | 210,025 | — | — | 2,749,010 |
| Credit to banking clients |
11,245,241 | 14,707,276 | (7,614,585) | (3,118,702) | (2,967,630) | — | 3,350,104 | 15,601,705 |
| Other banking financial assets |
3,712 | 555 | (10,964) | — | 8,406 | — | — | 1,709 |
| 13,969,341 | 14,740,448 | (7,720,309) | (3,118,702) | (2,753,935) | — | 3,350,104 | 18,466,949 | |
| 14,439,109 | 14,801,065 | (7,777,681) | (3,118,702) | (2,753,935) | — | 3,350,104 | 18,938,962 | |
| Current assets | ||||||||
| Accounts receivable | 39,633,843 | 4,209,818 | (2,588,327) | (1,423,383) | — | 51,648 | — | 39,883,599 |
| Credit to banking clients |
5,419,841 | 14,600,735 | (7,559,425) | (3,096,110) | 2,797,807 | — | 3,325,837 | 15,488,685 |
| Debt securities at fair value through other comprehensive income |
3,511 | — | (1,215) | — | (1,673) | — | — | 623 |
| Debt securities at amortised cost |
6,505 | 2,492 | (6,855) | — | 6,410 | — | — | 8,551 |
| Other current assets | 10,052,551 | 995,992 | (267,494) | (245,159) | (210,024) | — | — | 10,325,865 |
| Other banking financial assets |
3,262,950 | 30,981 | (36,623) | (1,446,399) | (8,406) | — | — | 1,802,503 |
| Slight and term deposits |
17,509 | 11,433 | (4,028) | — | — | — | — | 24,913 |
| 58,396,710 | 19,851,451 (10,463,967) | (6,211,051) | 2,584,113 | 51,648 | 3,325,837 | 67,534,740 | ||
| Non-current assets held for sale |
282,778 | 14,234 | (132,572) | — | — | — | — | 164,441 |
| 282,778 | 14,234 | (132,572) | — | — | — | — | 164,441 | |
| Merchandise | 2,525,086 | 680,033 | (743) | (72,971) | — | — | — | 3,131,405 |
| Raw, subsidiary and consumable |
847,331 | 128,297 | (8,329) | (99,631) | — | — | — | 867,668 |
| 3,372,417 | 808,331 | (9,072) | (172,602) | — | — | — | 3,999,073 | |
| 62,051,906 | 20,674,015 (10,605,611) | (6,383,653) | 2,584,113 | 51,648 | 3,325,837 | 71,698,254 | ||
| 76,491,014 | 35,475,080 (18,383,292) | (9,502,356) | (169,822) | 51,648 | 6,675,941 | 90,638,216 |
In April 2021, Banco CTT and Sonae Financial Services started a new partnership in consumer credit through the financing of Universo card credit and the respective management of exposure to credit risk. As at 31 December 2021, the credit card portfolio had a value of 298,716,076 Euros and an increase in impairment of 6,617,578 Euros, which justifies the increase in impairment increases in 2021.
| 30.06.2022 | |||||||
|---|---|---|---|---|---|---|---|
| Group | Opening balance |
Increases | Reversals | Utilizations | Transfers | Other movements |
Closing balance |
| Non-current assets | |||||||
| Tangible fixed assets | 19,460 | — | — | — | — | — | 19,460 |
| Investment properties | 392,936 | — | — | — | — | — | 392,936 |
| Intangible assets | 60,617 | — | — | — | — | — | 60,617 |
| 473,013 | — | — | — | — | — | 473,013 | |
| Debt securities at fair value through other comprehensive income |
2,572 | — | — | — | (2,572) | — | — |
| Debt securities at amortised cost | 111,953 | 36,126 | (10,804) | — | (409) | — | 136,865 |
| Other non-current assets | 2,749,010 | — | — | — | 32,521 | — | 2,781,531 |
| Credit to banking clients | 15,601,705 | 9,340,584 | (4,656,297) | (269,439) | (1,993,726) | 61,875 | 18,084,702 |
| Other banking financial assets | 1,709 | 444 | (421) | — | (895) | — | 838 |
| 18,466,949 | 9,377,154 | (4,667,523) | (269,439) | (1,965,082) | 61,875 | 21,003,935 | |
| 18,939,963 | 9,377,154 | (4,667,523) | (269,439) | (1,965,082) | 61,875 | 21,476,948 | |
| Current assets | |||||||
| Accounts receivable | 39,883,599 | 2,142,714 | (1,448,077) | (319,734) | — | 2,910 | 40,261,412 |
| Credit to banking clients | 15,488,685 | 12,000,013 | (5,982,028) | (346,153) | 1,993,726 | 79,493 | 23,233,738 |
| Debt securities at fair value through other comprehensive income |
623 | 263 | (2,201) | — | 2,572 | — | 1,257 |
| Debt securities at amortised cost | 8,551 | 2,902 | (868) | — | 409 | — | 10,995 |
| Other current assets | 10,325,865 | 642,202 | (154,840) | (74,503) | (32,521) | — | 10,706,203 |
| Other banking financial assets | 1,802,503 | 27,998 | (1,598) | (13,927) | 895 | — | 1,815,872 |
| Slight and term deposits | 24,914 | 32 | (20,084) | — | — | — | 4,861 |
| 67,534,741 | 14,816,126 | (7,609,695) | (754,317) | 1,965,082 | 82,403 | 76,034,338 | |
| Non-current assets held for sale | 164,441 | 3,792 | (1,262) | — | — | — | 166,971 |
| 164,441 | 3,792 | (1,262) | — | — | — | 166,971 | |
| Merchandise | 3,131,405 | — | (80,560) | (101,006) | — | — | 2,949,839 |
| Raw, subsidiary and consumable | 867,668 | — | (23,137) | — | — | — | 844,531 |
| 3,999,073 | — | (103,697) | (101,006) | — | — | 3,794,370 | |
| 71,698,254 | 14,819,917 | (7,714,654) | (855,323) | 1,965,082 | 82,403 | 79,995,678 | |
| 90,638,215 | 24,197,071 (12,382,176) | (1,124,762) | — | 144,277 101,472,625 |
The amounts classified as "Other movements", with reference to 31 December 2021 and 30 June 2022, refer to the movements resulting from adjustments to POCI credits (Purchase or Originated Credit Impaired) regarding the acquisition of 321 Crédito on 1 May 2019, according to IFRS 3 - Business Combinations.
As at 30 June 2022, the Company share capital was composed of 150,000,000 shares with the nominal value of 0.50 Euros each. The share capital is fully underwritten and paid-up.
The information related to the shareholders with shareholdings equal to or greater than 2% can be found in chapter 5.4 of the Integrated Report.
The commercial legislation regarding own shares requires that a non-distributable reserve must be created for the same amount of the acquisition price of such shares. This reserve is not available for distribution while the shares stay in the Company's possession. In addition, the applicable accounting
standards determine that the gains or losses obtained with the sale of such shares are recognized in reserves.
During the 1st half of 2022, the following movements were made in the caption "Own Shares":
| Quantity | Amount | Average Price | |
|---|---|---|---|
| Balance 31 December 2021 |
1,500,001 | 6,404,963 | 4.27 |
| Acquisitions | 4,207,721 | 15,422,025 | 3.67 |
| Balance 30 June 2022 | 5,707,722 | 21,826,988 | 3.82 |
As at 30 June 2022, CTT held 5,707,722 own share, with a nominal value of 0.50€, being all the inherent rights suspended pursuant to article 324 of the Portuguese Companies Code.
At the Company's Board of Directors meeting held on 16 March 2022, it was unanimously decided to approve the implementation of a buyback program for CTT's own shares ("Buyback Program"), including the related terms and conditions, and in accordance with the deliberation limits within the scope of the General Meeting of shareholders of CTT, held on 21 April 2022, under which the acquisition and disposal of own shares by the Company and its subsidiaries was authorized, under the terms defined by the Board of Directors.
The sole purpose of the Buyback Program is to reduce CTT share capital by extinguishing the own shares acquired under the program, in accordance with the proposed capital reduction to be presented by the Board of Directors to the 2022 Annual General Meeting. The reduction in CTT's share capital to be implemented for these purposes was therefore approved by the CTT General Meeting, held on 21 April 2022.
The maximum number of shares to be acquired within the scope of the Buyback Program will be 4,650,000 CTT ordinary shares, representing up to 3.1% of the respective share capital and corresponding to the maximum number of shares that, under the terms of the capital reduction proposal submitted by the Board of Directors to the 2021 Annual General Meeting of CTT and approved at the same, they will be extinguished in the context of the capital reduction that constitutes the purpose of this program. The maximum cash amount of the Buyback Program will be 18,000,000 Euros.
The Buyback Program will last until 18 December 2022 and started on 17 March 2022, without prejudice to ending on an earlier date if the maximum number of shares to be acquired or the maximum monetary amount of the Buyback Program are reached.
In the context of the share buyback program as of 30 June 2022, the Company had already acquired 4,207,721 shares. As a result, as of 30 June 2022, considering as acquired shares those whose financial settlement took place until 31 March 2022. As a result, as of 30 June 2022, the Company held, as a result of the acquisition operations indicated herein, an accumulated total of 5,707,722 treasury shares, representing 1.30% of the share capital, including 1,500,001 treasury shares previously acquired.
Own shares held by CTT are within the limits established by the Articles of Association of the Company and by the Portuguese Companies Code. These shares are recorded at acquisition cost.
As at 31 December 2021 and 30 June 2022, the caption "Reserves" showed the following composition
| 31.12.2021 | |||||
|---|---|---|---|---|---|
| Legal reserves | Own shares reserves | Fair Value reserves |
Other reserves | Total | |
| Opening balance | 15,000,000 | 8 | 83,330 | 50,836,597 | 65,919,935 |
| Own shares acquisition | — | 6,404,954 | — | (6,404,954) | — |
| Assets fair value | — | — | (56,584) | — | (56,584) |
| Share Plan | — | — | — | 1,215,000 | 1,215,000 |
| Closing balance : |
15,000,000 | 6,404,963 | 26,746 | 45,646,642 | 67,078,351 |
| 30.06.2022 | |||||
|---|---|---|---|---|---|
| Legal reserves | Own shares reserves | Fair Value reserves |
Other reserves | Total | |
| Opening balance | 15,000,000 | 6,404,963 | 26,746 | 45,646,642 | 67,078,351 |
| Own shares acquisition | — | 15,422,025 | — | (15,422,025) | — |
| Assets fair value | — | — | (8,140) | — | (8,140) |
| Share Plan | — | — | — | 810,000 | 810,000 |
| Closing balance | 15,000,000 | 21,826,988 | 18,606 | 31,034,617 | 67,880,211 |
The commercial legislation establishes that at least 5% of the annual net profit must be allocated to reinforce the legal reserve, until it represents at least 20% of the share capital. This reserve is not distributable except in the event of the liquidation of the Company but may be used to absorb losses after all the other reserves have been depleted or incorporated in the share capital.
As at 30 June 2022, this caption includes the amount of 21,826,988 Euros related to the creation of an unavailable reserve for the same amount of the acquisition price of the own shares held.
This caption records the profits transferred to reserves that are not imposed by the law or articles of association, nor constituted pursuant to contracts signed by the Company.
In the six-months period ended 30 June 2022, a reserve in the total amount of 810,000 Euros was recorded related with the stock option plan, as described in the note 24 - Staff Costs.
During the year ended on 31 December 2021 and six-months period ended 30 June 2022, the following movements were made in caption "Retained earnings":
| 31.12.2021 | 30.06.2022 | |
|---|---|---|
| Opening balance | 39,962,419 | 43,904,074 |
| Application of the net profit of the prior year | 16,669,309 | 38,404,113 |
| Distribution of dividends (note 16) | (12,750,000) | (17,656,441) |
| Adjustments from the application of the equity method | 22,345 | 43,385 |
| Closing balance | 43,904,074 | 64,695,131 |
The actuarial gains/losses associated to post-employment benefits, as well as the corresponding deferred taxes, are recognized in this caption.
During the year ended on 31 December 2021 and six-months period ended 30 June 2022, the movements occurred in this caption were as follows:
| 31.12.2021 | 30.06.2022 | |
|---|---|---|
| Opening balance | (47,600,236) | (43,998,612) |
| Actuarial gains/losses (note 19) | 4,999,158 | 47,275,716 |
| Tax effect (Note 26) | (1,397,534) | (13,234,189) |
| Closing balance | (43,998,612) | (9,957,085) |
According to the dividend distribution proposal included in the 2020 Annual Report, at the General Meeting of Shareholders, which was held on 21 April 2021, a dividend distribution of 12,750,000 Euros, corresponding to a dividend per share of 0.085 Euros, regarding the financial year ended 31 December 2020 was proposed and approved. The dividend amount assigned to own shares was transferred to Retained earnings, amounting to 0.085 Euros.
According to the dividend distribution proposal included in the 2021 Annual Report, at the General Meeting of Shareholders, which was held on 21 April 2022, a dividend distribution of 17,820,000 Euros, corresponding to a dividend per share of 0.12 Euros (amount that excludes the dividend attributable to own shares in the portfolio at that date), regarding the financial year ended 31 December 2021 was proposed and approved. The dividend amount assigned to own shares was transferred to Retained earnings, amounting to 343,559 Euros.
During the six-months periods ended 30 June 2021 and 30 June 2022, the earnings per share were calculated as follows:
| Group | 30.06.2021 | 30.06.2022 |
|---|---|---|
| Net income for the period | 17,186,714 | 14,549,183 |
| Average number of ordinary shares | 149,800,684 | 148,627,657 |
| Earnings per share | ||
| Basic | 0.11 | 0.10 |
| Diluted | 0.11 | 0.10 |
The average number of shares is detailed as follows:
| 30.06.2021 | 30.06.2022 | |
|---|---|---|
| Shares issued at begining of the period | 150,000,000 | 150,000,000 |
| Own shares effect | 199,316 | 1,372,343 |
| Average number of shares during the period | 149,800,684 | 148,627,657 |
The basic earnings per share are calculated dividing the net profit attributable to equity holders of the parent company by the average ordinary shares, excluding the average number of own shares held by the Group.
As at 30 June 2022, the number of own shares held is 5,707,722 and its average number for the year ended 30 June 2022 is 1,372,343, reflecting the fact that no acquisitions or sales/attribution have occurred in the given period.
There are no dilutive factors of earnings per share.
As at 31 December 2021 and 30 June 2022, the Debt caption showed the following composition:
| 31.12.2021 | 30.06.2022 | |
|---|---|---|
| Non-current liabilities | ||
| Bank loans | 62,161,852 | 55,166,706 |
| Lease liabilities | 87,174,586 | 95,579,955 |
| 149,336,438 | 150,746,661 | |
| Current liabilities | ||
| Bank loans | 22,169,000 | 21,984,031 |
| Confirming | 1,500,152 | — |
| Lease liabilities | 28,113,860 | 29,422,045 |
| 51,783,012 | 51,406,076 | |
| 201,119,450 | 202,152,737 |
As at 30 de junho de 2022, the interest rates applied to bank loans were between 1.00% and 1.875% (31 December 2021: 1.00% and 1.875%).
As at 31 December 2021 and 30 June 2022, the details of the bank loans were as follows:
| 31.12.2021 | 30.06.2022 | |||||
|---|---|---|---|---|---|---|
| Amount used | Amount used | |||||
| Limit | Current | Non-current | Limit | Current | Non-current | |
| Bank loans | ||||||
| Millennium BCP | 12,673,148 | 8,054,480 | 1,100,926 | 12,512,037 | 8,017,989 | 993,519 |
| BBVA / Bankinter | 40,375,000 | 6,958,272 | 33,121,646 | 40,375,000 | 6,958,272 | 33,194,430 |
| Novo Banco | 35,000,000 | 7,029,645 | 27,939,280 | 28,000,000 | 7,007,770 | 20,978,757 |
| Caixa Geral de depósitos |
126,470 | 126,603 | — | — | — | — |
| Banco Montepio | 25,000,000 | — | — | — | — | — |
| Bankinter Confirming |
2,200,000 | 1,500,152 | — | — | — | |
| 115,374,618 | 23,669,152 | 62,161,852 | 80,887,037 | 21,984,031 | 55,166,706 |
On 27 September 2017, a financing contract between CTT and BBVA and Bankinter was signed, for an initial period of 5 years and for a total amount of 90 million Euros, with the possibility of using the funds until September 2018. As no amount was used until the mentioned date, the contract was renegotiated on 27 September 2018, having the total amount been altered to 75 million Euros, while maintaining the one-year term for the use of the funds. As at 30 June 2022, the referred used amount, net of commissions and added by the amount of interests to be paid in the following period corresponded to 40,152,702 Euros. By the Group decision, the remaining available amount will not be used.
On 22 April 2019, a simple credit agreement was signed between CTT and Novo Banco for a period of 60 months, with a grace period of two years, and may be extended for a period of 24 months, for a total amount of 35 million Euros. As at 30 June 2022, the 35 million Euros were used and are presented in the statement of financial position net of commissions and added by the amount of interests to be paid in the following period, in the total amount of 27,986,527 Euros.
On 21 May 2020, a Commercial Paper Issue Placement Agreement was signed with Banco Montepio in the maximum amount of 25 million Euros, with a term of 3 years, renewable for the same period. As of 31 December 2021 no amount was used. As no available amount was used, the contract was discontinued and no amount was available on 30 June 2022.
Bank loans obtained are subject to compliance with financial covenants, namely clauses of Cross default, Negative Pledge and Assets Disposal's limits. Additionally, the loans obtained also require compliance with rations of Net Debt over EBITDA and financial autonomy. Compliance with financial covenants is regularly monitored by the Group and is measured by counterparties on an annual basis based on the Financial Statements as at 31 December. As at 31 December 2021, the Group is in compliance with financial covenants.
The Group presents lease liabilities which future payments, undiscounted and discounted amounts presented in the financial position, are detailed as follows:
| 31.12.2021 | 30.06.2022 | |
|---|---|---|
| Due within 1 year | 30,860,141 | 33,049,847 |
| Due between 1 to 5 years | 66,579,734 | 66,534,757 |
| Over 5 years | 28,808,052 | 40,731,251 |
| Total undiscounted lease liabilities |
126,247,928 | 140,315,854 |
| Current | 28,113,860 | 29,422,045 |
| Non-current | 87,174,586 | 95,579,955 |
| Lease liabilities included in the statement of financial position |
115,288,445 | 125,002,000 |
The amounts recognized in the income statement are detailed as follows:
| 30.06.2021 | 30.06.2022 | |
|---|---|---|
| Lease Liabilities interests (note 25) | 1,545,247 | 1,563,999 |
| Variable payments not included in the measurament of the lease liability | 1,024,331 | 1,026,154 |
The amounts recognized in the Cash flow statement are as follows:
| 30.06.2021 | 30.06.2022 | |
|---|---|---|
| Total of lease payments | (15,159,693) | (16,597,114) |
The movement in the rights of use underlying these lease liabilities can be analyzed in note 4.
The reconciliation of changes in the responsibilities of financing activities as of 31 December 2021 and 30 June 2022, is detailed as follows:
| 31.12.2021 | 30.06.2022 | |
|---|---|---|
| Opening Balance | 206,866,753 | 201,119,450 |
| Changes in the consolidation perimeter | 2,667,159 | — |
| Movements without cash | 35,383,531 | 25,511,526 |
| Contract changes | 26,291,146 | 24,543,704 |
| IFRS 16 Interests | 3,066,925 | 1,563,999 |
| Others | 6,025,460 | (596,177) |
| Loans: | ||
| Inflow | 100,261,411 | 58,217,607 |
| Outflow | (110,777,850) | (66,098,731) |
| Confirming: | ||
| Inflow | — | — |
| Outflow | (2,938,473) | — |
| Lease liabilities: | ||
| Inflow | — | — |
| Outflow | (30,343,081) | (16,597,115) |
| Closing balance | 201,119,450 | 202,152,737 |
Liabilities related to employee benefits refer to (i) post-employment benefits – healthcare and pension plan (ii) other long-term employee benefits and (iii) other long-term benefits for the Statutory Bodies.
In order to obtain the estimate of the liabilities and costs to be recognized for each period, an actuarial study is performed by an independent entity every year for each benefit, based on the Projected Unit Credit method, and according to assumptions that are considered adequate and reasonable, an actuarial study has been performed as at 31 December 2021.
However, considering the relevant variation of one of the financial assumptions of the actuarial valuation during the first half of 2022, the discount rate, essentially related to the current economic situation, an update was made to the actuarial study prepared with reference to 31 December 2021 by an independent entity. This update considers the revision of the discount rate, keeping the remaining assumptions constant.
The discount rate is estimated based on interest rates of private debt bonds with high credit rating ("AA" or equivalent) at the date of the balance sheet and with a duration equivalent to that of the liabilities with healthcare.
The discount rate is determined by the Group analysis of the evolution of the macroeconomic context and the constant need to match the actuarial and financial assumptions to that reality. Therefore, as a result of that analysis the discount rate was changed to 2.94% (1.42% 31 December 2021).
During the years ended 31 December 2021 and 30 June 2022, the Group liabilities presented the following movement:
| 31.12.2021 | ||||||
|---|---|---|---|---|---|---|
| Group | ||||||
| Healthcare | Healthcare - SAMS | Pension Plan |
Other benefits | Other long-term employee benefits |
Total | |
| Opening balance | 271,158,313 | 1,431,894 | 325,457 | 9,882,604 | 201,592 | 282,999,860 |
| Movement of the period | (7,631,699) | 35,987 | (56,503) | 6,338,404 | 209,837 | (1,103,974) |
| Closing balance | 263,526,615 | 1,467,881 | 268,954 | 16,221,007 | 411,429 | 281,895,886 |
| 30.06.2022 | ||||||
|---|---|---|---|---|---|---|
| Group | ||||||
| Healthcare | Healthcare - SAMS |
Pension Plan |
Other benefits | Other long-term employee benefits |
Total | |
| Opening balance | 263,526,615 | 1,467,881 | 268,954 | 16,221,007 | 411,429 | 281,895,886 |
| Movement of the period | (48,496,191) | (411,885) | (35,911) | 301,203 | 274,285 | (48,368,499) |
| Closing balance | 215,030,424 | 1,055,996 | 233,043 | 16,522,210 | 685,714 | 233,527,387 |
The heading Other long-term employee benefits essentially refers to the benefit Pensions for work accidents, to the on-going staff reduction program and to the benefit End of Career Awards.
The caption Other long-term benefits for the Statutory Bodies refers to the long-term variable remuneration assigned to the executive members of the Board of Directors.
The details of the Group liabilities related to employee benefits, considering their classification, are as follows:
| 31.12.2021 | 30.06.2022 | |
|---|---|---|
| Non-current liabilities | 260,805,742 | 213,098,330 |
| Current liabilities | 21,090,144 | 20,429,057 |
| 281,895,886 | 233,527,387 |
As at 31 December 2021 and 30 June 2022, the costs related to employee benefits recognized and the amount recognized directly in Other changes in equity were as follows:
| 31.12.2021 | 30.06.2022 | |
|---|---|---|
| Costs for the period | ||
| Healthcare | 7,481,517 | 3,940,000 |
| Healthcare - SAMS | 126,019 | 65,279 |
| Pension plan | 4,203 | 1,874 |
| Other benefits | — | — |
| Other long-term employee benefits |
9,499,035 | 1,152,317 |
| Other long-term benefits statutory bodies |
209,837 | 274,285 |
| 17,320,611 | 5,433,755 | |
| Other changes in equity | ||
| Healthcare | (4,878,001) | (46,773,937) |
| Healthcare - SAMS | (88,952) | (476,623) |
| Pension Plan | (32,205) | (25,156) |
| (4,999,158) | (47,275,716) |
In 30 June 2022, actuarial gains/losses related to financial assumptions changes reflect the discount rate review from 1.42% in 2021 to 2.94% to 2022.
CTT is responsible for financing each healthcare plans applicable to certain employees – IOS Plan and Insurance policy.
For the years ended 31 December 2021 and 30 June 2022, the movement which occurred in the present value of the defined benefits liability regarding the healthcare plans was as follows:
| Total | IOS Plan | Insurance policy | ||||
|---|---|---|---|---|---|---|
| 31.12.2021 | 30.06.2022 | 31.12.2021 | 30.06.2022 | 31.12.2021 | 30.06.2022 | |
| Opening balance | 271,158,314 263,526,615 | 261,776,888 254,937,950 | 9,381,426 | 8,588,665 | ||
| Service cost of the year | 4,045,000 | 2,110,500 | 4,045,000 | 2,110,500 | — | — |
| Interest cost of the year | 3,447,000 | 1,829,500 | 3,328,000 | 1,770,000 | 119,000 | 59,500 |
| Plan amendment | (10,483) | — | 95,250 | — | (105,733) | — |
| Pensioners contributions | 4,917,973 | 2,432,430 | 4,647,786 | 2,297,337 | 270,187 | 135,093 |
| (Payment of benefits) | (14,598,406) | (7,848,749) (13,903,508) | (7,526,068) | (694,898) | (322,681) | |
| (Other costs) | (554,781) | (245,935) | (531,582) | (235,872) | (23,199) | (10,063) |
| Actuarial (gains)/losses | (4,878,001) (46,773,937) | (4,519,884) (45,425,795) | (358,117) | (1,348,142) | ||
| Closing balance | 263,526,615 215,030,424 | 254,937,950 207,928,052 | 8,588,665 | 7,102,372 |
The total costs for the period were recognized as follows:
| Total | IOS Plan | Insurance policy | ||||
|---|---|---|---|---|---|---|
| 31.12.2021 | 30.06.2022 | 31.12.2021 | 30.06.2022 | 31.12.2021 | 30.06.2022 | |
| Staff costs/employee benefits (Note 24) |
3,479,736 | 1,864,565 | 3,608,668 | 1,874,628 | (128,932) | (10,063) |
| Other costs | 554,781 | 245,935 | 531,582 | 235,872 | 23,199 | 10,063 |
| Interest expenses (Note 25) | 3,447,000 | 1,829,500 | 3,328,000 | 1,770,000 | 119,000 | 59,500 |
| 7,481,517 | 3,940,000 | 7,468,250 | 3,880,500 | 13,267 | 59,500 |
As at 31 December 2021 and 30 June 2022, regarding the IOS Plan, the actuarial (gains)/losses in the amount of (4,519,884) Euros (45,425,795) Euros were recognized in equity under Other changes in equity, net of deferred taxes of 1,268,568 Euros and 12,719,223 at 31 December 2021 and 30 June 2022, respectively.
At at 30 June 2022, regarding the IOS plan, the amount of actuarial (gains)/ losses is mainly due to the increase in the discount rate from 1.42% to 2.94%.
In what refers to the Insurance Policy, as at 31 December 2021 and 30 June 2022, the amounts of (358,117) Euros and (1,348,142) Euros, respectively, related to the actuarial (gains)/losses were recognized in equity under Other changes in equity, net of deferred taxes of 100,273 Euros and 377,480 Euros, respectively.
The Group is responsible for paying medical care charges to all 321 Crédito, S.A. employees in a situation of retirement, as well as for survival pensioners.
The provision of this medical care is ensured by the Social Medical Assistance Service (SAMS) whose post-retirement charges, for the member, are defined in clause 92 of the ACT of the banking sector published in BTE nº 38 of 2017 of October 15.
In order to obtain the estimate of the liabilities and costs to be recognized for each period, an actuarial study is performed by an independent entity every year, based on the Projected Unit Credit method, and according to assumptions that are considered adequate and reasonable, an actuarial study has been performed as at 31 December 2021.
For the year ended 31 December 2021 and 30 June 2022, the movement of Group liabilities with the Healthcare – SAMS was as follows:
| 31.12.2021 | 30.06.2022 | |
|---|---|---|
| Opening balance | 1,431,894 | 1,467,881 |
| Service cost of the year | 107,426 | 54,865 |
| Interest cost of the year | 18,593 | 10,414 |
| (Payment of benefits) | (1,080) | (540) |
| Actuarial (gains)/losses | (88,952) | (476,623) |
| Closing balance | 1,467,881 | 1,055,997 |
The total costs for the period were recognized as follows:
| 31.12.2021 | 30.06.2022 | |
|---|---|---|
| Staff costs/employee benefits (Note 24) | 107,426 | 54,865 |
| Interest expenses (Note 25) | 18,593 | 10,414 |
| 126,019 | 65,279 |
The Group is responsible for the payment of cash benefits in the form of supplementary retirement pension contributions over the amounts paid by Social Security to a closed group of employees of Transporta, which was merged into CTT Expresso during the year 2019.
For the year ended 31 December 2021 and 30 June 2022, the movement of Group liabilities with the Pension Plan was as follows:
| Group | 31.12.2021 | 30.06.2022 |
|---|---|---|
| Opening balance | 325,457 | 268,954 |
| Service cost of the year | 173 | 63 |
| Interest cost of the year | 4,030 | 1,812 |
| (Payment of benefits) | (28,501) | (12,630) |
| Actuarial (gains)/losses | (32,205) | (25,156) |
| Closing balance | 268,954 | 233,043 |
The total costs for the period were recognized as follows:
| 31.12.2021 | 30.06.2022 | |
|---|---|---|
| Staff costs/employee benefits (Note 24) | 173 | 63 |
| Interest expenses (Note 25) | 4,030 | 1,812 |
| 4,203 | 1,875 |
As at 31 December 2021 and 30 June 2022, the amounts of (32,205) Euros and (25,156) Euros, respectively, related to the actuarial (gains)/losses were recognized in equity under Other changes in equity, net of deferred taxes of 7,230 Euros and 6,415 Euros, respectively.
The Group assumed the commitment regarding the payment of a "End of Career award" on the date of retirement, due to disability or old age, in the amount of 1.5 times the effective monthly remuneration earned in that date as well as the payment of a capital called "Death Allowance resulting from Work Accidents" to 321 Crédito, S.A. employees. Both benefits are attributed under the banking sector ACT published in BTE nº 38 of 2017 of October 15, clauses 69 and 72, respectively.
For the year ended 31 December 2021 and 30 June 2022, the movement of Group liabilities with the Other post-employment benefits related to "End Career Awards" and Death Allowance resulting from work accidents", presented in the table below, was as follows:
| 31.12.2021 | 30.06.2022 | |
|---|---|---|
| End of Career Awards | ||
| Opening balance | 209,851 | 197,170 |
| Service cost of the year | 12,899 | 6,950 |
| Interest cost of the period | 2,544 | 1,387 |
| (Payment of benefits) | — | — |
| Actuarial (gains)/losses | (28,124) | (34,950) |
| Closing balance | 197,170 | 170,557 |
| Death Allowance resulting from Work Accidents |
||
| Opening balance | 6,797 | 6,829 |
| Service cost of the year | 712 | 399 |
| Interest cost of the period | 84 | 46 |
| (Payment of benefits) | — | — |
| Actuarial (gains)/losses | (764) | (669) |
| Closing balance | 6,829 | 6,605 |
| Total | 203,999 | 177,162 |
The total costs for the period were recognized as follows:
| 31.12.2021 | 30.06.2022 | |
|---|---|---|
| Staff costs/employee benefits (Note 24) | ||
| End of Career Awards | (15,225) | (28,000) |
| Death Allowance resulting from Work Accidents |
(52) | (270) |
| (15,277) | (28,270) | |
| Interest expenses (Note 25) | 2,628 | 1,433 |
| (12,649) | (26,837) |
Additionally, in certain situations, the Group has liabilities related to the payment of salaries in situations of Suspension of contracts, redeployment and release of employment, the payment of the Telephone subscription fee, Pensions for work accidents, and Monthly life annuity.
For the years ended 31 December 2021 and 30 June 2022, the movement of Group liabilities with other long-term employee benefits, was as follows:
| 31.12.2021 | 30.06.2022 | |
|---|---|---|
| Suspension of contracts, redeployment and release of employment |
||
| Opening balance | 2,754,747 | 9,493,686 |
| Interest cost of the period | 27,227 | 78,097 |
| Liabilities relative to new beneficiaries | 8,550,491 | 2,017,472 |
| Transfers - Provisions (Note 20) | — | 1,250,000 |
| (Payment of benefits) | (2,658,170) | (1,910,075) |
| Actuarial (gains)/losses | 819,390 | (115,229) |
| Closing balance | 9,493,686 | 10,813,951 |
| Telephone subscription fee | ||
| Opening balance | 414,119 | 383,961 |
| Interest cost of the period | 5,076 | 2,561 |
| (Payment of benefits) | (43,865) | (19,740) |
| Actuarial (gains)/losses | 8,631 | (29,749) |
| Closing balance | 383,961 | 337,033 |
| Pension for work accidents | ||
| Opening balance | 6,458,399 | 6,113,602 |
| Interest cost of the period | 81,216 | 41,904 |
| (Payment of benefits) | (447,405) | (165,914) |
| Actuarial (gains)/losses | 21,392 | (815,815) |
| Closing balance | 6,113,602 | 5,173,777 |
| Monthly life annuity | ||
| Opening balance | 38,691 | 25,760 |
| Interest cost of the period | 419 | 137 |
| Curtailment | — | — |
| (Payment of benefits) | (11,191) | (5,385) |
| Actuarial (gains)/losses | (2,159) | (222) |
| Closing balance | 25,760 | 20,290 |
| Total | 16,017,008 | 16,345,051 |
At at 30 June 2022, the caption "Transfers - Provisions" refers to the transfer of an amount from the caption "Provisions", due to the new agreements made in 2022, as explained in note 20.
During the years ended 31 December 2021 and 30 June 2022, the total costs for the year were recognized as follows:
| 31.12.2021 | 30.06.2022 | |
|---|---|---|
| Staff costs/employee benefits (Note 24) | ||
| Suspension of contracts, redeployment and release of employment |
1,369,881 | 1,902,243 |
| Telephone subscription fee | 8,631 | (29,749) |
| Pension for work accidents | 21,392 | (815,815) |
| Monthly life annuity | (2,159) | (222) |
| Suspension and Early-Retirement Agreements (Note 20) |
8,000,000 | — |
| 9,397,745 | 1,056,457 | |
| Interest expenses (Note 25) | 113,938 | 122,698 |
| 9,511,684 | 1,179,155 |
The liabilities related to new beneficiaries on 30 June 2022, in the Suspension of contracts, redeployment and release of employment benefit occur under the referred human resources optimization process, following agreements of suspension of employment contracts entered into or terminated in the meantime.
As at 31 December 2021, the amount relating to "Suspension and Early-Retirement Agreements" of 8,000,000 Euros is explained in detail in Note 20 - Provisions, Guarantees provided, Contingent Liabilities and Commitments and in Note 24 - Staff Costs.
At the General Meeting held on 21 April 2021, a new Remuneration Regulation for Members of the Statutory Bodies was approved for the 2020-2022 term, which replaces the Regulation in force at that date. This regulation changes the assumptions for the annual variable remuneration (AVR) attribution and changes the long-term variable remuneration (LTVR) terms to a "stock option" mechanism.
The main features of the plan and the accounting impacts are explained in detail in note 24 - Staff costs.
For the year ended on 31 December 2021 and six-months period ended 30 June 2022 in order to face legal proceedings and other liabilities arising from past events the Group recognized provisions, which showed the following movement:
| 31.12.2021 | |||||||
|---|---|---|---|---|---|---|---|
| Group | Opening balance |
Increases | Reversals | Utilizations | Transfers | Regularizations | Closing balance |
| Non-current provisions |
|||||||
| Litigations | 3,003,416 | 1,254,601 | (1,383,155) | (90,046) | 49,983 | — | 2,834,799 |
| Restructuring | 1,083,347 | — | (964,524) | (123,823) | — | 5,000 | — |
| Other provisions | 10,402,877 | 686,564 | (3,623,942) | (83,435) | (67,983) | — | 7,314,082 |
| Commitment provisions |
— | 211,465 | (67,125) | — | 169,822 | — | 314,163 |
| Sub-total - caption "Provisions (increases)/ reversals" |
14,489,641 | 2,152,630 | (6,038,746) | (297,304) | 151,822 | 5,000 | 10,463,043 |
| Restructuring | 163,800 | 9,341,409 | (13,145) | (36,328) | (8,000,000) | — | 1,455,737 |
| Other provisions | 2,762,913 | 41,951 | — | (44,123) | — | — | 2,760,741 |
| 17,416,354 | 11,535,990 | (6,051,891) | (377,755) | (7,848,178) | 5,000 | 14,679,520 |
| 30.06.2022 | |||||||
|---|---|---|---|---|---|---|---|
| Group | Opening balance |
Increases | Reversals | Utilizations | Transfers | Regularizations | Closing balance |
| Non-current provisions |
|||||||
| Litigations | 2,834,799 | 858,930 | (756,935) | (92,761) | 213,598 | — | 3,057,631 |
| Onerous contracts |
— | 453,598 | — | (99,851) | — | — | 353,747 |
| Other provisions | 7,314,082 | 1,340,311 | (785,589) | (91,556) | (213,598) | — | 7,563,650 |
| Commitment provisions |
314,163 | 30,111 | (53,079) | — | — | — | 291,195 |
| Sub-total - caption "Provisions (increases)/ reversals" |
10,463,044 | 2,682,950 | (1,595,603) | (284,168) | — | — | 11,266,223 |
| Restructuring | 1,455,737 | 55,993 | (50,000) | — | (1,250,000) | (102,344) | 109,386 |
| Other provisions | 2,760,741 | 240,122 | — | — | — | — | 3,000,863 |
| 14,679,522 | 2,979,065 | (1,645,603) | (284,168) | (1,250,000) | (102,344) | 14,376,468 |
The net amount between increases and reversals of provisions was recorded in the consolidated income statement under the caption Provisions, net and amounted to (3,886,116) Euros as at 31 December 2021 and 1,087,346 Euros as at 30 June 2022.
A provision should only be used for expenditures for which the provision was originally recognized, so the Group reverse the provision when it is no longer probable that an outflow of resources that incorporate future economic benefits will be necessary to settle the obligation.
The provisions for litigations were set up to face the liabilities resulting from lawsuits brought against the Group and are estimated based on information from their lawyers as well as on the termination of the mentioned lawsuits. The final amount and the timing of the outflows regarding the provision for litigations depend on the outcome of the respective proceedings.
The reversal of the provision for litigations, in the amount of 1,383,155 Euros as at 31 December 2021 and 756,935 Euros as at 30 June 2022, essentially results from lawsuits whose decision, which was made known in the course of 2021 or 2022, respectively, proved to be favourable to the Group, or, not being favourable, resulted in the condemnation to pay amounts that proved to be lower than the estimated amounts (and reflected in this provision item).
The provision for onerous contracts is intended to cover contracts in which the unavoidable costs of meeting the obligations of the contracts exceed the economic benefits that are expected to be received under them, amounting at 30 June 2022 the amount of 353,747 euros.
As at 30 June 2022, the provision to cover any contingencies relating to labour litigation proceedings not included in the current court proceedings related to remuneration differences that can be claimed by workers, amounts to 3,780,356 Euros (3,916,051 as at 31 December 2021). The amount of the provision corresponds to the Group's best estimate for the outflow.
As at 30 June 2022, a provision is recognized in CTT Expresso branch in Spain to face the notification issued by the Spanish National Commission on Markets and Competition. This process was originated during the year 2016, based on the alleged contrary action to article 1 of the Law 15/2017 ("Law on Competition Defense") and article 101º of the Treaty on the Functioning of the European Union ("TFUE"). This notification amounts to 3,148,845 Euros and has already been subject of an appeal to
the Spanish Audiencia Nacional (National High Court). Regarding this matter, Tourline (currently designated as CTT Expresso branch in Spain) submitted a formal request to the coercive measure suspension, and the request was accepted under the condition of a guarantee presentation – a procedure that was duly and timely adopted by Tourline. The amount provisioned, of 1,400,000 Euros, is the result of the evaluation carried out by its legal advisors and the Group is awaiting the outcome of the process and it is not possible to anticipate a deadline for resolution.
The amount provisioned in 321 Crédito, S.A. amounting to 885,036 Euros as at 30 June 2022 (741,641 Euros at 31 December 2021) mainly results from the management assessment regarding the possibility of materializing tax contingencies and other processes.
As at 30 June 2022, in addition to the previously mentioned situations, this caption also includes:
Commitments provisions refer to provisions for indirect credit, amounting to 291,195 Euros in the period ended 30 June 2022 (31 December 2021: 314,163 Euros).
In June 2021, CTT approved a new HR optimization program considering the need to optimize teams. This program presumed the launch of a Voluntary Exit Program based on the signing of Suspension or Pre-Retirement Agreements. As at 31 December 2021, a provision in the amount of 9,341,409 Euros was booked, which was recognized under Staff costs caption in the income statement. As at 31 December 2021, regarding the agreements performed at this date, an amount of 8,000,000 Euros was transferred to the caption employee benefits in the statement of financial position. As at 30 June 2022, regarding the agreements performed during 2022, an amount of 1,250,000 Euros was transferred to the caption employee benefits in the statement of financial position.
As at 31 December 2021 and 30 June 2022, the Group has provided bank guarantees to third parties as follows:
| 31.12.2021 | 30.06.2022 | |
|---|---|---|
| Contencioso Administrativo da Audiência Nacional (National Audience Administrative Litigation) and CNMC - Comission Nacional de los Mercados y la Competencia - Espanha (National Commission on Markets and Competition - Spain) |
3,148,845 | 3,148,845 |
| Autoridade Tributária e Aduaneira (Portuguese Tax and Customs Authority) |
2,917,205 | 2,917,205 |
| PLANINOVA - Soc. Imobiliária, S.A. (Real estate company) | 2,033,582 | 2,033,582 |
| LandSearch, Compra e Venda de Imóveis (Real estate company) | 1,792,886 | 1,792,886 |
| Fidelidade, Multicare, Cares - (Glintt BPO) | 1,022,834 | 1,022,834 |
| MARATHON (Closed investment fund) | 432,000 | 810,435 |
| O Feliz - Imobiliaria (Real estate company) | 369,932 | 801,932 |
| AMBIMOBILIÁRIA- INVESTIMENTOS E NEGÓCIOS, S.A. (Real estate company) |
480,000 | 480,000 |
| Courts | 339,230 | 339,230 |
| EUROGOLD (Real estate company) | — | 318,299 |
| CIVILRIA (Real estate company) | 224,305 | 224,305 |
| TRANSPORTES BERNARDO MARQUES , S.A. | 220,320 | 220,320 |
| TIP - Transportes Intermodais do Porto, ACE (Oporto intermodal transport) |
150,000 | 150,000 |
| Via Direta | 150,000 | 150,000 |
| Municipalities | 118,658 | 118,658 |
| EPAL - Empresa Portuguesa de Águas Livres (Multi-municipal System of Water Supply and Sanitation of the Lisbon Area) |
68,895 | 68,895 |
| INCM - Imprensa Nacional da Casa da Moeda (Portuguese Mint and Official Printing Office) |
85,056 | 68,386 |
| ANA - Aeroportos de Portugal (Airports of Portugal) | 34,000 | 34,000 |
| GNB Companhia de seguros vida SA (Insurance company) | 25,000 | 25,000 |
| Águas do Norte (Water Supply of the Northern Region) | 23,804 | 23,804 |
| Instituto de Gestão Financeira Segurança Social (Social Security Financial Management Institute) |
21,557 | 21,557 |
| EMEL, S.A. (Municipal company managing parking in Lisbon) | 19,384 | 19,384 |
| Serviços Intermunicipalizados Loures e Odivelas (Inter-municipal Services of Water Supply and Sanitation of the Loures and Odivelas Areas) |
17,000 | 17,000 |
| Direção Geral do Tesouro e Finanças (Directorate General of Treasury and Finance) |
16,867 | 16,867 |
| Portugal Telecom, S.A. (Telecommunication Company) | 16,658 | 16,658 |
| Refer (Public service for the management of the national railway network infrastructure) |
16,460 | 16,460 |
| Other entities | 16,144 | 16,144 |
| SMAS de Sintra (Services of Water Supply and Sanitation of the city of Sintra) |
15,889 | 15,889 |
| Repsol (Oil and Gas Company) | 15,000 | 15,000 |
| DOLCE VITA TEJO (Real State Company) | 13,832 | 13,832 |
| Lagos em Forma - Gestão desportiva, E.M., S.A. (Municipal company managing sports in Lagos) |
11,000 | 11,000 |
| Águas do Porto, E.M (Services of Water Supply and Sanitation of the city of Porto) |
10,720 | 10,720 |
| ADRA - Águas da Região de Aveiro (Services of Water Supply and Sanitation of the city of Aveiro) |
10,475 | 10,475 |
| SMAS Torres Vedras (Services of Water Supply and Sanitation of the city of Torres Vedras) |
9,910 | 9,910 |
| ACT Autoridade Condições Trabalho (Authority for Working Conditions) |
9,160 | 9,160 |
| Consejeria Salud ( Local Health Service/Spain) | 4,116 | 4,116 |
| Instituto do Emprego e Formação Profissional (Employment and Professional Training Institute) |
3,719 | 3,719 |
| EMARP - Empresa de Aguas e Resíduos de Portimão (Services of Water Supply and Sanitation of the city of Portimão) |
3,100 | — |
| 13,867,543 | 14,976,507 |
According to the terms of some lease contracts of the buildings occupied by the Company's services, the Portuguese State ceased to hold the majority of the share capital of CTT, bank guarantees on first demand had to be provided. These guarantees amount to 3,826,468 Euros as at 31 December 2021 and 30 June 2022.
CTT provided a bank guaranty, on behalf of CTT Expresso branch in Spain, to the Sixth Section of the National Audience Administrative Litigation and to the Spanish National Commission on Markets and Competition ("Comisión Nacional de los Mercados y la Competencia") in the amount of 3,148,845 Euros, while the appeal presented by CTT Expresso branch in Spain in the National Audience in Spain proceeds.
As at 31 December 2021 and 30 June 2022., the Group subscribed promissory notes amounting to approximately 41.9 thousand Euros and 45.7 thousand Euros, respectively, for various credit institutions intended to secure complete and timely compliance with the corresponding financing contracts.
The Group engaged guarantee insurances in the total amount of 4,393,691 Euros(31 December 2021: 4,226,910 Euros), with the purpose of guaranteeing the fulfilment of contractual obligations assumed by third parties. In addition, the Group also assumed commitments relating to real estate rents under lease contracts and rents for other leases.
The Group contractual commitments related to Tangible fixed assets and Intangible assets are detailed respectively in Notes 4 and 5.
As at 31 December 2021 and 30 June 2022, the caption "Accounts payable" showed the following composition:
| 31.12.2021 | 30.06.2022 | |
|---|---|---|
| Current | ||
| Advances from customers | 2,368,197 | 2,352,894 |
| CNP money orders | 51,157,113 | 102,093,380 |
| Suppliers | 88,144,917 | 91,055,300 |
| Invoices pending confirmation | 12,256,372 | 10,538,271 |
| Fixed assets suppliers | 7,008,092 | 2,794,688 |
| Invoices pending confirmation (fixed assets) |
6,300,825 | 3,145,028 |
| Values collected on behalf of third parties |
8,911,160 | 8,085,794 |
| Postal financial services | 156,371,620 | 96,773,537 |
| Deposits | 594,183 | 625,829 |
| Charges | 2,200,392 | 11,102,881 |
| Compensations | 881,108 | 1,159,929 |
| Postal operators - amounts to be settled |
1,586,135 | 472,580 |
| Amounts to be settled to third parties |
1,919,132 | 1,038,687 |
| Amounts to be settled in stores | 495,269 | 586,106 |
| Other accounts payable | 10,109,816 | 9,975,800 |
| 350,304,332 | 341,800,704 |
The value of CNP money orders refers to the money orders received from the National Pensions Center (CNP), whose payment date to the corresponding pensioners will occur in the month after the closing of the financial year. The increase noted on 30 June 2022 is related to the vacation allowance payment that occurs during this period.
This caption records mainly the amounts collected related to taxes, insurance, savings certificates and other money orders, whose settlement date should occur in the month following the end of the period. The decrease seen is mainly due to the reduction observed in the amounts related to savings certificates and to the amounts charged for taxes, since in 2021 there was a flexibilization of the tax calendar by the tax authority, which allowed the delivery of the tax related to the periodic VAT returns of the month December 2021, for the monthly regime, could be carried out until 30 December, which resulted in temporarily higher balances to be delivered.
As at 31 December 2021 and 30 June 2022, the composition of the caption Banking clients' deposits and other loans in the Group is as follows:
| 31.12.2021 | 30.06.2022 | |
|---|---|---|
| Sight deposits | 1,485,969,930 | 1,610,321,747 |
| Term deposits | 223,067,357 | 201,622,269 |
| Savings deposits | 412,474,058 | 431,856,237 |
| 2,121,511,345 | 2,243,800,254 |
The above-mentioned amounts relate to Banco CTT clients' deposits. Savings deposits are deposits associated with current accounts and which allow the client to obtain a remuneration above the slight deposits, which can be mobilized at any time, with no subscription limit, and it is possible to schedule transfers from and for this account. These deposits are different from term deposits as they have a definite date of constitution and maturity, and the savings accounts are fully mobilizable without penalty on remuneration.
For the six-months period ended 30 June 2022 the average rate of return on customer funds was 0.02% (31 December 2021: 0.02%).
As at 31 December 2021 and 30 June 2022, the residual maturity of banking client deposits and other loans, is detailed as follows:
| 31.12.2021 | ||||||
|---|---|---|---|---|---|---|
| No defined maturity |
Due within 3 months |
Over 3 months and less than 1 year |
Over 1 year and less than 3 years |
Over 3 years |
Total | |
| Sight deposits and saving | ||||||
| accounts | 1,898,443,987 | — | — | — | — 1,898,443,987 | |
| Term deposits | — 106,310,120 116,757,237 | — | — | 223,067,357 | ||
| 1,898,443,987 106,310,120 116,757,237 | — | — 2,121,511,345 |
| 30.06.2022 | |||||
|---|---|---|---|---|---|
| No defined maturity |
Due within 3 months |
Over 3 months and less than 1 year |
Over 1 year and less than 3 years |
Over 3 Total years |
|
| Sight deposits and saving accounts |
2,042,177,985 | — | — | — | — 2,042,177,985 |
| Term deposits | — 100,463,369 101,158,901 | — | — 201,622,269 |
||
| 2,042,177,985 100,463,369 101,158,901 | — | — 2,243,800,254 |
As at 30 June 2022, the caption reflects the estimated income tax regarding the six-months period ended 30 June 2022.
During six-months periods ended 30 June 2021 and 30 June 2022, the composition of the caption Staff Costs was as follows:
| 30.06.2021 | 30.06.2022 | |
|---|---|---|
| Remuneration | 139,582,569 | 139,234,377 |
| Employee benefits | 2,146,704 | 4,121,720 |
| Indemnities | 8,405,619 | 862,657 |
| Social Security charges | 29,797,412 | 29,769,283 |
| Occupational accident and health insurance |
2,058,571 | 1,962,123 |
| Social welfare costs | 3,412,808 | 4,066,165 |
| Other staff costs | 89,105 | 57,910 |
| 185,492,788 | 180,074,236 |
During the six-months periods ended 30 June 2021 and 30 June 2022, the fixed and variable remunerations attributed to the members of the statutory bodies of CTT, SA, were:
| 30.06.2021 | |||||
|---|---|---|---|---|---|
| Company | Board of Directors |
Audit Comittee | Remuneration Board |
General Meeting of Shareholders |
Total |
| Short-term remuneration | |||||
| Fixed remuneration | 1,237,427 | 67,500 | 9,900 | 14,000 | 1,328,827 |
| Annual variable remuneration |
— | — | — | — | — |
| 1,237,427 | 67,500 | 9,900 | 14,000 | 1,328,827 | |
| Long-term remuneration | |||||
| Defined contribution | |||||
| plan RSP | 102,567 | — | — | — | 102,567 |
| Long-term variable | |||||
| remuneration | 98,408 | — | — | — | 98,408 |
| 200,975 | — | — | — | 200,975 | |
| 1,438,402 | 67,500 | 9,900 | 14,000 | 1,529,802 |
| 30.06.2022 | |||||
|---|---|---|---|---|---|
| Company | Board of Directors |
Audit Comittee | Remuneration Board |
General Meeting of Shareholders |
Total |
| Short-term remuneration | |||||
| Fixed remuneration | 1,296,590 | 79,286 | 9,900 | 14,000 | 1,399,776 |
| Annual variable remuneration |
— | — | — | — | — |
| 1,296,590 | 79,286 | 9,900 | 14,000 | 1,399,776 | |
| Long-term remuneration | |||||
| Defined contribution plan RSP |
98,850 | — | — | — | 98,850 |
| Long-term variable remuneration |
724,286 | — | — | — | 724,286 |
| 823,136 | — | — | — | 823,136 | |
| 2,119,726 | 79,286 | 9,900 | 14,000 | 2,222,912 |
At the General Meeting held on 21 April 2021, a new Remuneration Regulation for Members of the Statutory Bodies was approved for the 2020-2022 term, which replaces the Regulation in force at that date. This regulation changes the assumptions for the annual variable remuneration (AVR) attribution and changes the long-term variable remuneration (LTVR) terms to a "stock option" mechanism.
Similarly, the Board of Directors put in place a stock options program addressed to CTT's top management, using the same terms of the program approved for the governing bodies members.
The LTVR model through participation in CTT's stock option plan, also depends on the Company's performance and aims to align interests with this performance in a long-term, as follows:
a. The plan sets out the number of options allocated that may be exercised by the Plan's participants (the CEO, the CFO, the remaining executive Directors and the Top Manager), as detailed:
| Number of options - per participant | ||||
|---|---|---|---|---|
| CEO | CFO | Other executive administrators |
Strike Price | |
| 700.000 | 400.000 | 3.00 | ||
| 700.000 | 400.000 | 5.00 | ||
| 700.000 | 400.000 | 7.50 | ||
| 700.000 | 400.000 | 10.00 | ||
| 700.000 | 400.000 | 12.50 | ||
| 300.000 € 300.000 € 300.000 € 300.000 € 300.000 € |
d. The LTVR attributed under the plan is subject to the positive evolution of the share price and the positive performance of the Company and to eligibility conditions related to the nonverification of the situations that give rise to the application of the adjustment mechanisms mentioned below and material breaches of the terms of the plan;
e. The plan also provides for mechanisms for deferring the exercise of options and retaining shares which result from the combination of two aspects: (i) deferral of exercise date of all options (1 January 2023 considering the end of the 2020/2022 term of office); and (ii) the establishment of a retention period by the Company of part of the shares allocated (throughout the period from the exercise date and the fifth trading day immediately following the end of the month after the date of approval of the accounts for 2024 at the annual general meeting to be held in 2025, or as of 31 May 2025 whichever occurs later).
The fair value of the options granted was determined through a study carried out by an independent entity on the grant date. The model used for the valuation of the stock plan was the Monte Carlo simulation model.
The amount related to the share plan recognized as at 31 December 2021, amounted to 1,626,429 Euros, with the financial settlement component, recognized under the caption "Employee benefits", in the amount of 411,431 Euros and the component of settlement in instruments recognized under the caption "Other reserves", in the amount of 1,215,000 Euros. In the six-months period ended 30 June 2022, the amount recognized in personnel costs amounted to 1,084,286 Euros, of which 274,286 Euros corresponds to the cash settlement component and 810,000 Euros corresponds to the instrument settlement component.
Following the calculation carried out by an independent entity on 31 December 2021, an amount of 1,447,419 Euros was calculated by reference to the Remuneration Regulation as an estimate of annual variable remuneration for the members of the Governing Bodies, recognized in expenses of the period in 2021. As at 30 June 2022, the final amount to be settled was calculated, and 50% of the amount has already been settled, as stipulated in the Remuneration Regulation.
For the six-months periods ended 30 June 2021 and 30 June 2022, the caption Staff costs includes the amounts of 250,197 Euros and 78,006 Euros related to expenses with workers' representative bodies.
For six-months period ended 30 June 2022, the average number of staff of the Group was 12,613 (12,053 employees for the period ended 30 June 2021 ).
For the six-months periods ended 30 June 2021 and 30 June 2022, the caption Interest Expenses had the following detail:
| 30.06.2021 | 30.06.2022 | |
|---|---|---|
| Interest expenses | ||
| Bank loans | 886,913 | 785,786 |
| Lease liabilities | 1,545,247 | 1,563,999 |
| Other interest | — | 65,478 |
| Interest costs from employee benefits | 1,785,486 | 1,965,856 |
| Other interest costs | 56,307 | 181,569 |
| 4,273,952 | 4,562,688 |
During the six-months periods ended 30 June 2021 and 30 June 2022, the caption Interest income was detailed as follows:
| 30.06.2021 | 30.06.2022 | |
|---|---|---|
| Interest income | 7,841 | 12,679 |
| Other supplementary income | 18,442 | — |
| 26,282 | 12,679 |
Companies with head office in Portugal are subject to tax on their profit through Corporate Income Tax ("IRC") at the normal tax rate of 21%, whilst the municipal tax is established at a maximum rate of 1.5% of taxable profit, and State surcharge is 3% of taxable profit between 1,500,000 Euros and 7,500,00 Euros, 5% of taxable profit between 7,500,000 and to 35,000,000 Euros and 9% of the taxable profit above 35,000,000 Euros. CTT – Expresso, S.A., Spain branch is subject to income taxes in Spain, through income tax (Impuesto sobre Sociedades - "IS") at a rate of 25%, and the subsidiary CORRE is subject to corporate income tax in Mozambique ("IRPC") at a rate of 32%.
Corporate income tax is levied on CTT and its subsidiaries CTT – Expresso, S.A., Payshop Portugal, S.A, CTT Contacto, S.A. and Banco CTT, S.A., 321 Crédito – Instituição Financeira de Crédito, S.A. e CTT Soluções Empresariais, S.A. as a result of the option for the Special Regime for the Taxation of Groups of Companies ("RETGS") application. The remaining companies are taxed individually. The entities 321 Crédito – Instituição Financeira de Crédito S.A. and CTT Soluções Empresariais, S.A. integrated the RETGS in the previous financial year. The entity CTT IMO – Sociedade Imobiliária, S.A. integrated the RETGS in this financial year.
For the six-months periods ended 30 June 2021 and 30 June 2022, the reconciliation between the nominal rate and the effective income tax rate was as follows:
| 30.06.2021 | 30.06.2022 | |
|---|---|---|
| Earnings before taxes (a) | 25,660,221 | 14,999,614 |
| Nominal tax rate | 21.0% | 21.0% |
| 5,388,646 | 3,149,919 | |
| Tax Benefits | (138,593) | (159,776) |
| Accounting capital gains/(losses) | (8,073) | (2,154) |
| Tax capital gains/(losses) | 4,033 | 1,075 |
| Equity method | 231,581 | — |
| Provisions not considered in the calculation of deferred taxes | 25,843 | 72,202 |
| Impairment losses and reversals | 65,192 | 101,502 |
| Compensation for insurable events | 73,751 | 124,363 |
| Depreciation and car rental charges | 12,973 | 12,564 |
| Credits uncollectible | 13,152 | 33,927 |
| Difference between current and deferred tax rates | — | |
| Fines, interest, compensatory interest and other charges | 8,964 | 2,892 |
| Other situations, net | 409,755 | (387,801) |
| Adjustments related with - autonomous taxation | 424,114 | 276,647 |
| Adjustments related with - undistributed variable remuneration | — | |
| Tax losses without deferred tax | — | |
| SIFIDE tax credit | (216,176) | (2,154,501) |
| Insuficiency / (Excess) estimated income tax | 825,000 | (76,845) |
| Subtotal (b) | 7,120,162 | 994,015 |
| (b)/(a) | 27.75% | 6.63% |
| Adjustments related with - Municipal Surcharge | 404,490 | 224,126 |
| Adjustments related with - State Surcharge | 880,181 | 281,187 |
| Income taxes for the period | 8,404,833 | 1,499,328 |
| Effective tax rate | 32.75% | 10.00% |
| Income taxes for the period | ||
| Current tax | 8,268,159 | 2,223,213 |
| Deferred tax | (472,149) | 1,507,460 |
| SIFIDE tax credit | (216,176) | (2,154,501) |
| Insuficiency / (Excess) estimated income tax | 825,000 | (76,845) |
| 8,404,833 | 1,499,328 |
For the six-month period ended on 30 June 2021, the caption "SIFIDE Tax Credit" refers to the reimbursement of SIFIDE for the year 2018. For the six-months period ended 30 June 2022, the caption "SIFIDE Tax Credit" refers to the SIFIDE tax credit for the year 2021 (1,528,260 Euros) and the remaining is related to Banco CTT for the years 2020 and 2021.
As at 31 December 2021 and 30 June 2022, the balance related to deferred tax assets and liabilities was composed as follows:
| 31.12.2021 | 30.06.2022 | |
|---|---|---|
| Deferred tax assets | ||
| Employee benefits - healthcare | 73,832,987 60,122,983 | |
| Employee benefits - pension plan | 68,583 | 53,011 |
| Employee benefits - other long-term benefits | 4,208,731 | 4,580,822 |
| Impairment losses and provisions | 4,139,032 | 3,833,047 |
| Tax losses carried forward | 2,078,911 | 2,079,988 |
| Impairment losses in tangible fixed assets | 481,187 | 529,025 |
| Long-term variable remuneration (Board of diretors) | 455,400 | 964,646 |
| Land and buildings | 343,652 | 343,652 |
| Tangible assets' tax revaluation regime | 1,282,862 | 1,122,504 |
| Other | 363,742 | 690,547 |
| 87,255,087 74,320,224 | ||
| Deferred tax liabilities | ||
| Revaluation of tangible fixed assets before IFRS | 1,684,213 | 1,548,732 |
| Suspended capital gains | 658,042 | 2,667,280 |
| Non-current assets held for sale | 42,718 | — |
| PPA Movements - NewSpring Services | — | 437,817 |
| Other | 42,540 | 102,216 |
| 2,427,513 | 4,756,045 |
The deferred tax asset related to Tangible assets tax revaluation regime was recognized following the Companies' accession to the regime established in Decree-Law no. 66/2016, of 3 November. In the year ended 30 June 2022 the deferred tax asset amounts to 1,548,732 Euros.
The increase in the item "Others" essentially refers to the deferred tax associated with the caption "results of assets and liabilities at fair value through profit or loss", the amount of which in the current period resulted in the recognition of the respective deferred tax.
As at 30 June 2022, the expected amount of deferred tax assets and liabilities to be settled within 12 months is 3.2 million Euros and 0.4 million Euros, respectively.
During the years ended 31 December 2021 and 30 June 2022, the movements which occurred under the deferred tax captions were as follows:
| 31.12.2021 | 30.06.2022 | |
|---|---|---|
| Deferred tax assets | ||
| Opening balances | 87,891,869 | 87,255,087 |
| Changes in the consolidation perimeter | ||
| Effect on net profit | (745,695) | (475,816) |
| Employee benefits - healthcare | 3,037 | (15,572) |
| Employee benefits - pension plan | 1,022,295 | 372,091 |
| Employee benefits - other long-term benefits | (797,419) | (305,984) |
| Impairment losses and provisions | 1,291,917 | 1,077 |
| Tax losses carried forward | 72,431 | 47,838 |
| Impairment losses in tangible fixed assets | — | — |
| Long-term variable remuneration (Board of diretors) | 401,422 | 509,246 |
| Land and buildings | (12,118) | (160,358) |
| Tangible assets' tax revaluation regime | (320,715) | — |
| Other | (154,405) | 326,805 |
| Effect on equity | ||
| Employee benefits - healthcare | (1,390,302) | (13,227,774) |
| Employee benefits - pension plan | (7,230) | (6,417) |
| Closing balance | 87,255,087 | 74,320,224 |
| 31.12.2021 30.06.2022 | ||
| Deferred tax liabilities | ||
| Opening balances | 2,793,698 | 2,427,513 |
| Saldo final | 2,427,513 | 4,756,046 |
|---|---|---|
| PPA movements - NewSpring Services | — | 522,013 |
| Others | ||
| Other | (31,746) | (267) |
| Fair Value Reserve | (13,384) | — |
| Effect on equity | ||
| Other | 16,344 | (19,640) |
| Suspended capital gains | (40,292) | (42,718) |
| Revaluation of tangible fixed assets before IFRS adoption | (26,149) 2,004,626 | |
| Effect on net profit | (270,958) | (135,481) |
| Changes in the consolidation perimeter | ||
| Opening balances | 2,793,698 | 2,427,513 |
The tax losses carried forward are related to the losses of the subsidiaries Tourline and Transporta which were merged by incorporation into CTT Expresso, S.A., in 2019, and are detailed as follows:
| 31.12.2021 | 30.06.2022 | ||||
|---|---|---|---|---|---|
| Group | Tax losses | Deferred tax assets |
Tax losses | Deferred tax assets |
|
| CTT – Expresso, S.A., branch in Spain | 75,434,282 | — | 77,049,104 | — | |
| CTT Expresso/Transporta | 13,747,683 | 2,075,283 | 13,322,364 | 2,069,097 | |
| Total | 89,181,965 | 2,075,283 | 90,371,468 | 2,069,097 |
Regarding CTT – Expresso, S.A., branch in Spain (prior Tourline), the tax losses of the years 2008, 2009 and 2011 may be reported in the next 15 years (available for reporting until 2023, 2024 and 2026, respectively), the tax losses related to 2012, 2013 and 2014 may be carried forward in the next 18 years (available for reporting until 2030, 2031 and 2032, respectively) and the tax losses of the years 2015, 2016, 2017,2018, 2019, 2020 and 2021 have no time limit for deduction. No deferred tax assets associated with CTT Expresso branch in Spain's tax losses were recognized, given its losses history.
Regarding to CTT Expresso/ Transporta, the tax losses presented refer to the losses of Transporta for the years 2014 and 2015 and 2017 and 2018, since in 2019 this company was incorporated into CTT Expresso, which can be reported in the next 14 years (previously 12 years, but extended to 14 years under exceptional measures approved to deal with adverse consequences caused by the COVID Pandemic), for the years 2014 and 2015 and 7 years (previously 5 years, but extended to 7 years within the scope of exceptional measures approved to deal with adverse consequences caused by the COVID Pandemic) for the years 2017 and 2018. The recognition of deferred tax assets related to Transporta's tax losses is supported by the estimate of future taxable profits of CTT Expresso, based on the company's 8-year business plan (ie, until 2029).
It should be noted that, following the acquisition of Transporta, a request was made to maintain the tax losses that had been determined with reference to the periods of 2014 and 2015 (in the amounts of 4,536,810 Euros and 3,068,088 Euros, available for reporting until 2028 and 2029, respectively), for which a favourable response was obtained from the Tax Authority during 2021.
The sensitivity analysis performed allows us to conclude that a 1% reduction in the underlying rate of deferred tax would imply an increase in the income tax for the period of about 2.37 million Euros.
Until 2021, the Group recognized the tax credit related to SIFIDE upon the actual receipt of the declaration from the certifying commission of the expenses eligibility presented in the application.
Currently, and considering the history associated with this reality, the Group started to recognize, in the period to which the investments relate, an estimate of the tax credit that was submitted for certification by the competent authority (ANI - National Innovation Agency).
Regarding to R&D expenses incurred in the 2019 financial year, during the 2021 period, a tax credit of 753,235 Euros was attributed by the Certifying Committee.
Regarding to R&D expenses incurred in the 2020 financial year, with the submission of the application, these amounted to approximately 5,304,741 Euros, with the possibility of benefiting from an income tax deduction estimated at 3,850,195 Euros. During the first three months of the current year, a tax credit of 310,239 Euros was attributed by the Certifying Committee, in relation to the 2020 financial year, and the Group is awaiting receipt of the declarations regarding the remaining amount.
Regarding the expenses incurred with R&D by the Group in the year 2021, with the application submission, these amounted to 6,474,190 Euros and the Group will have the possibility of benefiting from a deduction in corporate income tax estimated at 3,816,703 Euros.
Pursuant to the legislation in force in Portugal, income tax returns are subject to review and correction by the tax authorities for a period of four years (five years for Social Security), except when there have been tax losses, tax benefits have been received, or when inspections, claims or challenges are in progress, in which cases, depending on the circumstances, these years are extended or suspended. Therefore, CTT's income tax returns from 2018 and onwards may still be reviewed and corrected.
The Board of Directors believes that any corrections arising from reviews/inspections by the tax authorities of these income tax returns will not have a significant effect on the consolidated financial statements as at 30 June 2022.
The Regulation on Assessment and Control of transactions with CTT related parties defines related party as: qualified shareholder, manager, subsidiaries companies' managers or third party with any of these related through relevant commercial or personal interest (under the terms of IAS 24) and also subsidiaries, associates and joint ventures of CTT. It is considered that there is a "relevant commercial or personal interest" in relation to (i) close family members of the managers, subsidiaries companies' managers and qualified shareholders who, at each moment, have significant influence on CTT, as well as (ii) controlled entities (individually or jointly), either by management, subsidiaries companies' managers qualified shareholders or by the persons referred to in (i). For this purpose, "control" is considered to exist when an investor is exposed or holds rights in relation to variable results through its relationship with it and has the capacity to affect those results through the power it exercises over the investee.. Additionally, "close family members" are: (i) the spouse or domestic partner and (ii) the children and dependents of the person and persons referred to in (i).
According to the Regulation, the significant transactions with related parties, as well as transactions that members of the Board of Directors of CTT and/or its subsidiaries conduct with CTT and/or its subsidiaries, must be previously approved by resolution of Board of Directors, preceded by a prior favorable opinion of Audit Committee , except when included in the normal company´s business and no special advantage is granted to the director directly or by an intermediary. Significant transaction is any transaction with a related party whose amount exceeds one million Euros, and / or carried out outside current activity scope of CTT and / or subsidiaries and / or outside market conditions.
The other related parties' transactions are approved by Executive Committee, to the extent of the related delegation of powers, and subject to subsequent examination by the Audit Committee.
For the six-months periods ended 30 June 2021 and 30 June 2022, the following transactions took place and the following balances existed with related parties:
| 30.06.2021 | ||||||
|---|---|---|---|---|---|---|
| Group | Accounts receivable |
Accounts payable |
Revenues | Costs | Dividends | Financial investments / Increase in share capital |
| Shareholders | — | — | — | — | 12,750,000 | — |
| Group companies | ||||||
| Associated companies | — | — | — | — | — | — |
| Jointly controlled | 234,888 | 45,178 | 563,196 | 62,904 | — | — |
| Members of the (Note 24) | ||||||
| Board of Directors | — | — | — | 1,237,427 | — | — |
| Audit Committee | — | — | — | 67,500 | — | — |
| Remuneration Committee |
— | — | — | 9,900 | — | — |
| General Meeting | — | — | — | 14,000 | — | — |
| 234,888 | 45,178 | 563,196 | 1,391,731 | 12,750,000 | — |
| 30.06.2022 | ||||||
|---|---|---|---|---|---|---|
| Group | Accounts receivable |
Accounts payable |
Revenues | Costs | Dividends | Financial investments / Increase in share capital |
| Shareholders | — | — | — | — | 17,656,441 | — |
| Group companies | ||||||
| Associated companies | — | — | — | — | — | — |
| Jointly controlled | 162,353 | 50,869 | 288,578 | 256,019 | — | — |
| Members of the (Note 24) | ||||||
| Board of Directors | — | — | — | 1,296,590 | — | — |
| Audit Committee | — | — | — | 79,286 | — | — |
| Remuneration Committee |
— | — | — | 9,900 | — | — |
| General Meeting | — | — | — | 14,000 | — | — |
| 162,353 | 50,869 | 288,578 | 1,655,795 | 17,656,441 | — |
In the context of transactions with related parties, no commitments were made, nor were any guarantees given or received.
No provision was recognized for doubtful debts or expenses recognized during the period in respect of bad or doubtful debts owed by related parties.
The remunerations attributed to the members of the statutory bodies of CTT, S.A. are disclosed in note 24 – Staff Costs.
On 23 December 2021, the Council of Ministers communicated the approval on same date of the decree amending the legal framework applicable to the provision of postal services in Portugal. The corresponding decree was promulgated on 5 February 2022 and Decree-Law no. 22-A/2022 was published on 7 February 2022. The new concession agreement thus came into force for seven years – until 31 December 2028.
This approved regime improves the decision-making mechanisms and provides clear criteria to guarantee the provision of the universal postal service under sustainable economic conditions, promoting a better balance between the continuity of the postal service provision and the reinforcement of the Company's capacity to face the challenges of digital transition, pursuing the consistent implementation of its transformation process. For reasons of general interest, only the following activities and services have remained reserved to the concessionaire: sitting of letter boxes on the public highway intended for the deposit of postal items, issue and sale of postage stamps bearing the word Portugal and the registered mail service used in court or administrative proceedings.
The concession agreement sets out that, in the year 2022, the transition period, the prices of the services included in the universal postal service offer shall respect a maximum annual average variation of 6.80%, which considers the decline in mail volumes observed in the first nine months of 2021 and the variation of the Consumer Price Index for the Transport expense category, as communicated by the National Statistics Institute for the month of October 2021. The pricing proposal was submitted to ANACOM on 28 February and the new prices entered into force on 7 March 2022, without prejudice to the evaluation to be carried out by ANACOM, in accordance with the provisions of said agreement.
The special prices of the postal services included in the universal postal service offer applicable to bulk mail senders were also updated on 7 March 2022 following the information sent to ANACOM on 28 February 2022.
The aforementioned updates correspond to an average annual price variation of 5.84% for the year 2022.
While some impacts of the pandemic still persist in 2022, CTT continued to periodically report the status of the postal network to the Government, as a counterparty in the agreement, and to ANACOM, the regulatory authority responsible for overseeing the provision of the universal postal service until 21 February 2022.
By deliberations dated 6 May 2022 and 6 July 2022, ANACOM granted CTT's requests regarding the deduction of the records of mail items in all national flows directly affected by the COVID-19 pandemic in the 2nd half of 2021, for the purposes of calculating the Quality of Service Indicators (QSI) of the year 2021, and in the months of January and February 2022, for the purposes of calculating the QSI of the year 2022.
In the 1st half of 2022, work was carried out leading to the definition of the criteria to be followed in the pricing of the postal services within the basket of the universal postal service for the three-year period 2023-2025, in accordance with the provisions of Article 14(4) of Law 17/2012 of 26 April (Postal Law), as amended by Decree-Law 22-A/2022 of 7 February.
Pursuant to the law, the pricing criteria for the USO are defined by agreement between the regulator of the sector (ANACOM), the Consumer Directorate-General (DGC) and the universal service provider (CTT) for periods of three years. In case of agreement, the convention must be concluded, signed by the parties and notified to the member of Government responsible for the area of communications by 30 July of the year preceding that to which the criteria are to apply.
Following the negotiation process conducted by the parties (ANACOM, DGC and CTT), agreement was reached in principle on a draft text for the Convention to be concluded for the period 2023-2025, which was under public consultation until 15 July 2022. Subsequently, the Convention in its final wording was signed by the parties and is to be notified to the Government by the deadline set for this purpose.
The scope of the Convention maintains the same services which were the subject of ANACOM's decisions on the pricing criteria for the universal postal service, thus covering letter mail, parcels and newspapers and periodicals services which are part of the USO offer, including registered mail services used in legal or administrative proceedings, and not applying to special prices for postal services, which are part of the USO offer applicable to bulk mail senders (subject to the specific regime provided for in article 14-A of the Postal Law).
The highlights of the pricing regime of the services covered by the Convention are:
• The maintenance of a maximum annual variation of the prices of the basket of services covered by the Convention, which will be ascertained as per the following formula: CPI - ∆Volumes * (1 - VC) - E + K.
The referred maximum annual price variation thus takes into consideration historical figures relative to the inflation rate (CPI) in the last 12 months, the variation in volumes (∆Volumes) excluding an indicator of the weight of variable costs (VC) in total costs associated to the SPU (value defined at 16% for each year) and an efficiency factor (E) associated to CTT's activity within the USO (value defined at 0.5 percentage points for each year). In the event of significant contextual changes related to the conditions for the provision of the universal postal service, the application of an additional factor (K) is foreseen, the value of which shall be determined by agreement, upon proposal of any of the parties that integrate the Convention.
• The definition for each price of a maximum annual variation of 15% and a maximum global variation of 30% for the period from 2023 to 2025.
On 28 June 2022, CTT was notified of ANACOM's decision which granted CTT's application deferring the date for the entry into force of ANACOM's decision of 29 April 2021 on the delivery of postal items at premises other than the domicile to 1 January 2023.
With regard to the legal proceedings relating to ANACOM's Decision regarding the quality of service parameters and performance targets applicable to the universal postal service provision, dated of July 2018, CTT was notified of the Government's appeal against the decision of the Arbitration Court to the South Administrative Central Court, considering that the Arbitration Court should have considered itself incompetent to judge both of CTT's requests.
The administrative proceedings brought against ANACOM, the first one regarding the same decision and the second one concerning the December 2018 resolution regarding the new measurement procedures to be applied to the quality of service indicators, had no relevant developments. The process related to the proposal to enforce eleven contractual fines, initiated in 2018 by ANACOM, within the scope of the Universal Postal Service Concession Agreement, based on alleged breaches of contract obligations during 2015, 2016 and 2017, following the Grantor's decision that additional evidence was presented, is still pending a decision. There were no developments following the presentation of defence in the administrative proceedings initiated against CTT on 30 July 2021 for four administrative offences related to the measurement of quality of service indicators (QSI), relating to events occurred in 2016 and 2017 (partially contested in the abovementioned administrative action brought against ANACOM in March 2019), and on 30 August 2021.
On 18 January 2022, CTT was notified of the action brought against the Company by the companies Vasp Premium – Entrega Personalizada de Publicações, LDA. (Vasp) and Iberomail – Correio Internacional, S.A., (Iberomail) before the Competition, Regulation & Supervision Court. The action against CTT for abuse of dominant position, in particular for refusal of access to its postal network, since 2012 to the day the alleged illegal conduct ceases. Claims were also made for damages estimated at €69.5m to €158m by Vasp and between €9.5m and €31m by Iberomail, to be ascertained in the course of the proceedings. The lawsuit also requests the conviction of CTT to immediately cease the anti-competitive practices, giving Vasp and Iberomail access to its postal distribution network for their products, at the access points and in the manner intended by those companies, or in the conditions that the Court deems necessary for the access offer to be, in the opinion of those companies, viable. In this context, it should be recalled that, following VASP's complaint to the Competition Authority on 21 November 2014, the proceedings then opened were subject to a decision to close the proceedings, with the imposition of commitments on 5 July 2018. CTT follows the best market practices and considers the request to be totally unfounded, and as such the Company presented its contestation on 29 March 2022.
On 6 April 2022, ANACOM decided to impose a fine of €153,750 on CTT for twenty-six administrative offence related to the non-compliance with postal network density targets and minimum service offers that occurred in 2015 and 2016. CTT disagreed with this decision and filed an appeal against it on 6 May. The trial is expected to take place in September.
The Geopolitical events in Ukraine, military actions taken by Russia and the response of several countries, namely the Europe and the United States, in the form of economic sanctions, are currently affecting global markets, logistics chains and economic developments in general, intensifying the inflationary pressures that had already been observed, with a particular impact on the price of energy goods. Although the Group has no direct exposure to Russian entities, the conflict may also have indirect impacts that, at the present time, cannot be estimated with a reasonable degree of confidence.
However, in order to face the current economic context, the Group has adopted some mechanisms that aim to mitigate the adverse impacts that arise, namely:
In the context of the administrative action filed against ANACOM in October 2018 regarding the decision on the quality of service parameters and performance objectives applicable to the provision of the universal postal service, of July 2018, a preliminary hearing was held on 13 July 2022 to define the facts and points of law.
Within the scope of the authorization conferred at the Annual General Meeting of Shareholders held on 21 April 2022, on 27 July 2022, the Board of Directors of the Company deliberated to increase the maximum pecuniary amount and number of shares that may be acquired under the share buyback program of the Company (the "Buy-back Program") as follows:
The other terms and conditions of the Buy-back Program approved by the Board of Directors and the 2022 Annual General Meeting and communicated on 16 March 2022 remain unchanged.
With the exception of what is mentioned in note 28 - Other information on the pricing convention entered into by CTT, ANACOM and DGC, after 30 June 2022 and up to the date that the financial statements were approved for issue, no relevant or material facts have occurred in the Group's activity that have not been disclosed in the notes to the financial statements.
For the purposes of article 29-J(1)(c) of the Portuguese Securities Code, the members of the Board of Directors and of the Audit Committee of CTT - Correios de Portugal, S.A. ("CTT") identified below hereby declare that, to the best of their knowledge, the interim condensed consolidated accounts relative to the first half of 2022 were prepared in compliance with the applicable accounting standards, providing a true and fair view of the assets and liabilities, the financial position and the results of CTT and the companies included in its consolidation perimeter, and that the interim report faithfully presents the important events which occurred in the first half of 2022 and their impact on the interim condensed consolidated financial statements, as well as the main risks and uncertainties for the second half of the year.
Lisbon, 27 July 2022
The Board of Directors
The (non-executive) Chairman of the Board of Directors
_____________________________________
Raul Catarino Galamba de Oliveira
The Member of the Board of Directors and Chief Executive Officer (CEO)
João Afonso Ramalho Sopas Pereira Bento
_____________________________________
_____________________________________
The Member of the Board of Directors and of the Executive Committee
António Pedro Ferreira Vaz da Silva
The Member of the Board of Directors and Chief Financial Officer (CFO)
Guy Patrick Guimarães de Goyri Pacheco
_____________________________________
The Member of the Board of Directors and of the Executive Committee
João Carlos Ventura Sousa
_____________________________________
_____________________________________
_____________________________________
_____________________________________
_____________________________________
_____________________________________
The Member of the Board of Directors and Chief Operating Officer (COO)
João Miguel Gaspar da Silva
The (non-executive) Member of the Board of Directors and Chairwoman of the Audit Committee
Maria Luísa Coutinho Ferreira Leite de Castro Anacoreta Correia
The (non-executive) Member of the Board of Directors and of the Audit Committee
Steven Duncan Wood
The (non-executive) Member of the Board of Directors
Duarte Palma Leal Champalimaud
The (non-executive) Member of the Board of Directors
Isabel Maria Pereira Aníbal Vaz
The (non-executive) Member of the Board of Directors
_____________________________________
Jürgen Schröder
The (non-executive) Member of the Board of Directors
_____________________________________ Margarida Maria Correia de Barros Couto
The (non-executive) Member of the Board of Directors and of the Audit Committee
María del Carmen Gil Marín
The (non-executive) Member of the Board of Directors
_____________________________________
_____________________________________ Susanne Ruoff
(SIGNED ON THE ORIGINAL)
CTT investor support is carried out by the Investor Relations department, a team made up of six people.
E-mail: [email protected] Telephone: +351 210 471 087 Fax: +351 210 471 996
During the 1st half of 2022, CTT's disclosure of material information to the market consisted of:
Throughout the semester, CTT participated virtually and in person in several events organised by different banks and brokers, as follows:
It is also worth highlighting the CTT Capital Markets Day 2022 held in Lisbon on 23 June. During this event, CTT's Management team reviewed the Company's continued transformation strategy anchored on business and commerce services, and presented the new strategy and the ESG (Environment, Social and Governance) and financial targets for the 2022-25 period. The video of the event, and the corresponding presentation and press release are available on CTT's website, at https://www.ctt.pt/ grupo-ctt/investidores/eventos/capital-markets-day-2022.
CTT financial calendar for the 2nd half of 2022 foresees the following corporate events:
| Date |
|---|
| 27 July 2022 * |
| 7 September 2022 |
| 3 November 2022 * |
| 6 & 7 December 2022 |
* After market close
CTT will continue to organise and participate in marketing activities aimed at conveying adequately the prospects and performance of its businesses and engage with market participants in a long-term relationship.
Avenida D. João II, no. 13 1999-001 Lisbon PORTUGAL Telephone: +351 210 471 836 Fax: +351 210 471 994
CTT Line +351 210 471 616 Workdays from 08:30 am to 07:30 pm https://www.ctt.pt/ajuda/contacto
Market Relations Representative Guy Pacheco
Nuno Vieira Email: [email protected] Telephone: +351 210 471 087 Fax: +351 210 471 996
Communication Department Media Advisory Cátia Cruz Simões Email: [email protected] Telephone: +351 210 471 800
Website address
www.ctt.pt
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