Annual Report • Aug 31, 2020
Annual Report
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| 1. INTRODUCTION TO CTT |
|---|
| 1.1 Key Figures |
| 1.2 External Awards and Distinctions ……………………………………………………………………………………10 |
| 2. STRATEGIC BACKGROUND |
| 2.1 Requlatory Framework |
| 2.2 Strategic Lines |
| 2.3 Sustainable Development Goals |
| 2.4 Risk Management |
| 3. CTT BUSINESS UNITS |
| 3.1 Mail |
| 3.2 Express & Parcels |
| 3.3 Banco CTT |
| 3.4 Financial Services & Retail |
| 3.5 Future Perspectives |
| 4. PERFORMANCE |
| 4.1 Financial Capital |
| 4.2 Human Capital |
| 41.3 Intellectual Capital |
| 4.4 Social Capital |
| 43.5 Natural Capital |
| 5. CORPORATE GOVERNANCE |
| 6. INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
| 7. DECLARATION OF CONFORMITY |
| 8. AUDIT REPORT |
| 9. INVESTOR SUPPORT |
| CONTACTS |
We go further to bring the world closer.
| 1.1.1 Economic and financial indicators |
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|---|---|---|---|
| € thousand or %, except where indicated | '1H19 | '1H20 | Δ 20/19 |
| Revenues | 354,995 | 349,168 | -1.6% |
| Operating costs (1) | 308,598 | 315,775 | 2.3% |
| EBITDA (1) | 46,397 | 33,393 | -28.0% |
| EBIT | 19,713 | 4,867 | -75.3% |
| EBT | 14,703 | -1,031 | -107.0% |
| Net profit before non-controlling interests | 8,987 | -1,928 | -121.5% |
| Net profit for the period attributable to equity holders | 8,988 | -1,984 | -122.1% |
| Earnings per share (euro) (2) | 0.06 | -0.01 | -122.1% |
| EBITDA margin | 13.1% | 9.6% | -3.5 p.p. |
| EBIT margin | 5.6% | 1.4% | -4.2 p.p. |
| Net profit margin | 2.5% | -0.6% | -3.1 p.p. |
| Capex | 14,700 | 10,903 | -25.8% |
| Free cash flow (3) | -2,085 | -556 | 73.3% |
| '31.12.19 | '30.06.20 | Δ 20/19 | |
| Restated | |||
| Cash and cash equivalents | 363,684 | 396,590 | 9.0% |
| Own cash | 59,835 | 114,070 | 90.6% |
| Assets | 2,513,441 | 2,640,263 | 5.0% |
| '31.12.19 | '30.06.20 | Δ 20/19 | |
|---|---|---|---|
| '31.12.19 | '30.06.20 | Δ 20/19 | |
|---|---|---|---|
| Restated | |||
| Cash and cash equivalents | 363,684 | 396,590 | 9.0% |
| Own cash | 59,835 | 114,070 | 90.6% |
| Assets | 2,513,441 | 2,640,263 | 5.0% |
| Equity | 131,415 | 129,788 | -1.2% |
| Liabilities | 2,382,026 | 2,510,475 | 5.4% |
| Share capital | 75,000 | 75,000 | - |
| Number of shares | 150,000,000 | 150,000,000 | - |
(2) Considering the number of shares outstanding excluding 1 own share.
(3) The 1Q19 operating cash flow was restated to be comparable with that of 1Q20. In 2Q19 the methodology to calculate the operating cash flow was changed, in particular with respect to the change in working capital, which no longer includes a non-cyclical value related to the mobility allowance.
| 1.1.2 Operating indicators |
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|---|---|---|---|
| '1H19 | '1H20 | Δ 20/19 | |
| Mail (volumes; million items) | |||
| Addressed mail | 320.6 | 263.0 | -18.0% |
| Transactional mail | 279.0 | 228.3 | -18.2% |
| Editorial mail | 17.3 | 15.1 | -12.5% |
| Advertising mail | 24.4 | 19.6 | -19.5% |
| Unaddressed mail | 237.6 | 183.2 | -22.9% |
| Express & Parcels (external volumes; million items) | |||
| Portugal | 9.8 | 12.4 | 26.1% |
| Spain | 7.8 | 11.3 | 43.9% |
| Financial Services | |||
| Payments (number of transactions; millions) | 630.2 | 763.6 | 21.2% |
| Savings and insurance (subscriptions; €m) | 1,771.4 | 1,935.2 | 9.2% |
| Banco CTT | |||
| Number of current accounts | 408,204 | 488,931 | 19.8% |
| Customer deposits (€m) | 1,063,597.2 | 1,511,891.2 | 42.1% |
| Payments (number of transactions; millions) | 25.1 | 20.4 | -18.8% |
| Mortgage loans book, net (€m) | 312,097.7 | 472,689.5 | 51.5% |
| Consumer credit production (€m) | 21,189.5 | 14,167.4 | -33.1% |
| Loan-to-Deposits ratio (including 321 Crédito) | 69.3% | 65.4% | -3.9 p.p. |
| Number of branches | 212 | 212 | 0.0% |
| Staff | |||
| Staff (FTE) (1) | 11,640 | 11,592 | -0.4% |
| Retail, Transport and Distribution networks | |||
| CTT access points | 2,380 | 2,354 | -1.1% |
| Retail network (post offices) | 538 | 547 | 1.7% |
| Postal agencies | 1,842 | 1,807 | -1.9% |
| Payshop agents | 4,721 | 4,902 | 3.8% |
| Postal delivery offices | 230 | 226 | -1.7% |
| Postal delivery routes | 4,681 | 4,651 | -0.6% |
| Fleet (number of vehicles) | 3,749 | 3,996 | 6.6% |
(1) FTE = Full-time equivalent; from 1 January 2020 onwards, the methodology for counting staff was changed, 1H19 FTEs were restated in order to be comparable.
| 1.1.3 Sustainability indicators |
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|---|---|---|---|
| '1H19 | '1H20 | Δ 20/19 | |
| Customers | |||
| Customer satisfaction (%) | 78.8 | 85.2 | 6.4 p.p. |
| Staff | |||
| Number of accidents | 529 | 407 | -23.1% |
| Training (hours) | 118,646 | 58,243 | -50.9% |
| Women in management positions (1st management level) (%) |
20.5 | 20.4 | -0.1 p.p. |
| Community/Environment | |||
| Value chain - contracts with environmental criteria (%) | 94.2 | 96.1 | 1.8 p.p. |
| Total CO2 emissions, scopes 1 and 2 (kton.) (1) (2) | 8.1 | 7.4 | -8.7% |
| Energy consumption (TJ) (1) (2) | 186.4 | 169.3 | -9.1% |
| Eco‑friendly vehicles | 308 | 321 | 4.2% |
| Weight of Eco product range in Direct Mail line (%) | 37.7 | 48.9 | 11.2 p.p. |
| Investment in the Community (€ thousand) | 543 | 474 | -12.7% |
(2) 1H19 figures updated - information was received after the 1H19 Interim Report release.
In the 1st half of 2020, CTT received the following awards and distinctions:
For the 17th time, CTT was distinguished as one of the Trusted Brands of the Portuguese population in a study carried out by Reader's Digest magazine, having ranked first in the "Postal and Logistics Services" category, with 90% of the votes.
CTT was invited to participate in the event "The Strength and Value of Brands", organized by the consulting firm OnStrategy to distinguish several brands for their reputation, consistency and sustainability. CTT, represented by its Chief Executive Officer João Bento, was awarded for its reputational consistency in the last three years.
CTT reaffirmed its Leadership position, in the Climate Change section, with a score of A-, in what is considered to be the main energy and carbon sustainability rating worldwide, the CDP – Carbon Disclosure Project. Ocupying the 1st place at domestic level and 2nd place in the worldwide postal sector, ex-aequo with other domestic and postal companies.
CTT was distinguished with an award of the Portuguese Corporate Comunication Association and of the jury of the APCE 2020 Grand Prize, in the category "Internal Campaign of National Scope – CTT Academy Flight Simulation". Its merit was also recognized in 3 other categories.
Dott platform obtained the Highly Commended distinction in the 12th edition of the Parcel & Post Technology International Awards.
Banco CTT was considered the number 1 bank in Customer Satisfaction, with a score of 8.1 (on a scale of 1 to 10). Banco CTT received again the ECSI (European Customer Satisfaction Index) award, which results from a study carried out in Portugal by the Nova University and evaluates the customer satisfaction rate in relation to goods and services available in different sectors, based on 9 dimensions.
Banco CTT was awarded the Five Stars 2020 Award in the Mortgage Loan category, from a list of five banks evaluated in the same category, obtaining an overall score of 74.2%.
We go further to bring the world closer.
Under the Universal Postal Service Concession Contract, on 13.03.2020, CTT invoked force majeure before the Grantor, following the public health emergency of international scope, declared by the World Health Organization on 30.01.2020 and the subsequent classification of COVID-19 as a pandemic, on 11 March. In view of the seriousness and magnitude of the facts, which are public and notorious, and in order to comply with the public health instructions issued by the competent authorities, CTT could not fail to take the necessary and appropriate measures to protect its workers and customers.
Pursuant to the provisions of the concession contract, CTT continued to ensure the functioning and continuity of the postal services, which were considered as essential, taking the necessary and appropriate measures to the situation of force majeure, in terms of planning, prevention of operation and human resources, submitting a daily update on the situation to the Government, as a counterparty in the contract, and to ANACOM, the regulatory authority responsible for overseeing the provision of the universal postal service.
The universal service pricing proposal submitted by CTT on 18.02.2020, and reformulated on 27.03.2020 and 11.05.2020, was approved by ANACOM by resolution of 23.05.20201 . The prices underlying this proposal, which complied with the applicable principles and criteria of price formation, entered into force on 01.06.2020. This update corresponded to an average annual variation in the price of the basket of letter mail, editorial mail and parcels services of 1.41%, not including the offer of the universal service to bulk mail senders, to whom special prices apply.
The special prices of the postal services included in the universal service offer applicable to bulk mail senders were also updated2 on 01.06.2020 following a proposal presented to the Regulator on 22.05.2020.
Under the company's pricing policy for 2020, these updates correspond to an average annual variation of 1.76% in prices, also reflecting the effect of the updating of prices for reserved services (service of legal summons and notifications by post) and special prices for bulk mail.
Following the regulatory changes that took place at a very fast pace in recent years, with regard to the legal framework of the banking activity, the first half of 2020 was a period in which, on the one hand, regulations were issued containing minor changes to the original versions and, on the other hand, it was inevitably marked by the issue of a set of legal diplomas and documents related to the measures required to cope with the context of the COVID-19 pandemic.
In fact, there has not been a single regulation that can be called structural, as opposed to what has happened in recent years, such as the Markets in Financial Instruments Directive (MiFID II), the PSD 2 (Payment Services Directive 2), the Insurance Distribution Directive and the successive Directives on the Prevention of Money Laundering and Terrorist Financing.
1 Pursuant to the criteria setting the formation of the prices defined by a decision of ANACOM of 12.07.2018, complemented by a decision of 05.11.2018, under article 14(3) of Law 17/2012, of 26 April l (Postal Law), amended by Decree-Law 160/2013, of 19 November, and by Law 16/2014, of 4 April.
2 See article 14-A of the Postal Law as amended by article 4 of Decree-Law 160/2013, of 19 November.
On the contrary, what happened was a movement to clarify the existing legal framework, which took the form of the publication of various Guidelines, in what is known as European soft law. Examples of this are the Guidelines amending the EBA/GL/2018/05 Guidelines on fraud reporting requirements under the Payment Services Directive (PSD2) and the Recommendations on outsourcing to cloud computing providers issued by EIOPA, the European Insurance and Occupational Pensions Authority. It should also be noted that as of 30 June the Guidelines on ICT and security risk management, which had been published as recently as 2019, became applicable.
In terms of the Prevention of Money Laundering, the emphasis is on the amendment of Instruction No. 5/2019 of the Banco de Portugal, which included in the Report on the Prevention of Money Laundering and Terrorist Financing information on specific procedures to comply with Regulation (EU) 2015/847, with regard to transfers of funds.
From mid-March 2020 and with the emergency caused by the COVID-19 outbreak, there has been a proliferation of legal diplomas that provide for the safeguard from situations arising from the pandemic, in particular, and in a first stage, by disclosing measures that lead to greater flexibility of the regulatory and supervisory requirements to alleviate the contingency situation arising from the outbreak of COVID-19.
In addition, norms were published that approved a number of exceptional and temporary measures in response to the epidemiological situation caused by COVID-19, among which are several legal diplomas concerning the newly created moratorium schemes (for public and private contracts) to be applied in the context of the pandemic. These norms were accompanied by a set of guidelines for moratorium schemes both at national and European level.
With regard to the COVID-19 outbreak, mention should also be made to the legislation produced regarding the duties to provide information to bank customers on the public moratorium and on private moratoria and the obligation to report information to Banco de Portugal on the same issue.
The insurance sector was also naturally sensitive to the issue of the impacts of COVID-19, and an exceptional and temporary program was established for insurance contracts, regarding the payment of the insurance premium and the effects of the temporary reduction of risk in insurance contracts resulting from a significant reduction or suspension of activity.
In terms of the impact of the pandemic on credit institutions, Banco de Portugal adopted the European Central Bank's Guidance on the use of macroeconomic forecasts to estimate the expected credit loss during the COVID-19 pandemic. This document establishes references on the use of macroeconomic forecasts to avoid excessively procyclical assumptions in expected credit loss estimations, given the current context of heightened uncertainty and very limited availability of reasonable and supportable forward-looking information on the impact of COVID-19. In particular, the above-mentioned Guidance covers: i) the collective assessment of the significant increase in credit risk; ii) the use of long-term macroeconomic forecasts; and iii) the use of macroeconomic forecasts for specific years.
Also to be highlighted is the publication by the Banco de Portugal of a number of additional clarifications regarding the measures to be taken in order to mitigate the impact of COVID-19 on the banking sector, namely with regard to i) dividend distribution and remuneration policies, ii) ensuring greater flexibility at the level of behavioural supervision reports, as well as iii) emphasising the need to adopt measures to ensure the effective prevention of money laundering and terrorist financing in this context.
| Financial Capital Management efficiency $\cdot$ Recognition of the & focus on results Portfolio diversification, Investment in training enhancing existing networks (distribution & retail) |
Human Capital +12,000 employees $(+58k hours)$ · Talent development |
Intellectual Capital · Trusted & proximity brand · Sector in-depth know- how & experience · Innovation strategy |
Social Capital · Partnerships & cooperationprotocols with institutions · Volunteers pool |
Natural Capital · Integrated Quality, Environment & Safety policy · Quality certifications (ISO 14001) |
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|---|---|---|---|---|---|---|---|
| We focus on our stakeholders | |||||||
| CUSTOMERS | EMPLOYEES | SHAREHOLDERS | $\circledast$ SOCIETY |
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| Be morethan just the best logistics partner of the companies. Be the physical and digital site where people can find a variety of services and products that are simple, affordable and close. Be recognized as a simpler, closer, uncomplicated bank. |
Build a desirable business project aiming to have in each employee a CTT ambassador, based on the development of our employees, the promotion of the work/family balance and gender diversity, and the continued improvement of labor relations. |
Be a topperformer in shareholder return in the European postal sector and the PSI 20, build a reference shareholder base and be a model of transparency in the relationship with the capital markets. |
Be the incumbent of a sustainable universal postal service that meets the needs of the population, be a trusted brand recognized by the population and the local authorities, and be a reference in social and environmental sustainability. |
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| & Business model trategy |
Adjustment of operational procedures in distribution, eliminating risk factors Implementation of contingency plans in operations Acceleration of projects under development & special offers (e.g. Dott membership campaign, online store creation and #STAYATHOME promotions) |
Non-exhaustive measures regarding Covid-19: Coordinated action with the different stakeholders · Supply and general use of protection equipment · Sanitization actions · Intensification of internal communication · Creation of helpline · Implementation of homeworking for all functions that allow it |
· Definition and liquidity communication |
implementation of cost reduction measures · Specific measures to ensure Relinquishment of dividend payment proposal · Intensification of market |
. Custom postcards with 50% revenue going to Red Cross · Redefinition of all money order payment procedures · #istayathomevideo · Preparation and distribution of hand sanitizer (pro bono operation with Hovione) |
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| PARTNERSHIP | VALUE CREATION | PROXIMITY | TRUST | ||||
| ⊠ Preservethe value of the Mail business |
Consolidate our Iberian position, leading in Portugal and growing in Spain |
伵 Be one of the largest non- specialized retail networksin Portugal |
Be an innovative and fast-growing banking operator |
Developnew businesses. promotingthe diversification of profits |
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| Combined forces with clients to eliminate restriction on mail production and expedition |
· Partnership with Nat. Assoc. of Pharmacies · Expansion of the geographical coverage of some offers |
Covid-19 measures and leveraged businesses (non-exhaustive) · Modification of counter customer service model (eg.: shorter workinghours, definition of separation line between customer & employees, maximum cap of clients per post office) · Definition of contingency plan |
New offer: Online stores creation, regional fairs in Dott and app "CTT Comércio Local" |
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| GROWTH | DIVERSIFICATION | EFFICIENCY INNOVATION |
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| Dutputs | + value for customers: services and quality + innovation |
+ value for shareholders: financial strength Valuing and training the employees |
+ trust and proximity to citizens, contributing to their development Contribution to a more sustainable ecosystem: environmental responsibility |
Ensure the USO and other CTT awarded services Cultural and digital transformation |
The United Nations Sustainable Development Goals (SDG) include 17 priority topics at a global level, for the preservation of the planet and the dignity of human beings.
Apart from aligning its environmental management strategy with the priority SDG for the sector, derived from a study by IPC – International Post Corporation, CTT mapped and prioritised the SDG for its value chain, using the SDG Compass methodology, developed by the WBCSD, UN Global Compact and GRI.
CTT joined the PostEurop initiative "A New Deal for Europe: a Europe with a shared sustainable vision for its future" which aims to contribute to a more sustainable Europe, by achieving the SDG. CTT commitments are aligned with these global goals, aiming at a balance between the creation of economic value and the preservation of the planet and the dignity of human beings.
The table below presents the performance level of the 1st half of 2020 vis-à-vis the goals defined by CTT for 2020. It should be noted that due to the COVID-19 pandemic some of these goals did not achieve the levels set forth.
| Good health and well-being | Quality education |
|---|---|
| Focused on road accident goals | Focused on training goals |
| Reduce road accidents by 23.1%3 | |
| Fatal accidents: 0 | Volume of training: 58.2k hours |
| Road Safety Program – with more than 2,700 participants |
Training effort rate of 0.6% |
| Affordable and clean energy | Decent work and economic growth |
| Focused on renewable energy and energy efficiency goals |
Focused on goals related to labor conditions and access to financial services |
| Launch of the process to acquire 100% of | Consolidate the banking business |
| electricity of renewable origin | 14 new employees trained on Prevention of Money Laundering and Terrorist Financing |
| Sustainable cities and communities | Responsible consumption and production |
| Focused on electric mobility | Focused on the eco portfolio |
| Entry into operation of 9 new electric vehicles | Carbon-neutral "green" mail and express mail offer |
| Test more ecological fleet solutions | |
| Global climate action | Peace, justice and strong institutions |
| Focused on carbon management, Compliance with international norms and Environmental education |
Focused on anti-corruption and bribery, governance and ethics, and engagement with stakeholders |
| Reduce direct emissions by 9.1%4 | 810 employees trained on: the Codes of Conduct |
| Align CTT carbon goals (SBT) with the global ambition to limit global warming to 1.5ºC by 2030 |
of CTT, CTT Subsidiaries and Banco CTT; Code of Good Conduct to Prevent and Fight Harassment at the Workplace |
| Communication article for the internal stakeholder |
3 Reduction of accidents due to reduced working hours and lagging schedules, as well as less road traffic during the period of the COVID-19 pandemic.
4 Considering CO2 emissions of scopes 1 and 2.
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 decisionmaking process, taking into consideration the risks to which CTT is exposed.
Under the banking activity, 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 specificities and to 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, in order 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 at a given moment on the 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
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 is thus reflected in the maximum level of exposure that CTT consciously undertakes and is willing to accept in the pursuit of its strategy, taking into account its business principles, policies and procedures, as well as the fact that it operates in strongly regulated markets. The risk appetite is reviewed annually and is defined by type of risk, according to the approved classifications.
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 act as a barometer of CTT's current level of exposure to risks and alert, in a timely manner, to possible changes in the probability of occurrence and/or impact of the risk event. Each KRI has a defined objective and a tolerance level. Surpassing this tolerance level could mean that CTT will incur financial losses that are higher than expected (value-at-risk), thus requiring the adoption of immediate response measures. In some cases, in order to maximize the effectiveness of the KRI, programmed action plans are defined a priori with specific mitigation measures whose implementation is conditioned to the exceed the tolerance levels defined for the KRI.
During the first half of 2020, CTT activity was strongly conditioned by the COVID-19 pandemic, namely by the restriction measures imposed on most sectors of the economy - closure of trade, services and industry, and retraction of consumption in some sectors due to the lockdown. This has increased exposure to some risks already identified and has led to the resurgence of others, which were therefore also closely monitored and subject to mitigation measures. For their relevance, we highlight the evolution over the semester of the following risks:
| Strategic Risks derive from uncertainties resulting from the strategy defined by and the way it is implemented |
Impacted business |
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|---|---|---|
| Iberian CEP (Courier, Express & Parcels) challenge |
In February, the brand was changed to CTT Express (in Spain), thus promoting a greater Iberian alignment and a commitment to the market of urgent parcels in this geography. In March, the outbreak of the pandemic led to a significant decline in B2B volumes in both countries. Gradually, this decline was offset by strong growth in B2C activity resulting from changes in consumption patterns that stimulated the evolution of e-commerce. |
|
| Public image | Aware of itscritical role in preserving vital communication and logistics chains for the Portuguese economy and society, CTT always maintained its activity during the state of emergency. In addition, CTT has joined the "Stay at home" movement in the several geographies where it operates, carrying out various initiatives with the aim of facilitating customer access to the services provided and thus reinforcing CTT's image of proximity to the population. |
| Operational Risks derive from failures or deficiencies in the management of business processes, people and information systems |
Impacted business |
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|---|---|---|---|
| Cybersecurity | The lockdown measures enacted during the pandemic have forced the implementation of homeworking in all services where this was possible. With more than 2k workers remotely accessing the internal CTT network from home, exposure to this risk increased considerably, so there was a need to strengthen technological security controls and focus on training on good homeworking practices and cybercrime awareness. |
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| Continuity of the business |
In response to the pandemic, CTT activated its contingency plans for the operational areas, the retail network and the central services, thus managing to ensure the continuity of all operations with the least possible degree of disruption, taking into account the very adverse circumstances. A Crisis Management Committee, chaired by the CEO, was created to coordinate the implementation of all initiatives aimed at protecting workers and customers, and promoting business continuity. |
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| Universal Service Obligations |
Under the Universal Postal Service Concession Contract, CTT invoked force majeure before the Grantor, following the classification of COVID-19 as a pandemic. CTT continued to ensure the functioning and continuity of postal services, taking the necessary and appropriate measures to the situation of force majeure, in terms of planning, prevention of operation and human resources, submitting a daily update on the situation to the Government and to ANACOM. |
| Financial Risks condition of CTT |
derive from exogenous and internal factors that significantly and directly affect the performance and financial | Impacted business |
|---|---|---|
| Liquidity | Due to the context of uncertainty caused by the pandemic, at the Annual General Meeting, CTT decided to suspend the payment of dividends and variable remuneration relative to 2019. CTT has been implementing additional measures to strengthen its financial position and liquidity and ensure its operational response, while seeking to preserve the value of traditional businesses and invest in new ones, more linked to digital platforms and e commerce. |
| External Risks | derive from more or less unpredictable factors that are beyond the power of intervention and influence of CTT | Impacted business |
|
|---|---|---|---|
| E-substitution | According to ANACOM, in the 1st quarter, postal volumes fell by 8.8% compared to the same period of last year (-9.6% in transactional mail). The effects of the pandemic only began to be felt from mid-March onwards when it was possible to confirm a very significant reduction in addressed mail volumes. Although a recovery is expected during the 2nd half of the year, it is predictable that the increasing substitution of physical mail, boosted by the pandemic, will lead to a double-digit decline in volumes by the end of the year. |
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| Regulatory changes |
At the end of June, ANACOM submitted for public consultation (until 28 July) a set of draft decisions regarding the provision of the Universal Postal Service after the end of the current concession. These decisions refer, among other topics, to the criteria setting the formation of prices, the quality of service parameters and performance targets, the concept of unreasonable financial charge for purposes of compensation of the net cost of the USO, and the methodology for calculating the net costs of the universal postal service. |
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| Epidemics (COVID-19) |
Although the Express & Parcels business benefited from the growth of e-commerce due to the lockdown, most of the remaining CTT businesses were negatively affected by the pandemic. However, the real impact on business growth and profitability cannot yet be reliably quantified as it depends on several factors, including the duration of the pandemic, the emergence of a new wave as well as the severity of its impacts on the international and domestic economy. |
We go further to bring the world closer.
The Mail business unit was very much affected, from the second half of March until May, by the lockdown provoked by the COVID-19 pandemic. This situation led to the closure or reduction of the opening hours of CTT post offices, which resulted in lower demand for B2C services, as well as a reduction in the activity of customers in the B2B segment, with particular emphasis on the banking and utilities sectors and the Public Administration due the closure/suspension of activity of various public institutions and mail pre-sorters.
| Mail revenues reached €202.8m in 1H20, -€32.2m (-13.7%) vis-à-vis 1H19, mainly due to the fall in the | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| revenues of transactional (-€30.2m; -14.9%) and advertising mail (-€2.3m; -21.3%), somewhat mitigated by the revenue growth in business solutions (+€2.8m; +49.8%). |
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| Mail volumes | |||||||||
| million items | |||||||||
| 1Q19 | 1Q20 | ∆ | 2Q19 | 2Q20 | ∆ | 1H19 | 1H20 | ∆ | |
| Transactional mail | 142.6 | 126.2 | -11.5% | 136.4 | 102.0 | -25.2% | 279.0 | 228.3 | -18.2% |
| Advertising mail | 13.1 | 11.1 | -15.3% | 11.3 | 8.5 | -24.3% | 24.4 | 19.6 | -19.5% |
| Editorial mail | 8.5 | 7.6 | -11.2% | 8.7 | 7.5 | -13.8% | 17.3 | 15.1 | -12.5% |
| Addressed mail | 164.2 | 144.9 | -11.8% | 156.4 | 118.1 | -24.5% | 320.6 | 263.0 | -18.0% |
| 8.6% | 131.4 | 67.8 | -48.4% | 237.6 | 183.2 | -22.9% |
In 1H20, transactional mail volumes decreased by 18.2% in all products, except for green mail (+75.6%) which maintained the growth of recent quarters mainly due to product substitution, as the registered mail and priority mail prepaid products business lines were discontinued. The decline of domestic ordinary mail reached 16.2%, mainly in the banking and insurance, telecommunications and Government segments, priority mail volumes fell by 46.8% and registered mail by 20.9%. It should be noted that in June there was a marked recovery in registered mail in some government sectors, namely in the area of courts and notifications regarding administrative offences, as well as a growth in volumes from private consumers.
International mail suffered a more severe drop due to the rather restrictive measures imposed by the pandemic both in international outbound mail (-27.5%) and in international inbound mail (-25.1%).
The advertising mail business suffered a significant negative impact in the months of March to May, with the pandemic crisis leading to a reduced utilization of this type of mail by the customers, in some cases with full cancellation of shipments and campaigns. In June there was a recovery compared to the previously mentioned months, and a pick-up of the activity is expected in 2H20.
In 1H20, addressed advertising mail volumes decreased by 19.5%. Unaddressed advertising mail volumes recorded a decline of 22.9% in 1H20 as a result of the reduction in the frequency of campaigns by retail customers that offset the growth momentum observed at the beginning of the year (+44.7% in the first two months) triggered mainly by the capture of new customers.
In 1H20, the business solutions area recorded revenues of €8.3m, +49.8% versus 1H19. This increase resulted from the management team's ambition to pursue revenue alternatives to compensate for the mail revenues decline. This has been achieved mainly by designing and establishing partnerships and sought, at this stage, to focus mostly on new needs that stemmed from the COVID-19 pandemic, such as the sale and delivery of personal protection products or the supply of IT equipment as a result of the increased needs due to homeworking.
The average change in prices of the Universal Service5 in 1H20 was 0.97% vs. the same period of the previous year. The price increase for 2020 took place in June.
Clients continued to embrace CTT's Eco portfolio products. Eco direct mail continues to gain weight in the direct mail product line, representing 49% of total direct mail volumes. Green mail, a product strongly linked to convenience and enviromental issues, ensuring carbon neutrality of all its products, had more than 3.5 million items sold in the first half of the year.
In 1H20, philately revenues amounted to €2.4m, corresponding to -20.2% versus 1H19 (-€0.6m) but it should be noted that due to the pandemic some events planned for 2Q20 have not taken place.
| Commemorative Issues – 1st half of 2020 | |
|---|---|
| Figures from History and Culture 250th Anniversary of Ludwig Van Beethoven 500th Anniversary of the Navigation of the Strait of Magellan Centenary Museums of Portugal Archbishops of Braga (3rd group) World Portuguese Language Day (UNESCO) / 30 Years of AICEP Europa – Ancient Postal Routes 75 Years of TAP – Air Portugal Festivals and Pilgrimages – Places of Faith 300 Years of the Foundation of the Royal Academy of History 800 Years of the General Inquiries of King Alfonso II |
National and International Events 2020 |
| Portuguese Autochthonous Breeds (3rd group) |
Environment and Sustainability |
| Madeira Booklet Azores Booklet |
Self-adhesive |
5 Including letter mail, editorial mail and parcels of the Universal Postal Service, excluding international inbound mail.
Find out more on the plan of philatelic issues of CTT at: https://www.ctt.pt/particulares/filatelia/plano-emissoes/
The Express & Parcels revenues totaled €85.1m in 1H20, growing €12.3m (+16.9%) compared to the same period of 2019. In 2Q20, they reached €47.8m, up €11.7m (+32.5%) versus the same quarter of 2019, which illustrates the strong growth achieved in the period, when B2C deliveries grew consistently and significantly. The performance of this quarter showcases unprecedented revenues figures and the best EBITDA figure of the last 17 quarters.
Revenues in Portugal stood at €51.8m in 1H20, 12.8% above those of the same period of 2019, with a marked upturn in 2Q20, when revenues reached €27.4m, up €4.4m (+19.1%) versus 2Q19. This growth resulted mostly from the CEP (Courier, Express & Parcels) business which totaled €41.5m (+20.2%) in revenues.
1H20 was marked by the impacts of the COVID-19 pandemic, as the end of March and the beginning of April were particularly affected by the restrictions on operation imposed on most sectors of the economy. These restrictions had a strong impact on the profile of shipments, with a reduction in B2B volumes of both parcels and cargo, while strong growth in e-commerce activity was observed.
In 1H20, CEP volumes in Portugal totaled 11.2 million items, 35.0% more than in the same period of 2019. In 2Q20, CEP volumes reached 6.2 million items, 49.3% above those of 2Q19 and more than the double of the growth rate recorded in 1Q20 (+20.4%). This evolution was strongly boosted by e-commerce, with very relevant growth in the sectors of health and well-being, food, sports and leisure, education and culture, and consumer electronics.
The growth achieved in Portugal resulted from a number of initiatives launched by CTT seeking to accelerate and leverage on solutions that would help bolster the recovery of lost activity and create growth opportunities, among which the following services should be noted:
The revenues of the cargo business amounted to €5.4m in 1H20 (-17.2%) and those of the logistics business to €1.2m (-17.8%). These business lines were already under pressure in 1Q20 and felt the economic impact of the pandemic on sectors such as automotive, textile and retail. In June, the cargo activity recovered somewhat compared to the previous months. The banking documents deliveries business remained stable with revenues of €3.4m (+1.2%).
The Dott marketplace6 , launched in May 2019 in partnership with Sonae, had, at the end of June 2020, 1,060 registered vendors on the platform (an increase of 296 in the quarter) and more than 2.3 million products available for purchase. At the end of June 2020, a total of 150k users were registered (+79% vs. the end of March 2020), evidencing the strong growth and the acceleration of digitalization and e-commerce in the lockdown period.
Revenues in Spain stood at €31.9m in 1H20, 23.2% above those of the same period of 2019. In 2Q20, they reached €19.8m, corresponding to more €7.2m (+ 57.2%) versus 2Q19.
Volumes totaled 11.3 million items, growing 43.9% vis-à-vis the same period of 2019. However, an increase took place in B2C volumes with lower weight and consequently lower price per item, while a decline was registered in B2B volumes as a result of the COVID-19 pandemic.
The month of March 2020 was strongly impacted by COVID-19; however, this trend was reversed immediately after, in the month of April. The months of April and May recorded strong volumes growth resulting from changes in consumption patterns that drove e-commerce purchases and captured the confidence of new B2C customers. Commercial initiatives that resulted in agreements with major global e-tailers that started urgent parcels operations throughout the Iberian Peninsula also contributed to this.
The Company is preparing to take on this increase in activity – compatible with the restructuring and relaunch plan presented for Spain –, having invested in sorting machines for its main centers – in Madrid and Barcelona – and acquired more than 1,500 mobile devices and a new artificial intelligence software to optimize the day-today life of parcel carriers, their cargo loads and routes, and improve the quality of service while reducing costs per item.
Revenues in Mozambique stood at €1.4m in 1H20, 43.2% above those of the same period of the previous year. In 2Q20 they amounted to €0.7m, up €0.2m (+30.3%) vis-à-vis 2Q19. The CEP and the bank documents delivery businesses positively contributed to this growth, the latter underpinned by the capture of a new important business in the health area (collection of biological samples), which started in the 2nd half of 2019, but also by the continued growth of the banking sector.
The Express & Parcels portfolio is totally neutrallized by carbon offset projects selected by public vote and which promote positive impacts on biodiversity and the development of local communities where these projects are carried out.
6 The Dott marketplace investment is accounted for by the equity method.
Banco CTT revenues reached €38.4m in 1H20, a year-on-year growth of €14.8m (+63.0%), of which +€11.2m originated in 321 Crédito, acquired in May 2019. Excluding this inorganic effect, the revenues would amount to €22.1m, up €3.7m (+19.8%) vis-à-vis 1H19.
The revenues growth was driven by the positive performance of net interest income in 1H20, €12.3m more (+135.3%) than in the same period of 2019. Excluding 321 Crédito, the growth of the net interest income would be €3.2m (+63.2%) in 1H20.
Banco CTT business performance continued to allow for growth in customer deposits to €1,512m (+42.1% versus 1H19 and +17.8% compared to the end of 2019) and in the number of accounts to 489k (81k more than in 1H19 and 28k more than at the end of 2019).
Banco CTT commissions received grew €2.2m (+62.5%), mainly due to customer transactionality (+20.7%), as well as accounts and debit cards, and were boosted, as from the beginning of April, by the introduction of debit card commissions. The charge of an annual commission on debit cards contributed to an increase of 612.9% in commissions in 2Q20 versus 2Q19.
The consumer credit commissions increased by 11.9% (+€0.1m), albeit affected by the current economic context. While in 1Q20 they grew by 80.3% compared to the same period of the previous year, in 2Q20 they decreased by 37.7%, with a reduction in production volumes of 64.4% compared to 2Q19 and 59.5% compared to 1Q20.
PPR placements fell by 84.3% to €22.2m compared to 1H19. Although the PPR production compared to the previous year is also influenced by the change in the risk profile of the product, that no longer guarantees the preservation of the customer's capital, which in itself has contracted demand, the effects of the lockdown period also contributed to the reduction in placements from 1Q20 to 2Q20. In terms of commissions received, the product continues to grow, in this case by €0.8m (+285.1%) versus 1H19. The volume of the PPR product reached €378.8m (off balance sheet), up 127.0% versus 1H19.
The payments business line recorded a decrease of €1.8m (-18.2%) in commissions received in 1H20 compared to the same period of the previous year, with total revenues of €8.0m. Revenues have been strongly affected by the lower demand for transactional services in the payments area in the course of the restrictive measures imposed by the state of emergency. This was partly offset by the focus on extending the MBSPOT service, which allows for payments with ATM and Payshop references, to all the agents. The peak of the decline occurred in April, especially in the payment of tolls and invoices, with the last two months of this semester already showing signs of recovery.
Revenues from auto loans remained stable, with a quarterly average of €2.7m per month in both quarters of 1H20 and a credit portfolio net of impairments of €506.1m (up 7.8% compared to December 2019). The volume of auto loans production was strongly affected by the closure of auto dealerships, as a result of the lockdown measures. In mid-March, a downward trend of new proposal generation began, a situation that lasted until the second week of May, when the trend was reversed.
The net mortgage loan portfolio stood at €472.7m (up 16.7% versus December 2019). The mortgage loan production grew by 3.5% (+€2.9m) in 1H20 compared to the same period of the previous year, although a decrease of 16.4% (-€7.6m) from 1Q20 to 2Q20 was recorded.
In 2Q20, impairments of €5.8m were registered, reflecting the evolution of the credit portfolio in the quarter for an amount of €2.6m and the effect of the estimate of the potential losses due the projected economic downturn (forward-looking effect) in the order of €3.2m. As a result of the worsening economic situation, 321 Crédito's impairments and provisions reached €7.0m in 1H20, an increase of €6.2m vis-à-vis the same period of the previous year.
Moratorium requests (public and private) reached 2.9k with a total exposure of €66.6m, representing circa 7% of the total gross credit portfolio.
Financial Services & Retail revenues amounted to €21.5m in 1H20 (€16.5m relative to Financial Services and €5.0m to Retail), with a growth of €0.2m (+1.2%) compared to the same period of the previous year. While in 1Q20 growth was 23.0% (+€2.4m), in 2Q20 a decrease of 20.4% (-€2.2m) was registered.
The 2Q20 of this business unit was strongly influenced by (i) the restrictive measures of the state of emergency, namely the effect it generated on the preference for liquidity and consequently on medium/long-term financial investments, (ii) limited access to the CTT retail network and changes in post office opening hours, (iii) suspended launch of new products and services by suppliers and the adjustment of supplies, (iv) the cancellation and postponement of shows, and (v) the cancellation since 20 March of the subletting of space in the post offices.
Financial products obtained revenues of €16.5m, an increase of €1.1m (+7.5%) versus 1H19, due to the strong performance in 1Q20 that allowed to absorb the significant decreases that occurred after the second half of March 2020. The increase in subscriptions of public debt certificates (Savings Certificates and Treasury Certificates Savings Growth) in the first two months of 2020 due to the good performance in recapturing the amounts of public debt certificates (PDC) maturing in January 2020 (circa €1,500m in maturing PDC) allowed to obtain revenues of €6.6m (+66.4%) and €1,176m in subscriptions, +89.7% compared to the two first months of 2019.
The revenues of public debt certificates subscriptions totaled €12.0m in 1H20, +€1.0m (+8.9%) versus 1H19, as €1,933.3m were placed (+11.1%). In 2Q20, subscriptions fell by 31.0% (-€260.2m) vis-à-vis 2Q19. The daily average in April was the lowest in subscriptions with €6.1m per working day although a sustained recovery in subscriptions is currently taking place as in June the daily average was €11.5m per working day.
Money orders revenues stood at €3.0m, +€0.2m vs. 1H19 (+7.4%), as the money order issuance service was used to pay unemployment and other social assistance benefits, from year-end 2019 onwards. Also noteworthy is the launch in May of a new Portugal/Senegal electronic money order exchange in partnership with La Poste Sénégal.
CTT payment services reached revenues of €0.8m in 1H20, with a positive performance of 21.0% (+€0.1m), as the payment of taxes, namely IMI – Municipal Property Tax, absorbed the structural effect of e-substitution in the this type of service.
The retail products and services, with a €5.0m revenues performance in 1H20, recorded a decrease of 12.1% (-€0.7m), intensifying the reversal of the growth trend of the first two months of 2020. It was in third-party retail products and services, essentially in lottery, books and in the payment of the air transport subsidy (Azores and Madeira) that the reduction was most felt due to the significant reduction of customer visits to the post offices. Conversely, merchandising posted a positive year-on-year growth of €0.5m (+273.0%) due to the successful introduction of products such as protection masks and alcohol gel for hand disinfection.
In retail there was a gradual, albeit slow, recovery with CTT strengthening its position, both with the sale of new book issues (novelties with weight in the competitive market) and the establishment of new partnerships in telecommunications and merchandising.
Assuming the gradual recovery of the economy and the improvement of the pandemic situation, CTT expects that the positive dynamics in its growth levers will continue.
Although it is expected that Mail will endure significant reductions in letter (statements) and advertising mail, which are expected to lead to double-digit addressed mail volumes decline for the year, a continued positive performance is projected in Express & Parcels, Banco CTT and Financial Services. Express & Parcels will continue to be the main growth engine of the Company, spurred by the fast approximation of e-commerce adoption to developed markets' averages and continued market share gains; Banco CTT is sufficiently provisioned and well capitalized to face potential challenges in 2H20 (in accordance with the current projections), such as lower GDP and increased unemployment as a result of the pandemic; and Financial Services will benefit from the Portuguese population's increasing propensity to save, boding well for the placement of public debt; hence, all of them, with the exception of Mail, are expected to grow in revenues and EBITDA.
In 2H20, margin and cost focus will be on the foreground, as various operational improvement initiatives will be launched. The notable recovery towards the end of 2Q20 provides a steppingstone for the remainder of the year. As a result of sales countermeasures to cope with the sudden decline in mail, CTT expects to achieve growth in revenues driven by parcels, as well as an EBITDA7 above €90m and more than €30m in EBIT in the full year 2020.
7 Excluding depreciation / amortization, impairments and provisions, the impact of IFRS 16 and specific items.
We go further to bring the world closer.
Revenues8 stood at €349.2m (-€5.8m; -1.6% compared to 1H19), with special emphasis on Banco CTT (+€14.8m;+63.0%, of which +€11.2m relative to 321 Crédito which was acquired in May 2019), Express & Parcels (+€12.3m;+16.9%) and Financial Services & Retail9 (+€0.2m;+1.2%), all of which could not fully offset the sharp decline of Mail & other (-€33.2m) revenues.
| stood at €349.2m (-€5.8m; -1.6% compared to 1H19), with special emphasis on Banco CTT (+€14.8m;+63.0%, of which +€11.2m relative to 321 Crédito which was acquired in May 2019), Express & |
(+€0.2m;+1.2%), all of which could not fully offset | |||
|---|---|---|---|---|
| Revenues | ||||
| € million | ||||
| 1H19 | 1H20 | ∆ | ∆ % | |
| Revenues | 355.0 | 349.2 | -5.8 | -1.6% |
| Mail & other | 237.4 | 204.2 | -33.2 | -14.0% |
| 235.1 | 202.8 | -32.2 | -13.7% | |
| Central Structure | 2.3 | 1.3 | -1.0 | -42.6% |
| Express & Parcels | 72.8 | 85.1 | 12.3 | 16.9% |
| Banco CTT | 23.6 | 38.4 | 14.8 | 63.0% |
| Financial Services & Retail | 21.2 | 21.5 | 0.2 | 1.2% |
| Operating costs10 amounted to €315.8m in 1H20, an increase of €7.2m (+2.3%) vs. 1H19, with an impact of €6.0m from 321 Crédito. Excluding 321 Crédito, operating costs totaled €309.8m (+1.0%). In 2Q20, operating costs totaled €156.1m, a growth of €3.4m (+2.2%) vs. 2Q19, and the impact of 321 Crédito |
||||
| was €3.0m. Excluding 321 Crédito, operating costs totaled €153.1m in 2Q19 (+1.5%). | Operating Costs | € million | ||
| 1H19 | 1H20 | |||
| ∆ | ∆% | |||
| Operating costs | 308.6 | 315.8 | 7.2 | 2.3% |
| Staff costs ES&S |
169.2 125.9 |
170.1 129.6 |
0.9 3.8 |
0.5% 3.0% |
Operating costs10 amounted to €315.8m in 1H20, an increase of €7.2m (+2.3%) vs. 1H19, with an impact of €6.0m from 321 Crédito. Excluding 321 Crédito, operating costs totaled €309.8m (+1.0%).
In 2Q20, operating costs totaled €156.1m, a growth of €3.4m (+2.2%) vs. 2Q19, and the impact of 321 Crédito was €3.0m. Excluding 321 Crédito, operating costs totaled €153.1m in 2Q19 (+1.5%).
| Operating costs10 amounted to €315.8m in 1H20, an increase of €7.2m (+2.3%) vs. 1H19, with an impact of | |||||||
|---|---|---|---|---|---|---|---|
| In 2Q20, operating costs totaled €156.1m, a growth of €3.4m (+2.2%) vs. 2Q19, and the impact of 321 Crédito | |||||||
| Operating Costs | |||||||
| € million | |||||||
| Operating costs | 308.6 | 315.8 | 7.2 | 2.3% | |||
| Staff costs | 169.2 | 170.1 | 0.9 | 0.5% | |||
| ES&S | 125.9 | 129.6 | 3.8 | 3.0% | |||
| Other operating costs | 13.5 | 16.0 | 2.5 | 18.5% | |||
Staff costs increased €0.9m (+0.5%) in 1H20. Excluding the effect of 321 Crédito, those costs decreased €0.9m (-0.5%) mostly due to the fact that health costs with active members of staff have decreased by €1.8m (-55.8%) due to the effect of the COVID-19 pandemic. This effect was partly offset by actuarial gains in 2019, related to liabilities with retirees, following the reduction of average mobile phone tariffs, which had a positive impact of €0.9m in 1Q19, and reduced liability relative to employees with suspension agreements in 2Q19, due to early retirement (+€0.3m). While in 1Q20 staff costs increased €2.4m (+2.8%), in 2Q20 they decreased
8 Excluding specific items.
9 In 2020 and in the same period of the previous year (proforma), the retail products and services of the Mail & other business unit are considered within the Financial Services & Retail business unit (former Financial Services business unit).
10 Excluding depreciation / amortization, impairments and provisions, the impact of IFRS 16 and specific items.
€1.5m (-1.8%), especially in the Mail & other business unit where the reduction was €2.2m (-3.1%) compared to 2Q19.
External supplies & services costs increased €3.8m (+3.0%), of which €1.5m resulted from the integration of 321 Crédito. Excluding the inorganic effect, the growth was €2.3m (+1.8%) which includes mainly: (i) the increased direct costs (+€2.7m), as a result of the growth of costs in the Express & Parcels business unit (+€7.0m), partly offset by the decline in the costs of Mail & other (-€4.4m); (ii) the increase in costs related to temporary work (+€2.1m), mainly in the Express & Parcels business unit; and (iii) the reduction in commercial costs, costs from equipment and other costs (-€2.6m).
Other operating costs grew €2.5m (+18.5%) when compared to 1H19. Excluding the inorganic effect of 321 Crédito (+€0.8m), these costs increased €1.7m (+12.8%), mostly due to the launch of new partnerships (+€3.1m), an evolution in line with the revenues, which were partly offset by: (i) the reduction in other sales costs (-€0.5m); (ii) the lower amount of indemnities paid (-€0.6m); and (iii) the reduction of other administrative costs (-€0.3m).
| EBITDA | ||||
|---|---|---|---|---|
| In 1H20, the Company generated an EBITDA11 of €33.4m, €13.0m (-28.0%) below that of 1H19, with an EBITDA margin of 9.6% (versus 13.1% in 1H19). This performance was strongly influenced by the impacts occurred in the semester, namely the restrictions related to the COVID-19 pandemic, given that EBITDA was growing by €5.9m (+49.7%) in the first two months of 2020. |
||||
| Specific Items In 1H20, the Company recorded specific items for the amount of €0.8m, broken down as shown below: |
||||
| Specific Items | ||||
| € million | ||||
| 1H19 | 1H20 | ∆ | ∆% | |
| Specific items Corporate restructuring costs and strategic projects |
11.7 11.6 |
0.8 0.6 |
-10.9 -11.0 |
-93.2% -94.7% |
The decline of €11.0m in corporate restructuring and strategic projects is mostly related to spending on: (i) compensations paid for termination of employment contracts by mutual agreement and suspension agreements (-€6.8m) within the Human Resources Optimization Program, and consulting services (-€1.6m), both under the ongoing Operational Transformation Plan; (ii) the acquisition of 321 Crédito (-€1.2m); and (iii) the implementation of the changes to the Quality of Service Indicators measurement system required by ANACOM (-€1.0m).
In 1H20, corporate restructuring stood at €0.1m, €7.4m less than in the same period of the previous year, and strategic projects registered €0.5m (-€3.6m), mainly in studies to support the renegotiation of the new concession agreement. Other revenues and costs had an impact of €0.2m, of which the capital gains of +€0.6m (+€0.4m) from the sale of real estate, and other costs of €0.4m (+€0.3m), mainly associated with the pandemic, stand out.
11 Excluding depreciation / amortization, impairments and provisions, the impact of IFRS 16 and specific items.
EBIT stood at €4.9m in 1H20, -€14.8m (-75.3%) compared to 1H19, with a margin of 1.4% (5.6% in 1H19), strongly penalized by the growth in impairments and provisions (+€8.7m), mainly in Banco CTT business unit, particularly in auto loans, and amortizations (+€3.6m) that result from strategic investments that have been made to increase productivity in Mail and the implementation of the strategic plan for Iberian growth in the Express & Parcels business unit. As mentioned above, impairments of €5.8m were registered in Banco CTT in 2Q20 reflecting the evolution of the credit portfolio in the quarter (€2.6m) and the effect of the estimate of potential losses (€3.2m) due the projected economic downturn (forward-looking effect). 1H19 1H20 ∆ ∆%
With the exception of Mail & other, all the remaining business units, despite the adverse environment, managed to show growth in EBIT.
| With the exception of Mail & other, all the remaining business units, despite the adverse environment, managed | |||||
|---|---|---|---|---|---|
| EBIT by business unit | |||||
| € million | |||||
| EBIT | 19.7 | 4.9 | -14.8 | -75.3% | |
| Mail & other | 22.3 | 0.02 | -22.2 | -99.9% | |
| 48.7 | 29.9 | -18.9 | -38.8% | ||
| Central Structure | - 26.5 | - 29.8 | -3.3 | -12.6% | |
| Express & Parcels | - 4.3 | - 3.5 | 0.8 | 18.9% | |
| Banco CTT | -7.2 | - 2.3 | 5.0 | 68.9% | |
| Financial Services & Retail | 9.0 | 10.6 | 1.6 | 17.7% |
The consolidated financial results totaled -€5.9m, corresponding to a deterioration of €0.9m (-17.7%) compared to the same period of the previous year.
| EBIT by business unit | |||||
|---|---|---|---|---|---|
| € million | |||||
| Express & Parcels | - 4.3 | - 3.5 | 0.8 | 18.9% | |
| Banco CTT | -7.2 | - 2.3 | 5.0 | 68.9% | |
| Financial Services & Retail | 9.0 | 10.6 | 1.6 | 17.7% | |
| Financial Results | |||||
| The consolidated financial results totaled -€5.9m, corresponding to a deterioration of €0.9m (-17.7%) compared to the same period of the previous year. |
€ million | ||||
| 1H19 | 1H20 | ∆ | ∆% | ||
| -5.0 | -5.9 | -0.9 | |||
| -4.8 -4.9 |
-4.7 -4.7 |
0.1 0.2 |
|||
| Financial results Financial income, net Financial costs and losses Financial income |
0.1 | 0.01 | -0.11 | -17.7% 1.8% 3.9% -94.5% |
Financial costs and losses incurred amounted to €4.7m, mainly incorporating financial costs related to post-employment and long-term employee benefits of €2.2m, interest associated to finance leases liabilities linked to the implementation of IFRS 16 for an amount of €1.6m, and interest on financial debt for an amount of €0.8m.
In 1H20, CTT obtained a consolidated net profit attributable to equity holders of CTT Group of -€2.0m, €11.0m (-122.1%) below that obtained in 1H19, strongly impacted by the negative evolution of EBIT (-€14.8m), partly offset by the positive performance of the income tax for the period (-€4.8m).
Capex stood at €10.9m, which is 25.8% (-€3.8m) less than in 1H19.
The financial effort made, in an economic environment strongly impacted by the pandemic, continued to focus on the expanding business unit of Express & Parcels (+€2.6m), in order to improve the systems that support this activity. This amount was offset by initiatives to reduce investment in information systems in the remaining business units (-€2.9m) and in sorting equipment in the Mail & other business unit with a natural reduction of €3.4m following the strong investment of 2019.
In 1H20, the Company generated an operating cash flow of €3.9m, -€2.3m versus 1H19.
| In 1H20, the Company generated an operating cash flow of €3.9m, -€2.3m versus 1H19. | |||
|---|---|---|---|
| Cash flow 121314 |
|||
| € million | |||
| 1H19 | 1H20 | ∆ | |
| EBITDA | 46.4 | 33.4 | -13.0 |
| Specific items* | 11.7 | 0.79 | -10.9 |
| CAPEX | 14.7 | 10.9 | -3.8 |
| Δ Working capital | -13.8 | -17.8 | -4.0 |
| Operating cash flow12 | 6.2 | 3.9 | -2.3 |
| Employee benefits | -6.7 | -5.1 | 1.6 |
| Tax | -1.6 | 0.62 | 2.26 |
| Free cash flow | -2.1 | -0.6 | 1.5 |
| Debt (principal + interest) | 36.7 | -0.7 | -37.5 |
| Dividends | -15.0 | 0.0 | 15.0 |
| Financial investments | -112.9 | 0.0 | 112.9 |
| Net change in organic own cash | -93.3 | -1.3 | 92.0 |
| Changes to consolidation perimeter - 321Crédito | 6.8 | 0.0 | -6.8 |
| Change in own cash | -86.4 | -1.3 | 85.1 |
| Δ Liabilities related to Financial Services & other | |||
| & Banco CTT, net13 | 19.4 | -34.9 | -54.3 |
| Δ Other14 | 8.0 | -10.2 | -18.2 |
| Net change in cash (Balance Sheet) | -59.0 | -46.4 | 12.6 |
The negative change in working capital compared to 1H19 (-€4.0m) resulted mainly from the high investment at the end of 2019 (€27.0m in 4Q19), which was paid mainly in 1H20 and compares to a lower investment at the end of 2018 (€18.9m in 4Q18), implying a negative evolution in working capital related to Capex in the amount of €10.5m in 1H20 vs. 1H19. This change was partially offset by a positive evolution of working capital related to the current business, with a strong contribution from the positive evolution in the management of accounts receivable, particularly general customers (+€13.8m) and financial services customers (+€3.0m).
12 The 1Q19 operating cash flow was restated to be comparable with that of 1Q20. In 2Q19 the methodology to calculate the operating cash flow was changed, in particular with respect to the change in working capital, which no longer includes a non-cyclical value related to the mobility allowance.
13 The change in net liabilities of Financial Services & Retail 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.
14 The change in other cash items reflects the evolution of Banco CTT's sight deposits at Bank of Portugal, outstanding cheques / clearing of Banco CTT cheques, and impairment of sight and term deposits and bank applications.
| INTEGRATED REPORT 1ST HALF 2020 | ||||
|---|---|---|---|---|
| Consolidated Balance Sheet | ||||
| Consolidated Balance Sheet | € million | |||
| 31.12.2019 | 30.06.2020 | ∆ | ∆% | |
| Non-current assets | 1,734.7 | 1,864.9 | 130.2 | 7.5% |
| Current assets | 778.8 | 775.4 | -3.4 | -0.4% |
| Assets | 2,513.4 | 2,640.3 | 126.8 | 5.0% |
| Equity | 131.4 | 129.8 | -1.6 | -1.2% |
| Liabilities | 5.4% | |||
| Non-current liabilities | 2,382.0 | 2,510.5 | 128.4 | -3.0% |
| Current liabilities | 512.8 1,869.2 |
497.3 2,013.2 |
-15.6 144.0 |
7.7% |
The key aspects of the comparison between the Balance Sheet as at 30.06.2020 and that as at 31.12.2019 are as follows:
| (-€46.4m), largely as a result of the drop in third-party cash amounts. | ||||
|---|---|---|---|---|
| Equity decreased €1.6m following the generation of net income attributable to equity holders of CTT Group in 1H20 for an amount of -€2.0m. |
||||
| Liabilities increased €128.4m, with emphasis on the increase in Banking clients' deposits and other loans (+€190.5m) partly offset by the decrease in Accounts payable (-€60.5m) as a direct consequence of the substantial reduction of Treasury Certificates subscriptions, and the decrease of Other banking financial liabilities (-€10.9m). |
||||
| Consolidated Balance Sheet excluding Banco CTT | ||||
| € million | ||||
| 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: |
31.12.2019 | 30.06.2020 | ∆ | ∆% |
| Non-current assets | 615.8 | 608.4 | -7.5 | -1.2% |
| Current assets | 456.9 | 415.4 | -41.6 | -9.1% |
| Assets | 1,072.8 | 1,023.7 | -49.0 | -4.6% |
| Equity | 131.4 | 129.9 | -1.6 | -1.2% |
| Liabilities | 941.3 | 893.9 | -47.5 | -5.0% |
| Non-current liabilities Current liabilities |
432.0 509.3 |
430.7 463.1 |
-1.3 -46.2 |
-0.3% -9.1% |
| INTEGRATED REPORT 1ST HALF 2020 | ||||
|---|---|---|---|---|
| As at 30 June 2020, the liabilities related to employee benefits (post-employment and long-term benefits) decreased to €285.8m, -€0.9m compared to December 2019, as specified in the table below: |
||||
| Liabilities related to employee benefits | € million | |||
| 31.12.2019 | 30.06.2020 | ∆ | ∆% | |
| Total liabilities | 286.7 | 285.8 | -0.9 | -0.3% |
| Healthcare | 274.4 | 274.8 | 0.4 | 0.1% |
| Healthcare (321 Crédito) | 1.3 | 1.3 | 0.1 | 4.5% |
| Suspension agreements | -37.0% | |||
| Other long-term employee benefits | 3.1 | 2.0 -1.2 |
-2.2% | |
| 7.1 | 7.0 | -0.2 | ||
| Other post-employment benefits Pension plan |
0.2 0.4 |
0.2 0.4 |
0.0 0.0 |
3.8% -2.9% |
| Consolidated net debt | |||
|---|---|---|---|
| Consolidated net debt | |||
| 31.12.2019 | 30.06.2020 | € million ∆ |
|
| Net debt | 60.0 | 65.0 | 5.0 |
| ST & LT debt | 175.4 | 179.1 | 3.6 |
| Of which Finance leases (IFRS 16) | 84.0 | 87.5 | 3.5 |
| Own cash (I+II) | 115.4 | 114.1 | -1.3 |
| Cash & cash equivalents | 443.0 | 396.6 | -46.4 |
| Cash & cash equivalents at the end of the period (I) | 414.9 | 378.7 | -36.2 |
| Other cash items | 28.1 | 17.9 | -10.2 |
| Other Financial Services liabilities, net (II) | -299.5 | -264.6 | 34.9 |
| The key aspects of the comparison between the consolidated net debt as at 30.06.2020 and that as at | |||
The key aspects of the comparison between the consolidated net debt as at 30.06.2020 and that as at 31.12.2019 are as follows:
| logistics centers to support the growth in the Express & Parcels activity. | |||
|---|---|---|---|
| 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: |
|||
| Consolidated net debt excluding Banco CTT | € million | ||
| 31.12.2019 | 30.06.2020 | ∆ | |
| Net debt with Banco CTT under equity method | 144.1 | 149.7 | 5.6 |
| ST & LT debt | 173.2 | 176.9 | 3.6 |
| Of which Finance leases (IFRS 16) | 81.8 | 85.3 | 3.5 |
| Own cash (I+II) | 29.1 | 27.2 | -1.9 |
| -51.7 | |||
| Cash & cash equivalents | 268.2 | 216.4 | |
| Cash & cash equivalents at the end of the period (I) | 268.2 | 216.5 | -51.7 |
| Other cash items | -0.02 | -0.03 | -0.01 |
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 challenges.
As at 30 June 2020, the CTT headcount (permanent and fixed-term staff) consisted of 12,01515 employees, 546 less (-4.3%) than as at 30 June 2019.
| Characterization of human capital As at 30 June 2020, the CTT headcount (permanent and fixed-term staff) consisted of 12,01515 employees, |
||||
|---|---|---|---|---|
| Headcount16 30.06.2019 |
30.06.2020 | Δ 2020/2019 | ||
| Mail & other | 10,978 | 10,382 | -596 | -5.4% |
| Express & Parcels | 1,154 | 1,175 | 21 | 1.8% |
| Banco CTT | 392 | 420 | 28 | 7.1% |
| Financial Services & Retail | 37 | 38 | 1 | 2.7% |
| Total, of which: | 12,561 | 12,015 | -546 | -4.3% |
| Permanent | 10,889 | 10,806 | -83 | -0.8% |
| Fixed-term contracts | 1,672 | 1,209 | -463 | -27.7% |
| Portugal | 12,090 | 11,487 | -603 | -5.0% |
| Other geographies | 471 | 528 | 57 | 12.1% |
There was a decrease of 83 in the number of permanent staff and 463 in the number of staff with fixed-term contracts. The reduction of staff (both permanent and with fixed-term contracts) in the Mail & other business unit (-596) had a notable impact on this evolution. This reduction more than offset the increase in headcount of the Financial Services & Retail (+1), Express & Parcels (+21) and Banco CTT (+28) business units.
Together, the areas of operations and distribution within the basic network (5,972 employees, of whom 4,360 delivery postmen and women) and the retail network (2,281 employees) represent circa 76% of CTT's permanent staff.
The overall absenteeism rate increased to 8.9% (+2.6 pp). The main reasons for these absences include illness (4.8%), COVID-19 (1.3%), accidents (0.9%), maternity/paternity leave (0.5%), other motives (0.5%) and union activity (0.4%).
It should be noted that these figures already include 5 exits that occurred in 2020, to which are added 531 exits, split into 161 in 2017, 268 in 2018 and 102 in 2019, which took place in the context of the Human Resources Optimization Programme within the ongoing Operational Transformation Plan.
15 It should be noted that from 2020 onwards, the methodology for counting staff was changed and members of staff with suspension agreements were no longer considered, with an impact in the period under review of -45 employees. Excluding this effect, the decrease in total staff would have been of 501 employees.
16 In 2020 and in the same period of the previous year (proforma), the retail products and services of the Mail & other business unit are considered within the Financial Services & Retail business unit (former Financial Services business unit). This migration had an impact on the movement of workers between these business units.
In the first half of 2020, since the start of the COVID-19 pandemic, the diffusion of the training offer has been made remotely, both asynchronously through CTT's e-learning platform – Formare – and also through synchronous sessions on MS Teams and other third-party platforms.
This semester, 68% of the employees participated in training actions, in a total of 58,243 hours with an average of 5 hours per employee and a training rate of 0.6%. There was a reduction in training hours due to the impossibility of carrying out some of the planned actions and as a result of the transition to e-learning format, with shorter sessions, in other.
Among the 11 training programs carried out, the following should be noted: health and safety at work (with emphasis on the training on preventive measures regarding the COVID-19 pandemic), personal efficacy (here, the training related to new collaborative tools for homeworking should be highlighted). As for the CTT offer, the main training programs were the training on auto insurance +, specialized technical training, namely regarding the management applications – Orion Service and Work Force Management.
The awareness-raising actions on occupational safety, accident prevention and ergonomics continued at postal delivery offices and post offices. There were 407 occupational accidents and incidents, a decrease of 23.1% versus the same period of 2019, certainly as an effect of the pandemic, since, even though operations continued during this period, the working hours were reduced or followed lagging schedules. Overall, the motives that most contributed to the occurrence of labor accidents were road accidents (31.8%), which include driving and tramplings, slides and stumbles (14.9%) and excessive physical stress (9.1%).
Regarding equal opportunities in a pandemic situation, CTT focused primarily on ensuring that all its employees felt safe. A Crisis Management Committee was created, to ensure CTT contingency and continuity plan and guarantee adequate information and support, promoting key risk mitigating measures and focusing on preserving the integrity of its employees. One of the key measures taken was the implementation of homeworking in all services where this was possible.
At the beginning of the year there were working sessions with the Commission for Equality in Labour and Employment (CITE), however these activities had to cease, and all actions suspended.
The protocol with CERCI Lisbon (Cooperative for the Education and Rehabilitation of Non-adapted Citizens) was maintained, which provides labor integration experiences for disabled young people, involving 15 young adults. This CTT/CERCI partnership is a case of success with a 17-year track record.
Employees and its families were encouraged, at the beginning of the year, to participate in internal competitions and were challenged to write stories about their time in CTT. Over the course of the lockdown period they received much information about prevention measures and advice on work and family life balance. The "Sou CTT" (I am CTT) partnership program continued to be promoted, offering preferential prices to CTT employees in various areas, with special focus on health, sports and family.
On matters of diversity, the Board of Directors complied with the target set in the CTT Equality Plan and in Law 62/2017, as it has 33.3% of women on the Board of Directors and the Audit Committee. It should also be noted that 20.4% of women occupy first-degree management positions.
The following initiatives should be highlighted, some of them fostered by the need to address the COVID-19 pandemic:
Upgrade of address reading machines (OCR-RMS): improved recognition of handwritten characters, aiming at reaching more quality and reliability of the system decisions, with an average increase of 10% in the OCR (Optical Character Recognition) reading rate.
Progress towards the launch of a new platform which will allow clients to invest through digital channels, supported by a robot-advisory platform.
Our social and environmental patronage policy has been prioritizing issues such as poverty and social exclusion, culture, language, sports for disabled, health, solidarity, biodiversity and innovation. To this end, ten social solidarity and aid initiatives to groups in need or at risk were supported, with a total investment of €474k.
Having reached the 15th consecutive year supporting Fenacerci for fundraising through the sale of thousands of Pirilampos Mágicos (Magic Glow-worms) in CTT post offices, this year it was not possible to carry out that sale due to the restrictions imposed by the pandemic. Nevertheless, CTT supported the Portuguese Red Cross as part of the fight against COVID-19, the Campus of Nova School of Business Economics and the Order of Malta. CTT Express Spain continued to give its support to Save the Children NGO.
For the preservation of the environment and biodiversity, the Iberian lynx of the Lisbon Zoo continued to be sponsored. Regarding the annual campaign "A Tree for the Forest", the planting actions planned with CTT had to be suspended and are expected to be safely implemented in the foreseeable future.
Despite the restrictions imposed, young persons with educational underachievement continued to be supported through mentorship volunteering and with tutoring through digital means, within the partnership with EPIS. CTT offered computers for some students to be able to undertake distance learning. The closing session of the three-year program was performed through digital means with students, mentors, tutors and CTT and EPIS officials.
The continuity of volunteering activities within the League of Friends of the Santa Maria Hospital and of others which require physical presence had to be suspended. Likewise, it was not possible to perform the usual blood donation at CTT headquarters with PIBT - Portuguese Institute of Blood and Transplantation.
Customer feeback, expressed through daily satisfaction surveys, indicates that 85.2% of the respondents perceive the overall CTT quality as good or very good and consider CTT as a trustworthy company.
CTT was aware of the social and economic consequences provoked by the COVID-19 pandemic in the Portuguese and world population and triggered various proximity initiatives that had a facilitated implementation due to CTT's capillarity throughout the national territory.
For that matter partnerships in several areas were established, such as with: Hovione, National Association of Pharmacies, Uber, Red Cross, Portuguese Football Federation, among others. CTT decided to expedite the isssue of money orders and extended the payment deadline of pensions, in order to promote the safety and well being of Portuguese pensioners in the context of the pandemic and the state of emergency.
These social responsibility measures reflect CTT engagement with the community, along with its sustainability strategy.
The measures for the lockdown and safety of workers, adopted to tackle the COVID-19 pandemic, propelled a reduction of CTT energy consumption, estimated at circa 9.1% in the first half of 2020. Electricity consumption had an estimated reduction of 9.5% in the first half of 2020 and own fleet fuel consumption had a reduction of 8.2%.
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.
CTT acquired 100% certified green energy for the whole of its activity, for the sixth consecutive year, in order to minimize its carbon footprint. Energy efficiency measures were also implemented in its facilities, especially in post offices and postal delivery offices, with the installation of more efficient lighting, renovation of air conditioning equipment and modernization of facilities, reinforcing its commitment to optimizing energy consumption. Legal obligations applicable to CTT real estate were also followed up, namely on energy certification and energy audit.
Additionally, an energy efficiency project for CTT facilities was initiated for the 2020-2022 period. This project consists of monitoring energy consumptions of 72 relevant facilities, identifying the technical details of each facility and opportunities of energy efficiency improvement and proposals for actions. It has a 13.7% savings potential of energy consumption in these facilities.
CTT has also regularly invested in the renewal of its conventional fleet, with an average of 3.1 years, one of the largest and newest in Portugal.
The current CTT eco-fleet is composed of 321 alternative vehicles, predominantly electric vehicles, corresponding to 8% of the total fleet. During the period under analysis, 5 more light passenger vehicles, 2 light goods vehicles, 1 tricycle and 1 scooter, totalling 9 new electric vehicles started operating. 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 start of the installation process of two more charging units for electric vehicles.
CTT developed a pilot test with the Nissan e-NV200 XL Voltia commercial vehicle, an extended version of the e-NV200 commercial variant but with electric motorization and circa 200 km range. Tailor-made for the postal sector and in particular for last mile distribution, this XL version offers greater load capacity, thus adapting to the current context of growth in parcels and urgent mail, where the available load capacity represents a daily operational need for CTT. The results obtained were very positive regarding the response to the operational needs of CTT, with benefits in terms of the pollutant emissions and their carbon footprint.
As a pioneer company in the incorporation of electric vehicles in its car fleet and in the permanent innovation of its products and services, CTT is testing a total of 5 new models of electric vehicles in several cities along the Portuguese coastline, with positive results in terms of greater load capacity, safety, driving ergonomics and range, in addition to the associated environmental benefits. Like the Nissan e-NV200, we pioneered in the use of some of these models in Portugal and it is estimated that 17.5 tonnes of CO2 can be saved by using them.
There was an 8.7% reduction in total CO2 emissions (scopes 1 and 2), compared to the same period of the previous year, resulting mainly from the reduction in fuel consumption, although there was also a sharp reduction in energy consumption at CTT facilities for air conditioning and heating, strongly influenced by the measures taken in response to the COVID-19 pandemic.
It should also be noted that the lockdown period ordered by the Government had a direct impact on the homework-home commuting of the employees, with an estimated associated reduction of 582 tonnes of CO2, equivalent to around 1% of the overall carbon footprint of CTT.
Since the energy transition is an unavoidable trend nowadays, CTT intends to continue promoting efficiency in terms of fossil fuel consumption and electricity consumption from renewable sources, and supporting the transition to a sustained and increasing integration of electric vehicles and/or powered by alternative fuels in the fleet.
CTT was distinguished with the highest Leadership level, in the 2019 Climate Change category, with a score of A-, in the CDP – Carbon Disclosure Project rating, the capital market index which is the main energy and carbon sustainability rating worldwide.
Following the success of the EMMS – Environmental Measurement and Monitoring System of IPC – International Post Corporation, started in 2008, which culminated in meeting the carbon reduction targets set for 2020 ahead of time, the working group moved towards a new sustainability program. The new SMMS - Sustainability Monitoring and Measurement System program is aligned with 5 UN Sustainable Development Goals considered the most relevant for the postal sector and focuses now on 7 intervention areas: health and safety (SDG 8); learning and development (SDG 8); resource efficiency (SDG 9); climate change (SDG 13); air quality (SDG 11); circular economy (SDG 11); and sustainable consumption (SDG 12).
CTT signed the Commitment - Lisbon European Green Capital 2020 - Lisbon 2030 Climate Action, at the invitation of the Lisbon City Council, which aims to ensure the contribution of the various economic agents to the achievement of the objectives and goals defined under the Sustainable Energy and Climate Action Plan and which promotes a new vision of the city of Lisbon with a view to carbon neutrality in 2050. For this purpose, CTT submitted 14 measures in the following categories, with a view to improving the environmental performance of the company: energy, mobility, water, circular economy, and citizenship and participation.
At the invitation of BCSD (Business Council for Sustainable Development) Portugal, CTT joined the manifesto "Taking advantage of the crisis to launch a new paradigm of sustainable development", with the objective of contributing to the construction of a development model based on five fundamental principles: promotion of sustainable and inclusive development, promotion of growth, search for efficiency, strengthening resilience and reinforcement of corporate citizenship.
Several articles of environmental and social nature were published in the CTT internal magazine with a view to raising the employees' awareness. Likewise, the internal TV channel at CTT headquarters broadcasted environment-related contents, such as the commemoration of the World Earth Day, the National Energy Day and the International Biodiversity Day, which involved hobbies for workers and their families, and the dissemination of tips and suggestions on small daily habits with a view to environmental protection. Sustainability e-newsletters for employees in operational areas are also disseminated.
CTT also transmitted information on this issue through social networks and the TV channel of the retail network countrywide, as well as to the digital public and to customers. In addition, CTT sponsored once again the Smart Cities initiative, which will organise a set of conferences and showcases of some of the most advanced solutions of urban sustainability and will disclose 30 initiatives aimed at making Portuguese cities more intelligent and therefore more sustainable.
We go further to bring the world closer.
| Board of Directors 18 | |
|---|---|
| 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 | |
| João Eduardo Moura da Silva Freixa | |
| Jürgen Schröder | |
| Margarida Maria Correia de Barros Couto | |
| María del Carmen Gil Marín | |
| Susanne Ruoff | |
| Board of the General Meeting 18 | |
| Chairman: | Pedro Miguel Duarte Rebelo de Sousa |
| Vice-Chairwoman: | Teresa Sapiro Anselmo Vaz Ferreira Soares |
|---|---|
Remuneration Committee 18
| Chairman: | Fernando Paulo de Abreu Neves de Almeida |
|---|---|
| Members: | Manuel Carlos de Melo Champalimaud |
| Christopher James Torino |
18 Members elected at the Annual General Meeting of CTT - Correios de Portugal, S.A. (CTT) held on April 29, 2020 for the term of office 2020/2022.
17As at the date of approval of this Interim Integrated Report of the 1st Half of 2020.
| 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) |
| Chairwoman: | Maria Luísa Coutinho Ferreira Leite de Castro Anacoreta Correia |
|---|---|
| Members: | Steven Duncan Wood |
| María del Carmen Gil Marín |
| Chairman: | Raul Catarino Galamba de Oliveira |
|---|---|
| Members: | Isabel Maria Pereira Aníbal Vaz |
| Duarte Palma Leal Champalimaud |
Statutory Auditor20
| Statutory Auditor: | KPMG & Associados, SROC, S.A., representada por Paulo Alexandre Martins |
|---|---|
| Quintas Paixão | |
19 Appointed by resolution of the Board of Directors of April 29, 2020 for the term of office 2020/2022.
20 Elected at the Annual General Meeting of CTT on April 18, 2018 for the 2018/2020 term of office. Considering the conclusion of the current Statutory Auditor term of office, Ernst & Young Audit & Associados, SROC, S.A. (EY) was already elected at the Annual General Meeting of CTT on April 29, 2020, as CTT's Statutory Auditor for the term of office of 2021/2023, assuming the term of office for which it was appointed as CTT's Statutory Auditor as from January 1, 2021.
Pursuant to the internal control mechanisms implemented in accordance with the Regulation on Assessment and Control of Transactions with Related Parties and Prevention of Conflicts of Interest (the "Regulation on Related Parties") available at www.ctt.pt, the Audit Committee is responsible for implementing internally, among others, the control procedures with respect to transactions with related parties 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.
In terms of internal functioning, the Executive Committee of CTT is responsible for submitting to the Audit Committee for analysis and then to the Board of Directors for authorization, the terms and conditions of transactions to be contracted by CTT with related parties, which include qualified Shareholders, senior managers and third parties related to any of these through relevant commercial or personal interests (pursuant to the terms of IAS 24) and also subsidiaries, associated companies and joint ventures.
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, it was authorized by resolution of the Board of Directors of April 28, 2020, and prior favorable opinion from the Audit Committee, the acquisition of individual protection equipment (Face Shields) to GLNPLAST, S.A. company fully controlled by GLN - Engineering, Molding and Plastics, S.A., which is owned by Manuel Champalimaud S.G.P.S., S.A., a related party of CTT non-executive Director Duarte Palma Leal Champalimaud.
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 first half of 2020, 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 Management Report:
| Members of the Board of Directors |
Internal Appointments | External Appointments |
|---|---|---|
| Raul Catarino Galamba de Oliveira João Afonso Ramalho Sopas Pereira Bento |
Chairman (non-executive) of the Board of Directors of CTT Chairman of the Corporate Governance, Evaluation and Nominating Committee of CTT Chairman of the Board of Directors of CTT Expresso – Serviços Postais e Logística, S.A. Member of the Board of Directors of CTT and Chief Executive Officer Member of the Selection and Remuneration Committee (elected at the General Meeting) of Banco CTT, S.A. Member of the Selection Committee (elected at the General Meeting) of Payshop (Portugal), S.A. Member of the Selection Committee (elected at the General Meeting) 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 Banco Bilbao Vizcaya Argentaria, S.A. Member of the Board of Directors of José de Mello Capital, S.A. Member of the Board of Directors of José de Mello Saúde, S.A. Chairman of the Board of Directors of Fundação Manuel Violante Member of the Board of Directors of the International Post Corporation (IPC) Director at QPDM Consulting, S.A. (since 2019 he is the Chairman of the Board of Directors) 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) Member of the Advisory Council of ANI (National Innovation Agency) Permanent member of the Advisory Council of AICEP (Agency for Investment and External Trade of Portugal) Vice-Chairman of Academia de Engenharia Honorary President of ASECAP (European |
| António Pedro Ferreira Vaz da Silva |
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. |
Association of Operators of Toll Road Infrastructures) |
| Guy Patrick Guimarães de Goyri Pacheco |
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 New Finerge, S.A. Member of the Board of AEM (Portuguese Issuers Association) |
| Members of the Board of Directors |
Internal Appointments | External Appointments |
|---|---|---|
| Member of the Board of Directors of CTT Expresso - Serviços Postais e Logística, S.A. |
||
| João Carlos Ventura Sousa |
Chairman of the Board of Directors of CTT Contacto, 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. |
|
| João Miguel Gaspar da Silva |
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 |
Chairwoman of the Fiscal Board of Centro Hospitalar Universitário de S. João, EPE Non-executive Member of the Board of Directors of SFS – Gestão de Fundos, SGOIC, S.A. (formerly Sonaegest - Sociedade Gestora de Fundos de Investimento, 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. Member of the Management Board of Ordem dos Revisores Oficiais de Contas and its representative in the Accountancy Europe Member of the General Council and of the Executive Committee of Comissão de Normalização Contabilística, representing Ordem dos Revisores Oficiais de Contas 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 |
| Members of the Board of Directors |
Internal Appointments | External Appointments |
|---|---|---|
| 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. Founder and Managing Member of Greenwood Investors, LLC Managing Member of GreenWood Performance Investors, LLC Advisory Board Member of Cortland |
| 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 |
Associates, Inc. Manager of Sotaque – Assessoria de Comunicação e Traduções, Lda. Member of the Board of Directors of Manuel Champalimaud, SGPS, S.A. (having been appointed Vice-Chairman in 2019) 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 Sonae Capital, SGPS, S.A. Chairwoman of the Board of Directors of Capital Criativo HealthCare Investments II 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 S. C. H. - Sociedade de Clínica Hospitalar 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. |
| Members of the Board of Directors |
Internal Appointments | External Appointments |
|---|---|---|
| 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. |
||
| Member of the Board of Directors of Genomed-Diagnósticos de Medicina Molecular, 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 Arrábida – Gaia, 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 Cliria – Hospital Privado de 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 |
||
| João Eduardo Moura da Silva Freixa |
Non-executive Member of the Board of Directors of CTT |
Managing Partner of F2NG, Consultores de Gestão, Unipessoal, Lda. |
| Non-executive Member of the Board of Directors of CTT |
Executive Partner of JS-Rat &Tat GmbH | |
| Jürgen Schröder | Board Member of ISR (International School on the Rhine) (Germany) |
|
| Board Member of Marketing Club Düsseldorf (Germany) |
||
| Margarida Maria Correia | Non-executive Member of the Board of Directors of CTT |
Chairwoman of GRACE (Group for Reflection and Support for Corporate Citizenship) |
| de Barros Couto | Member of the board of Directors and Chief Executive Officer (CEO) of Fundação Vasco Vieira de Almeida |
| Members of the Board of Directors |
Internal Appointments | External Appointments |
|---|---|---|
| Secretary of the General Assembly of Forum Oceano – Association of the Sea Economy |
||
| Secretary of the General Assembly of BCSD Portugal – Business Council for Sustainable Development |
||
| Chairwoman of the Board of VdA Academia |
||
| Non-executive Member of the Board of Directors of CTT |
Executive Member of the Board of Directors of Novabase, SGPS, S.A. |
|
| Member of the Audit Committee of CTT | Executive Member of the Board of Directors of Novabase IMS2, S.A. |
|
| Executive Member of the Board of Directors of Novabase Capital, Sociedade de Capital de Risco, S.A. |
||
| Member of the General Board of AEM (Portuguese Issuers Association) |
||
| Chairwoman of the Board of the General Meeting of Celfocus- Soluções Informáticas para Telecomunicações, S.A. |
||
| María del Carmen Gil Marín |
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 Board of Fórum de Investor Relations (FIR) - Associação Portuguesa de Responsáveis pelas Relações com Investidores (Portuguese Association of Investor Relations Officers), having previously been a member of the Supervisory Board (2011- 2013) |
||
| Member of the Advisory Committee of FCR ISTART I |
||
| Non-executive Member of the Board of Directors of CTT |
Member of the Board of Eldora AG (Switzerland) |
|
| Susanne Ruoff | Chief Executive Officer (CEO) of Ruoff Advisory GmbH (Switzerland) |
|
| Member of the Strategic Advisory Board of EPFL - École Polytechnique Fédérale de Lausanne (Switzerland) |
In the 1st half of 2020, the share capital of CTT, amounting to €75,000,000, was fully subscribed and paid-up, represented by 150,000,000 ordinary shares with a nominal value of €0.50 each. These shares are registered and in book-entry form having no different categories. All shares representing the capital of the Company are admitted to trading on the regulated market Euronext Lisbon.
As at 30 June2020, CTT shareholder structure in terms of qualifying holdings was as follows:
At the end of the 1st half of 2020, based on the communications made to the Company, the qualifying holdings in CTT were as follows:
| Shareholders | No. 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) | 9,210,000 | 6.140% | 6.140% | |
| GreenWood Investors LLC(3) | Total | 9,210,000 | 6.140% | 6.140% |
| Norges Bank | Total | 8,741,023 | 5.827% | 5.827% |
| BBVA Asset Management, SA SGIIC (4) | Total | 3,495,499 | 2.330% | 2.330% |
| BPI Gestão de Activos (5) | Total | 3,044,307 | 2.030% | 2.030% |
| CTT, S.A. (own shares)(6) | Total | 1 | 0.000% | 0.000% |
| Other shareholders | Total | 90,767,964 | 60.512% | 60.512% |
| TOTAL | 150,000,000 | 100.000% | 100.000% |
(1) Includes 19,246,815 shares directly 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 member of the Board of Directors 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 Wood, Non-Executive member of the Board of Directors of CTT, is a Managing Member exercises the voting rights not in its own name but on behalf of the fund 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) BBVA ASSET MANAGEMENT, SA, SGIIC exercises the voting rights not in its own name but on behalf of the funds BBVA BOLSA FI, BBVA BOLSA EURO FI, BBVA BOLSA EUROPA FI and BBVA BOLSA PLUS FI as their management company. Cidessa Uno, SL is the direct controlling entity of BBVA ASSET MANAGEMENT, SA, SGIIC.
(5) This holding corresponds to the number of shares held by Portuguese securities investment funds managed by BPI Gestão de Activos, as well as held by portfolios regarding which BPI Gestão de Activos Fundos carries out the discretionary management.
(6) As at this date, CTT holds 1 own share with the nominal value of €0.50 corresponding to 0.000% of the share capital, the inherent voting rights being suspended as prescribed in article 324(1)(a) of the Portuguese Companies Code.
Updated information on qualifying holdings in the Company as at the date of approval of this report can be found at www.ctt.pt and the Portuguese Securities Commission (CMVM) website www.cmvm.pt.
As at 30 June 2020 and on this date, CTT holds 1 own share with the nominal value of €0.50 corresponding to 0.000% of the share capital, the inherent voting rights being suspended as prescribed in article 324(1)(a) of the Portuguese Companies Code.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2019 AND 30 JUNE 2020
Euros
| NOTES | Unaudited | ||
|---|---|---|---|
| 31.12.2019 | 30.06.2020 | ||
| ASSETS | |||
| Non-current assets | 4 | 263,443,040 | 265,136,318 |
| Tangible fixed assets Investment properties |
6 | 7,653,000 | 7,471,129 |
| Intangible assets | 5 | 62,012,644 | 56,697,868 |
| Goodwill | 70,201,828 | 70,201,828 | |
| Investments in associated companies | 293,434 | 293,434 | |
| Investments in joint ventures | 2,723,803 | 1,564,799 | |
| Other investments | 1,379,137 | 1,379,137 | |
| Debt securities | 8 | 424,851,179 | 467,262,375 |
| Other non-current assets | 1,543,308 | 1,375,750 | |
| Credit to banking clients | 10 | 792,469,611 | 889,771,436 |
| Other banking financial assets | 9 | 18,764,049 | 14,782,937 |
| Deferred tax assets | 25 | 89,329,806 | 88,971,392 |
| Total non-current assets | 1,734,664,839 | 1,864,908,402 | |
| Current assets | |||
| Inventories | 5,860,069 | 5,931,880 | |
| Accounts receivable | 146,471,712 | 150,649,003 | |
| Credit to banking clients | 10 | 93,350,959 | 98,577,986 |
| Deferrals | 11 | 7,305,261 | 10,444,323 |
| Debt securities | 8 | 31,560,152 | 56,028,797 |
| Other current assets | 35,766,227 | 35,152,473 | |
| Other banking financial assets | 9 | 14,660,286 | 20,990,381 |
| Cash and cash equivalents | 12 | 442,995,724 | 396,589,505 |
| 777,970,390 | 774,364,348 | ||
| Non-current assets held for sale | 805,675 | 990,199 | |
| Total current assets | 778,776,065 | 775,354,547 | |
| Total assets | 2,513,440,904 | 2,640,262,949 | |
| EQUITY AND LIABILITIES | |||
| Equity | |||
| Share capital | 14 | 75,000,000 | 75,000,000 |
| Own shares | 15 | (8) | (8) |
| Reserves | 15 | 65,852,595 | 66,208,486 |
| Retained earnings | 15 | 10,867,301 | 40,014,024 |
| Other changes in equity | 15 | (49,744,144) | (49,744,144) |
| Net profit | 29,196,933 | (1,984,332) | |
| Equity attributable to equity holders | 131,172,677 | 129,494,026 | |
| Non-controlling interests | 242,255 | 294,193 | |
| Total equity | 131,414,932 | 129,788,219 | |
| Liabilities | |||
| Non-current liabilities | |||
| Medium and long term debt | 18 | 148,597,934 267,286,679 |
149,366,434 266,677,002 |
| Employee benefits | 19 | 17,635,379 | 17,187,706 |
| Provisions | 11 | 294,490 | 288,890 |
| Deferrals Other banking financial liabilites |
9 | 76,060,295 | 60,881,194 |
| Deferred tax liabilities | 25 | 2,958,115 | 2,881,374 |
| Total non-current liabilities | 512,832,892 | 497,282,600 | |
| Current liabilities | |||
| Accounts payable | 20 | 373,790,665 | 313,295,888 |
| Banking clients' deposits and other loans | 21 | 1,321,418,042 | 1,511,891,168 |
| Employee benefits | 19,416,212 | 19,167,857 | |
| Income taxes payable | 22 | 5,958,753 | 6,962,459 |
| Short term debt | 18 | 26,813,567 | 29,694,789 |
| Deferrals | 11 | 3,454,477 100,353,646 |
3,087,122 106,780,312 |
| Other current liabilities | 9 | 17,987,719 | 22,312,535 |
| Other banking financial liabilities Total current liabilities |
1,869,193,080 | 2,013,192,130 | |
| Total liabilities | 2,382,025,972 | 2,510,474,730 | |
| Total equity and liabilities | 2,513,440,904 | 2,640,262,949 |
The attached notes are an integral part of these financial statements.
| INTEGRATED REPORT 1ST HALF 2020 | |||||
|---|---|---|---|---|---|
| CTT-CORREIOS DE PORTUGAL, S.A. | |||||
| CONSOLIDATED INCOME STATEMENT FOR THE SIX MONTH PERIODS ENDED 30 JUNE 2019 AND 30 JUNE 2020 | |||||
| Euros | Six months ended | Three months ended | |||
| Unaudited | Unaudited | Unaudited | Unaudited | ||
| 30.06.2019 | 30.06.2020 | 30.06.2019 | 30.06.2020 | ||
| Sales and services rendered | 3 | 337,177,746 | 316,456,988 | 167,025,762 | 153,063,959 |
| Financial margin | 9,087,750 | 21,382,995 | 6,587,380 | 10,957,420 | |
| Other operating income | 8,729,937 | 11,327,549 | 4,520,799 | 5,236,706 | |
| 354,995,433 | 349,167,532 | 178,133,941 | 169,258,085 | ||
| Cost of sales | (6,345,536) | (8,710,756) | (3,131,411) | (5,732,342) | |
| External supplies and services | (116,281,424) | (117,353,082) | (58,551,476) | (58,772,489) | |
| Staff costs | 23 | (176,680,951) | (170,271,336) | (86,744,196) | (81,952,417) |
| Impairment of accounts receivable, net | (1,989,338) | (3,761,294) | (1,368,007) | (2,559,130) | |
| Impairment of other financial banking assets | (514,570) | (6,403,565) | (547,825) | (5,783,468) | |
| Provisions, net | 19 | 196,890 | (889,640) | 50,091 | 114,061 |
| Depreciation/amortisation and impairment of investments, net | (26,440,767) | (30,034,172) | (13,157,365) | (15,567,800) | |
| Other operating costs | (7,446,751) | (7,462,797) | (3,845,440) | (3,412,243) | |
| Gains/losses on disposal of assets | 219,520 | 586,494 | 193,835 | 9,510 | |
| (335,282,926) | (344,300,148) | (167,101,794) | (173,656,318) | ||
| 19,712,507 | 4,867,384 | 11,032,147 | (4,398,233) | ||
| Interest expenses | 24 | (4,938,536) | (4,745,106) | (2,554,453) | (2,230,753) |
| Interest income | 24 | 113,409 | 6,211 | 91,240 | 3,068 |
| Gains/losses in subsidiary, associated companies and joint ventures | (184,625) | (1,159,003) | (469,586) | (601,043) | |
| (5,009,752) | (5,897,899) | (2,932,799) | (2,828,729) | ||
| Earnings before taxes | 14,702,755 | (1,030,515) | 8,099,348 | (7,226,962) | |
| Income tax for the period | 25 | (5,716,031) | (897,715) | (2,803,016) | 1,587,477 |
| Net profit for the period | 8,986,724 | (1,928,230) | 5,296,332 | (5,639,484) | |
| Net profit for the period attributable to: | |||||
| Equity holders | 8,988,445 | (1,984,332) | 5,290,291 | (5,665,874) | |
| Non-controlling interests | (1,720) | 56,102 | 6,041 | 26,390 | |
| Earnings per share: | 17 | 0.06 | (0.01) | 0.04 | (0.04) |
| CTT-CORREIOS DE PORTUGAL, S.A. | |||||
|---|---|---|---|---|---|
| CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTH PERIODS ENDED 30 JUNE 2019 AND 30 JUNE 2020 | |||||
| Euros | |||||
| Six months ended | Three months ended | ||||
| NOTES | |||||
| Unaudited | Unaudited | ||||
| 30.06.2019 | 30.06.2020 | 30.06.2019 | 30.06.2020 | ||
| Net profit for the period | 8,986,724 | (1,928,230) | 5,296,332 | (5,639,484) | |
| Adjustments from application of the equity method (non re-classifiable adjustment to profit and | 15 | 132 | (4,164) | (610) | (2,615) |
| loss) | |||||
| Changes to fair value reserves | 15 | 20,854 | 355,891 | (1,650) | 390,392 |
| Other changes in equity | (150,260) | (50,211) | (610) | (2,416) | |
| Other comprehensive income for the period after taxes | (129,275) | 301,516 | (2,871) | 385,361 | |
| Comprehensive income for the period | 8,857,450 | (1,626,714) | 5,293,461 | (5,254,123) | |
| Attributable to non-controlling interests | (1,589) | 51,938 | 5,431 | 23,974 | |
| Attributable to shareholders of CTT | 8,859,038 | (1,678,652) | 5,288,030 | (5,278,097) | |
| The attached notes are an integral part of these financial statements. | |||||
| 135,887,186 - (15,000,000) (15,000,000) (11,005) (18,750,714) 15,720 (10,954) 29,284,700 10,527,747 131,414,932 - - (50,211) 355,891 (4,164) (1,928,230) (1,626,714) 165,494 - - - (11,005) - - - 87,767 76,762 242,255 - - (4,164) - - 56,102 51,938 29,196,933 21,499,271 (21,499,271) - (21,499,271) - - - - 29,196,933 29,196,933 (29,196,933) (29,196,933) - - - (1,984,332) (1,984,332) 4,378,984 21,499,271 (15,000,000) (10,954) (10,954) 29,196,933 29,196,933 (46,047) (4,164) (50,211) 6,499,271 - - - - 10,867,301 - - (30,993,430) - - - - (18,750,714) - - - (18,750,714) (49,744,144) - - - - - - - 65,836,875 - - - - - 15,720 - - 15,720 65,852,595 - - - 355,891 - - 355,891 (8) - - - - - - - - - (8) - - - - - - - 75,000,000 - - - - - - - - - 75,000,000 - - - - - - - 16 15 15 15 15 15 15 15 Actuarial gains/losses - Health Care, net from deferred taxes Appropriation of net profit restated for the year of 2018 Adjustments from the application of the equity method Adjustments from the application of the equity method Appropriation of net profit for the year of 2019 Balance on 31 December 2018 Restated Comprehensive income for the period Comprehensive income for the period Changes to fair value reserves Changes to fair value reserves Net profit for the period Net profit for the period Other movements Other movements Dividends |
|
|---|---|
| Balance on 31 December 2019 | |
| 129,788,219 294,193 (1,984,332) 40,014,024 (49,744,144) 66,208,486 (8) 75,000,000 Balance on 30 June 2020 (Unaudited) |
|
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63
| CONSOLIDATED CASH FLOW STATEMENT FOR THE SIX MONTH PERIODS ENDED 30 JUNE 2019 AND 30 JUNE 2020 NOTES Cash flow from operating activities (1) 8 |
Unaudited 30.06.2019 325,629,220 (144,013,706) (159,226,740) 179,579,170 (90,969,025) 110,998,920 (1,646,660) 43,010,939 152,363,199 148,100 420,720 41,708,952 |
|
|---|---|---|
| Unaudited 30.06.2020 310,935,758 (149,815,466) (146,675,063) 228,496,058 (105,376,978) 137,564,308 615,550 (28,193,253) 109,986,605 870,185 |
||
| 55,000 | ||
| 85,432,793 | ||
| - | 11,731,434 | |
| 9 | 102,455,000 | 13,565,000 |
| 50,824 | 16,220 | |
| (16,556,056) | ||
| (6,191,062) | ||
| - | ||
| (152,334,478) | ||
| - (15,550,000) |
||
| (78,960,963) | ||
| 11,259,039 | ||
| 250,000 | ||
| (11,307,511) | ||
| (38,131,082) | ||
| (15,168,848) | ||
| (717,067) | ||
| (13,399,816) | ||
| - | ||
| Cash flow from financing activities (3) | (164,539,984) | (67,215,286) |
| (36,189,644) | ||
| - | ||
| 414,865,569 | ||
| 12 | 347,844,552 | 378,675,926 |
| 378,675,926 | ||
| 14,192,600 | ||
| 3,747,910 | ||
| (26,931) | ||
| 396,589,505 | ||
| 8 9 Cash flow from investing activities (2) 18 18 9 18 |
(8,510,540) (9,052,504) (112,932,247) (32,832,813) (5,774,422) (37,330,000) (61,648,930) 45,005,668 106,009,399 (38,221,444) (43,823,906) (204,022,327) (693,920) (13,793,455) (15,000,000) (73,825,715) 6,823,653 414,846,614 347,844,552 11,991,840 3,876,188 (28,930) 363,683,650 |
Notes to the interim condensed consolidated financial statements (Amounts expressed in Euros)
| 1. INTRODUCTION | ||
|---|---|---|
| 2. SIGNIFICANT ACCOUNTING POLICIES | ||
| 2.1 Basis of presentation | ||
| 3. SEGMENT REPORTING | ||
| 4. TANGIBLE FIXED ASSETS | ||
| 5. INTANGIBLE ASSETS | ||
| 6. INVESTMENT PROPERTIES | ||
| 7. COMPANIES INCLUDED IN THE CONSOLIDATION | ||
| 8. DEBT SECURITIES | ||
| 9. OTHER BANKING FINANCIAL ASSETS AND LIABILITIES | ||
| 10. | CREDIT TO BANKING CLIENTS | |
| 11. | DEFERRALS | |
| 12. | CASH AND CASH EQUIVALENTS | |
| 13. | ACCUMULATED IMPAIRMENT LOSSES | |
| 14. | EOUITY | |
| 15. | OWN SHARES, RESERVES, OTHER CHANGES IN EQUITY AND RETAINED EARNINGS .92 | |
| 16. | DIVIDENDS | |
| 17. | EARNINGS PER SHARE | |
| 18. | DEBT | |
| 19. | PROVISIONS, GUARANTEES PROVIDED, CONTINGENT LIABILITIES AND COMMITMENTS |
|
| 20. | ACCOUNTS PAYABLE | |
| 21. | BANKING CLIENTS' DEPOSITS AND OTHER LOANS | |
| 22. | INCOME TAXES RECEIVABLE / PAYABLE | |
| 23. | STAFF COSTS | |
| 24. | INTEREST EXPENSES AND INTEREST INCOME | |
| 25. | INCOME TAX FOR THE PERIOD | |
| 26. | RELATED PARTIES | |
| 27. | OTHER INFORMATION |
CTT – Correios de Portugal, S.A. – Sociedade Aberta ("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 privatisation 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 privatisation 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 functional currency of the Group.
These interim condensed consolidated financial statements were approved by the Board of Directors and authorised for issue on 31 August 2020.
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 2019.
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 2020, and in accordance with IAS 34 - Interim Financial Reporting.
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.
The Retail Products previously reported in the Mail segment and the respective operating costs, in order to reflect the changes made in the business organization, were migrated, along with their respective history, to the segment previously designated "Financial Services" and which now was renamed "Financial Services & Retail".
The period of 2019 was restated, for comparison purposes, according to the changes performed.
Therefore, the business of CTT is organised in the following segments:
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 various 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.
| for the services mentioned above. After this initial allocation, costs relating to corporate and support areas (CTT Central Structure) previously unallocated, are allocated by nature to the Mail segment and others. The consolidated income statement by nature and segment of the 1st half of 2019 and 2020 are as follows: Thousand Euros |
||||||
|---|---|---|---|---|---|---|
| Restated 30.06.2019 |
||||||
| Mail Express & Parcels |
Financial Services & Retail |
Bank | Total | |||
| Revenues | 237,414 | 72,805 | 21,221 | 23,556 | 354,995 | |
| Sales and services rendered | 234,187 | 72,487 | 20,715 | 9,788 | 337,178 | |
| Sales | 3,876 | 389 | 3,931 | - | 8,195 | |
| Services rendered | 230,312 | 72,098 | 16,785 | 9,788 | 328,982 | |
| Financial Margin | - | - | - | 9,088 | 9,088 | |
| Other operating income | 3,227 | 318 | 506 | 4,680 | 8,730 | |
| Operating costs excluding depreciations, amortizations, impairment and provisions | 196,226 | 73,572 | 11,895 | 26,905 | 308,598 | |
| Staff costs External supplies and services |
147,569 48,975 |
11,832 61,634 |
961 1,602 |
8,860 13,664 |
169,222 125,875 |
|
| Other costs | 5,762 | 1,313 | 3,540 | 2,886 | 13,501 | |
| Internal services rendered | (6,079) | (1,207) | 5,792 | 1,494 | - | |
| EBITDA | 41,188 | (768) | 9,326 | (3,349) | 46,397 | |
| IFRS 16 (impact on EBITDA) | 10,356 | 2,742 | 11 | 621 | 13,730 | |
| EBITDA including IFRS 16 | 51,544 | 1,975 | 9,337 | (2,728) | 60,128 | |
| Impairment and provisions | (56) | (1,610) | - | (641) | (2,307) | |
| Depreciation/amortisation and impairment of investments, net | (19,619) | (4,023) | (124) | (2,675) | (26,441) | |
| Specific Items | (9,614) | (607) | (245) | (1,202) | (11,667) | |
| EBIT | 22,256 | (4,265) | 8,968 | (7,246) | 19,713 | |
| Financial results | (5,010) | |||||
| Interest expenses | (4,939) | |||||
| Interest income Gains/losses in subsidiary, associated companies and joint ventures |
113 (185) |
|||||
| Earnings before taxes (EBT) | 14,703 | |||||
| Income tax for the period | (5,716) | |||||
| Net profit for the period | 8,987 | |||||
| Non-controlling interests | 2 | |||||
| Equity holders of parent company | 8,988 |
| 30.06.2020 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Thousand Euros | Financial | |||||||
| Express & Parcels | Services & Retail | Bank | Total | |||||
| Revenues | 204,182 | 85,120 | 21,465 | 38,400 | 349,168 | |||
| Sales and services rendered | 202,398 | 84,841 | 21,229 | 7,989 | 316,457 | |||
| Sales | 6,926 | 394 | 3,454 | - | 10,774 | |||
| Services rendered | 195,472 | 84,447 | 17,774 | 7,989 | 305,683 | |||
| Financial Margin | - | - | - | 21,383 | 21,383 | |||
| Other operating income | 1,784 | 279 | 237 | 9,028 | 11,328 | |||
| Operating costs excluding depreciations, amortizations, impairment and provisions | 188,853 | 84,972 | 10,788 | 31,162 | 315,775 | |||
| Staff costs | 145,105 | 12,817 | 1,062 | 11,165 | 170,149 | |||
| External supplies and services | 40,972 | 72,212 | 1,457 | 14,992 | 129,633 | |||
| Other costs | 8,190 | 942 | 3,032 | 3,829 | 15,993 | |||
| Internal services rendered | (5,414) | (999) | 5,237 | 1,176 | - | |||
| EBITDA | 15,329 | 148 | 10,677 | 7,238 | 33,393 | |||
| IFRS 16 (impact on EBITDA) | 9,363 | 2,940 | 56 | 992 | 13,351 | |||
| EBITDA including IFRS 16 | 24,692 | 3,088 | 10,733 | 8,230 | 46,744 | |||
| Impairment and provisions | (1,958) | (1,722) | - | (7,374) | (11,054) | |||
| Depreciation/amortisation and impairment of investments, net | (22,172) | (4,586) | (176) | (3,100) | (30,034) | |||
| Specific Items | (540) | (238) | - | (9) | (787) | |||
| EBIT | 21 | (3,457) | 10,558 | (2,254) | 4,868 | |||
| Financial results | (5,898) | |||||||
| Interest expenses | (4,745) | |||||||
| Interest income | 6 | |||||||
| Gains/losses in subsidiary, associated companies and joint ventures | (1,159) | |||||||
| Earnings before taxes (EBT) | (1,030) | |||||||
| Income tax for the period | (898) | |||||||
| Net profit for the period | (1,928) | |||||||
| Non-controlling interests | (56) | |||||||
| (1,984) | ||||||||
| Equity holders of parent company |
The amount recorded as specific items amounts to €0.8m, mainly related to expenses regarding the COVID-19 pandemic, namely personal protection equipment, nebulisation, temperature measurement and cleaning reinforcement (+€0.6m), works related to studies and advisory for strategic projects (+€0.5m) and other expenses (+€0.3m) that were partially offset by capital gains related to the sale of fixed assets (-€0.6m).
| Thousand Euros | Restated 30.06.2019 |
30.06.2020 | |
|---|---|---|---|
| 237,414 | 204,182 | ||
| Transactional mail | 203,340 | 173,092 | |
| Editorial mail | 7,400 | 6,435 | |
| Parcels (USO) | 3,063 | 2,652 | |
| Advertising mail | 10,939 | 8,606 | |
| Philately | 3,035 | 2,422 | |
| Business Solutions | 5,548 | 8,309 | |
| Other | 4,090 | 2,666 | |
| Express & Parcels | 72,805 | 85,120 | |
| Portugal | 45,923 | 51,807 | |
| Parcels | 34,514 | 41,491 | |
| Cargo | 6,498 | 5,380 | |
| Banking network | 3,319 | 3,360 | |
| Logistics | 1,442 | 1,185 | |
| Other | 150 | 391 | |
| Spain | 25,881 | 31,880 | |
| Mozambique | 1,001 | 1,434 | |
| Financial Services & Retail | 21,221 | 21,465 | |
| Savings & Insurance | 11,872 | 12,616 | |
| Money orders | 2,798 | 3,007 | |
| Payments | 644 | 780 | |
| Retail | 5,631 | 4,952 | |
| Other | 275 | 111 | |
| Bank | 23,556 | 38,400 | |
| Net interest income | 5,093 | 8,312 | |
| Interest income | 5,468 | 8,834 | |
| Interest expense | (375) | (522) | |
| Fees & commissions income | 3,553 | 5,773 | |
| Own produts | 2,318 | 3,439 | |
| Consumer credit & insurance | 1,235 | 2,333 | |
| Payments & other | 9,826 | 8,046 | |
| 321 Crédito | 5,084 | 16,270 | |
| 354,995 | 349,168 |
| The assets by segment are detailed as follows: | ||||||
|---|---|---|---|---|---|---|
| Restated 31.12.2019 |
||||||
| Assets (Euros) | Express & Parcels | Financial Services & Retail |
Bank | Non allocated assets | Total | |
| Intagible assets | 20,426,590 | 5,514,463 | 200,198 | 27,682,577 | 8,188,816 | 62,012,644 |
| Tangible fixed assets | 222,255,084 | 33,599,340 | 42,095 | 3,204,855 | 4,341,666 | 263,443,040 |
| Investment properties | - | - | - | - | 7,653,000 | 7,653,000 |
| Goodwill | 6,161,326 | 2,955,753 | - | 61,084,749 | - | 70,201,828 |
| Deferred tax assets | - | - | - | - | 89,329,806 | 89,329,806 |
| Accounts receivable | - | - | - | - | 146,471,712 | 146,471,712 |
| Credit to bank clients | - | - | - | 885,820,569 | - | 885,820,569 |
| Debt securities | - | - | - | 456,411,331 | - | 456,411,331 |
| Other banking financial assets | - | - | - | 33,424,335 | - | 33,424,335 |
| Other assets | - | - | - | - | 54,871,239 | 54,871,239 |
| - | 5,403,455 | - | 174,819,282 | 262,772,987 | 442,995,724 | |
| Cash and cash equivalents | - | - | 805,675 | - | 805,675 | |
| Non-current assets held for sale | - |
| INTEGRATED REPORT 1ST HALF 2020 | ||||||
|---|---|---|---|---|---|---|
| 30.06.2020 | ||||||
| Assets (Euros) | Express & Parcels | Financial Services & Retail |
Bank | Non allocated assets | Total | |
| Intagible assets | 23,257,548 | 4,913,009 | 211,333 | 27,032,020 | 1,283,958 | 56,697,868 |
| Tangible fixed assets | 221,977,002 | 35,340,229 | 72,718 | 3,153,345 | 4,593,023 | 265,136,318 |
| Investment properties | - | - | - | - | 7,471,129 | 7,471,129 |
| Goodwill | 6,161,326 | 2,955,753 | - | 61,084,749 | - | 70,201,828 |
| Deferred tax assets | - | - | - | - | 88,971,392 | 88,971,392 |
| Accounts receivable | - | - | - | - | 150,649,003 | 150,649,003 |
| Credit to bank clients | - | - | - | 988,349,422 | - | 988,349,422 |
| Debt securities | - | - | - | 523,291,172 | - | 523,291,172 |
| Other banking financial assets | - | - | - | 35,773,318 | - | 35,773,318 |
| Other assets | - | - | - | - | 56,141,796 | 56,141,796 |
| Cash and cash equivalents | - | 10,497,678 | - | 180,139,974 | 205,951,854 | 396,589,505 |
| Non-current assets held for sale | - | - | - | 990,199 | - | 990,199 |
| 251,395,877 | 53,706,669 | 284,051 | 1,819,814,198 | 515,062,156 | 2,640,262,949 |
| 251,395,877 | 53,706,669 | 284,051 | 1,819,814,198 | 515,062,156 | 2,640,262,949 | ||
|---|---|---|---|---|---|---|---|
| Restated 31.12.2019 |
|||||||
| Other information (Euros) | Mail Express & Parcels | Financial Services & Retail |
Bank | Total | |||
| Non-current debt | 127,309,217 | 19,770,671 | 30,858 | 1,487,187 | 148,597,934 | ||
| Bank loans | 81,702,538 | - | - | - | 81,702,538 | ||
| Lease liabilities | 45,606,680 | 19,770,671 | 30,858 | 1,487,187 | 66,895,396 | ||
| Current debt | 12,896,744 | 13,203,570 | 11,589 | 701,665 | 26,813,567 | ||
| Bank loans | - | 9,749,470 | - | - | 9,749,470 | ||
| Lease liabilities | 12,896,744 | 3,454,099 | 11,589 | 701,665 | 17,064,097 | ||
| 140,205,961 | 32,974,241 | 42,447 | 2,188,852 | 175,411,501 | |||
| 30.06.2020 | |||||||
| Other information (Euros) | Mail Express & Parcels | Financial Services & Retail |
Bank | Total | |||
| Non-current debt | 129,100,629 | 18,561,195 | 51,869 | 1,652,741 | 149,366,434 | ||
| Bank loans | 81,803,310 | - | - | - | 81,803,310 | ||
| Lease liabilities | 47,297,319 | 18,561,195 | 51,869 | 1,652,741 | 67,563,124 | ||
| 140,205,961 32,974,241 |
42,447 | 2,188,852 | 175,411,501 |
|---|---|---|---|
| Other information (Euros) Mail Express & Parcels |
30.06.2020 Financial Services & Retail |
Bank | Total |
| Non-current debt 129,100,629 18,561,195 |
51,869 | 1,652,741 | 149,366,434 |
| Bank loans 81,803,310 |
- - |
- | 81,803,310 |
| Lease liabilities 47,297,319 18,561,195 |
51,869 | 1,652,741 | 67,563,124 |
| Current debt 15,218,688 13,882,194 |
21,638 | 572,268 | 29,694,789 |
| Bank loans - 9,748,498 |
- | - | 9,748,498 |
| Lease liabilities 15,218,688 4,133,696 |
21,638 | 572,268 | 19,946,291 |
| 144,319,318 32,443,389 |
73,507 | 2,225,009 | 179,061,223 |
The Group is domiciled in Portugal. The result of its Sales and services rendered by geographical segment is disclosed below:
| Thousand Euros | 30.06.2019 | 30.06.2020 |
|---|---|---|
The financial statements are subject to seasonality, however this does not affect comparability between identical periods in a given year. There are nonetheless atypical / non-recurring factors that may affect comparability between equal periods of the several years such as the number of working days of the period (mobile holidays or weekend holidays), special events (elections, promotional campaigns for clients) which may impact the revenue to increase / decrease from one period to another.
During the year ended 31 December 2019 and the six-month period ended 30 June 2020, the movements occurred in Tangible fixed assets, as well as the respective accumulated depreciation, regarding the Group were as follows:
| INTEGRATED REPORT 1ST HALF 2020 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 31.12.2019 | ||||||||||
| 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 | 35,591,993 | 334,565,087 | 143,060,832 | 3,597,961 | 63,825,994 | 26,571,051 | 2,409,296 | 174,162 | 217,781,407 | 827,577,785 |
| Acquisitions | - | 289,864 | 5,397,771 | 205,223 | 4,132,769 | 1,087,015 | 5,037,328 | 10,933,074 | - | 27,083,044 |
| New contracts | - | - | - | - | - | - | - | - | 6,995,186 | 6,995,186 |
| Disposals | (11,962) | (302,339) | (1,085,186) | (828) | (10,822) | - | - | - | - | (1,411,137) |
| Transfers and write-offs | - | 3,990,959 | 8,798,878 | (199,167) | 714,914 | (14,188) | (3,990,959) | (8,693,236) | (1,023,301) | (416,100) |
| Terminated contracts | - | - | - | - | - | - | - | - | (47,988,327) | (47,988,327) |
| Remeasurements | - | - | - | - | - | - | - | - | 2,200,608 | 2,200,608 |
| Adjustments | - | 497 | 12,141 | 461 | 875 | 590 | - | - | 108,299 | 122,863 |
| Changes in the consolidation perimeter | - 420,472 |
- | - 692,154 |
175,664 | - | - 1,549,917 |
2,838,207 | |||
| Other movements Closing balance |
- 35,580,031 |
338,964,540 | - 156,184,436 |
- 3,603,651 |
- 69,355,884 |
- 1,826,550 29,646,684 |
35,907 3,491,573 |
- 2,414,000 |
179,623,789 | - 1,862,457 818,864,586 |
| Accumulated depreciation | ||||||||||
| Opening balance | 3,739,154 | 210,562,512 | 127,971,545 | 3,428,245 | 58,772,955 | 22,311,709 | - | - | 136,058,784 | 562,844,906 |
| Depreciation for the period | - | 9,445,914 | 5,641,044 | 56,981 | 2,342,240 | 1,803,688 | - | - | 21,631,653 | 40,921,520 |
| Disposals Transfers and write-offs |
(1,747) | (192,958) - |
(1,022,632) - 107,382 |
(828) (128,381) |
(14,649) 640,734 |
- 40,895 |
- - |
- | - - (858,850) |
(1,232,814) (198,220) |
| Terminated contracts | - | - | - | - | - | - | - | - (47,988,327) |
(47,988,327) | |
| - | 89 | 7,736 | 325 | 759 | 506 | - | - | - | 9,415 | |
| - 164,081 |
- | - 666,123 |
121,676 | - | - 89,014 |
1,040,894 | ||||
| Adjustments Changes in the consolidation perimeter |
219,979,639 | 132,705,076 | 3,356,342 | 62,408,163 | 24,278,473 | - | - | 108,932,275 | 555,397,374 | |
| Closing balance | 3,737,406 | |||||||||
| Accumulated impairment | ||||||||||
| Opening balance | - | - | - | - | - | 24,255 | - | - | - | 24,255 |
| Other variations Closing balance |
- - |
- - |
- - |
- - |
- - |
(83) 24,172 |
- - |
- - |
- - |
(83) 24,172 |
| Land and natural resources | Buildings and other constructions | Basic equipment | Transport equipment | 30.06.2020 Office equipment |
Other tangible fixed assets | Tangible fixed assets in progress | Advance payments to suppliers | Rights of use | Total | |
|---|---|---|---|---|---|---|---|---|---|---|
| Tangible fixed assets | ||||||||||
| Opening balance | 35,580,031 | 338,964,540 | 156,184,436 | 3,603,651 | 69,355,884 | 29,646,684 | 3,491,573 | 2,414,000 | 179,623,789 | 818,864,586 |
| Acquisitions | - | 163,412 | 3,260,649 | 6,771 | 259,543 | 326,290 | 3,540,944 | 19,950 | - | 7,577,559 |
| New contracts | - | - | - | - | - | - | - | - | 9,727,798 | 9,727,798 |
| Disposals | (8,099) | (149,792) | (98,624) | (11,218) | (3,809) | - | - | - | - | (271,543) |
| Transfers and write-offs | - | 192,835 | 242,544 | (4,359) | 1,102 | (4,966,900) | (192,835) | (303,347) | - | (5,030,960) |
| Terminated contracts | - | - | - | - | - | - | - | - | (10,161,689) | (10,161,689) |
| Remeasurements | - | - | - | - | - | - | - | - | 5,449,353 | 5,449,353 |
| - | (2,701) | (67,406) | (3,587) | (27,319) | (10,450) | - | - | - | (111,463) | |
| Adjustments | 35,571,931 | 339,168,293 | 159,521,600 | 3,591,257 | 69,585,401 | 24,995,624 | 6,839,682 | 2,130,603 | 184,639,251 | 826,043,643 |
| Closing balance | ||||||||||
| Accumulated depreciation | ||||||||||
| Opening balance | 3,737,406 | 219,979,639 | 132,705,076 | 3,356,342 | 62,408,163 | 24,278,473 | - | - | 108,932,275 | 555,397,374 |
| Depreciation for the period | - | 4,724,581 | 3,240,985 | 29,577 | 1,279,866 | 618,482 | - | - | 11,350,910 | 21,244,402 |
| Disposals | (460) | (95,058) | (92,006) | (11,218) | (3,527) | - | - | - | - | (202,270) |
| Transfers and write-offs | - | - (41,393) |
(4,359) | 32,314 | (5,334,615) | - | - | - (5,348,053) |
||
| Terminated contracts | - | - | - | - | - | - | - | - (10,161,689) |
(10,161,689) | |
| Adjustments | - | (673) | (36,248) | (1,968) | (4,312) | (3,411) | - | - | - | (46,611) |
| Closing balance | 3,736,946 | 224,608,489 | 135,776,414 | 3,368,374 | 63,712,504 | 19,558,929 | - | - | 110,121,496 | 560,883,153 |
| Accumulated impairment | ||||||||||
| Opening balance | - | - | - | - | - | 24,172 | - | - | - | 24,172 |
| Other variations | - | - | - | - | - | - | - | - | - | - |
| Closing balance | - | - | - | - | - | 24,172 | - | - | - | 24,172 |
The depreciation recorded in the Group amounting to 21,244,402 Euros (20,188,942 Euros on 30 June 2019), is booked under the heading Depreciation/amortisation and impairment of investments, net.
In the year ended 31 December 2019, the caption Changes in the consolidation perimeter in the Group, relates to the balances of the company 321 Crédito – Instituição Financeira de Crédito, S.A. acquired in May 2019.
In the Group as at 30 June 2020, Land and natural resources and Buildings and other constructions include 538.681 Euros (554,730 Euros as at 31 December 2019), related to land and property in co-ownership with MEO – Serviços de Comunicações e Multimédia, S.A..
During the year ended 30 June 2020, the most significant movements in Tangible Fixed Assets were the following:
The movements associated to acquisitions and transfers relate mostly to the capitalisation of repairs in own and third-party buildings of CTT.
The amount of acquisitions mainly relates to the acquisition of parcel sorting machines in the amount of 3,186 thousand Euros by CTT.
The amount of acquisitions relates essentially the acquisition of office furniture for approximately 88 thousand Euros by CTT.
The amount of acquisitions mainly relates to prevention and safety equipment for approximately 289 thousand Euros by CTT.
The amounts under this heading are related to the capitalisation of improvements in own and third-party properties.
Following the adoption of IFRS 16 the Group recognised rights of use, detailed by type of asset, as follows:
| The amounts under this heading are related to the capitalisation of improvements in own and third-party | ||||
|---|---|---|---|---|
| Following the adoption of IFRS 16 the Group recognised rights of use, detailed by type of asset, as follows: | ||||
| 31.12.2019 | ||||
| Buildings | Vehicles | Other assets | Total | |
| Tangible fixed assets | ||||
| Opening balance | 187,977,519 | 28,092,244 | 1,711,643 | 217,781,407 |
| New contracts | 3,275,146 | 3,643,838 | 76,202 | 6,995,186 |
| Transfers and write-offs | (1,004,078) | (19,223) | - | (1,023,301) |
| Terminated contracts | (36,450,459) | (11,252,228) | (285,640) | (47,988,327) |
| Remeasurements | 2,200,608 | - | - | 2,200,608 |
| Adjustments | 24,605 | 56,854 | 26,839 | 108,299 |
| Changes in the consolidation perimeter | 1,419,084 | 130,833 | - | 1,549,917 |
| Closing balance | 157,442,425 | 20,652,319 | 1,529,045 | 179,623,789 |
| Accumulated depreciation | ||||
| Opening balance | 123,639,470 | 11,900,424 | 518,891 | 136,058,784 |
| Depreciation for the period | 15,252,183 | 6,015,929 | 363,540 | 21,631,653 |
| Transfers and write-offs | (855,861) | (2,989) | - | (858,850) |
| Terminated contracts | (36,450,459) | (11,252,228) | (285,640) | (47,988,327) |
| Adjustments | 5 | (5) | - | - |
| Changes in the consolidation perimeter | 71,751 | 17,264 | - | 89,014 |
| Closing balance | 101,657,089 | 6,678,395 | 596,791 | 108,932,275 |
| Net Tangible fixed assets | 55,785,336 | 13,973,924 | 932,254 | 70,691,514 |
| 30.06.2020 | ||||
| Buildings | Vehicles | Other assets | Total | |
| Tangible fixed assets | ||||
| Opening balance | 157,442,425 | 20,652,319 | 1,529,045 | 179,623,789 |
| Transfers and write-offs | (855,861) | (2,989) | - | (858,850) |
|---|---|---|---|---|
| 30.06.2020 | ||||
| Buildings | Vehicles | Other assets | Total | |
| Tangible fixed assets | ||||
| Opening balance | 157,442,425 | 20,652,319 | 1,529,045 | 179,623,789 |
| New contracts | 2,911,142 | 6,768,120 | 48,537 | 9,727,798 |
| Terminated contracts | (9,426,610) | (724,193) | (10,886) | (10,161,689) |
| Remeasurements | 5,449,353 | - | - | 5,449,353 |
| Closing balance | 156,376,310 | 26,696,246 | 1,566,696 | 184,639,251 |
| Accumulated depreciation | ||||
| Opening balance | 101,657,089 | 6,678,395 | 596,791 | 108,932,275 |
| Depreciation for the period | 8,525,907 | 2,659,354 | 165,650 | 11,350,910 |
| Terminated contracts | (9,426,610) | (724,193) | (10,886) | (10,161,689) |
| Closing balance | 100,756,386 | 8,613,555 | 751,555 | 110,121,496 |
| 55,619,924 | 18,082,691 | 815,141 | 74,517,755 |
The depreciation recorded, in the Group, in the amount of 11,350,910 Euros (11,057,998 Euros on 30 June 2019), is booked under the heading Depreciation/amortisation and impairment of investments, net.
Information on the liabilities associated with these leases as well as the interest expenses are disclosed on the notes 18 - Debt and 24 - Interest expenses and Interest income, respectively.
In the six-month period ended 30 June 2020, the Group entered into a sale & lease back agreement for the building held in Sintra. This operation met the requirements of IFRS 15 to be accounted for as a sale of the asset, having originated a capital gain in the amount of 590 thousand Euros, recognised in the caption "Gains / losses on disposal of assets", as well as the registration of a right of use in the amount of 9,629 Euros and a Lease liability of 117,353 Euros.
In the six-month period ended 30 June 2020, no interest on loans was capitalised, in the Group, 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 with reference to 30 June 2020, 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.
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 Group contractual commitments, related to Tangible fixed assets, are as follows:
| 30.06.2020 | ||
|---|---|---|
| Mail Sorting Machines | 1,476,109 | |
| Improvements in properties | 737,724 | |
| DVE - Explosives Detector | 31,882 | |
| 2,245,715 | ||
| 5. Intangible assets were as follows: 31.12.2019 Intangible assets in progress Advance payments to suppliers Development projects Computer Software Industrial property Other intangible assets Total Intangible assets Opening balance 4,380,552 98,081,032 14,252,424 444,739 15,139,681 - 132,298,428 Acquisitions - 1,106,752 2,365,069 - 14,817,787 69,072 18,358,681 |
|---|
| During the year ended 31 December 2019 and the six-month period ended 30 June 2020, the movements which occurred in the main categories of the Group Intangible assets, as well as the respective accumulated amortisation, |
| Disposals - - - - - - |
| Transfers and write-offs - 13,595,464 8,579 - (14,331,297) (69,072) (796,326) |
| Adjustments - 1,400 9,098 - - - 10,498 |
| Changes in the consolidation perimeter - 1,092,007 213,269 - 462,568 - 1,767,844 |
| Closing balance 4,380,552 113,876,654 16,848,440 444,739 16,088,740 - 151,639,125 |
| Accumulated amortisation Opening balance |
| 4,375,722 61,288,015 9,419,396 444,739 - - 75,527,871 |
| Amortisation for the period 1,272 12,754,618 782,218 - - - 13,538,108 |
| Disposals - - - - - - |
| Transfers and write-offs - (730,878) 3,624 - - - (727,254) |
| Adjustments - 1,400 4,087 - - - 5,487 |
| Changes in the consolidation perimeter - 1,082,878 199,390 - - - 1,282,268 Closing balance 4,376,994 74,396,033 10,408,714 444,739 - - 89,626,480 |
| Net intangible assets 3,558 39,480,622 6,439,725 - 16,088,740 - 62,012,644 |
| 30.06.2020 | |||||||
|---|---|---|---|---|---|---|---|
| Development projects | Computer Software | Industrial property | Other intangible assets | Intangible assets in progress | Advance payments to suppliers | Total | |
| Intangible assets | |||||||
| Opening balance | 4,380,552 | 113,876,654 | 16,848,440 | 444,739 | 16,088,740 | - | 151,639,125 |
| Acquisitions | - | 334,696 | - | - | 2,990,649 | - | 3,325,345 |
| Disposals | - | - | - | - | - | - - |
|
| Transfers and write-offs | - | 11,915,616 | - | - | (11,857,986) | - | 57,630 |
| Adjustments | - | - | (49,977) | - | (80,876) | - | (130,854) |
| Closing balance | 4,380,552 | 126,126,966 | 16,798,462 | 444,739 | 7,140,527 | - | 154,891,246 |
| Accumulated amortisation Opening balance | 4,376,994 | 74,396,033 | 10,408,714 | 444,739 | - | - | 89,626,480 |
| Amortisation for the period | 637 | 7,989,964 | 597,072 | - | - | - | 8,587,673 |
| Disposals | - | - | - | - | - | - | - |
| Transfers and write-offs | - | 3,231 | - | - | - | - | 3,231 |
| Adjustments | - | - | (24,006) | - | - | - | (24,006) |
| Closing balance | 4,377,631 | 82,389,228 | 10,981,780 | 444,739 | - | - | 98,193,378 |
| 2,921 | 43,737,738 | 5,816,682 | - | 7,140,527 | - | 56,697,868 |
The amortisation in the Group for the six-month period ended 30 June 2020, amounting to 8,587,673 Euros (6,112,141 Euros as at 30 June 2019) was recorded under Depreciation / amortisation and impairment of investments, net.
In the year ended 31 December 2019, the caption Changes in the consolidation perimeter in the Group, relates to the balances of the company 321 Crédito – Instituição Financeira de Crédito, S.A. as at the acquisition date.
The caption Industrial property in the Group 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 amortised.
The transfers occurred in the year ended 31 December 2019 and the six-month period ended 30 June 2020, from Intangible assets in progress to Computer software refer to IT projects, which were completed during the referred periods.
The amounts of 474,392 Euros and 481,562 Euros were capitalised in computer software or in intangible assets in progress as at 30 June 2019 and 30 June 2020, respectively, related to Group staff costs incurred in the development of these projects.
As at 30 June 2020 the Group Intangible assets in progress, relate to IT projects which are under development, of which the most relevant are:
| The amounts of 474,392 Euros and 481,562 Euros were capitalised in computer software or in intangible assets in progress as at 30 June 2019 and 30 June 2020, respectively, related to Group staff costs incurred in |
||
|---|---|---|
| As at 30 June 2020 the Group Intangible assets in progress, relate to IT projects which are under development, | ||
| Group | ||
| OneBiller Solution | 740,505 | |
| New Payment Platform | 651,788 | |
| Data Governance - software | 538,369 | |
| MiddleWare | 486,775 | |
| EPM & BI & Analytics | 451,445 | |
| Transaction Monitoring - software | 450,140 | |
| Zero+ RAID | 420,283 | |
| CRM - Pilar Service | 404,873 | |
| Digital channels | 298,547 | |
| Ecosystem CTT Expresso | 271,870 | |
| 4,714,596 |
The Group has not identified any relevant uncertainties regarding the conclusion of ongoing projects, nor about their recoverability. According to the analysis of impairment signs with reference to 30 June 2020, no events or circumstances were identified that indicate that the amount for which the Group's intangible assets are recorded may not be recovered.
Most of the projects are expected to be completed in 2020.
The amount of research and development expenses incurred by the Group in 2019, in the amount of 1,063,800 Euros was disclosed in Note 25.
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-month period ended 30 June 2020, no interest on loans were capitalised, in the Group, 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 relative to the Group Intangible assets are as follows:
| In the six-month period ended 30 June 2020, no interest on loans were capitalised, in the Group, as no loans were directly identified attributable to the acquisition or construction of an asset that requires a substantial |
||
|---|---|---|
| 30.06.2020 | ||
| CBS - Core Banking System | 1,200,000 | |
| Account Opening Process | 485,000 | |
| Data Ignition | 365,000 | |
| Projeto X Sharepoint Sunset |
302,000 270,000 |
As at 31 December 2019 and 30 June 2020, the Group has the following assets classified as investment properties:
| 31.12.2019 | |||||||
|---|---|---|---|---|---|---|---|
| Land and natural resources | Buildings and other constructions | Total | |||||
| Investment properties | |||||||
| Opening balance | 3,508,355 | 16,538,633 | 20,046,988 | ||||
| Additions | - | - | - | ||||
| Disposals | (195,997) | (1,528,862) | (1,724,859) | ||||
| Closing balance | 3,312,358 | 15,009,771 | 18,322,129 | ||||
| Accumulated depreciation | |||||||
| Opening balance | 234,974 | 10,388,531 | 10,623,505 | ||||
| Depreciation for the period | - | 261,092 | 261,092 | ||||
| Disposals | (21,122) | (943,491) | (964,612) | ||||
| Closing balance | 213,853 | 9,706,133 | 9,919,985 | ||||
| Accumulated impairment | |||||||
| Opening balance | - | 1,243,502 | 1,243,502 | ||||
| Impairment for the period | - | (494,358) | (494,358) | ||||
| Closing balance | - | 749,144 | 749,144 | ||||
| Net Investment properties | 3,098,506 | 4,554,494 | 7,653,000 |
| Accumulated impairment | |||
|---|---|---|---|
| 30.06.2020 | |||
| Land and natural resources | Buildings and other constructions |
Total | |
| Investment properties | |||
| Opening balance | 3,312,358 | 15,009,771 | 18,322,129 |
| Additions | - | - | - |
| Disposals | (14,500) | (43,500) | (58,000) |
| Closing balance | 3,297,858 | 14,966,271 | 18,264,129 |
| Accumulated depreciation | |||
| Opening balance | 213,853 | 9,706,133 | 9,919,985 |
| Depreciation for the period | - | 128,293 | 128,293 |
| Disposals | - | (4,423) | (4,423) |
| Closing balance | 213,853 | 9,830,003 | 10,043,856 |
| Accumulated impairment | |||
| Opening balance | - | 749,144 | 749,144 |
| Impairment for the period | - | - | - |
| Closing balance | - | 749,144 | 749,144 |
| Net Investment properties | 3,084,006 | 4,387,123 | 7,471,129 |
These assets are not allocated to the Group operating activities, being in the market available for lease.
Depreciation for the three-month period ended on 30 June 2020, of 128,293 Euros (139,812 Euros on 30 June 2019) was recorded in the caption Depreciation/amortisation and impairment of investments, net.
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 2019 which were conducted by independent entities, amounts to 12,261,900 Euros.
In the year ended 31 December 2019, the amount recorded under the disposals heading relates to the sale of three properties having the corresponding accounting gains, of 353 thousand Euros, been recorded in the caption Gains/Losses on disposal of assets.
Impairment losses for the year ended 31 December 2019 amounting to (494,358) Euros were recorded in the caption Depreciation/amortisation and impairment of investments, net and are explained by the market value reduction observed in some buildings.
| 7. | Companies included in the consolidation | |||||||
|---|---|---|---|---|---|---|---|---|
| Subsidiary companies | ||||||||
| As at 31 December 2019 and 30 June 2020, the parent company, CTT - Correios de Portugal, S.A. and the | ||||||||
| following subsidiaries were included in the consolidation: | ||||||||
| Company name | Place of business | Head office | 31.12.2019 Percentage of ownership |
30.06.2020 Percentage of ownership |
||||
| Parent company: CTT - Correios de Portugal, S.A. |
Portugal | Av. D. João II N.º 13 1999-001 Lisboa |
Direct - |
Indirect - |
Total - |
Direct - |
Indirect - |
Total - |
| 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 |
| Correio Expresso de Moçambique, S.A. ("CORRE") |
Mozambique | Av. 24 de Julho, Edificio 24, n.º 1097, 3.º Piso, Bairro da Polana Maputo - Mozambique |
50 - |
50 | 50 | - | 50 | |
| Banco CTT, S.A. ("BancoCTT") |
Portugal | Av. D. João II N.º 13 1999-001 Lisboa |
100 | - | 100 | 100 | - | 100 |
| Av. Duque d'Ávila, 46, 7º B | - | 100 | 100 | - | 100 | 100 |
| Portugal | ||||||||
|---|---|---|---|---|---|---|---|---|
| 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. |
||||||||
| Joint ventures | ||||||||
| As at 31 December 2019 and 30 June 2020, the Group held the following interests in joint ventures, registered | ||||||||
| through the equity method: | ||||||||
| 31.12.2019 | 30.06.2020 | |||||||
| Company name | Place of business | Head office | Percentage of ownership | Percentage of ownership | ||||
| NewPost, ACE | Portugal | Av. Fontes Pereira de Melo, 40 Lisboa |
Direct 49 |
Indirect - |
Total 49 |
Direct 49 |
Indirect - |
Total 49 |
| PTP & F, ACE | Portugal | Estrada Casal do Canas Amadora |
51 | - | 51 | 51 | - | 51 |
| On 2 April, 6 May and 6 August 2019, the company MKTPlace - Comércio Eletrónico, S.A., was subject to capital increases in the amount of 3,625,523 Euros made by CTT. Associated companies As at 31 December 2019 and 30 June 2020, the Group held the following interests in associated companies accounted for by the equity method: 31.12.2019 30.06.2020 Percentage of ownership Company name Place of business Head office Direct Indirect Total Direct Indirect Multicert - Serviços de Certificação Electrónica, S.A. Lagoas Parque, Edifício 3, Piso 3 20 - 20 20 - Portugal ("Multicert") Oeiras Mafelosa, SL (a) Castellon - Spain - 25 25 - 25 Spain Urpacksur, SL (a) Málaga - Spain - 30 30 - 30 Spain (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. |
|||||||||
|---|---|---|---|---|---|---|---|---|---|
| Percentage of ownership | |||||||||
| Total | |||||||||
| 20 | |||||||||
| 25 | |||||||||
| 30 | |||||||||
Additionally, considering the requirements of IFRS 10, the Group's consolidation perimeter includes the following structured entities:
| INTEGRATED REPORT 1ST HALF 2020 | ||||
|---|---|---|---|---|
| Name | Constitution Year | Place of issue | % Economic Interest | Consolidation Method |
| Ulisses Finance No.1 (*) | 2017 | Portugal | 12.2% | Full |
| 2019 | Portugal | 100% | Full | |
| Chaves Funding No.8 (*) |
The main impacts of the consolidation of these structured entities on the Group's accounts are the following:
| Ulisses Finance No.1 (*) | 2017 Portugal |
12.2% | Full | |
|---|---|---|---|---|
| The main impacts of the consolidation of these structured entities on the Group's accounts are the following: | ||||
| 31.12.2019 | 30.06.2020 | |||
| Cash and cash equivalents | 7,730,012 | 8,535,418 |
In the year ended 31 December 2019, the consolidation perimeter was changed following the acquisition of 321 Crédito – Instituição Financeira de Crédito, S.A..
During the six-month period ended 30 June 2020, there were no changes in the consolidation perimeter.
As at 31 December 2019 and 30 June 2020, the caption Debt securities, in the Group, showed the following composition:
| As at 31 December 2019 and 30 June 2020, the caption Debt securities, in the Group, showed the following | ||
|---|---|---|
| 31.12.2019 | 30.06.2020 | |
| Non-current | ||
| Financial assets at fair value through other | ||
| comprehensive income (1) | ||
| Government bonds | 528,420 | 6,230,918 |
| Bonds issued by other entities | - | 8,375,361 |
| 528,420 | 14,606,279 | |
| Financial assets at amortised cost | ||
| Government bonds | 409,886,034 | 449,037,515 |
| Bonds issued by other entities | 14,605,943 | 3,797,936 |
| Impairment | (169,217) | (179,355) |
| 424,322,759 | 452,656,096 | |
| 424,851,179 | 467,262,375 | |
| Current | ||
| Financial assets at fair value through other | ||
| comprehensive income (1) | ||
| Government bonds | 13,727 | 537,231 |
| Bonds issued by other entities | - | 4,414 |
| 13,727 | 541,646 | |
| Financial assets at amortised cost | ||
| Government bonds | 31,536,069 | 28,948,055 |
| Bonds issued by other entities | 14,491 | 26,556,025 |
| Impairment | (4,136) | (16,929) |
| 31,546,424 | 55,487,151 | |
| 31,560,152 | 56,028,797 | |
| 456,411,331 | 523,291,172 |
The analysis of the Financial assets at fair Value through other comprehensive income and the Financial assets at amortised cost, by remaining maturity, as at 31 December 2019 and 30 June 2020 is detailed as follows:
| INTEGRATED REPORT 1ST HALF 2020 | |||||||
|---|---|---|---|---|---|---|---|
| 31.12.2019 | |||||||
| Current | Non-current | ||||||
| Due within 3 months | Over 3 months and less than 1 year | Over 1 year and less than 3 years Total |
Over 3 years | Total | Total | ||
| Financial assets at fair value through other | |||||||
| comprehensive income (1) | |||||||
| Government bonds | |||||||
| National | 13,727 | - | 13,727 | 528,420 | - | 528,420 | 542,147 |
| Foreign | - | - | - | - | - | - | - |
| Bonds issued by other entities | |||||||
| National | - | - | - | - | - | - | - |
| Foreign | - | - | - | - | - | - | - |
| 13,727 | - | 13,727 | 528,420 | - | 528,420 | 542,147 | |
| (1) As at 31 December 2019 includes the amount of 225 Euros regarding Accumulated impairment losses. | |||||||
| 31.12.2019 | |||||||
| Current | Non-current | ||||||
| Due within 3 months | Over 3 months and less than 1 year | Over 1 year and less than 3 years Total |
Over 3 years | Total | Total | ||
| Financial assets at amortised cost | |||||||
| Government bonds | |||||||
| National | 4,538,504 | 4,717,697 | 9,256,202 | 41,143,284 | 236,717,591 | 277,860,875 | 287,117,077 |
| Foreign | 752,422 | 21,527,446 | 22,279,868 | 34,645,814 | 97,379,345 | 132,025,158 | 154,305,026 |
| Bonds issued by other entities | |||||||
| National | 14,491 | - | 14,491 | 14,605,943 | - | 14,605,943 | 14,620,434 |
| Foreign | - | - | - | - | - | - | - |
| 5,305,417 | 26,245,143 | 31,550,561 | 90,395,041 | 334,096,936 | 424,491,976 | 456,042,537 |
| (1) As at 31 December 2019 includes the amount of 225 Euros regarding Accumulated impairment losses. | |||||||
|---|---|---|---|---|---|---|---|
| Due within 3 months | Over 3 months and less than 1 year | Over 1 year and less than 3 years Total |
Over 3 years | Total | |||
| Financial assets at amortised cost | |||||||
| Government bonds | |||||||
| National | 4,538,504 | 4,717,697 | 9,256,202 | 41,143,284 | 236,717,591 | 277,860,875 | 287,117,077 |
| Foreign | 752,422 | 21,527,446 | 22,279,868 | 34,645,814 | 97,379,345 | 132,025,158 | 154,305,026 |
| Bonds issued by other entities | |||||||
| National | 14,491 | - | 14,491 | 14,605,943 | - | 14,605,943 | 14,620,434 |
| Foreign | - | - | - | - | - | - | - |
| 5,305,417 | 26,245,143 | 31,550,561 | 90,395,041 | 334,096,936 | 424,491,976 | 456,042,537 | |
| Current | 30.06.2020 | Non-current | |||||
| Total |
| 30.06.2020 | |||||||
|---|---|---|---|---|---|---|---|
| Current | Non-current | ||||||
| Total | |||||||
| 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 | ||
| Financial assets at fair value through other | |||||||
| comprehensive income (1) | |||||||
| Government bonds | |||||||
| National | 19,711 | 517,520 | 537,231 | 992,118 | 5,238,800 | 6,230,918 | 6,768,149 |
| Foreign | - | - | - | - | - | - | - |
| Bonds issued by other entities | |||||||
| National | 4,414 | - | 4,414 | 8,375,361 | - | 8,375,361 | 8,379,775 |
| Foreign | - | - | - | - | - | - | - |
| 24,126 | 517,520 | 541,646 | 9,367,479 | 5,238,800 | 14,606,279 | 15,147,924 |
| 30.06.2020 | |||||||
|---|---|---|---|---|---|---|---|
| Current | Non-current | ||||||
| Due within 3 months | Over 3 months and less than 1 year | Over 1 year and less than 3 years Total |
Over 3 years | Total | Total | ||
| Financial assets at amortised cost | |||||||
| Government bonds | |||||||
| National | 5,058,374 | 10,496,603 | 15,554,977 | 30,348,114 | 244,223,063 | 274,571,177 | 290,126,154 |
| Foreign | 7,884,336 | 5,508,741 | 13,393,078 | 29,089,759 | 145,376,579 | 174,466,338 | 187,859,416 |
| Bonds issued by other entities | |||||||
| National | 21,009,723 | 5,546,302 | 26,556,025 | 3,797,936 | - | 3,797,936 | 30,353,961 |
| Foreign | - | - | - | - | - | - | - |
| 33,952,434 | 21,551,646 | 55,504,080 | 63,235,809 | 389,599,642 | 452,835,451 | 508,339,531 | |
| The impairment losses, for the year ended 31 December 2019 and the six-month period ended 30 June 2020, are detailed as follows: |
|||||||
| 31.12.2019 | |||||||
| Opening balance | Increases | Reversals | Utilisations | Transfers | Closing balance | ||
| Non-current assets | |||||||
| Financial assets at fair value through other comprehensive income |
504 | 19 | (40,529) | (299) | 40,529 | 225 |
| Closing balance | |||||
|---|---|---|---|---|---|
| 225 | |||||
| 31,512 | (43,292) | - | 169,217 | ||
| 31,531 | (83,821) | (299) | 57,147 | 169,442 | |
| - | - | (86,757) | (40,529) | - | |
| 4,136 | |||||
| 4,136 | |||||
| 127,790 | 19 | (40,529) | (87,056) | - | 225 |
| 34,190 | (43,662) | - | - 173,353 |
||
| 182,826 | |||||
| Opening balance 504 164,379 164,883 127,286 18,447 145,733 |
Increases 19 2,678 2,678 |
Reversals (40,529) (370) (370) |
31.12.2019 Utilisations (299) - (86,757) |
The impairment losses, for the year ended 31 December 2019 and the six-month period ended 30 June 2020, Transfers 40,529 16,618 (16,618) (57,147) |
| INTEGRATED REPORT 1ST HALF 2020 | |
|---|---|
| 30.06.2020 | |
| Opening balance Increases Reversals Utilisations Transfers |
Closing balance |
| Non-current assets | |
| Financial assets at fair value through other 225 9,913 (48) - (8) comprehensive income |
10,081 |
| Financial assets at amortised cost 169,217 29,069 (8,116) - (10,815) |
179,355 |
| 169,442 38,982 (8,165) - (10,822) |
189,436 |
| Current assets Financial assets at fair value through other |
|
| - 368 (2) - 8 comprehensive income |
374 |
| Financial assets at amortised cost 4,136 2,744 (766) - 10,815 |
16,929 |
| 4,136 3,112 (768) - 10,822 |
17,303 |
| Financial assets at fair value through other 225 10,280 (50) - - comprehensive income |
10,455 |
| Financial assets at amortised cost 173,353 31,813 (8,883) - - |
196,284 |
| 173,578 42,094 (8,932) - - |
206,739 |
| Financial assets at amortised cost 173,353 31,813 (8,883) - - Regarding the movements in impairment losses of Financial assets at fair value through other comprehensive income by stages, in the year ended 31 December 2019 and the six-month period ended 30 June 2020, they 31.12.2019 30.06.2020 Stage 1 Stage 1 Opening balance 127,790 225 Change in the accounting standards - - Change in period: Increases due to origination and acquisition - 10,281 |
|---|
| Changes due to change in credit risk 19 (50) |
| Decrease due to derecognition repayments and disposals (127,585) - |
| Write-offs - - |
| Changes due to update in the institution's methodology for estimation - - |
| Foreign exchange and other - - |
| Impairment - Financial assets at fair value through other |
| 225 10,455 comprehensive income |
The reconciliation of accounting movements related to impairment losses is presented below:
| Impairment - Financial assets at fair value through other | ||
|---|---|---|
| The reconciliation of accounting movements related to impairment losses is presented below: | ||
| 31.12.2019 | 30.06.2020 | |
| Stage 1 | Stage 1 | |
| Opening balance | 127,790 | 225 |
| Change in the accounting standards | - | - |
| Change in period: | ||
| ECL income statement change for the period | (40,510) | 10,231 |
| Stage transfers (net) | - | - |
| Disposals | - | - |
| Utilisations during the period | (87,056) | - |
| Write-offs | - | - |
| Write-off recoveries | - | - |
| Foreign exchange and other | - | - |
| Impairment - Financial assets at fair value through other | ||
| 225 | 10,455 | |
| comprehensive income |
For the impairment losses of Financial assets at amortised cost, the movements by stages, in the year ended 31 December 2019 and the six-month period ended 30 June 2020, they are detailed as follows:
| INTEGRATED REPORT 1ST HALF 2020 | ||
|---|---|---|
| 31.12.2019 | 30.06.2020 | |
| Stage 1 | Stage 1 | |
| Opening balance | 182,825 | 173,353 |
| Change in the accounting standards | - | - |
| Change in period: | ||
| Increases due to origination and acquisition | 13,008 | 16,887 |
| Changes due to change in credit risk | (4,033) | 8,846 |
| Decrease due to derecognition repayments and disposals | (18,447) | (2,802) |
| Write-offs | - | - |
| Changes due to update in the institution's methodology for estimation | - - |
|
| Foreign exchange and other | - | - |
| Impairment - Financial assets at amortised cost | 173,353 | 196,284 |
The reconciliation of accounting movements related to impairment losses is presented below:
| Write-offs | - | - |
|---|---|---|
| The reconciliation of accounting movements related to impairment losses is presented below: | ||
| 31.12.2019 | 30.06.2020 | |
| Stage 1 | Stage 1 | |
| Opening balance | 182,825 | 173,353 |
| Change in the accounting standards | - | - |
| Change in period: | ||
| ECL income statement change for the period | (9,473) | 22,931 |
| Stage transfers (net) | - | - |
| Disposals | - | - |
| Utilisations during the period | - | - |
| - | - | |
| Write-offs | ||
| Write-off recoveries Foreign exchange and other |
- - |
- - |
According to the current accounting policy, 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, following the criteria defined in the accounting policies.
As at 31 December 2019 and 30 June 2020, the Group headings Other banking financial assets and Other banking financial liabilities showed the following composition:
| INTEGRATED REPORT 1ST HALF 2020 | ||
|---|---|---|
| 31.12.2019 | 30.06.2020 | |
| Non-current assets | ||
| Investments in credit institutions | - | - |
| Loans to credit institutions | 18,928,416 | 14,783,340 |
| Impairment | (166,249) | (4,803) |
| Other | 1,882 | 4,401 |
| 18,764,049 | 14,782,937 | |
| Current assets | ||
| Investments in credit institutions | 1,650,072 | 10,000,001 |
| Loans to credit institutions | 11,551,960 | 9,325,960 |
| Impairment | (47,303) | (17,947) |
| Other | 5,688,014 | 4,931,891 |
| Impairment | (4,182,457) | (3,249,525) |
| 14,660,286 | 20,990,381 | |
| 33,424,335 | 35,773,318 | |
| Non-current liabilities | ||
| Debt securities issued | 76,060,295 | 60,881,194 |
| 76,060,295 | 60,881,194 | |
| Current liabilities | ||
| Debt securities issued | 17,073 | 10,774 |
| Other | 17,970,646 | 22,301,761 |
| 17,987,719 | 22,312,535 | |
| 94,048,014 | 83,193,729 |
Investments in credit institutions and Loans to credit institutions
Regarding the above-mentioned captions, the scheduling by maturity is as follows:
| 31.12.2019 | 30.06.2020 | |
|---|---|---|
| 3,367,931 | 2,907,688 | |
| 9,834,101 | 16,418,274 | |
| 13,689,301 5,239,115 |
11,848,163 2,935,177 |
|
| Impairment | |||||||
|---|---|---|---|---|---|---|---|
| The impairment losses, for the year ended 31 December 2019 and the six-month period ended 30 June 2020, | |||||||
| are detailed as follows: | |||||||
| 31.12.2019 | |||||||
| Opening balance | Increases | Reversals | Utilisations | Transfers | Changes in the consolidation perimeter |
Closing balance | |
| Non-current assets | |||||||
| Investments and loans in credit institutions | 217,751 | 91,523 | (244,427) | - | 101,403 | - | 166,249 |
| 217,751 | 91,523 | (244,427) | - | 101,403 | - | 166,249 | |
| Current assets | |||||||
| Investments and loans in credit institutions Other |
197,018 10,927 |
24,916 224,755 |
(73,229) (53,534) |
- - |
(101,403) (10,927) |
- 4,011,235 |
47,303 4,182,457 |
| 207,945 | 249,672 | (126,763) | - | (112,330) | 4,011,235 | 4,229,760 | |
| 425,696 | 341,194 | (371,190) | - | (10,927) | 4,011,235 | 4,396,009 | |
| 30.06.2020 | |||||||
| Opening balance | Increases | Reversals | Utilisations | Transfers | Changes in the consolidation | Closing balance | |
| perimeter | |||||||
| Non-current assets | |||||||
| Investments and loans in credit institutions | 166,249 | 3,332 | (43,616) | - | (121,161) | - | 4,803 |
| 166,249 | 3,332 | (43,616) | - | (121,161) | - | 4,803 | |
| Current assets |
| Opening balance | Increases | Reversals | 30.06.2020 Utilisations |
Transfers | Changes in the consolidation perimeter |
Closing balance | |
|---|---|---|---|---|---|---|---|
| Non-current assets | |||||||
| Investments and loans in credit institutions | 166,249 | 3,332 | (43,616) | - | (121,161) | - | 4,803 |
| 166,249 | 3,332 | (43,616) | - | (121,161) | - | 4,803 | |
| Current assets | |||||||
| Investments and loans in credit institutions | 47,303 | 12,449 | (162,967) | - | 121,161 | - | 17,947 |
| Other | 4,182,457 | 17,132 | (950,064) | - | - | - | 3,249,525 |
| 4,229,760 | 29,581 | (1,113,031) (1,156,647) |
- | 121,161 | - | 3,267,472 | |
| 4,396,009 | 32,913 | - | - | - 3,272,275 |
Regarding the movements in impairment losses on investments and loans to credit institutions by stages, in the year ended 31 December 2019 and the six-month period ended 30 June 2020, they are detailed as follows:
| INTEGRATED REPORT 1ST HALF 2020 | ||
|---|---|---|
| Regarding the movements in impairment losses on investments and loans to credit institutions by stages, in the | ||
| year ended 31 December 2019 and the six-month period ended 30 June 2020, they are detailed as follows: | ||
| 31.12.2019 | 30.06.2020 | |
| Stage 1 | Stage 1 | |
| Opening balance | 414,769 | 213,552 |
| Change in the accounting standards | - | - |
| Change in period: | ||
| Increases due to origination and acquisition | 52,737 | 15,781 |
| Changes due to change in credit risk | (64,377) | (194,660) |
| Decrease due to derecognition repayments and disposals | (189,576) | (11,923) |
| Write-offs | - | - |
| Changes due to update in the institution's methodology for estimation | - - |
|
| Foreign exchange and other | - | - |
| Impairment | 213,552 | 22,750 |
The reconciliation of accounting movements related to impairment losses is presented below:
| Write-offs | - | - |
|---|---|---|
| The reconciliation of accounting movements related to impairment losses is presented below: | ||
| 31.12.2019 | 30.06.2020 | |
| Stage 1 | Stage 1 | |
| Opening balance | 414,769 | 213,552 |
| Change in the accounting standards | - | - |
| Change in period: | ||
| ECL income statement change for the period | (201,217) | (190,802) |
| Stage transfers (net) | - | - |
| Disposals | - | - |
| Utilisations during the period | - | - |
| Write-offs | - | - |
| Write-off recoveries | - | - |
| - | - | |
| Foreign exchange and other |
This caption showed the following composition:
| - | ||
|---|---|---|
| 31.12.2019 | 30.06.2020 | |
| 76,077,368 | 60,891,968 | |
| - |
| This caption showed the following composition: | ||||||
|---|---|---|---|---|---|---|
| 31.12.2019 | 30.06.2020 | |||||
| As at 31 December 2019 and 30 June 2020 the Debt securities issued are analysed as follows: | ||||||
| 31.12.2019 | ||||||
| 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. | 61,938,000 | 61,963,646 | |
| Ulisses Finance No.1 – Class B | July 2017 | July 2033 | Euribor 1M + 160 b.p. | 7,000,000 | 7,004,497 | |
| Ulisses Finance No.1 – Class C | July 2017 | July 2033 | Euribor 1M + 375 b.p. | 7,100,000 | 7,109,225 | |
| 76,038,000 | 76,077,368 | |||||
| 30.06.2020 | ||||||
| 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. | 46,769,205 | 46,782,283 | |
| Ulisses Finance No.1 – Class B | July 2017 | July 2033 | Euribor 1M + 160 b.p. | 7,000,000 | 7,003,124 | |
| Ulisses Finance No.1 – Class C | July 2017 | July 2033 | Euribor 1M + 375 b.p. | 7,100,000 | 7,106,561 | |
| 60,869,205 | 60,891,968 |
| 31.12.2019 | ||||||
|---|---|---|---|---|---|---|
| 30.06.2020 | ||||||
| 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. | 46,769,205 | 46,782,283 | |
| Ulisses Finance No.1 – Class B | July 2017 | July 2033 | Euribor 1M + 160 b.p. | 7,000,000 | 7,003,124 | |
| Ulisses Finance No.1 – Class C | July 2017 | July 2033 | Euribor 1M + 375 b.p. | 7,100,000 | 7,106,561 |
The movement of this item in the year ended 31 December 2019 and the six-month period ended 30 June 2020 is as follows:
| INTEGRATED REPORT 1ST HALF 2020 | ||||||
|---|---|---|---|---|---|---|
| 31.12.2019 | ||||||
| Opening balance | Changes in the consolidation perimeter |
Issues | Repayments | Other movements |
Closing balance | |
| Chaves Funding No.7 | - | 201,660,418 | - | (201,600,000) | (60,418) | - |
| Ulisses Finance No.1 | - | 101,060,139 | - | (25,007,517) | 24,746 | 76,077,368 |
| - | 302,720,556 | - | (226,607,517) | (35,672) | 76,077,368 | |
| 30.06.2020 | ||||||
| Opening balance | Changes in the consolidation perimeter |
Issues | Repayments | Other movements |
Closing balance | |
| Chaves Funding No.7 | - | - | - | - | - | - |
| Ulisses Finance No.1 | 76,077,368 | - | - | (14,780,716) | (404,683) | 60,891,968 |
| 76,077,368 | - | - | (14,780,716) | (404,683) | 60,891,968 |
| 30.06.2020 | ||||||
|---|---|---|---|---|---|---|
| Opening balance | Changes in the consolidation perimeter |
|||||
| The scheduling by maturity regarding this caption is as follows: | 31.12.2019 | |||||
| Current | Non-current | |||||
| Due within 3 months | Over 3 months and less than 1 year | Total | Over 1 year and | Total |
| Opening balance | Changes in the consolidation perimeter |
|||||||
|---|---|---|---|---|---|---|---|---|
| Due within 3 months | Current Over 3 months and less than 1 year |
Total | 31.12.2019 Over 1 year and less than 3 years |
Non-current Over 3 years |
Total | Total | ||
| Securitisations | 17,073 | - | 17,073 | - 76,060,295 |
76,060,295 | 76,077,368 | ||
| 17,073 | - | 17,073 | - 76,060,295 |
76,060,295 | 76,077,368 | |||
| 30.06.2020 | ||||||||
| Due within 3 months | Current Over 3 months and less than 1 year |
Total | Over 1 year and less than 3 years |
Non-current Over 3 years |
Total | Total | ||
| Due within 3 months | Over 3 months and less than 1 year | Total | Over 1 year and | ||||
|---|---|---|---|---|---|---|---|
| Current | 30.06.2020 | 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 | |
| Securitisations | 10,774 | - | 10,774 | - 60,881,194 |
60,881,194 | 60,891,968 |
As at 31 December 2019 and 30 June 2020, the Group caption Credit to banking clients was detailed as follows:
| As at 31 December 2019 and 30 June 2020, the Group caption Credit to banking clients was detailed as follows: | |||
|---|---|---|---|
| 31.12.2019 | 30.06.2020 | ||
| Performing loans | 884,922,781 | 993,805,846 | |
| Mortgage Loans | 405,168,238 | 473,122,107 | |
| Auto Loans | 469,774,742 | 511,920,272 | |
| Leasings | 8,977,360 | 7,716,054 | |
| Overdrafts | 1,002,441 | 1,047,413 | |
| Other credits | - | - | |
| Overdue loans | 4,875,990 | 6,302,977 | |
| Overdue loans - less than 90 days | 740,614 | 857,863 | |
| Overdue loans - more than 90 days | 4,135,376 | 5,445,114 | |
| 889,798,770 | 1,000,108,823 | ||
| Credit risk impairment | (3,978,200) | (11,759,401) |
The maturity analysis of the Credit to bank clients as at 31 December 2019 and 30 June 2020 is detailed as follows:
| INTEGRATED REPORT 1ST HALF 2020 | ||||||||
|---|---|---|---|---|---|---|---|---|
| 31.12.2019 | ||||||||
| Current | Non-current | |||||||
| At sight / Undetermined | 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 | |
| Mortgage loans | 563 | 2,963,207 | 8,424,196 | 11,387,966 | 22,801,200 | 370,979,635 | 393,780,835 | 405,168,801 |
| Auto Loans | 3,120,988 | 21,508,729 | 53,448,350 | 78,078,067 | 138,181,295 | 256,636,368 | 394,817,663 | 472,895,730 |
| Leasings | 445,221 | 671,623 | 1,843,173 | 2,960,017 | 3,962,260 | 2,500,304 | 6,462,564 | 9,422,580 |
| Overdrafts | 1,682,194 | - | - | 1,682,194 | - | - | - | 1,682,194 |
| Other credits | 629,465 | - | - | 629,465 | - | - | - | 629,465 |
| 5,878,431 | 25,143,559 | 63,715,719 | 94,737,709 | 164,944,755 | 630,116,307 | 795,061,062 | 889,798,770 | |
| Current | 30.06.2020 | Non-current | ||||||
| Total | ||||||||
| At sight / Undetermined | 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 | ||
| Mortgage loans Auto Loans |
271 4,592,694 |
3,282,743 21,255,047 |
9,865,956 58,148,228 |
13,148,970 83,995,968 |
26,687,403 149,259,200 |
433,286,005 283,257,797 |
459,973,408 432,516,997 |
473,122,378 516,512,965 |
| Leasings | 188,057 | 412,702 | 1,846,413 | 2,447,172 | 3,404,025 | 2,052,916 | 5,456,941 | 7,904,112 |
| Overdrafts | 1,945,292 | - | - | 1,945,292 | - | - | - | 1,945,292 |
| Other credits | 624,076 | - | - | 624,076 | - | - | - | 624,076 |
| At sight / Undetermined | 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 | ||
|---|---|---|---|---|---|---|---|---|
| Mortgage loans | 271 | 3,282,743 | 9,865,956 | 13,148,970 | 26,687,403 | 433,286,005 | 459,973,408 | 473,122,378 |
| 4,592,694 | 21,255,047 | 58,148,228 | 83,995,968 | 149,259,200 | 283,257,797 | 432,516,997 | 516,512,965 | |
| 2,447,172 | 3,404,025 | 2,052,916 | 5,456,941 | 7,904,112 | ||||
| Auto Loans | ||||||||
| Leasings Overdrafts |
188,057 1,945,292 |
412,702 - |
1,846,413 - |
1,945,292 | - | - | - | 1,945,292 |
| Other credits | 624,076 | - | - | 624,076 | - | - | - | 624,076 |
| 7,350,390 | 24,950,492 | 69,860,596 | 102,161,478 | 179,350,628 | 718,596,717 | 897,947,345 | 1,000,108,823 | |
| The breakdown of this heading by type of rate is as follows: | 31.12.2019 | 30.06.2020 | ||||||
| Fixed rate | 427,176,016 | 472,482,731 | ||||||
| Floating rate | 462,622,754 | 527,626,092 | ||||||
| Credit risk impairment | 889,798,770 (3,978,200) |
1,000,108,823 (11,759,401) |
| 31.12.2019 | 30.06.2020 | ||||
|---|---|---|---|---|---|
| 427,176,016 | 472,482,731 | ||||
| Fixed rate | |||||
| Floating rate | 462,622,754 | 527,626,092 | |||
| Credit risk impairment | 889,798,770 | (3,978,200) | 1,000,108,823 (11,759,401) |
| 31.12.2019 | 30.06.2020 | ||||||
|---|---|---|---|---|---|---|---|
| follows: | As at 31 December 2019 and 30 June 2020, the analysis of this caption by type of collateral, is presented as | ||||||
| 31.12.2019 | |||||||
| Performing Loans |
Overdue Loans | Gross amount | Impairment | Net amount | |||
| Asset-backed Loans | 414,131,534 | 733,350 | 414,864,883 | (410,314) | 414,454,569 | ||
| Other guaranteed Loans | 463,692,443 | 1,651,366 | 465,343,809 | (1,938,840) | 463,404,969 | ||
| Unsecured Loans | 7,098,804 | 2,491,274 | 9,590,078 | (1,629,045) | 7,961,033 | ||
| 884,922,781 | 4,875,990 | 889,798,770 | (3,978,200) | 885,820,570 | |||
| 30.06.2020 | |||||||
| Performing Loans |
Overdue Loans | Gross amount | Impairment | Net amount | |||
| Asset-backed Loans | 480,875,135 | 776,688 | 481,651,823 | (1,125,989) | 480,525,834 | ||
| Other guaranteed Loans | 483,459,149 | 2,351,723 | 485,810,872 | (7,050,074) | 478,760,798 | ||
| 31.12.2019 Performing |
||
|---|---|---|
| 30.06.2020 | ||
| Performing Overdue Loans Gross amount Loans |
Impairment | Net amount |
| Asset-backed Loans 480,875,135 776,688 481,651,823 |
(1,125,989) | 480,525,834 |
| Other guaranteed Loans 483,459,149 2,351,723 485,810,872 |
(7,050,074) | 478,760,798 |
| Unsecured Loans 29,471,562 3,174,566 32,646,128 |
(3,583,338) | 29,062,790 |
| 993,805,846 6,302,977 1,000,108,823 |
(11,759,401) | 988,349,422 |
| The credit type analysis of the caption, as at 31 December 2019 and 30 June 2020 is detailed as follows: | |||||
|---|---|---|---|---|---|
| 31.12.2019 | |||||
| Performing Loans |
Overdue Loans | Gross amount | Impairment | Net amount | |
| Mortgage Loans | 405,168,238 | 563 | 405,168,801 | (94,675) | 405,074,126 |
| Auto Loans | 469,774,742 | 3,120,988 | 472,895,730 | (3,339,385) | 469,556,345 |
| Leasings | 8,977,360 | 445,221 | 9,422,580 | (99,647) | 9,322,933 |
| Overdrafts | 1,002,441 | 679,753 | 1,682,194 | (434,392) | 1,247,802 |
| Other credits | - | 629,465 | 629,465 | (10,101) | 619,364 |
| 884,922,781 | 4,875,990 | 889,798,770 | (3,978,200) | 885,820,571 | |
| 30.06.2020 | |||||
| Performing Loans |
Overdue Loans | Gross amount | Impairment | Net amount | |
| Mortgage Loans | 473,122,107 | 271 | 473,122,378 | (432,843) | 472,689,534 |
| Auto Loans | 511,920,272 | 4,592,694 | 516,512,966 | (10,583,658) | 505,929,309 |
| Leasings | 7,716,054 | 188,057 | 7,904,111 | (28,709) | 7,875,403 |
| Overdrafts | 1,047,413 | 897,879 | 1,945,292 | (695,671) | 1,249,621 |
| Performing | Overdue Loans | 30.06.2020 Gross amount |
Impairment | Net amount | |
|---|---|---|---|---|---|
| Loans | |||||
| Mortgage Loans | 473,122,107 | 271 | 473,122,378 | (432,843) | 472,689,534 |
| Auto Loans | 511,920,272 | 4,592,694 | 516,512,966 | (10,583,658) | 505,929,309 |
| Leasings | 7,716,054 | 188,057 | 7,904,111 | (28,709) | 7,875,403 |
| Overdrafts | 1,047,413 | 897,879 | 1,945,292 | (695,671) | 1,249,621 |
| Other credits | - | 624,076 | 624,076 | (18,521) | 605,555 |
| 993,805,846 | 6,302,977 | 1,000,108,823 | (11,759,401) | 988,349,422 |
| INTEGRATED REPORT 1ST HALF 2020 | |||||
|---|---|---|---|---|---|
| The analysis of credit to bank clients as at 31 December 2019 and 30 June 2020, by sector of activity, is as | |||||
| follows: | |||||
| 31.12.2019 | |||||
| Performing Loans |
Overdue Loans | Gross amount | Impairment | Net amount | |
| Companies | |||||
| Agriculture, forestry and fishing | 1,111,340 | 8,581 | 1,119,921 | (19,854) | 1,100,067 |
| Mining and quarrying | 22,559 | - 22,559 |
(130) | 22,430 | |
| Manufacturing | 3,414,359 | 82,939 | 3,497,297 | (53,265) | 3,444,032 |
| Water supply | 192,904 | 5,712 | 198,615 | (5,806) | 192,809 |
| Construction | 8,289,160 | 198,054 | 8,487,214 | (46,230) | 8,440,985 |
| Wholesale and retail trade | 5,370,786 | 654,597 | 6,025,382 | (41,074) | 5,984,309 |
| Transport and storage | 1,459,131 | 27,086 | 1,486,217 | (35,098) | 1,451,119 |
| Accommodation and food service activities | 1,969,233 | 15,598 | 1,984,831 | (40,979) | 1,943,852 |
| Information and communication | 347,009 | 1,459 | 348,467 | (2,804) | 345,663 |
| Financial and insurance activities | 167,845 | 702 | 168,547 | (2,503) | 166,044 |
| Real estate activities | 1,788,935 | 10,730 | 1,799,665 | (12,427) | 1,787,238 |
| Professional, scientific and technical activities | 1,107,319 | 7,105 | 1,114,424 | (12,141) | 1,102,283 |
| Administrative and support service activities | 1,611,610 | 289,475 | 1,901,084 | (19,749) | 1,881,336 |
| Education | 648,410 | 997 | 649,407 | (4,634) | 644,773 |
| Human health services and social work activities | 876,026 | 851 | 876,878 | (14,683) | 862,195 |
| Arts, entertainment and recreation | 478,756 | 2,074 | 480,830 | (9,266) | 471,564 |
| Other services | 14,038,952 | 34,985 | 14,073,937 | (106,888) | 13,967,049 |
| Individuals | |||||
| Mortgage Loans | 405,168,238 | 563 | 405,168,801 | (94,675) | 405,074,126 |
| Consumer Loans | 436,860,210 | 3,534,481 | 440,394,691 | (3,455,994) | 436,938,697 |
| 884,922,781 | 4,875,989 | 889,798,770 | (3,978,200) | 885,820,570 | |
| 30.06.2020 | |||||
| Performing Loans |
Overdue Loans | Gross amount | Impairment | Net amount | |
| Companies | |||||
| Agriculture, forestry and fishing | 1,159,807 | 11,769 | 1,171,576 | (41,024) | 1,130,552 |
| Education | 648,410 | 997 | 649,407 | (4,634) | 644,773 |
|---|---|---|---|---|---|
| Human health services and social work activities | 876,026 | 851 | 876,878 | (14,683) | 862,195 |
| Arts, entertainment and recreation | 478,756 | 2,074 | 480,830 | (9,266) | 471,564 |
| Other services | 14,038,952 | 34,985 | 14,073,937 | (106,888) | 13,967,049 |
| Individuals | |||||
| 30.06.2020 | |||||
| Performing | Overdue Loans | Gross amount | Impairment | Net amount | |
| Loans | |||||
| Companies | |||||
| Agriculture, forestry and fishing | 1,159,807 | 11,769 | 1,171,576 | (41,024) | 1,130,552 |
| Mining and quarrying | 61,601 | 0 | 61,601 | (623) | 60,979 |
| Manufacturing | 3,026,466 | 90,668 | 3,117,133 | (96,653) | 3,020,481 |
| Water supply | 168,350 | 5,712 | 174,062 | (5,847) | 168,215 |
| Construction | 6,946,541 | 333,781 | 7,280,322 | (179,690) | 7,100,632 |
| Wholesale and retail trade | 4,717,500 | 419,204 | 5,136,705 | (8,880) | 5,127,824 |
| Transport and storage | 1,340,243 | 19,947 | 1,360,191 | (78,754) | 1,281,437 |
| Accommodation and food service activities | 1,697,775 | 19,975 | 1,717,750 | (71,787) | 1,645,963 |
| Information and communication | 307,593 | 1,459 | 309,052 | (3,116) | 305,937 |
| Financial and insurance activities | 129,807 | 1,463 | 131,270 | (2,842) | 128,428 |
| Real estate activities | 1,489,411 | 11,450 | 1,500,861 | (18,795) | 1,482,066 |
| Professional, scientific and technical activities | 968,598 | 7,326 | 975,924 | (26,439) | 949,485 |
| Administrative and support service activities | 1,439,418 | 289,684 | 1,729,101 | (34,228) | 1,694,873 |
| Education | 605,208 | 763 | 605,971 | (11,206) | 594,765 |
| Human health services and social work activities | 822,654 | 3,709 | 826,362 | (31,325) | 795,037 |
| Arts, entertainment and recreation | 446,192 | 6,139 | 452,331 | (30,458) | 421,873 |
| Other services | 19,135,819 | 113,536 | 19,249,355 | (420,952) | 18,828,403 |
| Individuals | |||||
| Mortgage Loans | 473,122,107 | 271 | 473,122,378 | (432,843) | 472,689,534 |
| Consumer Loans | 476,220,757 | 4,966,121 | 481,186,877 | (10,263,940) | 470,922,937 |
| 993,805,846 | 6,302,977 | 1,000,108,823 | (11,759,401) | 988,349,422 |
The total credit portfolio, split by stage according to IFRS 9, is analysed as follows:
| 31.12.2019 | 30.06.2020 | ||
|---|---|---|---|
| Stage 1 | 834,895,752 | 925,548,571 | |
| Gross amount | 836,958,434 | 930,418,542 | |
| Impairment | (2,062,682) | (4,869,971) | |
| Stage 2 | 39,336,322 | 47,844,601 | |
| Gross amount | 40,207,967 | 50,234,134 | |
| Impairment | (871,645) | (2,389,533) | |
| Stage 3 | 11,588,496 | 14,956,250 | |
| Gross amount | 12,632,369 | 19,456,147 | |
| Impairment | (1,043,873) | (4,499,897) | |
| 885,820,571 | 988,349,422 |
The caption credit to bank clients includes the effect of traditional securitisation operations, through Special Purpose Entities (SPE) and subject to consolidation in accordance with IFRS 10.
The caption credit to bank clients includes the following amounts related to finance leases contracts:
| The caption credit to bank clients includes the effect of traditional securitisation operations, through Special | ||
|---|---|---|
| Purpose Entities (SPE) and subject to consolidation in accordance with IFRS 10. The caption credit to bank clients includes the following amounts related to finance leases contracts: |
||
| 31.12.2019 | 30.06.2020 | |
| Amount of future minimum payments | 9,632,194 | 8,330,454 |
| Interest not yet due | (654,835) | (614,400) |
The amount of future minimum payments of lease contracts, by maturity terms, is analysed as follows:
| 31.12.2019 | 30.06.2020 | |
|---|---|---|
| Interest not yet due | (654,835) | (614,400) |
| The amount of future minimum payments of lease contracts, by maturity terms, is analysed as follows: | ||
| 31.12.2019 | 30.06.2020 | |
| Due within 1 year | 2,532,976 | 2,281,079 |
| Due between 1 to 5 years | 5,835,429 | 4,977,675 |
| Over 5 years | 1,263,789 | 1,071,700 |
| Amount of future minimum payments | 9,632,194 | 8,330,454 |
The analysis of financial leases contracts, by type of client, is presented as follows:
| 31.12.2019 | 30.06.2020 | |
|---|---|---|
| Due between 1 to 5 years | 5,835,429 | 4,977,675 |
| Over 5 years | 1,263,789 | 1,071,700 |
| The analysis of financial leases contracts, by type of client, is presented as follows: | 31.12.2019 | 30.06.2020 |
| Individuals | 1,097,230 | 1,015,855 |
| 95,072 | 92,179 | |
| Home | ||
| Consumer Others |
- 1,002,158 |
- 923,676 |
| Companies Equipment |
7,880,129 634,577 |
6,700,199 570,875 |
| Real Estate | 7,245,552 | 6,129,325 |
| Impairment losses | ||||||||
|---|---|---|---|---|---|---|---|---|
| During the year ended 31 December 2019 and the six-month period ended 30 June 2020, the movement in the | ||||||||
| Group under the Accumulated impairment losses caption (Note 13) was as follows: | ||||||||
| 31.12.2019 | ||||||||
| Opening balance | Increases | Reversals | Utilisations | Transfers | PPA adjustments | Changes in the consolidation | Closing balance | |
| Non-current assets | perimeter | |||||||
| Credit to banking clients | 225,968 | 2,298,517 | (1,777,703) | (469,677) | 611,781 | (5,446,614) | 7,149,174 | 2,591,450 |
| 225,968 | 2,298,517 | (1,777,703) | (469,677) | 611,781 | (5,446,614) | 7,149,174 | 2,591,450 | |
| Current assets | ||||||||
| Credit to banking clients | 231,556 | 5,409,498 | (2,876,295) | (705,364) | (611,781) | (12,694,345) | 12,633,482 | 1,386,750 |
| 231,556 457,525 |
5,409,498 7,708,015 |
(2,876,295) (4,653,998) |
(705,364) (1,175,041) |
(611,781) - |
(12,694,345) (18,140,959) |
12,633,482 19,782,656 |
1,386,750 3,978,200 |
| INTEGRATED REPORT 1ST HALF 2020 | ||||||||
|---|---|---|---|---|---|---|---|---|
| 30.06.2020 | ||||||||
| Opening balance | Increases | Reversals | Utilisations | Transfers | Other adjustments | Changes in the consolidation perimeter |
Closing balance | |
| Non-current assets | ||||||||
| Credit to banking clients | 2,591,450 | 5,509,123 | (298,704) | (12,540) | 174,457 | 212,124 | - | 8,175,909 |
| 2,591,450 | 5,509,123 | (298,704) | (12,540) | 174,457 | 212,124 | - | 8,175,909 | |
| Current assets Credit to banking clients |
1,386,750 | 2,414,642 | (130,922) | (5,496) | (174,457) | 92,974 | - | 3,583,492 |
| 1,386,750 | 2,414,642 | (130,922) | (5,496) | (174,457) | 92,974 | - | 3,583,492 | |
| 3,978,200 | 7,923,765 | (429,626) | (18,036) | - | 305,098 | - | 11,759,401 |
| The impairment losses of Credit to banking clients (increases net of reversals) in the Group for the six-month | ||||
|---|---|---|---|---|
| period ended 30 June 2020, amounting to 7,494,139 Euros (711,871 Euros at 30 June 2019) was recorded | ||||
| under the caption Impairment of accounts receivable, net. | ||||
| Regarding the movements in impairment losses by stages, in the year ended 31 December 2019 and the six | ||||
| month period ended 30 June 2020, they are detailed as follows: | ||||
| Stage 1 | 31.12.2019 Stage 2 |
Stage 3 | Total | |
| Opening balance | 184,341 | 67,195 | 205,989 | 457,525 |
| Change in period: | ||||
| Increases due to origination and acquisition | 2,553,925 | 305,614 | 230,886 | 3,090,425 |
| Changes due to change in credit risk | (842,651) | 1,469,995 | (49,602) | 577,742 |
| Changes due to modifications without derecognition | - | - | - | - |
| Decrease due to derecognition repayments and disposals | (139,146) | (64,702) | (410,302) | (614,150) |
| Write-offs | - | - | (1,175,041) | (1,175,041) |
| Changes due to update in the institution's methodology for estimation | - | - | - | - |
| Transfers to: | ||||
| Stage 1 | 403,848 | (373,530) | (30,318) | - |
| Stage 2 | (82,928) | 121,868 | (38,940) | - |
| Stage 3 | (14,707) | (717,728) | 732,435 | - |
| Foreign exchange and other | - | 62,932 | 1,578,765 | 1,641,697 |
| Impairment | 2,062,682 | 871,644 | 1,043,873 | 3,978,200 |
| Of which: POCI | - | - | (1,293,376) | (1,293,376) |
| 30.06.2020 | ||||
| Stage 1 | Stage 2 | Stage 3 | Total | |
| Opening balance | 2,062,682 | 871,644 | 1,043,873 | 3,978,200 |
| Change in period: | ||||
| Increases due to origination and acquisition | 1,039,816 | 285,814 | 36,714 | 1,362,344 |
| Transfers to: | ||||
|---|---|---|---|---|
| Stage 1 | 403,848 | (373,530) | (30,318) | - |
| Stage 2 | (82,928) | 121,868 | (38,940) | - |
| Stage 3 | (14,707) | (717,728) | 732,435 | - |
| Foreign exchange and other | - | 62,932 | 1,578,765 | 1,641,697 |
| 30.06.2020 | ||||
| Opening balance | 2,062,682 | 871,644 | 1,043,873 | 3,978,200 |
| Change in period: | ||||
| Increases due to origination and acquisition | 1,039,816 | 285,814 | 36,714 | 1,362,344 |
| Changes due to change in credit risk | 1,600,812 | 1,791,914 | 3,086,983 | 6,479,709 |
| Changes due to modifications without derecognition | - | - | - | - |
| Decrease due to derecognition repayments and disposals | (104,629) | (19,950) | (223,334) | (347,914) |
| Write-offs | - | - | (18,036) | (18,036) |
| Changes due to update in the institution's methodology for estimation | - | - | - | - |
| Transfers to: | ||||
| Stage 1 | 437,564 | (337,940) | (99,624) | - |
| Stage 2 | (144,741) | 178,071 | (33,330) | - |
| Stage 3 | (23,906) | (534,616) | 558,523 | - |
| Foreign exchange and other | 2,373 | 154,595 | 148,129 | 305,098 |
| Impairment | 4,869,971 | 2,389,533 | 4,499,897 | 11,759,401 |
| Of which: POCI | - | - | (822,338) | (822,338) |
| The reconciliation of accounting movements related to impairment losses is presented below: | ||||
| Stage 1 | 31.12.2019 Stage 2 |
Stage 3 | Total | |
| Opening balance | 184,341 | 67,195 | 205,989 | 457,525 |
| Change in period: | ||||
| ECL income statement change for the period | 1,572,128 | 1,710,907 | (229,018) | 3,054,017 |
| Transfers to: | ||||
|---|---|---|---|---|
| Stage 1 | 437,564 | (337,940) | (99,624) | - |
| Stage 2 | (144,741) | 178,071 | (33,330) | - |
| Stage 3 | (23,906) | (534,616) | 558,523 | - |
| Foreign exchange and other | 2,373 | 154,595 | 148,129 | 305,098 |
| The reconciliation of accounting movements related to impairment losses is presented below: | ||||
| 31.12.2019 | ||||
| Stage 1 | Stage 2 | Stage 3 | Total | |
| Opening balance | 184,341 | 67,195 | 205,989 | 457,525 |
| Change in period: | ||||
| ECL income statement change for the period | 1,572,128 | 1,710,907 | (229,018) | 3,054,017 |
| Stage transfers (net) | 306,213 | (969,390) | 663,177 | - |
| Disposals | - | - | - | - |
| Utilisations during the period | - | - | - | - |
| Write-offs | - | - | (1,175,041) | (1,175,041) |
| Write-off recoveries | - | - | - | - |
| Foreign exchange and other | - | 62,932 | 1,578,765 | 1,641,697 |
| INTEGRATED REPORT 1ST HALF 2020 | ||||
|---|---|---|---|---|
| 30.06.2020 | ||||
| Stage 1 | Stage 2 | Stage 3 | Total | |
| Opening balance | 2,062,682 | 871,644 | 1,043,873 | 3,978,200 |
| Change in period: | ||||
| ECL income statement change for the period | 2,535,998 | 2,057,778 | 2,900,363 | 7,494,139 |
| Stage transfers (net) | 268,916 | (694,485) | 425,568 | - |
| Disposals | - | - | - | - |
| Utilisations during the period | - | - | - | - |
| Write-offs | - | - | (18,036) | (18,036) |
| - | - | - | - | |
| 2,373 | 154,595 | 148,129 | 305,098 | |
| Write-off recoveries Foreign exchange and other |
As at 31 December 2019 and 30 June 2020, the Deferrals included in current assets and current and noncurrent liabilities of the Group showed the following composition:
| As at 31 December 2019 and 30 June 2020, the Deferrals included in current assets and current and non | ||
|---|---|---|
| 31.12.2019 | 30.06.2020 | |
| Assets deferrals | ||
| Current | ||
| Rents payable | 1,391,768 | 1,537,277 |
| Meal allowances | 1,486,218 | 1,461,654 |
| Other | 4,427,275 | 7,445,392 |
| 7,305,261 | 10,444,323 | |
| Liabilities deferrals | ||
| Non-current | ||
| Investment subsidy | 294,490 | 288,890 |
| 294,490 | 288,890 | |
| Current | ||
| Investment subsidy | 11,201 | 11,201 |
| Contratual liabilities | 1,533,212 | 1,608,135 |
| Other | 1,910,064 | 1,467,787 |
| 3,454,477 | 3,087,122 | |
| 3,748,967 | 3,376,012 |
The variation in the caption Other assets deferrals 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 recognised as revenue because the performance obligations have not yet been met as recommended by the standard.
The "Contractual liabilities" recognised by the Group essentially refer to values related to stamps and prepaid postage of priority mail in the amount of 871,156 euros (1,028,940 euros on 31 December 2019 and to objects invoiced and not delivered on 30 June 2020 in the express segment, in the amount of 736,978 euros (504,272 euros as of 31 December 2019), whose revenue is recognised upon delivery in the following month.
The revenue recognised by the Group in the period, included in the balance of Contractual liabilities at the beginning of the period amounted to 754,504 Euros.
No "Assets resulting from contracts" associated with the application of IFRS 15 - Revenue from contracts with customers were recognised.
As at 31 December 2019 and 30 June 2020, cash and cash equivalents correspond to the value 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:
| As at 31 December 2019 and 30 June 2020, cash and cash equivalents correspond to the value 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: | ||
| 31.12.2019 | 30.06.2020 | |
| Cash Slight deposits |
59,266,424 | 61,971,706 |
| 182,192,757 | 85,583,790 | |
| Demand deposits at Bank of Portugal | 29,497,627 | 119,449,269 |
| Deposits in other credit institutions | 107,376,274 | 26,863,599 |
| Term deposits | 64,662,643 | 102,721,141 |
| Cash and cash equivalents (Balance sheet) | 442,995,724 | 396,589,505 |
| Sight deposits at Bank of Portugal | (25,924,034) | (14,192,600) |
| Outstanding checks / Checks clearing Impairment of slight and term deposits |
(2,226,045) 19,924 |
(3,747,910) 26,931 |
In accordance with the provisions of Regulation (EU) No. 1358/2011 of European Central Bank of 14 December 2011, the minimum cash requirements kept as demand deposits at Bank of Portugal amounts to 1% of deposits and other liabilities.
Therefore, the item Demand deposits at Bank of Portugal includes, as at 30 June 2020, a total amount of demand deposits of 119,449,269 Euros, of which 14,192,600 Euros were allocated to the fulfilment of the above mentioned mandatory minimum cash requirements at Banco de Portugal.
| above mentioned mandatory minimum cash requirements at Banco de Portugal. | |||||
|---|---|---|---|---|---|
| Impairment | |||||
| In the scope of IFRS 9 – Financial instruments the Group has begun to recognised impairment on sight and term deposits as well as on investments in credit institutions. Therefore, in the year ended 31 December 2019 and the six-month period ended 30 June 2020, the movement recorded under the caption "Impairment of sight and term deposits" (Note 13) related to the Group is detail as follows: |
|||||
| 31.12.2019 | |||||
| Opening balance | Increases | Reversals | Utilisations | Closing balance | |
| Sight and term deposits | 21,295 21,295 |
5,351 5,351 |
(6,723) (6,723) |
- - |
19,924 19,924 |
| 31.03.2020 | |||||
| Opening balance | Increases | Reversals | Utilisations | Closing balance | |
| Sight and term deposits | 19,924 19,924 |
12,378 | (5,371) | - | 26,930 |
| 12,378 | (5,371) | - | 26,930 |
The impairment losses (increases net of reversals) of sight and term deposits in the Group for the six-month period ended 30 June 2020, amounting to 7,007 Euros (7,635 Euros at 30 June 2019) was recorded under the heading Impairment of accounts receivable, net.
During the year ended 31 December 2019 and the six-month period ended 30 June 2020, the following movements occurred in the Group's impairment losses:
| INTEGRATED REPORT 1ST HALF 2020 | ||||||||
|---|---|---|---|---|---|---|---|---|
| 31.12.2019 | ||||||||
| Opening balance | Increases | Reversals | Utilisations | Transfers | Changes in the consolidation | PPA adjustments | Closing balance | |
| perimeter | ||||||||
| Non-current assets | ||||||||
| Tangible fixed assets | 24,256 | - | (83) | - | - | - | - | 24,173 |
| Investment properties | 1,243,502 | - | (494,358) | - | - | - | - | 749,144 |
| 1,267,758 | - | (494,442) | - | - | - | - | 773,316 | |
| Debt securities | 164,883 | 31,531 | (83,821) | (299) | 57,147 | - | - | 169,441 |
| Other non-current assets | 1,982,890 | - | - | - | 116,906 | - | - | 2,099,796 |
| Credit to banking clients | 225,968 | 2,298,517 | (1,777,703) | (469,674) | 611,781 | 7,149,174 | (5,446,614) | 2,591,449 |
| Other banking financial assets | 217,751 | 91,523 | (244,428) | - | 101,403 | - | - | 166,249 |
| 2,591,492 | 2,421,571 | (2,105,952) | (469,973) | 887,237 | 7,149,174 | (5,446,614) | 5,026,935 | |
| 3,859,250 | 2,421,571 | (2,600,394) | (469,973) | 887,237 | 7,149,174 | (5,446,614) | 5,800,251 | |
| Current assets Accounts receivable | 33,436,621 | 7,204,092 | (766,236) | (1,892,645) | - | - | - | 37,981,832 |
| Credit to banking clients | 231,556 | 5,409,498 | (2,876,295) | (705,365) | (611,781) | 12,633,482 | (12,694,345) | 1,386,750 |
| Debt securities | 145,733 | 2,678 | (370) | (86,758) | (57,147) | - | - | 4,136 |
| Other current assets | 7,516,988 | 1,585,794 | (100,275) | (554,795) | (105,979) | - | - | 8,341,734 |
| Other banking financial assets | 207,945 | 249,671 | (126,763) | - | (112,330) | 4,011,236 | - | 4,229,759 |
| Slight and term deposits | 21,295 | 5,352 | (6,723) | - | - | - | - | 19,923 |
| 41,560,139 | 14,457,085 | (3,876,662) | (3,239,562) | (887,237) | 16,644,718 | (12,694,345) | 51,964,134 | |
| Non-current assets held for sale | - | 9 | (3,059) | - | - | 187,659 | - | 184,609 |
| - | 9 | (3,059) | - | - | 187,659 | - | 184,609 | |
| 1,824,111 | 313,018 | (1,129) | (19,695) | - | - | - | 2,116,305 | |
| 633,526 | 91,662 | - | - | - | - | - | 725,188 | |
| Merchandise Raw, subsidiary and consumable |
404,680 | (1,129) | (19,695) | - | - | - | 2,841,493 | |
| 2,457,637 | ||||||||
| 44,017,776 | 14,861,773 | (3,880,850) | (3,259,257) | (887,237) | 16,832,377 | (12,694,345) | 54,990,236 |
| 30.06.2020 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Opening balance | Increases | Reversals | Utilisations | Transfers | Changes in the consolidation perimeter |
Other movements |
Closing balance | |
| Non-current assets | ||||||||
| Tangible fixed assets | 24,173 | - | - | - | - | - | - | 24,173 |
| Investment properties | 749,144 | - | - | - | - | - | - | 749,144 |
| 773,316 | - | - | - | - | - | - | 773,317 | |
| Debt securities | 169,441 | 38,981 | (8,165) | - | (10,821) | - | - | 189,436 |
| Other non-current assets | 2,099,796 | - | - | - | 364,519 | - | - | 2,464,315 |
| Credit to banking clients | 2,591,449 | 5,509,123 | (298,704) | (12,540) | 174,457 | - | 212,124 | 8,175,909 |
| Other banking financial assets | 166,249 | 3,332 | (43,616) | - | (121,161) | - | - | 4,804 |
| 5,026,935 | 5,551,436 | (350,485) | (12,540) | 406,994 | - | 212,124 | 10,834,465 | |
| 5,800,251 | 5,551,436 | (350,485) | (12,540) | 406,994 | - | 212,124 | 11,607,782 | |
| Current assets | ||||||||
| Accounts receivable | 37,981,832 | 3,122,749 | (785,482) | (452,029) | - | - | - | 39,867,071 |
| Credit to banking clients | 1,386,750 | 2,414,642 | (130,922) | (5,496) | (174,457) | - | 92,974 | 3,583,491 |
| Debt securities | 4,136 | 3,112 | (768) | - | 10,822 | - | - | 17,302 |
| Other current assets | 8,341,734 | 1,427,021 | (10,001) | (49,823) | 190,435 | - | - | 9,899,366 |
| Other banking financial assets | 4,229,759 | 29,581 | (1,113,031) | - | 121,161 | - | - | 3,267,470 |
| Slight and term deposits | 19,923 | 12,378 | (5,371) | - | - | - | - | 26,930 |
| 51,964,134 | 7,009,483 | (2,045,575) | (507,348) | 147,961 | - | 92,974 | 56,661,630 | |
| Non-current assets held for sale | 184,609 | 73,804 | - | - | - | - | - | 258,413 |
| 184,609 | 73,804 | - | - | - | - | - | 258,413 | |
| Merchandise | 2,116,305 | 373,003 | - | (104,705) | - | - | - | 2,384,603 |
| Raw, subsidiary and consumable | 725,188 | - | (13,510) | (2,255) | - | - | - | 709,423 |
| 2,841,493 | 373,003 | (13,510) | (106,960) | - | - | - | 3,094,026 | |
| 54,990,236 | 7,456,290 | (2,059,085) | (614,308) | 147,961 | - | 92,974 | 60,014,069 | |
| 60,790,487 | 13,007,726 | (2,409,570) | (626,848) | 554,955 | - | 305,098 | 71,621,851 |
As at 30 June 2020, the Group review the expected credit losses ("ECL") to be applied to amounts receivable and bank deposits, with reformulation of the risk parameters in order to reflect in the forward-looking component the economic deterioration resulting from the situation of COVID-19, considering for this purpose the combination of the projected changes in unemployment rate and GDP. This revision of the parameters had an impact of around €3.2m in the consolidated accounts of the Group.
As at 30 June 2020, 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.
As at 31 December 2019 and 30 June 2020 the Company's shareholders with greater than or equal to 2% shareholdings, according to the information reported, are as follows:
| INTEGRATED REPORT 1ST HALF 2020 | ||||
|---|---|---|---|---|
| 31.12.2019 | ||||
| Shareholder | No. of shares | % | Nominal value | |
| Manuel Champalimaud, SGPS, S.A. (1) | 19,271,134 | 12.847% | 9,635,567 | |
| Manuel Carlos de Melo Champalimaud | 353,185 | 0.235% | 176,593 | |
| Manuel Carlos de Melo Champalimaud (1) | Total | 19,624,319 | 13.083% | 9,812,160 |
| GreenWood Builders Fund I, LP (2) | 8,759,082 | 5.839% | 4,379,541 | |
| GreenWood Investors LLC(2) | Total | 8,759,082 | 5.839% | 4,379,541 |
| Global Portfolio Investments, S.L. (3) | 8,492,745 | 5.662% | 4,246,373 | |
| Indumenta Pueri, S.L. (3) | Total | 8,492,745 | 5.662% | 4,246,373 |
| Norges Bank | Total | 5,834,490 | 3.890% | 2,917,245 |
| BlackRock, Inc.(4) | Total | 4,496,864 | 2.998% | 2,248,432 |
| BBVA Asset Management, SA SGIIC (5) | Total | 3,495,499 | 2.330% | 1,747,750 |
| Wellington Management Group LLP(6) | Total | 3,321,219 | 2.214% | 1,660,610 |
| BPI Gestão de Activos (7) | Total | 3,044,307 | 2.030% | 1,522,154 |
| CTT, S.A. (own shares) (8) | Total | 1 | 0.000% | 1 |
| Other shareholders | Total | 92,931,474 | 61.954% | 46,465,737 |
| Total | 150,000,000 | 100.000% | 75,000,000 |
(1) Includes 19,146,815 shares directly held by Manuel Champalimaud, SGPS, S.A. and 124,319 shares held by the members of its Board of Directors, of which Duarte Palma Leal Champalimaud, non-executive member of the Board of Directors of CTT, is Vice-Chairman. Qualified shareholding directly and indirectly attributable to Manuel Carlos de Melo Champalimaud.
(2) GreenWood Investors, LLC, of which Steven Wood, Non-Executive member of the Board of Directors of CTT, is a Managing Member exercises the voting rights not in its own name but on behalf of the fund 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.
(3) Global Portfolio Investments, S.L. is controlled by Indumenta Pueri, S.L..
| INTEGRATED REPORT 1ST HALF 2020 | ||||
|---|---|---|---|---|
| 30.06.2020 | ||||
| Shareholder | No. of shares | % | Nominal value | |
| Manuel Champalimaud, SGPS, S.A. (1) | 19,330,084 | 12.887% | 9,665,042 | |
| Manuel Carlos de Melo Champalimaud | 353,185 | 0.235% | 176,593 | |
| Manuel Carlos de Melo Champalimaud (1) | Total | 19,683,269 | 13.122% | 9,841,635 |
| Global Portfolio Investments, S.L. (2) | 15,057,937 | 10.039% | 7,528,969 | |
| Indumenta Pueri, S.L. (2) | Total | 15,057,937 | 10.039% | 7,528,969 |
| GreenWood Builders Fund I, LP (3) | 9,210,000 | 6.140% | 4,605,000 | |
| GreenWood Investors LLC(3) | Total | 9,210,000 | 6.140% | 4,605,000 |
| Norges Bank | Total | 8,741,023 | 5.827% | 4,370,512 |
| BBVA Asset Management, SA SGIIC (4) | Total | 3,495,499 | 2.330% | 1,747,750 |
| BPI Gestão de Activos (5) | Total | 3,044,307 | 2.030% | 1,522,154 |
| CTT, S.A. (own shares) (6) | Total | 1 | 0.000% | 1 |
| Other shareholders | Total | 90,767,964 | 60.512% | 45,383,982 |
| Total | 150,000,000 | 100.000% | 75,000,000 |
(1) Includes 19,246,815 shares directly 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 member of the Board of Directors 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.
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 recognised in reserves.
As at 30 June 2020, CTT held 1 own share, with a nominal value of 0.50€, being all the inherent rights suspended pursuant to article 324 of the Portuguese Companies Code.
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.
| INTEGRATED REPORT 1ST HALF 2020 | |||||
|---|---|---|---|---|---|
| Reserves | |||||
| As at 31 December 2019 and 30 June 2020, the Group's and Company's heading Reserves showed the | |||||
| following composition: | |||||
| 31.12.2019 | |||||
| Legal reserves | Own shares reserves | Fair Value reserves |
Other reserves | Total | |
| Opening balance | 15,000,000 | 8 | 270 | 50,836,597 | 65,836,875 |
| Assets fair value | - | - | 15,720 | - | 15,720 |
| Closing balance | 15,000,000 | 8 | 15,990 | 50,836,597 | 65,852,595 |
| 30.06.2020 | |||||
| Legal reserves | Own shares reserves | Fair Value reserves |
Other reserves | Total | |
| Opening balance Assets fair value |
15,000,000 - 15,000,000 |
8 - 8 |
15,990 355,891 371,881 |
50,836,597 - 50,836,597 |
65,852,595 355,891 66,208,486 |
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 2020, this caption includes the amount of 8 Euros related to the creation of an unavailable reserve for the same amount of the acquisition price of the own shares held.
This heading 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.
During the year ended 31 December 2019 and the six-month period ended 30 June 2020, the following movements were made in the Group heading Retained earnings:
| This heading 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. | ||
| During the year ended 31 December 2019 and the six-month period ended 30 June 2020, the following | ||
| movements were made in the Group heading Retained earnings: | ||
| 31.12.2019 | 30.06.2020 | |
| Opening balance | 4,378,984 | 10,867,301 |
| Application of the net profit of the prior year | 21,499,271 | 29,196,933 |
| Distribution of dividends | (15,000,000) | - |
| Adjustments from the application of the equity method | (10,954) | (4,164) |
| Other movements | - | (46,047) |
The actuarial gains/losses associated to post-employment benefits, as well as the corresponding deferred taxes, are recognised in this heading.
Thus, for the year ended 31 December 2019 and the six-month period ended 30 June 2020, the movements occurred in this heading, in the Group, were as follows:
| Thus, for the year ended 31 December 2019 and the six-month period ended 30 June 2020, the movements | ||
|---|---|---|
| occurred in this heading, in the Group, were as follows: | ||
| 31.12.2019 | 30.06.2020 | |
| Opening balance | (30,993,430) | (49,744,144) |
| Actuarial gains/losses | (25,769,253) | - |
| Tax effect | 7,018,539 | - |
According to the dividend distribution proposal included in the 2018 Annual Report, at the General Meeting of Shareholders, which was held on 23 April 2019, a dividend distribution of 15,000,000 Euros, corresponding to a dividend per share of 0.10 Euros, regarding the financial year ended 31 December 2018 was proposed and approved. The dividend amount assigned to own shares was transferred to Retained earnings, totalling 0.10 Euros.
At the General Meeting of Shareholders, which was held on 29 April 2020, the non-distribution of dividends regarding the year ended 31 December 2019 was proposed and approved. The net income in the amount of 29,196,933 Euros was transferred to retained earnings.
During the periods ended 30 June 2019 and 30 June 2020, the earnings per share were calculated as follows:
| regarding the year ended 31 December 2019 was proposed and approved. The net income in the amount of 29,196,933 Euros was transferred to retained earnings. |
||
|---|---|---|
| 17. Earnings per share |
||
| During the periods ended 30 June 2019 and 30 June 2020, the earnings per share were calculated as follows: | ||
| 30.06.2019 | 30.06.2020 | |
| Net income for the period | 8,988,445 | (1,984,332) |
| Average number of ordinary shares | 149,999,999 | 149,999,999 |
| Earnings per share | ||
| Basic | 0.06 | (0.01) |
| Diluted | 0.06 | (0.01) |
| The average number of shares is detailed as follows: | 30.06.2019 | 30.06.2020 |
| Shares issued at begining of the period | 150,000,000 | 150,000,000 |
| 1 | 1 | |
| Own shares effect Average number of shares during the period |
149,999,999 | 149,999,999 |
The average number of shares is detailed as follows:
| Earnings per share | ||
|---|---|---|
| The average number of shares is detailed as follows: | 30.06.2019 | 30.06.2020 |
| Shares issued at begining of the period Own shares effect |
150,000,000 1 |
150,000,000 1 |
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 2020, the number of own shares held is 1 and its average number for the year ended 30 June 2020 is also 1, 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 2019 and 30 June 2020, Debt of the Group showed the following composition: | ||
|---|---|---|
| 31.12.2019 | 30.06.2020 | |
| Non-current liabilities | ||
| Bank loans | 81,702,538 | 81,803,310 |
| Lease liabilities | 66,895,396 | 67,563,124 |
| 148,597,934 | 149,366,434 | |
| Current liabilities | ||
| Bank loans | 9,749,470 | 9,748,498 |
| Lease liabilities | 17,064,097 | 19,946,291 |
| 26,813,567 | 29,694,789 | |
| 175,411,501 | 179,061,223 |
As at 31 December 2019 and 30 June 2020, Debt of the Group showed the following composition:
| 2019: 1.25% and 1.875%). | As at 30 June 2020, the interest rates applied to bank loans were between 1.25% and 1.875% (31 December | |||||
|---|---|---|---|---|---|---|
| Bank loans and other loans | ||||||
| As at 31 December 2019 and 30 June 2020, the details of the Group bank loans were as follows: | ||||||
| 31.12.2019 | 30.06.2020 | |||||
| Amount used | Amount used | |||||
| Limit | Current | Non-current | Limit | Current | Non-current | |
| 9,749,470 | - | 11,250,000 | 9,748,498 | - | ||
| Bank loans | ||||||
| Millennium BCP | 11,250,000 | |||||
| BBVA / Bankinter | 75,000,000 | - | 46,891,381 | - | - | 47,118,398 |
| Novo Banco | 35,000,000 | - | 34,811,157 | - | - | 34,684,912 |
| Banco Montepio BIM - (Mozambique) |
- 44,870 |
- - |
- - |
25,000,000 40,928 |
- - |
- - |
| Other loans BIM - (Mozambique) |
- | - | - | - | - | - |
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. Regarding 31 December 2018, the amount of 25 million Euros was used, presented in the balance sheet net of commission in the amount of 24,276,250 Euros. As at 30 June 2020 the referred amount corresponded to 47,118,398 Euros. By a company 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. Regarding 30 June 2020, the 35 million Euros were used and are presented in the balance sheet net of commission in the amount of 34,684,912 Euros.
On 21 May 2020, a Commercial Paper Issue Placement Agreement was signed in the maximum amount of 25 million Euros, with a term of 3 years, renewable for the same period. As of 30 June 2020, no amount was used.
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.
The Group presents lease liabilities which future payments, undiscounted and discounted amounts presented in the financial position, are detailed as follows:
| The Group presents lease liabilities which future payments, undiscounted and discounted amounts presented | |||
|---|---|---|---|
| in the financial position, are detailed as follows: | |||
| 31.12.2019 | 30.06.2020 | ||
| Due within 1 year | 20,168,630 | 26,014,237 | |
| Due between 1 to 5 years | 63,131,546 | 59,897,514 | |
| Over 5 years | 14,737,518 | 19,856,472 | |
| Total undiscounted lease liabilities | 98,037,694 | 105,768,224 | |
| 17,064,097 | 19,946,291 | ||
| 66,895,396 | 67,563,124 | ||
| Current Non-current Lease liabilities included in the statement of financial position |
83,959,493 | 87,509,415 | |
| The amounts recognised in the income statement are detailed as follows: | |||
| 30.06.2019 | 30.06.2020 | ||
| Lease liabilities interests (note 24) | 1,886,770 | 1,641,275 |
The amounts recognised in the income statement are detailed as follows:
| 30.06.2019 | 30.06.2020 | |
|---|---|---|
| The amounts recognised in the Cash flow statement are as follows: | 30.06.2019 | 30.06.2020 |
The amounts recognised in the Cash flow statement are as follows:
| 30.06.2019 | 30.06.2020 |
|---|---|
The movement in the rights of use underlying these lease liabilities can be analysed in note 4.
| Contingent liabilities and commitments | ||||||||
|---|---|---|---|---|---|---|---|---|
| Provisions | ||||||||
| For the year ended 31 December 2019 and the six-month period ended 30 June 2020, in order to face legal | ||||||||
| proceedings and other liabilities arising from past events, the Group recognised provisions, which showed the following movement: |
||||||||
| Opening balance | Increases | Reversals | 31.12.2019 Utilisations |
Transfers | Changes in the consolidation | PPA adjustments | Closing balance | |
| Non-current provisions | perimeter | |||||||
| Litigations | 3,149,620 | 1,975,191 | (1,652,175) | (691,483) | 67,824 | - | - | 2,848,977 |
| Restructuring | 1,842,159 | 100,826 | (863,627) | (39,610) | - | - | - | 1,039,748 |
| Other provisions | 9,021,484 | 210,045 | (675,510) | (2,942) | (67,824) | 1,499,282 | 397,421 | 10,381,956 |
| Sub-total - caption "Provisions (increases)/reversals" | 14,013,263 | 2,286,062 | (3,191,312) | (734,035) | - | 1,499,282 | 397,421 | 14,270,681 |
| Restructuring | 1,026,902 | 7,504,481 | - | (7,852,242) | - | - | - | 679,141 |
| Other provisions | 979,174 16,019,339 |
1,826,549 11,617,093 |
- (3,191,312) |
(120,167) (8,706,444) |
- - |
- 1,499,282 |
- 397,421 |
2,685,556 17,635,379 |
| 31.12.2019 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Opening balance | Increases | Reversals | 30.06.2020 Utilisations |
Transfers | Changes in the consolidation | Closing balance | ||
| perimeter | ||||||||
| Non-current provisions | ||||||||
| Litigations | 2,848,977 | 373,663 | (367,208) | (125,931) | 13,941 | - | 2,743,442 | |
| Restructuring | 1,039,748 | - | - | - | - | - | 1,039,748 | |
| Other provisions Sub-total - caption "Provisions (increases)/reversals" |
10,381,956 14,270,681 |
1,029,469 1,403,132 |
(146,284) (513,492) |
(2,400) (128,331) |
(284,532) (270,591) |
- - |
10,978,209 14,761,399 |
|
| Restructuring Other provisions |
2,685,556 | 679,141 | 24,728 - |
- - |
(663,075) (671,863) |
- 371,820 |
- - |
40,794 2,385,513 |
The net amount between increases and reversals of provisions was recorded in the consolidated income statement under the caption Provisions, net and amounted to 196,890 Euros as at 30 June 2019 and 889,640 Euros as at 30 June 2020.
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 1,652,175 Euros as at 31 December 2019 and 367,208 Euros as at 30 June 2020, essentially results from lawsuits whose decision, which was made known in the course of 2019 or 2020, 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).
On 19 December 2017, CTT approved an Operational Transformation Plan, which emphasises the purposes of optimising the retail network and reinforcing the HR optimisation programme. Following the maintenance, in 2018 and 2019, on the HR optimisation programme, the provision created for this purpose amounted to 40,794 Euros as at 30 June 2020, in the Group and has been recorded against the caption Staff costs in the income statement. It is expected that this provision will be substantially used in 2020.
The utilisations recorded in the same period regard mainly the payment of indemnities foreseen when the provision was booked as well as the costs incurred with the closing of post offices.
Also, within the scope of the Operational Transformation Plan, in the area of optimisation of the delivery network and mail processing operations, the Group, in the period ended 31 December 2018, created a provision for restructuring in the amount of 1,397,647 Euros which was recognised under "Provisions (increases) / reversals" in the income statement by nature. As at 31 December 2019 following an update/revision of the underlying criteria, the provision, in the Group, amounted to 1,039,748 Euros. As at 30 June 2020 the value has not been changed.
As at 30 June 2020 the provision, in the Group to cover any contingencies relating to labour litigation proceedings not included in the current court proceedings related to remuneration differences and attendance bonuses that can be claimed by workers, amounts to 6,775,067 Euros (6,891,248 Euros as at 31 December de 2019). The amount of the provision corresponds to the Group's best estimate for the outflow, and it is not possible to estimate the expected moment for the outflow as it depends on the moment when proceedings are initiated by the Group's employees.
As at 30 June 2020, a provision is recognised in CTT Expresso branch in Spain to face the notification issued by the Spanish National Commission on Markets and Competition, which has now been the subject of an appeal to the Spanish Audiencia Nacional (National High Court). 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. The amount provisioned in 321 Crédito, S.A. amounting to 2,331,871 Euros as at 30 June 2020 (1,499,282 Euros at the acquisition date) is essentially the result of the risk assessment associated with tax contingencies.
As at 30 June 2020, in addition to the previously mentioned situations, this heading also includes in the Group:
As at 31 December 2019 and 30 June 2020, the Group had provided bank guarantees to third parties as follows:
| As at 31 December 2019 and 30 June 2020, the Group had provided bank guarantees to third parties as follows: | |||||
|---|---|---|---|---|---|
| Description | 31.12.2019 | 30.06.2020 | |||
| Autoridade Tributária e Aduaneira (Portuguese Tax and Customs Authority) | 8,211,715 | 8,211,715 | |||
| 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 | |||
| 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 | |||
| O Feliz - Imobiliaria (Real estate company) | 381,553 | 381,553 | |||
| EUROGOLD (Real estate company) | 288,384 | 288,384 | |||
| Courts | 281,830 | 281,830 | |||
| CIVILRIA (Real estate company) | - | 224,305 | |||
| TIP - Transportes Intermodais do Porto, ACE (Oporto intermodal transport) | 150,000 | 150,000 | |||
| Municipalities | 118,658 | 118,658 | |||
| INCM - Imprensa Nacional da Casa da Moeda (Portuguese Mint and Official Printing Office) | 85,056 | 85,056 | |||
| Solred (Repsol's fuel cards) | 80,000 | 80,000 | |||
| EPAL - Empresa Portuguesa de Águas Livres (Multi-municipal System of Water Supply and Sanitation of the Lisbon Area) | 68,895 | 68,895 | |||
| Companhia Carris de Ferro de Lisboa, EM, SA (Portuguese Railway company) | 55,000 | 55,000 | |||
| ANA - Aeroportos de Portugal (Airports of Portugal) | 34,000 | 34,000 | |||
| EMEL, S.A. (Municipal company managing parking in Lisbon) | 26,984 | 26,984 | |||
| Águas do Norte (Water Supply of the Northern Region) Instituto de Gestão Financeira Segurança Social (Social Security Financial Management Institute)21,557 |
23,804 | 23,804 21,557 |
|||
| 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 | |||
| Administração Regional de Saúde - Lisboa e Vale do Tejo ( Regional Health Authority of the Lisbon Area) |
13,000 | 13,000 | |||
| 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 | |||
| Promodois (Real estate company) | 6,273 | 6,273 | |||
| Consejeria Salud ( Local Health Service/Spain) | 4,116 | 4,116 | |||
| Instituto do Emprego e Formação Profissional (Employment and Professional Training | 3,718 | 3,718 | |||
| EMARP - Empresa de Aguas e Resíduos de Portimão (Services of Water Supply and Sanitation of the city of Portimão) | 3,100 | 3,100 | |||
| IFADAP (National Support Institute for Farming and Fishing) |
1,746 | 1,746 | |||
| ADAM - Águas do Alto Minho (Services of Water Supply and Sanitation of theRegion of Alto Minho)466 | 466 | ||||
| 16,991,290 | 17,215,596 |
According to the terms of some lease contracts of the buildings occupied by the Company's services, at the moment that 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 2019 and 30 June 2020, in the Group.
The amounts relating to the Portuguese Tax and Customs Authority ("Autoridade Tributária e Aduaneira") arise essentially from tax enforcement proceedings arising from the inspection process regarding VAT of fiscal years 2014 and 2015. The litigation proceedings in the arbitral tribunal have already been concluded with a favourable decision to CTT, however, and due to the administrative procedures involved, bank guarantees have not yet been cancelled.
CTT Expresso branch in Spain provided a bank guaranty 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 2019 and 30 June 2020, the Group subscribed promissory notes amounting to approximately 43.7 thousand Euros and 38.5 thousand Euros, respectively, for various credit institutions intended to secure complete and timely compliance with the corresponding financing contracts.
The Group also assumed financial commitments (comfort letters) in the amount of 1,170,769 Euros regarding the branch of CTT Expresso in Spain which are still active as at 30 June 2020.
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 2019 and 30 June 2020, the Group's heading Accounts payable showed the following composition:
| Accounts payable | ||
|---|---|---|
| As at 31 December 2019 and 30 June 2020, the Group's heading Accounts payable showed the following | ||
| 31.12.2019 | 30.06.2020 | |
| Current | ||
| Advances from customers | 2,824,160 | 2,907,763 |
| CNP money orders | 87,890,044 | 97,295,333 |
| Suppliers | 76,261,148 | 78,046,856 |
| Invoices pending confirmation | 10,560,107 | 12,726,303 |
| Fixed assets suppliers | 14,189,288 | 5,357,212 |
| Invoices pending confirmation (fixed assets) | 9,543,900 | 3,295,297 |
| Values collected on behalf of third parties | 8,495,311 | 7,247,763 |
| Postal financial services | 153,139,714 | 94,252,087 |
| Advances regarding disposals | 14,108 | 125,081 |
| Other accounts payable | 10,872,886 | 12,042,192 |
| 373,790,665 | 313,295,888 | |
| 373,790,665 | 313,295,888 |
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 period.
This heading 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 significant reduction observed in the subscription of savings certificates.
As at 31 December 2019 and 30 June 2020, the composition of the heading Banking clients' deposits and other loans in the Group is as follows:
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 mobilised 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.
| with current accounts and which allow the client to obtain a remuneration above the slight deposits, which can | |||||||
|---|---|---|---|---|---|---|---|
| be mobilised 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. | |||||||
| As at 31 December 2019 and 30 June 2020, the residual maturity of banking client deposits and other loans, is | |||||||
| detailed as follows: | |||||||
| 31.12.2019 | |||||||
| No defined maturity | Due within 3 months | Over 3 months and less than 1 | Over 1 year and less than 3 years |
Over 3 years | Total | ||
| year | |||||||
| Sight deposits and saving accounts | 1,113,985,973 | - | - | - | - | 1,113,985,973 | |
| Term deposits | - | 53,164,869 | 116,416,423 | - | - | 169,581,292 | |
| Banking clients' deposits | 1,113,985,973 | 53,164,869 | 116,416,423 | - | - | 1,283,567,265 | |
| Other credit institutions' deposits | - | 37,850,777 | - | - | - | 37,850,777 | |
| Other credit institutions' deposits | - | 37,850,777 | - | - | - | 37,850,777 | |
| 1,113,985,973 | 53,164,869 | 116,416,423 | - | - | 1,321,418,042 | ||
| 30.06.2020 | |||||||
| No defined maturity | Due within 3 months | Over 3 months and less than 1 | Over 1 year and | Over 3 years | Total | ||
| less than 3 years | |||||||
| Sight deposits and saving accounts | 1,346,387,807 | - | - | - | - | 1,346,387,807 | |
| Term deposits | - | 83,648,770 | 81,854,591 | - | - | 165,503,361 | |
| Banking clients' deposits | 1,346,387,807 | 83,648,770 | 81,854,591 | - | - | 1,511,891,168 | |
| Other credit institutions' deposits | - | - | - | - | - | - | |
| 30.06.2020 | ||||||
|---|---|---|---|---|---|---|
| Over 1 year and | ||||||
| No defined maturity | Due within 3 months | Over 3 months and less than 1 | less than 3 years | Over 3 years | Total | |
| Sight deposits and saving accounts Term deposits |
1,346,387,807 - |
- 83,648,770 |
- 81,854,591 |
- - |
- - |
1,346,387,807 165,503,361 |
| Banking clients' deposits | 1,346,387,807 | 83,648,770 | 81,854,591 | - | - | 1,511,891,168 |
| Other credit institutions' deposits | - | - | - | - | - | - |
| Other credit institutions' deposits | - | - | - | - | - | - |
The caption Other credit institutions' deposits refer to sales transactions with a repurchase agreement by credit institutions abroad.
As at 30 June 2020 the caption reflects the estimated income tax regarding 2019, which has not yet been paid, as well as the estimated income tax regarding the six-month period ended 30 June 2020.
During the periods ended 30 June 2019 and 30 June 2020, the composition of the Group heading Staff Costs was as follows:
| Occupational accident and health insurance Social welfare costs |
2,250,894 3,988,727 |
2,181,713 1,960,586 |
|---|---|---|
| Social Security charges | 29,364,705 | 29,440,691 |
| Indemnities | 7,660,871 | 470,758 |
| Employee benefits | 768,020 | 2,148,088 |
| Remuneration | 132,626,124 | 134,012,853 |
| 30.06.2019 | 30.06.2020 | |
| INTEGRATED REPORT 1ST HALF 2020 |
| Remuneration | |||||
|---|---|---|---|---|---|
| The change in the "Remuneration" caption arises essentially from fact that on 30 June 2020 the contribution of | |||||
| 321 Crédito, SA was already being considered, an acquisition that only took place in May 2019, thus affecting | |||||
| only two months of the six-month period ended on 30 June 2019. | |||||
| As at 30 June 2019 and 30 June 2020, the fixed and variable remunerations attributed to the members of the | |||||
| statutory bodies of CTT, SA, were as follows: | |||||
| 30.06.2019 | |||||
| Company | Board of Directors | Audit Comittee | Remuneration Board | General Meeting of Shareholders | Total |
| Short-term remuneration | |||||
| Fixed remuneration | 1,340,715 | 94,286 | 27,900 | 14,000 | 1,476,901 |
| Annual variable remuneration | - | - | - | - | - |
| 1,340,715 | 94,286 | 27,900 | 14,000 | 1,476,901 | |
| Long-term remuneration Defined contribution plan RSP |
111,667 | - | - | - | 111,667 |
| Long-term variable remuneration | 25,440 | - | - | - | 25,440 |
| 137,107 | - | - | - | 137,107 | |
| 1,477,822 | 94,286 | 27,900 | 14,000 | 1,614,008 | |
| 30.06.2020 | |||||
| Company | Board of Directors | Audit Comittee | Remuneration Board | General Meeting of Shareholders | Total |
| Short-term remuneration | |||||
| Long-term remuneration | |||||
|---|---|---|---|---|---|
| 30.06.2020 | |||||
| Company | Board of Directors | Audit Comittee | Remuneration Board | General Meeting of Shareholders | Total |
| Short-term remuneration | |||||
| Fixed remuneration | 1,138,053 | 80,596 | 22,010 | 14,000 | 1,254,659 |
| Annual variable remuneration | - | - | - | - | - |
| 1,138,053 | 80,596 | 22,010 | 14,000 | 1,254,659 | |
| Long-term remuneration | |||||
| Defined contribution plan RSP | 150,467 | - | - | - | 150,467 |
| Long-term variable remuneration | - | - | - | - | - |
| 150,467 | - | - | - | 150,467 | |
| 1,288,520 | 80,596 | 22,010 | 14,000 | 1,405,126 |
For the year ended 31 December 2019, the amount of 801,968 Euros was recognised as Annual Variable Compensation for the members of the Statutory Bodies which was determined by the Remuneration Committee supported on a study carried out by an independent entity. Due to the COVID-19 pandemic, and by resolution of the Annual General Meeting, the non-payment of profit-sharing bonuses was approved, and the annual variable remuneration was suspended.
The change registered in the caption Employee benefits mainly reflects the liability reduction related to the benefits "Telephone subscription charge" and "Suspension of employment contracts" which occurred on 30 June 2019.
During the period ended 30 June 2020, this caption includes manly indemnities related to the termination of employment contracts.
Social welfare costs relate almost entirely to health costs incurred by the Group with the active workers, as well as expenses related to Health and Safety at work.
As at 30 June 2019 and 30 June 2020, the Group heading Staff costs includes the amounts of 338,703 Euros and 260,596 Euros respectively, related to expenses with workers' representative bodies.
For the period ended 30 June 2020, the average number of staff of the Group was 12,031 employees (12,247 employees in the period ended 30 June 2019).
For the periods ended 30 June 2019 and 30 June 2020, the heading Interest Expenses of the Group had the following detail:
| Interest expenses and Interest income | ||
|---|---|---|
| For the periods ended 30 June 2019 and 30 June 2020, the heading Interest Expenses of the Group had the | ||
| 30.06.2019 | 30.06.2020 | |
| Interest expenses | ||
| Bank loans | 365,021 | 827,127 |
| Lease liabilities | 1,886,770 | 1,641,275 |
| Other interest | 48 | 2 |
| Interest costs from employee benefits (Note 31) | 2,680,715 | 2,230,292 |
| Other interest costs | 5,981 | 46,411 |
The amount of 345,126 Euros previously reported as Other interest as at 30 June 2019 was reclassified to the caption Bank loans
During the periods ended 30 June 2019 and 30 June 2020, the Group heading Interest income was detailed as follows:
| The amount of 345,126 Euros previously reported as Other interest as at 30 June 2019 was reclassified to the | ||
|---|---|---|
| During the periods ended 30 June 2019 and 30 June 2020, the Group heading Interest income was detailed as | ||
| 30.06.2019 | 30.06.2020 | |
| Interest income Deposits in credit institutions |
26,664 | 6,211 |
| Other supplementary income | 86,745 | - |
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 above 1,500,000 Euros and 5% of taxable profit above 7,500,000 up 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., through the Special Regime for the Taxation of Groups of Companies ("RETGS"). The remaining companies are taxed individually.
For the periods ended 30 June 2019 and 30 June 2020, the reconciliation between the nominal rate and the effective income tax rate of the Group was as follows:
| Group | ||
|---|---|---|
| 30.06.2019 | 30.06.2020 | |
| Earnings before taxes (a) | 14,702,756 | (1,030,515) |
| Nominal tax rate | 21.0% 3,087,579 |
21.0% (216,408) |
| Tax Benefits | (255,999) | (194,979) |
| Accounting capital gains/(losses) | (40,914) | (125,794) |
| Tax capital gains/(losses) | 9,107 | 71,591 |
| Equity method | 38,771 | 243,391 |
| Provisions not considered in the calculation of deferred taxes | 27,223 | 374,604 |
| Impairment losses and reversals | 39,101 | 315,749 |
| Compensation for insurable events | 84,562 | 21,613 |
| Depreciation and car rental charges | 66,037 | 20,876 |
| Credits uncollectible | 17,120 | 7,258 |
| Difference between current and deferred tax rates | (1,648) | - |
| Fines, interest, compensatory interest and other charges | 5,561 | 23,227 |
| Other situations, net | 858,776 | (469,697) |
| Adjustments related with - autonomous taxation | 259,955 | 280,463 |
| Adjustments related with - undistributed variable remuneration | 253,145 | 898,639 |
| Tax losses without deferred tax | 1,035,476 | - |
| Insuficiency / (Excess) estimated income tax | (830,610) | (821,163) |
| Subtotal (b) | 4,653,242 | 429,370 |
| (b)/(a) | 31.65% | -41.67% |
| Adjustments related with - Municipal Surcharge | 297,977 | 141,302 |
| Adjustments related with - State Surcharge Income taxes for the period |
764,812 5,716,031 |
327,043 897,715 |
| Effective tax rate | 38.88% | -87.11% |
| Income taxes for the period | ||
| Current tax | 1,644,932 | 1,521,731 |
| Deferred tax | 4,901,708 | 197,147 |
| Insuficiency / (Excess) estimated income tax | (830,610) | (821,163) |
| 5,716,031 | 897,715 |
As at 31 December 2019 and 30 June 2020, the balance of the Group deferred tax assets and liabilities was composed as follows:
| As at 31 December 2019 and 30 June 2020, the balance of the Group deferred tax assets and liabilities was | ||
|---|---|---|
| 31.12.2019 | 30.06.2020 | |
| Deferred tax assets | ||
| Employee benefits - healthcare | 76,839,990 | 76,981,826 |
| Employee benefits - pension plan | 84,668 | 82,251 |
| Employee benefits - other long-term benefits | 2,868,626 | 2,504,279 |
| Impairment losses and provisions | 5,032,656 | 5,034,506 |
| Tax losses carried forward | 1,289,985 | 1,289,985 |
| Impairment losses in tangible fixed assets | 385,810 | 429,714 |
| Land and buildings | 356,809 | 356,809 |
| Tangible assets' tax revaluation regime | 1,924,292 | 1,763,934 |
| Other | 546,970 | 528,087 |
| 89,329,806 | 88,971,391 | |
| Deferred tax liabilities | ||
| Revaluation of tangible fixed assets before IFRS | 2,137,282 | 2,036,976 |
| Suspended capital gains | 718,036 | 704,366 |
| Non-current assets held for sale | 83,010 | 83,010 |
| Other | 19,787 | 57,022 |
| 2,958,115 | 2,881,374 | |
The deferred tax asset related to Tangible assets tax revaluation regime was recognised following the Companies' accession to the regime established in Decree-Law no. 66/2016, of 3 November. In the year ended 30 June 2020 the deferred tax asset amounts to 1,763,934 Euros.
As at 30 June 2020, the expected amount of deferred tax assets and liabilities to be settled within 12 months is 2.5 million Euros and 0.2 million Euros, respectively, regarding the Group.
During the year ended 31 December 2019 and the six-month period ended 30 June 2020, the movements which occurred under the deferred tax headings of the Group were as follows:
| 31.12.2019 | 30.06.2020 | |
|---|---|---|
| Deferred tax assets | ||
| Opening balances | 81,734,114 | 89,329,806 |
| Changes in the consolidation perimeter | 1,679,394 | - |
| Effect on net profit | ||
| Employee benefits - healthcare Employee benefits - pension plan |
(664,362) (10,581) |
141,835 (2,417) |
| Employee benefits - other long-term benefits | 223,382 | (364,347) |
| Impairment losses and provisions | (287,039) | (92,766) |
| Tax losses carried forward | (2,904) | - |
| Impairment losses in tangible fixed assets | 102,337 | 43,904 |
| Land and buildings | (95,203) | - |
| Tangible assets' tax revaluation regime | (320,715) | (160,358) |
| Other | (47,157) | 75,734 |
| Effect on equity | ||
| Employee benefits - healthcare | 7,000,770 | - |
| Employee benefits - pension plan | 17,769 | - |
| Other | - | - |
| Closing balance | 89,329,806 | 88,971,391 |
| 31.12.2019 | 30.06.2020 | |
| Deferred tax liabilities | ||
| Opening balances | 3,108,662 | 2,958,115 |
| Changes in the consolidation perimeter | 83,010 | - |
| Effect on net profit | ||
| Revaluation of tangible fixed assets before IFRS adoption | (200,606) | (100,306) |
| Suspended capital gains | (27,341) | (13,670) |
| Other | (5,610) | 37,235 |
| The tax losses carried forward are related to the losses of the previous subsidiaries Tourline and Transporta | |||
|---|---|---|---|
| (currently CTT Expresso, branch in Spain and CTT Expresso, respectively), which were merged by incorporation | |||
| Company | Tax losses | Deferred tax assets | |
| CTT – Expresso, S.A., branch in Spain | 47,586,402 | - | |
| CTT Expresso/Transporta Total |
6,142,786 53,729,188 |
1,289,985 1,289,985 |
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, the tax losses related to 2012, 2013 and 2014 may be carried forward in the next 18 years and the tax losses of the years 2015, 2016, 2017 and 2018 have no time limit for deduction. Regarding CTT Expresso the tax losses refer to the years 2017 and 2018 of the company Transporta, which was merged in CTT Expresso during the year 2019 and may be carried forward in the next 5 years.
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 2.2 million Euros in the Group.
The Group's policy for recognition of fiscal credits regarding SIFIDE is to recognise the credit at the moment of the effective receipt from the commission certification statement, certifying the eligibility of expenses presented in the applications for tax benefits.
For the year ended 31 December 2018 the expenses incurred with R&D, of 737,089 Euros the Group will have the possibility of benefiting from a tax deduction in corporate income tax estimated at 248,131 Euros.
According to the notification of the Certification Commission, for eligible expenses incurred with R&D in the amount of 682,312 Euros, a tax credit of 230,328 Euros was attributed.
For the year ended 31 December 2019, with the delivery of the application, the expenses incurred with R&D, of 1,422,552 Euros the Group will have the possibility of benefiting from a tax deduction in corporate income tax estimated at 753,235 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 2017 and onwards may still be reviewed and corrected.
The Board of Directors of the Company 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 2020.
The Regulation on Assessment and Control of transactions with CTT related parties defines related party as: qualified shareholder, manager 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 and qualified shareholder(s) who, at each moment, have significant influence (as defined above) on CTT, as well as (ii) controlled entities (individually or jointly), either by management, qualified shareholders or by the persons referred to in (i). For this purpose, "control" is considered to exist when the party has, directly or indirectly, the power to guide the financial and operational policies of an entity in order to obtain benefits from its activities. 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 the Audit Committee of CTT.
| be previously approved by the Audit Committee of CTT. | ||||||
|---|---|---|---|---|---|---|
| The other related parties' transactions are communicated to the Audit Committee for the purpose of subsequent examination. |
||||||
| During the periods ended 30 June 2019 and 30 June 2020, the following transactions took place and the | ||||||
| following balances existed with related parties, regarding the Group: | ||||||
| 30.06.2019 | ||||||
| Accounts receivable | Accounts payable | Revenues | Costs | Dividends | ||
| Shareholders | - | - | - | - | 15,000,000 | |
| Group companies | ||||||
| Associated companies | 2,435 | - | 5,454 | - | - | |
| Jointly controlled | 1,070,835 | - | 173,124 | 34,477 | - | |
| Members of the | (Note 23) | |||||
| Board of Directors | - | - | - | 1,340,715 | - | |
| Audit Committee | - | - | - | 94,286 | - | |
| Remuneration Committee | - | - | - | 27,900 | - | |
| General Meeting | - | - | - | 14,000 | - |
| INTEGRATED REPORT 1ST HALF 2020 | |||||
|---|---|---|---|---|---|
| 30.06.2020 | |||||
| Accounts receivable | Accounts payable | Revenues | Costs | Dividends | |
| Shareholders | - | - | - | - | - |
| Associated companies | 2,489 | - | 5,507 | 47,677 | - |
| Jointly controlled | 614,767 | - | 621,040 | - | - |
| - | 9,287 | - | 1,144,681 | - | |
| Audit Committee | - | - | - | 80,596 | - |
| Group companies Members of the Board of Directors Remuneration Committee General Meeting |
- - |
- - |
- - |
22,010 14,000 |
- - |
In the context of transactions with related parties, no commitments were made, nor were any guarantees given or received in addition to the comfort letters assumed regarding CTT Expresso, branch in Spain, mentioned in Note 19.
No provision was recognised for doubtful debts or expenses recognised during the period in respect of bad or doubtful debts owed by related parties.
The transactions and balances between subsidiaries are eliminated in the consolidation process and are not disclosed in this note.
Under the Universal Postal Service Concession Contract, on 13.03.2020, CTT invoked force majeure before the Grantor, following the public health emergency of international scope, declared by the World Health Organization on 30.01.2020 and the subsequent classification of COVID-19 as a pandemic, on 11 March. In view of the seriousness and magnitude of the facts, which are public and notorious, and in order to comply with the public health instructions issued by the competent authorities, CTT could not fail to take the necessary and appropriate measures to protect workers and customers.
Pursuant to the provisions of the concession contract, CTT continues to ensure the functioning and continuity of postal services, taking the necessary and appropriate measures to the situation of force majeure, in terms of planning, operation prevention and human resources, submitting a daily update of the situation to the Government, as a counterparty in the contract, and to ANACOM, the regulatory authority responsible for overseeing the provision of the universal postal service.
The legal proceedings relating to the ANACOM Decision regarding the parameters of quality of service and performance objectives applicable to the provision of the universal postal service, issued in July 2018, are still pending. In the arbitration proceedings brought against the Portuguese State, as grantor, in the Concession Agreement, is in the stage of producing evidence. In the administrative proceedings brought against ANACOM, the first regarding the same decision and the second concerning the December 2018 determination regarding the new measurement procedures to be applied to the quality of service indicators, there were no relevant developments. It should be recalled that these proceedings were motivated by the fact that CTT considered that the set of new indicators imposed by ANACOM in July 2018, unprecedented and unparalleled at European level, would be impossible to comply with.
Following the non-compliance with the Quality of Service Indicators, announced by CTT in March this year, on 27 August ANACOM issued a draft decision which, if confirmed, could lead to a penalty of -1% for the average annual variation in the basket of prices of the universal postal service, composed of mail, newspapers and periodicals, and parcels services, which are subject to prior approval, and of -0.31% for bulk mail prices.
The process related to the proposal of the application of 11 contractual fines, initiated in 2018 by ANACOM, within the Universal Postal Service Concession Agreement, based on alleged breaches of obligations resulting
from the contract which occurred during 2015, 2016 and 2017, is pending a decision following the additional submission of evidence determined by the grantor.
The administrative proceedings for the alleged infringement of the obligation to have a hard copy of the complaints book in the establishments operating on behalf of CTT and the alleged breach of the obligation to immediately provide at no cost the complaints book to the users who requested it, had no significant developments.
Following ANACOM's decision on the 2016 cost accounting system results, under which new criteria for the allocation of costs between the postal activity and the banking activity of the Company were identified, and specified that the cost accounting system for the 2016 and 2017 financial years in this regard should be restated, CTT submitted the restated results regarding those years as well as the results of the 2018 according to the new criteria, as determined. The results of the audits for the three financial years are awaited.
On 30.06.2020 ANACOM started a public consultation regarding the provision of the universal postal service after the end of the current concession on 31.12.2020, namely on the terms and conditions to be associated with the provision of the universal service (USO) and the terms under which the USO will be provided by the universal service provider(s) designated under Article 17(1)(b) of Law 17/2012 of 26 April (Postal Law).
For that purpose, on the same date ANACOM published six draft decisions regarding:
These draft decisions were submitted to public consultation until 18.08.2020 and CTT made its specific contributions on each one of the issues mentioned above. The procedure awaits ANACOM's public consultation report and its final decision.
On 11 March 2020, the World Health Organization declared the public health emergency caused by the COVID-19 disease as a pandemic. This situation has evolved very rapidly, and measures have been taken internationally to severely restrict the rights of free movement and economic freedom, thus seeking to prevent the transmission of the virus. Several governments, authorities and economic agents are implementing a series of initiatives with a very relevant impact on the populations and on the global and national economic activity. The COVID-19 pandemic affected consumers and companies and, although the Group has maintained its activity and has been associated from the outset with the "stay at home" movement in the various geographies where it operates and carried out various initiatives aimed at facilitating access for all to the services provided, business has generally been negatively influenced.
Due to the context of uncertainty, at the Annual General Meeting of 29 April, CTT decided to suspend the payment of the 2019 dividend and allocate the 2019 net profit to Retained Earnings.
In this context, the Group has been implementing additional measures to strengthen its financial position and liquidity and ensure its operational response, while seeking to preserve the value of traditional businesses and invest in new ones, more linked to digital platforms and e-commerce. As an example, the following services were created:
The E&P business unit also resented the effect of the COVID-19 pandemic, with the end of March and the beginning of April particularly affected by the restrictions imposed on most sectors of the economy. These restrictions had a strong impact on the profile of shipments, with a reduction in B2B volumes, both parcels and cargo, and strong growth in e-commerce activity. The growth of e-commerce has since supported the growth of this business area.
The Financial Services & Retail business unit was most impacted, with a significant reduction in Public Debt Certificates subscriptions, a situation which is already showing a sustainable trend towards recovery.
In Banco CTT business unit the impacts were more visible in terms of consumer credit and auto loans. The volume of auto loans production was strongly affected by the closure of auto dealerships, as a result of the confinement measures, and began in mid-March a downward trend of new proposals captured which lasted until the second week of May, when the trend was reversed.
In the context of the pandemic, the Group also carried out the following assessments:
Monitored the evolution of compliance with the financing covenants, not having identified situations of default;
In order to strengthen its financial position and manage liquidity risk, the Group contracted a new financing in the amount of 25 M €, of which no amount had yet been used as at 30 June 2020;
On 30 June 2020, the Group received around €0.2 million in support for families in connection with the closure of schools.
Despite the high uncertainty regarding the evolution of the pandemic and its effects on the Group's businesses, it is the understanding of the Board of Directors that in view of its financial and liquidity situation, the Group will overcome the negative impacts of this crisis, without jeopardizing the continuity of the business. Management will continue to monitor the threat evolution and its implications in the business and provide all necessary information to its stakeholders.
After 30 June 2020 and up to the present date, no relevant or material facts have occurred in the Group's activity that have not been disclosed in the notes to the financial statements.
Pursuant article 246(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 state that, to the best of their knowledge, the interim condensed consolidated accounts relative to the first half of 2020 were prepared in accordance 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 2020 and their impact on the interim condensed consolidated accounts, as well as the main risks and uncertainties for the second half of the year.
Lisbon, 31 August 2020
The Board of Directors
Non-Executive Chairman of the Board of Directors
Raul Catarino Galamba de Oliveira
Chief Executive Officer (CEO)
João Afonso Ramalho Sopas Pereira Bento
Member of the Board of Directors and of the Executive Committee
António Pedro Ferreira Vaz da Silva
Member of the Board of Directors and of the Executive Committee (CFO)
Guy Patrick Guimarães de Goyri Pacheco
Member of the Board of Directors and of the Executive Committee
João Carlos Ventura Sousa
Member of the Board of Directors and of the Executive Committee (COO)
João Miguel Gaspar da Silva
Non-Executive Member of the Board of Directors and Chairwoman of the Audit Committee
Maria Luísa Coutinho Ferreira Leite de Castro Anacoreta Correia
Non-Executive Member of the Board of Directors and of the Audit Committee
Steven Duncan Wood
Non-Executive Member of the Board of Directors
Duarte Palma Leal Champalimaud
Non-Executive Member of the Board of Directors
Isabel Maria Pereira Aníbal Vaz
Non-Executive Member of the Board of Directors
João Eduardo Moura da Silva Freixa
Non-Executive Member of the Board of Directors
Jürgen Schröder
Non-Executive Member of the Board of Directors
Margarida Maria Correia de Barros Couto
Non-Executive Member of the Board of Directors and of the Audit Committee
María del Carmen Gil Marín
Non-Executive Member of the Board of Directors
Susanne Ruoff
(SIGNED ON THE ORIGINAL)
KPMG & Associados - Sociedade de Revisores Oficiais de Contas, S.A. Edifício FPM41 - Avenida Fontes Pereira de Melo, 41 - 15° 1069-006 Lisboa - Portugal +351 210 110 000 | www.kpmg.pt
(This report is a free translation to English from the original Portuguese version. In case of doubt or misinterpretation the Portuguese version will prevail.)
We have performed a limited review of the accompanying condensed consolidated financial statements of CTT - Correios de Portugal, S.A. (the Group), which comprise the condensed consolidated statement of financial position as of 30 June 2020 (that presents a total of Euro 2,640,262,949 and total equity of Euro 129,788,219, including non-controlling interests of Euro 294,193 and a negative consolidated net profit attributable to the shareholders of Euro 1,984,332), the condensed consolidated statements of income, comprehensive income, changes in equity and cash flows for the six month period then ended, and the accompanying explanatory notes to these condensed consolidated financial statements.
Management is responsible for the preparation of these condensed consolidated financial statements in accordance with IAS 34 - Interim Financial Reporting as adopted by the European Union, and for the implementation and maintenance of an appropriate internal control system to enable the preparation of condensed consolidated financial statements that are free from material misstatement, whether due to fraud or error
Our responsibility is to express a conclusion on the accompanying condensed consolidated financial statements. Our work was performed in accordance with the International Standard on Limited Review on Financial Statements and further technical and ethical standards and quidelines issued by the Portuguese Institute of Statutory Auditors ("Ordem dos Revisores Oficiais de Contas"). These standards require that we conduct the review in order to conclude whether anything has come to our attention that causes us to believe that the condensed consolidated financial statements are not prepared in all material respects in accordance with the IAS 34 - Interim Financial Reporting as adopted by the European Union.
A limited review of condensed consolidated financial statements is a limited assurance engagement. The procedures that we have performed consist mainly of making inquiries and applying analytical procedures and subsequent assessment of the evidence obtained. The procedures performed in a limited review are substantially less that those performed in an audit conducted in accordance with International Standards on Auditing (ISA). Accordingly, we do not express an audit opinion on these condensed consolidated financial statements
Based on the work performed, nothing has come to our attention that causes us to believe that the accompanying condensed consolidated financial statements of CTT - Correios de Portugal, S.A. on 30 June 2020, are not prepared, in all material respects, in accordance with the IAS 34 - Interim Financial Reporting as adopted by the European Union.
Without modifying our conclusion, we draw attention to note 27, which describes the measures taken in the context of the pandemic resulting from the spread of the new coronavirus ("COVID-19") to strengthen its financial position and liquidity and ensure its operational response, as well as the impacts by business area and the analyses carried out in the preparation of the financial statements. In the same note, it is mentioned that, despite the high uncertainty regarding the evolution of the pandemic and its effects on the Group's businesses, it is the understanding of the Board of Directors that in view of its financial situation and liquidity, the Group will overcome the negative impacts of this crisis, without impacting the business continuity.
31 August 2020
SIGNED IN THE ORIGINAL
KPMG & Associados -Sociedade de Revisores Oficiais de Contas, S.A. (registered at CMVM under the nr. 20161489 and at OROC under the nr. 189) represented by Paulo Alexandre Martins Quintas Paixão (ROC nr 1427)
Investor support is carried out by the InvestorRelations Department (IR), a team of 3 people managed by Peter Tsvetkov.
E-mail: [email protected] Telephone: +351 210 471 087 Fax: +351 210 471 996
During the 1st half of 2020, CTT's disclosure of material information to the market consisted of:
Throughout the semester, CTT took part in multiple events, including virtual events from March onwards due to the COVID-19 pandemic, as follows:
Additionally, reference should also be made to the large number of conference calls with investors and research analysts, which together with the events mentioned above, allowed CTT to contact more than 100 capital market participants throughout the semester.
CTT financial calendar for the 2nd half of 2020 foresees the following corporate events:
| Event | Date |
|---|---|
| 1 st Half 2020 Results |
5 August 2020* |
| 1 st Half 2020 Integrated Interim Report |
31 August 2020* |
| 9 Months 2020 Results | 4 November 2020* |
* After market close.
Avenida D. João II, no. 13 1999-001 Lisboa PORTUGAL Telephone: +351 210 471 836 Fax: +351 210 471 994
Email: [email protected] CTT Line +351 210 471 616 Workdays from 08:30 am till 07:30 pm
Guy Pacheco
Peter Tsvetkov Email: [email protected] Telephone: +351 210 471 087 Fax: +351 210 471 996
Communication & Sustainability Department Media Advisory Cátia Cruz Simões Email: [email protected] Telephone: +351 210 471 800
www.ctt.pt
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