Annual Report • Jul 31, 2017
Annual Report
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| GOVERNING AND MANAGEMENT BODIES 5 | ||
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| KEY FIGURES 8 | ||
| HIGHLIGHTS OF THE SEMESTER 11 | ||
| AWARDS AND RECOGNITIONS 12 | ||
| PART I - INTERIM MANAGEMENT REPORT 14 | ||
| 1. | STRATEGIC LINES 14 | |
| 2. | BUSINESSES 18 | |
| 2.1. Economic and regulatory environment 18 |
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| 2.2. Mail 22 |
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| 2.3. Express & Parcels 28 |
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| 2.4. Financial Services 31 |
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| 2.5. Banco CTT 33 |
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| 3. | ECONOMIC AND FINANCIAL REVIEW AND CTT SHARE PERFORMANCE 35 | |
| 4. | HUMAN RESOURCES 51 | |
| 5. | QUALITY, INNOVATION AND SUSTAINABILITY IN CTT'S ACTIVITIES 54 | |
| 5.1. Quality of Service 54 |
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| 5.2. Innovation and development 55 |
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| 5.3. Sustainability 56 |
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| 6. | MAIN RISKS 59 | |
| 6.1. Risks faced by CTT 59 |
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| 6.2. Risk management and internal control systems 61 |
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| 7. | FUTURE PERSPECTIVES 63 | |
| 8. | DECLARATION OF CONFORMITY 64 | |
| PART II – FINANCIAL STATEMENTS 67 | ||
| Interim Condensed Consolidated Financial Statements 67 | ||
| PART III – OTHER CORPORATE GOVERNANCE DOCUMENTS 107 | ||
| PART IV - AUDIT REPORT 121 | ||
| CONTACTS 124 |
| Corporate Bodies |
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| ------------------ |
Board of Directors 2
| Chairman: | António Sarmento Gomes Mota |
|---|---|
| Vice-Chairman: | Francisco José Queiroz de Barros de Lacerda (CEO) |
| Members: | André Manuel Pereira Gorjão de Andrade Costa (CFO) Dionizia Maria Ribeiro Farinha Ferreira Nuno de Carvalho Fernandes Thomaz (Member of the Audit Committee) José Manuel Baptista Fino Céline Dora Judith Abecassis-Moedas António Pedro Ferreira Vaz da Silva Francisco Maria da Costa de Sousa de Macedo Simão João Afonso Ramalho Sopas Pereira Bento Maria Luísa Coutinho Ferreira Leite de Castro Anacoreta Correia (Chairman of the Audit Committee) Belén Amatriain Corbi (Member of the Audit Committee) Rafael Caldeira de Castel-Branco Valverde |
| Chairman: | Júlio de Lemos de Castro Caldas |
|---|---|
| Vice- Chairman: | Francisco Maria de Moraes Sarmento Ramalho |
| Chairman: | João Luís Ramalho de Carvalho Talone |
|---|---|
| Members: | Rui Manuel Meireles dos Anjos Alpalhão Manuel Fernando Macedo Alves Monteiro |
1 As at the date of approval of this Interim Report.
2 Members elected for the 2017-2019 term of office by a resolution of the General Meeting of 20/04/2017.
| Executive Committee3 | |
|---|---|
| Chairman: | Francisco José Queiroz de Barros de Lacerda (CEO) |
| Members: | André Manuel Pereira Gorjão de Andrade Costa (CFO) Dionizia Maria Ribeiro Farinha Ferreira António Pedro Ferreira Vaz da Silva Francisco Maria da Costa de Sousa de Macedo Simão |
| Audit Committee 2 | |
| Chairman: | Maria Luísa Coutinho Ferreira Leite de Castro Anacoreta Correia |
| Members: | Nuno de Carvalho Fernandes Thomaz Belén Amatriain Corbi |
| Chairman: | António Sarmento Gomes Mota |
|---|---|
| Members: | José Manuel Baptista Fino |
| Céline Dora Judith Abecassis-Moedas 4 | |
| João Afonso Ramalho Sopas Pereira Bento | |
| Rafael Caldeira de Castel-Branco Valverde |
| Statutory Auditor: | KPMG & Associados, SROC, S.A., represented by Paulo Alexandre |
|---|---|
| Martins Quintas Paixão 5 | |
| External Auditor: | Vítor Manuel da Cunha Ribeirinho |
3 Members elected for the 2017-2019 term of office by a resolution of the Board of Directors of 20/04/2017.
4 Appointed as Member of the Corporate Governance, Evaluation and Nominating Committee by a resolution of the Board of Directors of 14/02/2017 to replace Rui Miguel de Oliveira Horta e Costa who notified his resignation from the positions of Non-Executive Member of the Board of Directors and Member of the Corporate Governance, Evaluation and Nominating Committee on 08/02/2017. Reelected for the 2017-2019 term of office.
5 Representantative appointed by KMPG & Associados – SROC, SA, as Statutory Auditor of CTT replacing Maria Cristina Santos Ferreira, former representative, as of 1 May 2017.
| € thousand or %, except where indicated | 1H17 | 1H16 | Δ% 17/16 |
|---|---|---|---|
| Revenues (1) | 352,114 | 349,358 | 0.8 |
| Operating costs excluding depreciation, amortisation, | |||
| impairments, provisions and non recurring-costs | 299,497 | 286,896 | 4.4 |
| Recurring EBITDA (2) | 52,616 | 62,462 | -15.8 |
| Recurring EBIT (2) | 38,439 | 49,461 | -22.3 |
| EBIT | 30,555 | 47,433 | -35.6 |
| EBT | 28,155 | 44,925 | -37.3 |
| Net profit for the period | 17,695 | 31,550 | -43.9 |
| Net profit attributable to equity holders | 17,745 | 31,677 | -44.0 |
| Earnings per share (euro) | 0.12 | 0.21 | -44.0 |
| Recurring EBITDA margin | 14.9% | 17.9% | -2.9 p.p. |
| Recurring EBIT margin | 10.9% | 14.2% | -3.2 p.p. |
| Net profit margin | 5.0% | 9.1% | -4.0 p.p. |
| Capex | 7,187 | 12,461 | -42.3 |
| Operating free cash flow (3) | 64,790 | -13,506 | 579.7 |
| 30.06.2017 | 31.12.2016 | Δ% 17/16 | |
|---|---|---|---|
| Cash and cash equivalents | 720,291 | 618,811 | 16.4 |
| Net cash | 282,759 | 295,306 | -4.2 |
| Assets | 1,547,810 | 1,316,697 | 17.6 |
| Liabilities | 1,368,152 | 1,083,370 | 26.3 |
| Equity | 179,659 | 233,327 | -23.0 |
| Share Capital | 75,000 | 75,000 | - |
| Number of shares | 150,000,000 | 150,000,000 | - |
(1) Excluding non-recurring revenues.
(2) Before non-recurring revenues and costs.
(3) Cash flow from operating activities excluding change in net Financial Services payables.
| 1H17 | 1H16 | Δ% 17/16 | |
|---|---|---|---|
| Addressed mail volumes (million items) | 388.1 | 411.1 | -5.6 |
| Transactional mail | 331.0 | 349.9 | -5.4 |
| Editorial mail | 21.6 | 22.6 | -4.4 |
| Advertising mail | 35.4 | 38.6 | -8.1 |
| Unaddressed mail volumes (million items) | 234.8 | 234.7 | 0.0 |
| Express & Parcels | |||
| Portugal (million items) | 7.8 | 6.9 | 13.1 |
| Spain (million items) | 7.2 | 6.1 | 17.1 |
| Financial Services | |||
| Payments (number of transactions; million) | 26.3 | 28.8 | -8.8 |
| Savings and insurance (subscriptions; € million) | 2,261.4 | 2,014.2 | 12.3 |
| Banco CTT | |||
| Number of current accounts | 147,394 | 20,163 | 263.3 |
| Customer deposits (€ million) | 424,293 | 55,967 | 658.1 |
| Number of branches | 203 | 66 | 207.6 |
| Staff | |||
| Staff (FTE) (1) | 12,593 | 12,222 | 3.0 |
| Retail, Transport and Delivery Networks | |||
| Post offices | 613 | 617 | -0.6 |
| Postal agencies (partnership branches) | 1,744 | 1,709 | 2.0 |
| PayShop agents | 4,308 | 4,000 | 7.7 |
| Postal delivery offices | 235 | 249 | -5.6 |
| Postal delivery routes | 4,718 | 4,769 | -1.1 |
| Fleet (number of vehicles) | 3,624 | 3,632 | -0.2 |
(1) FTE = Full-time equivalent.
| 1H17 | 1H16 | Δ% 17/16 | |
|---|---|---|---|
| Customers | |||
| Customer satisfaction (%) | 85.2 | 85.9 | -0.7 p.p. |
| Total number of certified operating units (ISO standard and retail and delivery networks certification) |
1,251 | 1,183 | 5.7 |
| Retail and delivery networks certification (% coverage) | 100 | 100 | 0.0 |
| 1Q17 | 1Q16 | Δ 17/16 | |
| Overall Quality of Service Indicator (points) (1) | 136.1 | 89.9 | 46.2 |
| 1H17 | 1H16 | Δ% 17/16 | |
| Staff | |||
| Number of accidents (2) (3) | 531 | 470 | 13.0 |
| Training (hours) (2) (3) | 142,774 | 180,425 | -20.9 |
| Women in management positions (1st management level) (%) | 31.6 | 32.4 | -0.8 p.p. |
| Community/Environment | |||
| Value chain - contracts with environmental criteria (%) | 99.6 | 99.3 | 0.3 p.p. |
| Total CO2 emissions, scopes 1 and 2 (kton.) (2) (3) | 8.3 | 8.2 | 1.7 |
| Energy consumption (TJ) (2) (3) | 193.3 | 188.7 | 2.5 |
| Eco-friendly vehicles | 341 | 300 | 13.7 |
| Weight of Eco product range in Direct Mail line (%) (2) (3) (4) | 38.1 | 37.7 | 0.4 p.p. |
| Investment in the Community (€ thousand) | 539 | 585 | -7.9 |
(1) The indicators for the 2Q17 are still under revision.
(2) Provisional figures.
(3) 2016 data update: accidents, training hours, CO2 emissions, energy consumptions and Eco products volumes were considered which were communicated after the publication of the 1H16 Interim Report.
(4) Volumes.
• A Revision Agreement for CTT's 2016 Company Agreement was signed with eleven trade unions, effective 1 January 2017, wherein a raise between 0.65% and 1% in monthly base salaries up to €2,772.30/month was agreed. An identical raise was applied in the subsidiaries.
CTT was again awarded first place in the 2017 edition of the World Post & Parcel Awards in the Personnel Management category with NAVEINFORMA, a process that allows any Company department to communicate in real time at no additional cost with all retail network and computerised agency employees through the NAVE IT system, using images or written information. CTT was also nominated in two additional categories: Social Responsibility, with the "Solidary Santa Claus" project and Technology with the "CTTADS.PT" project, which received "highly recommended" honourable mentions.
CTT was recognised for the 14th time as a Trusted Brand by the Portuguese, having earned 1st place in the "Mail and Logistics Services" category, with 85% of the votes, which was significantly ahead of companies like DHL (5%) and Chronopost (3%).
CTT's Legal Services, through its Corporate and New Business team, were recognised as one of the most innovative in-house legal teams in the Iberian Peninsula and were part of the 2017 ranking for the best legal professionals by the publication Legal 500.
CTT was elected by Portuguese internet users as the company offering the best price-quality ratio as regards express delivery services, having received the Best Buy Award medal.
CTT was considered the "Highlight/Corporate Brand of the Year" in the 9th edition of the Marketeer Awards. These awards seek to reward the best Portugal has to offer in strategy, communication, marketing and advertising.
The "Canning Industry" philatelic issue received the 2017 WIPA Grand Prize bestowed by the prestigious jury of the Vienna International Philatelic Exposition. It was the first time ever in the world that stamps were issued on authentic tin cans and was voted the most beautiful issue of 2016.
The Portuguese Association of Museums (APOM) recognised CTT as cultural entity of the year, for its continued efforts in disclosing national museum heritage through philately.
CTT, with CTT TV, won in the Corporate Radio and Television category of the FUNDACOM AWARDS, which reward the best Portugal and Spain have to offer in organisational and strategic communication. CTT was also rewarded with two honourable mentions in the External Event category (up to 1,000 people), for its 2016 Assessment Day, and in the In-house Publication category, for Move-nos Magazine, both from Employer Brand.
CTT's and CTT Expresso's customer service lines were recently awarded the silver and bronze medals, respectively, in APCC's 2017 Best Awards in the category of "Transport, Delivery and Logistics". This is the 8th award that CTT's Contact Centre earns and CTT Expresso's 5th award in the main industry events therefor since 2010, which shows that CTT continues to be at the forefront of Contact Centres in Portugal.
CTT received the Reputational Sustainability Award following a study carried out by OnStrategy consultants, with the goal of getting to know and recognising brands that have shown sustained excellence and strength in Portugal over the last 10 years. The results establish CTT, in terms of archetypes, as a common, attentive, leading and adventurous brand, defining it as loyal/dependable, supportive/protective, powerful/expert and discovering/adventurous.
CTT was co-leader in the mail, express and logistics sector in the Carbon Disclosure Project ranking. This is the main energy and carbon sustainability rating worldwide.
For the 3rd consecutive year, CTT was recognised in the most important national environmental award, with CTT's national Driver's Challenge, having received an honourable mention in the "Efficient Resource Management" category.
CTT was distinguished with the Human Resources Portugal 2016 award in the categories of "Gender Equality", for encouraging and protecting gender equality, and "Management of Older Employees" for having the best policy for older employees.
In the 2017 edition of the Excellence in Road Safety Awards, carried out by the European Road Safety Charter, CTT was recognised for the Company's Road Safety Programme underway since 2015. These annual awards granted by the European Commission aim to acknowledge projects the best road safety projects in Europe.
Postal sector companies continue to face important challenges worldwide that entail the need to carry out a deep transformation in order to permanently optimise efficiency and reinforce growth levers. CTT's action plan and strategy are based on fast evolving consumer needs and general sector trends:
In 2016, CTT revised its strategy and made certain adjustments in order to reflect the Company's corporate priorities and the market's very dynamic evolution, both in trends and its competitive structure.
The strategic pillars are currently five, three of which are directly related to new businesses and the offer upgrade in its main business units (Mail, Express & Parcels and Financial Services). The other two, which cut cross the entire organisation, are operational efficiency and commercial excellence. The latter two have great importance and relevance within the organisation.
Some of the main initiatives carried out or currently underway regarding these strategic pillars are:
5 Commercial Excellence – an integrated client-focused commercial approach to identify and meet their needs and preferences: (i) optimising processes and creating new tools to support sales; (ii) improving the consumer's digital and interactive experience; (iii) reorganising commercial teams to adapt them to new client segmentation; and (iv) commercial proactivity, in order to adapt CTT to a new competitive environment, growing offer diversification and greater client sophistication.
To implement its strategy, CTT relies on 5 differentiating catalysts:
In the first quarter of 2017, the G20's Gross Domestic Product (GDP) had a real year-on-year growth of 3.4% (3.3% in the 4th quarter of 2016), influenced by economic recovery in the European Union, Canada, China, Brazil, Mexico and Turkey. In April 2017, world industrial production had a year-onyear growth of 3.3% (equal to the preceding month), but while that of advanced economies accelerated, it slowed down in emerging and developing economies (especially Asia), which was an inversion of the conversion trend of recent years. World trade in goods suffered a downturn, with lower worldwide exports and imports, thereby contributing to the aforementioned effect.
In the first quarter of 2017, the European Union and Eurozone grew by 2.1% and 1.9%, respectively. Conditions in the labour market continued to improve over the last months. The unemployment rate has been declining since the beginning of the year and was at 7.8% in the European Union and 9.3% in the Eurozone in May, the lowest rate since March 2009.
The Eurozone's annual inflation rate fell to 1.4% in May 2017 (1.9% in April) due to a drop in energy prices (from 7.6% in Abril to 4.5%), unprocessed food and service prices. However, in terms of change over the last 12 months, the inflation rate rose to 1.0% in May 2017 (0.8% in April), the highest rate since May 2014. This created an expectation of a return to positive interest rates in the Eurozone. In this regard, short-term interest rates in the Eurozone stabilised in June 2017 at an average of -0.33%. On the contrary, 3-month interest rates in the U.S. increased to 1.26%, in line with the Federal Reserve's decision on 14 June to raise federal interest rates by 25 b.p. to the interval between 1.00% and 1.25%.
In the first half of 2017, the Euro appreciated 7.2% relative to the dollar, reflecting stronger GDP growth in the Eurozone in the 1st quarter than initially expected. The expectation that the ECB will continue to pursue its expansionist monetary policy (in contrast to the policy initiated by the FED) also contributed thereto. These factors were supplemented by the lesser political uncertainty in Europe due, in part, to the electoral majority in France, putting the Euro at 1.14 vis-à-vis the dollar on the 30th (on 27 June, it hit a record high since 24 August 2016).
At the end of May, OPEP countries and Russia agreed to extend their agreement to reduce the oil supply for an additional 9 months (until March 2018). In June 2017, Brent oil prices again fell to, on average, 48 USD/bbl (42 €/bbl) due to an increase in production in the U.S. and Libya.
According to the National Quarterly Accounts for the first quarter of 2017 disclosed by the Portuguese National Institute of Statistics (INE – Instituto Nacional de Estatística), GDP had a yearon-year growth of 2.8%. GDP acceleration was due to greater contribution of net external demand, given that internal demand made a lesser contribution than in the preceding quarter.
The greatest contribution of the net external demand was due to accelerated growth in the export of goods and services (9.7%) as compared to the import of goods and services (8.0%). The drop in domestic demand was due to the behaviour in private consumption that had a year-on-year growth of 2.2% in the 1st quarter of 2017 (3.0% growth in the preceding quarter). This lower growth rate was largely due to lesser growth in private automobile consumption, in line with the evolution of sales of
passenger motor vehicles. Inversely, investment increased from a growth rate of 3.6% in the 4th quarter of 2016 to 5.5% in the 1st quarter of 2017. Gross Fixed Capital Formation (GFCF) in construction was the component that most contributed to the growth of GFCF in the 1st quarter and, to a lesser degree, GFCF in machinery and equipment.
According to the last data disclosed by INE, in June the average growth over the last twelve months of the Portuguese Harmonised Consumer Price Index (HCPI) was 1.2%, 0.1 p.p. higher than in the preceding month and in Eurozone countries.
The unemployment rate has tended to fall since the beginning of the year and was at 9.4% in May 2017, according to INE estimates. This fall has been accompanied by robust job creation. In the first quarter, employment for the whole of the economy's branches of activity, corrected for seasonality, showed a 3.2% year-on-year growth, a rate greater than observed in the 4th quarter of 2016 (2.4%) and a level not seen in over two decades.
The Portuguese economy's ability to finance itself, was 1.5% of GDP in the year ending in the 1st quarter of 2017, 0.1 p.p. greater than in the previous quarter. This evolution resulted in distinct behaviour in various sectors, while the balance of the Public Administration sector (PA) and of nonfinancial companies improved, the balance of financial companies stabilised and the financing capacity of families dropped. This fall mainly reflected the evolution of family savings rates which dropped due to greater growth in final consumption expenditure compared to available income (1.0% and 0.5%, respectively). The improved balance of the PA was essentially due to the simultaneous rise in tax revenues on production and imports and in welfare contributions from a rise in employment.
The provisions that govern the development of the internal market for E.U. postal services were set out in an initial Directive of the European Parliament and of the Council of 15 December 1997 (97/67/EC), which was supplemented by the Directives of 10 June 2002 (2002/39/EC) and 20 February 2008 (2008/6/EC), which are at the origin of the gradual liberalisation of the postal sector that was completed with the total opening of the market to competition on 01 January 2011. This liberalised market framework simultaneously safeguards a common level of obligations for the Universal Postal Service for all users of the Member States of the European Union (EU) and defines the harmonised principles for the regulation of postal services in a free market environment.
In terms of funding the Universal Postal Service, and since the provision of reserved postal services as a means of funding has been abolished, the new legal framework establishes a series of mechanisms that Member States can adopt to safeguard and fund the Universal Postal Service. The new Directive also contains guidelines on how to calculate the net cost of the Universal Postal Service. The provision of the Universal Postal Service tends to operate at a loss in the EU, with various countries having implemented measures to mitigate this cost without requiring direct compensation. Regulators, aware of the challenges that the postal sector and primarily the provider of the Universal Postal Service face, have permitted the diversification of activities and a more efficient allocation and use of resources, always safeguarding the obligations set out under European law.
According to the European Commission (EC), cross-border parcel delivery services are an essential element in encouraging electronic commerce across the EU. In May 2016, under the package of measures under development to improve consumer and company access to digital goods and services, the EC presented a regulation proposal, on cross-border parcel delivery services, which aims to increase price transparency and the regulatory supervision thereof, which is still under discussion.
In this context, European postal operators together implemented the Interconnect project that essentially entails 5 commitments: flexible delivery options; return solutions; expansion of the track and trace system; better quality of service for the client; and harmonised labels. The goal of this project is to thereby remove obstacles that dissuade consumers from making online purchases outside their country by equipping vendors with more flexible efficient delivery solutions with a single standard for clients and, as such, maximise growth potential in cross-border electronic commerce for postal operators and contribute to the development of the Single Digital Market.
The Postal Law entered into force in April 2012 (Law 17/2012, of 26 April, as amended by Decree-Law 160/2013, of 19 November), transposing to the Portuguese legal system Directive 2008/6/EC. The postal market in Portugal was thereby fully opened to competition, eliminating the areas under the Universal Postal Service that were still reserved to CTT. However, for reasons of public order and security or general public interest, some activities and services remain reserved up to 2020: placement of letter and mailboxes on public roads for the acceptance of mail, issuance and sale of postage stamps with the word "Portugal" and registered mail used in legal or administrative proceedings.
The Universal Postal Service includes the following services, of national and international scope:
In terms of the funding of the Universal Postal Service obligations (USO), the Universal Postal Service providers are entitled to compensation of the net cost of the USO when it constitutes an unreasonable financial burden for them. This compensation is made through a fund supported by the postal service providers, which offer services that, from the point of view of the user, are considered services exchangeable with those covered by the Universal Postal Service, the operation of which has yet to be defined. In February 2014, the regulatory entity (ANACOM) approved the methodology for the calculation of the net cost of the Universal Postal Service provided by CTT as a provider of the Universal Postal Service, as well as on the concept of unreasonable financial burden for effects of compensation of the net cost of the Universal Postal Service as well as the terms for its calculation.
As the concessionaire of the Universal Postal Service, CTT shall remain the Universal Postal Service provider until 2020, with the Government having reviewed the principles of the concession pursuant to the system established in the Postal Law, through the publication of Decree-Law 160/2013, of 19 November, with the execution thereunder of an amendment to the concession contract on 31 December 2013.
Pursuant to the Base XV of the Principles of the Concession of the Universal Postal Service, in August 2014, ANACOM approved the final decision on the objectives of postal network density and minimum service offer with which CTT should comply until 2017, to ensure availability and accessibility of the Universal Postal Service entrusted to CTT. In 2017, the definition of the objectives of postal network density and minimum service offer for 2018/2020 are underway and no significant changes are expected to the existing postal network.
Under the criteria for formation of prices for the 2015/2017 period as established by an ANACOM resolution of 21 November 2014, ANACOM approved the Universal Postal Service price proposal presented by CTT on 31 January 2017, as later adjusted, by a resolution of 28 March 2017. The prices
inherent to this proposal, which complied with the established price formation principles and criteria, became effective on 4 April 2017.
The update corresponded to an average annual increase of 2.4% in the price of the basket of letter mail, editorial mail and parcel services, not including the Universal Postal Service offer to bulk mail senders, to which a special price regime applies. Special prices for postal services included in the Universal Postal Service offer applicable to bulk mail senders were also updated on 4 April 2017, following the proposal submitted to the Regulator on 24 March 2017. Within the company's 2017 price policy, the referenced updates are an average annual price increase of 1.9%, which also reflects the effect of price update for reserved services (registered mail used in legal or administrative proceedings) and for bulk mail special prices.
As the Universal Postal Service provider and in order to provide a standardised and non-discriminatory service to operators that wish to use the Universal Postal Service network, as of February 2016, CTT made available to mail operators with an individual license an offer to access its network that is deemed competitive and that safeguards the network's security and the Universal Postal Service's efficiency. This offer consists of a basic service of pick-up, transport, sorting and delivering non-priority letter mail with a maximum weight of 2kg that allows items to be sent nationally or internationally using the Business Mail branch of Lisbon, Taveiro (Coimbra) and Maia (Porto) as access points. As regards access to the Universal Postal Service Provider's (USP) network, the regulator's likely decision has been put under public consultation. For the delivery of non-priority non-flat items, it provides for access to the USP's network in certain postal delivery offices. If this measure is adopted, CTT considers it will entail a relevant barrier to the automation and centralisation strategy the Company has been implementing, in order to increase operating efficiency and streamline costs, in a context of declining mail volumes.
Further regarding access to elements of the postal infrastructure by other postal operators, access was granted as of March 2016 to deliveries to P.O. Boxes through which mail operators can directly drop-off mail addressed to P.O. Boxes located in CTT post offices and agencies and return mail found in the CTT network with postage from other operators.
In terms of the quality of the Universal Postal Service and in the aftermath of the new Postal Law, quality indicators began to be measured as of the 4th quarter of 2016 through a measurement system carried out by an independent external entity, whose operation has been entrusted to an international company. Certain insufficiencies were detected in the measurement process and this entity is currently implementing a number of measures to improve the operation and stability of the new quality of service measurement system.
Under the legal framework, the regulator stipulates the quality of service parameters and performance goals associated with providing the Universal Postal Service, as well as the criteria for stipulating prices. During the current year, the last of the 2014-2017 regulatory period, the market is waiting on the regulator to state its position on these matters for the next three-year period. CTT considers that position should take into account recent mail volumes and changes in consumer needs, due to new realities that the new information and communication technologies have brought with them.
The recurring revenues 6 of the Mail business unit reached €269.8m in the first semester of 2017, corresponding to a year-on-year slight decline of 0.8%.
This business unit includes the Mail upstream and downstream businesses of postal services and corporate solutions, namely printing & finishing, mail manager, video encoding, hybrid mail and other solutions complementary to the Mail business. The Retail Network is also included in this business unit that in addition to postal, retail and convenience services renders services to the other business units as a sales channel. Of note is its role as a proximity channel for Banco CTT's financial services. The abovementioned services are provided by CTT S.A. (parent company), CTT Contacto and Mailtec Comunicação.
The evolution of the revenues is related to the decline in addressed mail volumes (-5.6%), predominantly in the 2nd quarter (-7.6%), that offset the price increase that took place on 4 April 2017.
The 2nd quarter, when compared to the same quarter in the preceding year, was influenced by the occurrence of one less business day, in the month of April, in particular, with two less business days due to Easter holidays (that in 2016 took place in March), which significantly affected mail consumption. The months of May and June showed smaller reductions, more in line with those of the 1st quarter, which attenuated the reduction in this 2nd quarter.
| Mail Volumes | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Million items | |||||||||
| 1 Q1 7 | 1 Q1 6 | ∆ | 2 Q1 7 | 2 Q1 6 | ∆ | 1 H1 7 | 1 H1 6 | ∆ | |
| Transactional Mail | 174.5 | 180.5 | -3.3% | 156.5 | 169.4 | -7.6% | 331.0 | 349.9 | -5.4% |
| Editorial Mail | 10.6 | 11.6 | -8.8% | 11.1 | 11.0 | 0.3% | 21.6 | 22.6 | -4.4% |
| Advertising Mail | 18.5 | 19.4 | -4.6% | 16.9 | 19.2 | -11.6% | 35.4 | 38.6 | -8.1% |
| Addressed Mail | 2 03.6 | 2 1 1 .5 | -3.7 % | 1 84.5 | 1 99.6 | -7 .6% | 388.1 | 41 1 .1 | -5 .6% |
| Unaddressed Mail | 1 07 .4 | 1 08.5 | -1 .1 % | 1 2 7 .4 | 1 2 6.2 | 1 .0% | 2 34.8 | 2 34.7 | 0.0% |
The price update of the basket of letter mail, editorial mail and parcel services took effect as of 4 April of this year, with only a partial effect on this semester. The average change in prices for the Universal Postal Service in the 1st semester of 2017 was a year-on-year increase of 1.3%, thereby contributing to offset the effect of the decline in volumes on addressed mail revenues.
The decline in transactional mail volumes (-5.4%) was the main contributor to the decline in addressed mail volumes. This evolution is the result of declines in the volumes of ordinary mail (- 7.3%) and priority mail (-7.7%). On the other hand, registered mail (+6.0%), green mail (+1.4%) and outbound international mail (+5.9%) and inbound international mail (+3.4%) showed a positive evolution, thereby also contributing to a positive mix effect.
6 Including internal services and intragroup transaxtions which are eliminated for consolidated purposes.
Notably, the evolution of transactional mail volumes in the semester contributed negatively to its performance in the 2nd quarter of 2017 (-7.6%), mainly due to the behaviour of ordinary mail in the 2nd quarter whose fall was sharp (-9.4%). This led to a 7.3% decline in volumes of that type of mail in the 1st half of 2017. The occurrence of Easter holidays in the 2nd quarter, which in 2016 had occurred in the 1st quarter, contributes to this evolution.
Registered mail grew in volume by 6.0%, mostly due to the rise in consumption by the Government sector, namely by the Tax Authority (+22.8%), although this behaviour is not expected to continue throughout the rest of 2017.
Editorial mail had a sharp recovery in the 2nd quarter, mainly in the Editors sector and other various sectors.
Volumes in addressed advertising mail fell 8.1% in the first half of the year. This drop was very sharp in the 2nd quarter (-11.6%), mainly due to the fall in advertising campaigns by large customers in the banking, insurance and utilities sectors and large retail distributors.
The new solution CTT Ads, launched in the first quarter of 2017, has not yet had visible effects on both volumes and income of advertising mail and some measures are being implemented to boost and promote this new offer.
Volumes in unaddressed advertising mail stabilised vis-à-vis the 1st half of last year.
CTT offers hybrid communication solutions, developing offers that combine physical with digital communication, such as: document production (through Mailtec Comunicação, the market leader), scanning and information technologies for the postal sector, geographic and geo-referencing solutions, as well as ViaCTT, a secure e-mail with controlled access.
There is growing market demand from a wide variety of business sectors for CTT's integrated solutions, which include features tailored to the needs and goals of each organisation, based on the portfolio and capabilities inherent to CTT's two capillary networks – post offices and delivery.
The Dematerialisation, Proximity and Business Intelligence Solutions (meter readings, document dematerialisation and handling services, handling of notices, etc.) evolved favourably compared to the same period in 2016. Application developments remain underway in order to make two new SaaS (Software as a Service) services available in 2017. This is aligned with a strategy to expand services to increasingly digital self-service models.
The Online Invoice service attained the one-million mark of processed invoices in the first half of 2017. The launch of the solution in more than 1,200 CTT post offices and agencies and initial testing with one of the largest Retail Distribution chains in Portugal contributed significantly thereto. In the second half of the year, a renewed version of the Online Invoice web portal will be launched and a mobile application for Android and iOS will become available. This renewal will bring with it not only an improved user experience for consumers, but also new features that can be explored by retailers, while maintaining the outlook of extending the purchasing experience beyond the point of sale.
The Philately business achieved €3.9m in revenues in the first half of 2017, resulting in a year-onyear increase of 22.5%. Revenues from the "100 Years of Fatima" project, made up of stamps and a book, and the sale of AA "Benfica" stamp booklets (2nd group) strongly contributed thereto. We further highlight the "Canning Industry" philatelic issue that received the 2017 WIPA Grand Prize.
The themes covered for the commemorative issues in the first half of the 2017 encompass various areas of human knowledge, as shown by the list below:
| Commemorative Issues | |||||
|---|---|---|---|---|---|
| • Joint Issue Portugal-India • Joint Issue Portugal-Israel • 800 Years since the founding of the Dominican Order • Centenary of the Fátima Apparitions • Visit of His Holiness Pope Francis • Historical and Cultural Figures Centenary of the Philanthropic Lions Club • • Evocation of Portuguese Participation in World War I |
Historical Dates and Figures |
||||
| • António Guterres – United Nations Secretary-General Lisbon – Iberian-American Capital of Culture 2017 • Evocation of the life of Mário Soares • |
National and International Events in 2017 |
||||
| • EUROPA – Castles • 50 Years of the Rally of Portugal Traditional Desserts of Portugal (1st group) – base issue • Portuguese Textile Industry • |
Music, Art and Culture |
||||
| Fruits of Portugal PDO and PGI (2nd group) • • UN Year of Sustainable Tourism for Development – Automatic Labels |
Environment and Sustainability |
||||
| • North Booklet • Traditional Desserts of Portugal (1st group) – base issue |
Self-Adhesive |
The following thematic books were also launched with the usual high level of success:
The Retail Network is an increasingly important sales channel for CTT's revenues growth in all business units, in an increasingly digital economy where convenience and proximity serve an important role in the physical component of this new paradigm and in which the consumer wants a breadth of interactive channels – the omni-channel concept – when purchasing or searching.
Management of business in the Retail Network is based on the following fundamental vectors:
At the end of the first half of 2017, the Retail Network was comprised of 4,377 contact points, with 613 post offices, 1,744 partnership branches (postal agencies) and 2,020 stamp sale points. The offer of services, under self-service available 24 hours a day in some cases, is complemented by 217 automated stamp vending machines and 15 automated postal product vending machines.
The strategy defined in 2016 to segment the offer by post office type, streamlining the offer of thirdparty products, reinforcing partnerships in the segments deemed strategic and strengthening CTT's position as a single provider of proximity services was continued in the first half of 2017. This segmentation allowed initiatives to be promoted during the first half of 2017 that stimulated other retail businesses, such as: (i) new partnerships in telecommunications, CTT ticket sales and Tourism and (ii) providing services to citizens, such as the payment of the Mobility Social Subsidy in the Autonomous Regions of Madeira and the Azores, which in the first half of 2017 entailed more than 125 thousand operations in a total amount paid to beneficiaries of 25 million Euros. The agreement entered into with Casa Campião for the sale of classic lottery tickets in all CTT post offices and through postmen and women is also worthy of note. This allowed lottery tickets to be again sold at CTT, after having been interrupted since the 4th quarter of 2016, which resulted in a revenues drop of €2.0m in this channel in the 1st half of 2017.
The Commercial Excellence Programme, a company-wide programme, was launched with the goal of creating a better focus on dynamic sales within the CTT Group, which translated into increased sales, more time with the client and better quality of service. It is based on three key elements: (i) skill development, (ii) support tools and monitoring of the programme and (iii) a new organisational and governance model, affecting all products of the CTT's B2B segment.
In line with the strategy for commercial excellence and greater efficiency in the various sales channels and for various targets, specific stimulation measures were developed in the B2C segment through sale of books and merchandising in postal agencies, thereby offsetting the reduced presence in post offices resulting from segmentation.
In parallel, optimisation measures continued to be developed in order to increase the convenience of the postal agency network for clients, by better analysing the best geographic location thereof, extending opening hours and expanding the portfolio of available services.
The "Future Opens" contest has also been maintained. This CTT initiative is aimed at national startups and was launched in the last quarter of 2016 in order to promote innovation by supporting
entrepreneurship in Portugal and thereby creating a showcase of distinctive products/services in the market. Following the selection of a short-list of 10 proposals, contacts were made to sell those products in CTT post offices and remote sales channels (catalogue and online shop).
In terms of innovation in the retail network, the development of the CTT App was concluded in the first half of the year by making the products meuselo, meupostal and ticket office available as of July.
In the first half of 2017, the Transformation Programme 7 remained heavily focused on reorganising the operational cycle, deepening synergies between CTT networks (Mail and Express & Parcels) and improving operational efficiency. We note the NARPEL (New Architecture in the Production and Logistics Network) project in this first semester of the year, as further detailed below. It was implemented in April 2017 and will go through a second implementation stage in August 2017. We also highlight the continued expansion of the MOGU project (Motorisation of Urban On -Foot Delivery Routes) to additional areas.
The sorting network is composed of 3 production and logistics centres, 7 logistics support centres and 1 business mail centre. The activities of the production and logistics centres are carried out by 46 automated mail sorting machines (of which 26 are mail sequencing machines, 2 medium-size item sorters and one Rest Mail Sort machine) and 54 video encoding posts.
In the first half of 2017, an average of 2.1 million items a day (flat letter mail) were automatically sorted by postal delivery route, 80% of which were automatically sequenced. The Rest Mail Sort (RMS) machine sorted a daily average of 82 thousand items in the first half of the year (+39% than in the same period of the previous year).
The Mailmanager solution showed notable growth in the first semester, as shown by the following indicators: 7.5m scanned pages and 4.4 million complete documents, numbers which show a 53% growth in documents produced, as compared to the same period in the previous year.
As regards the GEO10 project (geo-referencing doors of each home and their characteristics), developments were made to address information, both by inserting the toponymical approved by Local Government and by integrating surveys carried out under the project. Four million doors have already been identified, thereby covering 97% of the Portuguese population and 98% of the national territory.
We highlight the strong increase in customs-related activities and its positive impact on the increase of the revenues. The customs handling rate saw a rise in requests of 92.1% as compared to the same period in the previous year. From among the changes made to facilitate customs-related processes, we highlight: (i) the implementation of pre-payment for early payment of customs duties, (ii) the dematerialisation of customs clearance notices, which are now made electronically, (iii) the implementation of the CDS – Customer Declaration System, an application developed and managed by UPU for the complete IT handling of customs documentation and which is made up of 2 components, one to be used by Postal Operators and another by the Customs and Tax Authorities, namely Customs, and lastly (iv) cooperation with the Brazilian postal operator in exchanging electronic customs clearance messages.
7 Transformation Programme: a set of projects selected annually as fundamental to implementing CTT's strategy.
The Geocontact product's (unaddressed mail) operative process (handling and delivery), which has been in effect as of January 2017, is also to be noted. This was fully undertaken by the mail distribution network and enhanced its installed capacity, while reducing outsourcing costs thereof.
Finally, within the Transformation Programme 8 , the implementation of the NARPEL project is worth noting. Under it, changes were made to the mail and EMS forwarding model, as well as to the video encoding operational model, by reinforcing activities in the Southern and Northern production and logistics centres (with the transfer of 4 pieces of equipment that were installed at Pinheiro de Fora). This encompassed more suitable resources, a new sorting model and new layout for the production and logistic centres. This project adapted transport to new consumption profiles, as well as to the country's modes of communication, enabling a more centralised cover in large centres.
The transport network operates with 242 vehicles, which travel approximately 46 thousand km/day. In the first half of 2017, the national transport network covered a total of nearly 5.7 million km, thanks to ever more efficient vehicles acquired under the fleet renovation that has been carried out over the last years.
The implementation of the first stage of the NARPEL project contributed to increased operational efficiency of the logistics network, thereby ensuring greater synergy between the mail distribution network and express network in the logistics component, with important contributions to reducing kilometres covered and reducing expenditure in transport activities (with an expected annual reduction of 354 thousand km).
Regarding air and sea transport, we highlight certain initiatives carried out during the semester: (i) implementation of a new plan to Route air transport, which has contributed towards avoiding an increase in prices charged by carriers, (ii) consolidation of Nesting solutions - (feature installed in the IPS - International Processing System IT application supervised by UPU that manages inbound and outbound international mail) for sea transport regarding screening of transported mail and (iii) transfer of some air transport flows to sea transport of inbound international mail whose destination is the Azores or Madeira, with a positive impact on operational expenses and nearly 13% growth in volumes transported by sea.
In terms of innovation, we note the launch of the Vedur project, a pilot using an innovative electric tricycle to replace delivery routes that currently use scooters or are done on-foot. This reinforces the focus on vehicles adapted to face new postal delivery hurdles and was done in partnership with the Portuguese start-up UOU mobility.
The delivery network is made up of 235 postal delivery offices (PDOs), including 62 delivery support offices (DSO) and 2 delivery support services. These are organised into 4,718 delivery routes, which cover around 244 thousand km/day. The fleet provided for delivery is primarily comprised of motor vehicles, motorcycles and bicycles (mostly electric) and has been reinforced with more vehicles, mainly electric vehicles in order to make routes faster and endow them with greater load capacity in response to the mail distribution network's needs.
8 Transformation Programme: a set of projects selected annually as fundamental to implementing CTT's strategy.
Under the Transformation Programme 9 , we highlight the consolidation of new, more efficient delivery models that are geared toward meeting product service standards and promoting the continued reorganisation and optimisation of PDOs. In the first half of the year, 66 PDOs were reorganised and 13 operational units (DSO/PDO) were centralised, thereby contributing to the greater streamlining of delivery infrastructures. We further highlight the implementation of the MOGU project (Motorisation of Urban On-Foot Delivery Routes) in two PDOs in Lisbon and Porto. The results from these pilots were positive and support the expected expansion to other PDOs on a national level, in areas of greater urban density.
Due to measures carried out in the last years to make better use of the mail distribution network's capacity for EMS delivery, it is worth noting that, in the 1st half of 2017, nearly 75% of EMS volumes were delivered by the mail distribution network (70% in the same period of 2016).
In terms of innovation, we highlight that, in the first quarter, CTT successfully carried out the first delivery of a parcel by drone. The initiative was carried out in partnership with Connect Robotics, a start-up dedicated to managing and controlling drones in autonomous flights.
The recurring revenues 10 of this business unit reached €62.8m in the first half of 2017, a year-onyear growth of 4.8%. This business unit is comprised of the activities of CTT Expresso and Transporta in Portugal, Tourline Express in Spain, all increasingly anchored in the Iberian Peninsula, and CORRE in Mozambique.
In Portugal, as planned, the acquisition by CTT of the entire share capital of "Transporta – Transportes Porta a Porta, S.A." was concluded on 4 May 2017. The agreement for the sale of the company by Group Barraqueiro had been announced on 15 December 2016 and on 2 March 2017 CTT was notified of the decision of the Competition Authority not to oppose the transaction.
This acquisition falls under CTT's expansion and diversification strategy, through which the company intends to capture growth opportunities in neighbouring markets and with potential synergies with the CEP market. On the one hand, the fact Transporta offers integrated logistics solutions and is active in the goods delivery and transport market in Portugal, allows CTT to expand and reinforce its presence in those markets. On the other hand, because it is mostly active in the market for delivery and transport of cargo exceeding 30 kg, CTT can expand the range of services provided and offer increasingly integrated solutions to its customers. This growth strategy has already been adopted by other international postal operators and, in addition to the aforementioned benefits, it is crucial for customer loyalty.
Since 4 May, CTT has been working on the implementation of a plan to capture synergies of various natures: migration synergies of items between networks (transferring items from the Transporta network to the CTT network and vice versa, depending on which is more competitive for the various types of flows), infrastructure and fleet synergies, as well as optimisation of outsourcer networks, human resources and other costs.
9 Transformation Programme: a set of projects selected annually as fundamental to implementing CTT's strategy.
10 Including internal services and intra-group transactions which are eliminated for consolidation purposes.
Business revenues (excluding internal clients to the Group) in Portugal grew 6.2% to €36.6m, an amount that includes €2.3m from Transporta (€2m from Express & Parcels and €0.3m from Logistics).
Revenues in Portugal excluding Transporta, i.e., from CTT Expresso, essentially stabilised compared to the same period of the previous year (-0.6%). This evolution was due, on the one hand, to a 3.2% growth in the parcels business and, on the other, to a sharp drop in the banking business (-26.6%), which currently has a small weight (around 7%) in the overall revenues of this business unit in Portugal.
Total volumes in Portugal grew by 13.1% in the 1st half of 2017 compared to the same period of 2016 (6.3% excluding the approximately 0.5 million items contributed by Transporta in the months of May and June). The performance of CTT Expresso resulted both from the B2B segment (some customers acquired in 2016 entered cruising speed in 2017, mainly in the retail, electronics and telecommunications industries), as well as from the B2C/e-commerce, due to strong customer dynamics in the fashion and accessories sectors and to new recruitments in the sporting goods segment and food industry. It should also be noted that micro and small enterprises managed through remote channels (telemarketing and web) recorded a marked increase in volumes (over 20%).
The evolution of volumes, when compared to revenues, shows a decline of the average price in CTT Expresso's domestic business, which was mainly influenced by (i) the growth in the e-commerce segment, with lower prices and small-sized parcels, (ii) the competitive pressure in the large accounts segment, where the modular offer has allowed best price needs to be addressed and (iii) the growth and the capture of new clients in the small business segment which has allowed to partially offset the former effects and which is expected to undergo further growth throughout the year. The new CTT e-segue offer, by increasing the value proposition and range of services directed at e-buyers, is highly suited to the e-commerce segment, thereby permitting greater focus on the growing SME segment, due to positive growth in the economy. This offer will allow the shown effect of average price reduction to be contained.
E-commerce is a crucial lever for parcels growth. Its activity in CTT showed an estimated growth of 18.1% throughout the 1st half of 2017, in terms of last-mile volume delivery, including inbound cross-border flows. The following initiatives are of note:
creating a partnership with Phone House that seeks to create greater accessibility and convenience for online shoppers in collecting their parcels by expanding the network of CTT delivery points to another 100 points, many located in convenient (as regards opening times) commercial spaces with heavy foot traffic;
concluding the design and functional specifications for dynamic delivery solutions in an urban context that satisfy quick delivery needs in an e-commerce setting – Same Day & Instant Delivery, with a market pilot to begin in 2017;
Finally, it is very important to note that the 2nd quarter was the first quarter of full adoption of the Commercial Excellence model. The consolidation of this new organisational and activity model is aimed at reinforcing the capacity to attract clients and develop business. The new organisation of the commercial and marketing areas with (i) specialisation by activity sectors, (ii) development of pre-sale areas that will better support tailored sales and the operational solutions, (iii) the implementation of multi-product sales teams in order to better harness cross-selling opportunities and (iv) a multi-channel logic for small businesses through telephone, retail network and door-todoor channels, will provide a more suitable response to each market segment.
In Spain, business revenues (excluding clients internal to the Group) reached €24.0m, a year-onyear growth of 11.4%, mainly due to the 17.1% volumes growth. This was very much due to the capture of a major client and other relevant direct clients, mainly in the e-commerce business.
The strategy outlined for Tourline's recovery is based essentially on two principles: (i) volume growth, to leverage the fixed-cost structure and (ii) growth in the number of franchised post offices that allows, on the one hand, greater independence from large customers (typically with aggressive prices) and, on the other, reduction of the delivery costs by switching from own delivery to delivery by franchisees. For that, operational changes were made (profile of shipments, cut-off times and use of the other logistics platforms), which nowadays allow for greater growth in volume and upon which the company's evolution strategy can be based.
At the beginning of 2017, Tourline changed its market position in a way that was consistent with the defined strategy – increased pricing aggressiveness for end customers and created more attractive conditions for growing and attracting franchisees in order to achieve the intended growth by attracting franchisees from other networks to Tourline and promoting the growth of the current ones. This change in position enabled the aforementioned volumes growth in the 1st half of 2017 compared to the same period of 2016, and three times the number of new franchisee openings in the second quarter when compared to the first quarter of the year. Continued growth, which is expected to accelerate with the entry of more franchisees and their growth within the network, as well as the entry of large accounts (some already in the process of integration) will allow for the revenues growth trends to intensify and consolidate. They will lead to a greater reduction of unit costs due to larger economies of scale and greater distribution via franchisees, thus creating conditions to achieve the goal of monthly positive EBITDAs as of the last quarter of 2017.
In this regard, CTT and Tourline continue to evaluate consolidation opportunities in the Iberian market in order to accelerate this process and enable CTT to affirm itself as one of the major Iberian operators in the Express & Parcels sector.
In Mozambique, CTT has been active in the Express & Parcels business since October 2010 with the company CORRE – Correio Expresso de Moçambique, whose share capital is 50% held by CTT and 50% by Empresa Nacional de Correios de Moçambique (Mozambican National Post Office).
The company intends to become market leader of the domestic express mail market and to stand as one of the most important players in the international Express & Parcels trade with Mozambique. It already covers most of the provinces and owns an operating centre and two own branches in Maputo and an Air Mail Unit at the airport. CORRE products and services are also available at all post offices of Correios de Moçambique, thus achieving national coverage, which has contributed to the expansion of the business.
In the first half of 2017, the armed conflict in the country's central region was ended by peace talks. During this semester, the inflation rate also decelerated (from nearly 25.27% at the end of December 2016 to 20.45% in May 2017) and the local currency slowly but continuously appreciated compared to the Euro/U.S. dollar, although it is still far from its pre-crisis value. The practical effect of this situation has been the closing and/or downsizing of most companies that operate in the Mozambican market. The appreciation of the local currency will have a positive effect in the medium-term on imported goods with an impact on CORRE's cost structure. As far as expenditure management is concerned, a plan has been stipulated to reduce the human resource structure (expats), effective as of the 4th quarter of 2017.
In terms of business and in contrast with the economic performance of the country, CORRE has been presenting increased revenues and a consolidated position as the largest logistics operator in Mozambique to operate in the services sector. It has sought to diversify its client portfolio in order to ensure less dependence of its hegemonic position in the banking sector. In order to address the lack of budget of various government sectors, CORRE has been intensifying its collection model and restrictively applying its policies for granting credit, as well as diversifying the growth of its activity to other sectors.
A strategic plan is underway to reinforce commitment and alignment of the shareholders with a set of assumptions that will allow CORRE to consolidate its financial performance, reducing its exposure to currency fluctuations within the ongoing business. When implemented, it will allow the negative impact of previous financial years to be offset in the company's performance and accounts, thereby ensuring that annual results will become consistent with CORRE's good operational performance over the last 2 years.
CORRE had a year-on-year growth of 9.3% in business revenues in local currency (metical), +4.8 million metical mainly due to the growth in the banking business (+2.7 million metical; +9.5%); due to the negative evolution of the metical exchange rate, revenues expressed in Euro stood at 791 thousand euros (-8.7%).
The recurring revenues 11 of this business unit reached €32.8m in the first half of 2017, a year-onyear growth of 1.8%. This business unit includes the financial services provided by CTT, S.A., geared toward retail, and payments activities, directed toward the business segment (B2B), both through
11 Including internal services and intra-group transactions which are eliminated for consolidation purposes.
the Retail Network and the Payshop business with its vast network of agents, representing more than 6,500 payments points.
CTT's retail network continued to extensively market non-banking financial products and services based on partnership agreements, involving savings, fund transfer, life and non-life insurance, as well as the consumer credit and credit card business in CTT post offices that do not have a Banco CTT branch. This coordinated strategy with Banco CTT allows CTT clients to access this offer at a wider set of points.
With a nearly 52% weight in the revenues structure of the business unit, public debt products - Savings certificates (SC) and Treasury certificates Poupança Mais (TCPM) - have a crucial influence on the final result. For this reason, the 41.9% growth in revenues of the Public Debt products in this first semester, was decisive for the overall growth of the business unit. It was influenced by volumes growth, but especially by a change of the contractual terms and conditions between CTT and IGCP, whereby commissions became stable throughout the year (with no stock commission). Volumes growth was strong, with 18% growth in subscriptions and amortisations trebling as compared to activity recorded in the same period of 2016. The demand for public debt products was naturally focused on TCPM due to their high yield (average gross income of 2.25% p.a. for 5-years), in contrast with the reality of bank deposits whose average return rate decreased again to 0.31%, according to data from the Bank of Portugal in the middle of the reference period. The demand for TCPM also benefitted from being completely cost free to the customer, in a context where banks are increasing their servicing fees, in particular regarding current accounts.
The fund transfer business made a very positive contribution, in particular the outbound flow, as the number of transactions and the revenues increased, following up the positive evolution of the economy, employment and consumer confidence. The inbound flow maintained its downward trend in the number of transactions, although offset in terms of revenues, which increased as a result of rising prices in issuing countries.
Insurance and credit is offered by CTT only in post offices with no Banco CTT branch. This allows the Bank's strategy of reduced presence in the retail network to leave its capacity and breadth in offering these products intact. This is possible through integrated management between both institutions at all times and in communicating with the market.
In the area of life and non-life insurance, a reference should be made to the development of projects intended for re-launching and reinforcing this product offer. This will be carried out in close cooperation with Banco CTT and is scheduled for the beginning of the 2nd half of 2017. Commercial teams have received technical and behavioural training in health insurance, whose pilot test has been taking place since 2016 with positive results in an initial group of 150 post offices.
The business of consumer credit and credit cards in post offices with no banking activity has seen a 12.7% year-on-year decline in the semester, with credit of 4.2 million euros placed. Taking into consideration in the previous comparison only post offices that fell outside Banco CTT's perimeter as regards consumer credit in both periods under analysis, this business grew by almost 23%, in line with the market trends and considering CTT as a whole (including CTT and Banco CTT).
The first half of 2017 marked the launch of the transformational plan for CTT's payments business – an investment in diversification, innovation and excellence of service, leveraged on the potential of new technologies and maximising the value of the Payshop agent network, for these and for users. Four key elements stand out:
partnership will leave a mark on the payments market in Portugal. The web and mobile application with the project name "Virtual Agent" intends to consolidate recurring expenses and make available information thereon. This will help private (and corporate) users to manage and make all payments and expenses without needing to access bank accounts.
Despite the decline in revenues, especially in mobile top-ups and public transport ticketing, the payments business as a whole generated revenues of nearly 10 million euros in this semester. On a positive note, we highlight the revenues generated by new services, integrated payment solutions and the payment of State single collection documents, in their majority taxes.
The recurring revenues 12 of this business unit reached €3.5m in the first semester of 2017, already showing the initial monetisation of the client base, which has been growing quickly and sustainably. After only 15 months since its opening to the public in March 2016, Banco CTT has earned the trust of 185 thousand clients (with 200 thousand clients by the 3rd week in July), through the opening of more than 147 thousand current accounts. These are clients that established a relationship of trust and proximity with the Bank, values that are the root of its activity, and that have driven its growth, of which we highlight the 420 million euros worth of customers deposits captured, of which 252 million euros are in current accounts. In order to serve the general population and its clients, Banco CTT is present throughout the country in more than 200 branches set-up in CTT post offices.
The trust of the Portuguese population has also had an impact on the successful launch of new products and services. In this regard, we highlight the launch of Banco CTT's credit cards, in the last quarter of 2016, wherein more than 25 thousand cards have been issued to date. We further highlight consumer credit offered in partnership with Cetelem, which is available in both post office with and without Banco CTT branches and on the Bank's website and whose available credit volumes have already surpassed an accumulated €20m.
Under the plan to launch products and services during the year of 2017, Banco CTT launched mortgage loans in the first quarter, with a simple low-cost solution for those intending to purchase or move home, while maintaining the value associated with Banco CTT's launch: an accessible and comprehensible offer that is of value to clients. Banco CTT's mortgage loans offer also reinforces the brand's value of proximity, by allowing the client to be accompanied by a mortgage loan specialist throughout the entire home purchase process. Banco CTT has also launched a new smartphone app, specific to this offer that facilitates and guides our clients through every step until they obtain their new home, a process that is usually seen as lengthy and bureaucratic. With this
12 Including internal services and intra-group transactions which are eliminated for consolidation purposes.
offer, Banco CTT has now concluded its base offer to clients and, in time, will offer only new supplementary products and services.
Total customer credit, as at 30 June 2017, totalled nearly 32 million euros.
In the 2nd quarter of 2017, Banco CTT was authorised by the Regulator for Insurance and Pension Funds (ASF) to offer its clients insurance products (life insurance, multi-risk home insurance and health insurance), which will begin in the 3rd quarter of 2017 under the umbrella of supplementary products.
In the second half of the year, Banco CTT intends to reinforce its focus on mortgage loans, by improving the solutions made available to its clients, in order to make the process increasingly agile and convenient. To continue to grow in terms of clients, resources and granted credit is therefore the selected means of solidifying Banco CTT's presence and enhancing the bank's growth in the Portuguese banking sector.
This section summarises the consolidated results achieved by CTT and the consolidated assets, liabilities and financial position of the company as at 30 June 2017. This section should be read in conjunction with the consolidated financial statements and the accompanying notes, which have more detailed information. The present review includes the consolidation of the activities of the parent company and its subsidiaries as included in note 7 of the consolidated financial statements. In addition, a review is carried out by CTT excluding Banco CTT of the consolidation perimeter and treating it as a financial investment to facilitate the analysis of the impact of Banco CTT on CTT financials. This also allows CTT to have an overview of the balance sheet excluding financial assets, which besides being specific are autonomous and segregated assets.
During the first semester of 2017, it is important to highlight the following aspects for a better understanding of the company accounts:
In the first semester of 2017, CTT achieved a consolidated net profit of €17.7m, -44.0% (-€13.9m) than in the previous year, corresponding to a consolidated net profit per share of €0.12, compared to €0.21 in the first half of 2016, with the termination of the Altice agreement contributing to this decrease.
The operating activity generated earnings before non-recurring items, interest, taxes, impairments, depreciation and amortisation (recurring EBITDA) of €52.6m, -15.8% (-€9.8m) than those obtained in the same period of the previous year, with an EBITDA margin of 14.9% compared to 17.9% in the first half of 2016.
These results reflect an increase of 4.4% (+€12.6m) in the recurring operating costs (excluding impairments, provisions, depreciation/amortisation and non-recurring costs) of which €4.6m (+56.1%) are related to Banco CTT, €2.6m refer to Transporta in the Express & Parcels segment and €6.3m (+2.9%) to the Mail segment.
This increase in operating costs was not offset by the recurring revenues improvement of 0.8% (€2.8m). This growth is negatively affected by the gains related to the memorandum of understanding with Altice recognised in the previous year (€5.0m until June 2016) and by the decrease in sales and services rendered in the Mail segment (-€2.5m; -1.0%), mostly related to lottery sales, which had been suspended in the 4th quarter of 2016. These negative effects were not offset by the increases in the same caption in the Express & Parcels segment (+€4.2m; +7.3%) and in Financial Services (+€2.5m; +8.5%), as well as in the financial margin of Banco CTT (+€1.1m).
In the first half of 2017, the non-recurring results of CTT amounted to -€7.9m. This amount derived mainly from costs associated with studies and strategic projects (especially those related to Banco CTT, to the Commercial Excellence programme and to the Management of HR Talents programme), from the completion of the "Long-term variable remuneration – share plan" programme and consequent final adjustment of the recorded liability, from the continuation of the initiatives on structural and transformation matters, namely the human resources optimisation programme and the growing integration of Transporta within the CTT Group, as well as from the Tourline network optimisation measures.
The reported earnings before interest and taxes reached €30.6m, €16.9m (-35.6%) below those recorded in the first half of 2016.
The financial results amounted to -€2.4m, 4.3% (+€0.1m) above those of the same period of the previous year. Financial costs incurred reached €2.7m, and 97.3% of those are attributable to employee benefits. Financial revenues decreased by 38.4% (-€0.2m) in relation to the corresponding period of 2016, due to the decline in the rates of return on term deposits, lower liquidity levels resulting from the investment in Banco CTT and by CTT maintaining a very conservative liquidity management policy.
Earnings before taxes and non-controlling interests (EBT) amounted to €28.2m, 37.3% lower (-€16.8m) than the ones reported in the same period of last year.
In the first half of 2017 the effective income tax rate was 37.15%, vs 29.77% in the same period of 2016.
| Thousand Euros | 1 H2 01 7 | 1 H2 01 6 | % 1 7 /1 6 |
|---|---|---|---|
| Revenues | 352 ,1 1 4 | 349,358 | 0.8 |
| Sales and services rendered | 340,466 | 336,187 | 1.3 |
| Sales | 7,603 | 9,305 | -18.3 |
| Services rendered | 332,863 | 326,883 | 1.8 |
| Financial margin | 1,161 | 16 | 7,156.3 |
| Other operating income | 10,486 | 13,155 | -20.3 |
| Operating costs excluding impairments, provisions, depreciation/amortisation and non-recurring costs |
299,497 | 286,896 | 4.4 |
| Cost of sales | 4,968 | 6,781 | -26.7 |
| External supplies and services | 116,206 | 109,673 | 6.0 |
| Staff costs | 171,367 | 164,815 | 4.0 |
| Other operating costs | 6,956 | 5,627 | 23.6 |
| Earnings before depreciation/amortisation, impairments and provisions, non-recurring results, interest and taxes (recurring EBITDA) |
52,61 6 | 62,462 | -1 5.8 |
| Impairment of accounts receivable, net | 110 | 23 | 378.3 |
| Provisions, net | -102 | -147 | -30.6 |
| Impairment of other financial banking assets | 0 | 0 | n.a. |
| Impairment of non-depreciable assets | 0 | 0 | n.a. |
| Depreciation/amortisation and impairment of investments, net | (14,186) | (12,877) | 10.2 |
| Earnings before non-recurring results, financial income and taxes (recurring EBIT) |
38,439 | 49,461 | -22.3 |
| Company restructuring | -2,653 | -2,541 | 4.4 |
| Costs associated to studies and advice services for strategic projects | -4,561 | -5,017 | -9.1 |
| Other non-recurring income and costs | -670 | 5,530 | -112.1 |
| Earnings before interest and taxes | 30,555 | 47 ,433 | -35.6 |
| Financial results, net | -2,400 | -2,739 | 12.4 |
| Gains/losses in associated companies | 0 | 230 | -100.0 |
| Earnings before taxes (EBT) | 28,1 55 | 44,925 | -37 .3 |
| Income tax for the period | -10,460 | -13,375 | -21.8 |
| Net profit before non-controlling interests | 1 7 ,695 | 31 ,550 | -43.9 |
| Non-controlling interests | -50 | -127 | -60.6 |
| Net profit for the period attributable to equity holders | 1 7 ,7 45 | 31 ,67 7 | -0.4 |
Note: Revenues exclude non-recurring values.
| % | |||
|---|---|---|---|
| Thousand Euros | 1 H201 7 | 1 H201 6 | 1 7/1 6 |
| Sales and services rendered | 340,466 | 336,1 87 | 1 .3 |
| Sales | 7,603 | 9,305 | -18.3 |
| Services rendered | 332,863 | 326,883 | 1.8 |
| Financial margin | 1 ,1 61 | 1 6 | 7 ,1 56.3 |
| Other operating income | 1 0,486 | 1 3,1 55 | -20.3 |
| Revenues | 352,1 1 4 | 349,358 | 0.8 |
Note: Revenues exclude non-recurring items.
The business of CTT is organised in the following segments:
| 1H2017 - Revenues by segment | ||||||||
|---|---|---|---|---|---|---|---|---|
| Thousand Euros | Express & Parcels |
Financial Services |
Banco CTT | CTT Central Structure |
Intragroup eliminations |
Revenues | ||
| Sales and services rendered | 248,172 | 61,703 | 32,088 | - | - | (1,496) | 340,466 | |
| Sales | 7,212 | 391 | - | - | - | - | 7 ,603 | |
| Services rendered | 240,959 | 61,312 | 32,088 | - | - | (1,496) | 332,863 | |
| Financial Margin | - | - | - | 1,161 | - | - | 1 ,1 61 | |
| Other operating revenues | 21,638 | 1,056 | 665 | 2,355 | 27,420 | (42,647) | 1 0,486 | |
| Allocation to CTT central structure | - | - | - | - | 25,315 | (25,315) | - | |
| Revenues | 269,810 | 62,759 | 32,753 | 3,516 | 52,735 | (69,459) | 352,1 1 4 |
Note: Revenues exclude non-recurring items.
| Thousand Euros | Express & Parcels |
Financial Services |
Banco CTT | CTT Central Structure |
Intragroup eliminations |
Revenues | |
|---|---|---|---|---|---|---|---|
| Sales and services rendered | 250,645 | 57,510 | 29,564 | - | (0) | (1,533) | 336,1 87 |
| Sales | 8,907 | 398 | - | - | - | - | 9,305 |
| Services rendered | 241,739 | 57,112 | 29,564 | - | (0) | (1,533) | 326,883 |
| Financial Margin | - | - | - | 16 | - | - | 1 6 |
| Other operating revenues | 21,308 | 2,349 | 2,606 | 159 | 28,900 | (42,167) | 1 3,1 55 |
| Allocation to CTT central structure | - | - | - | - | 21,518 | (21,518) | - |
| Revenues | 271,953 | 59,859 | 32,171 | 175 | 50,418 | (65,218) | 349,358 |
Note: Revenues exclude non-recurring items.
The Mail segment, which includes the letter mail postal service revenues of CTT, including the USO (Universal Service Obligation, which includes parcels), represents the greatest weight in terms of revenues, amounting to €269.8m, with a decrease of 0.8% (-€2.1m) in the first half of 2017 in comparison to the same period of the previous year.
Sales decreased by €1.7m (-19.0%), mainly due to the decrease in retail products: mainly lottery by -€2.0m (-69.3%) as a consequence of supply problems arisen between the end of 2016 and the middle of the 2nd quarter of 2017, but also due to the drop in merchandising of -€0.4m (-20.3%). Conversely, philatelic products increased by €0.8m (+24.8%).
Services rendered decreased by €0.8m (-0.3%), continuing to be influenced by the evolution of addressed mail volumes which decreased by 5.6%. This decrease was mitigated by the 1.9% average increase in the prices of the USO services of April 2017 which represented a 1.3% increase in the first half of 2017 vs the same period of last year and by the increase in prices and volume of presentation-to-customs services but also by the effect of a better price mix resulting from the growth of higher added-value products. It is also worth noticing the growth of registered mail (+€3.5m; +6.1%), customs clearance services (+€1.3m; +206.7%) and international mail (+€1.1m; +3.5%). For the favourable evolution of the income generated by the foreign operators, mainly due to the maintenance of the high growth trend of the volumes received from Asian countries. As contributions in the opposite sense, it is important to point out the reductions verified in the contractual ordinary mail (-€6.6m; -6.2%) and in business solutions of printing & finishing (-€0.5m; -11.5%).
The other operating income in the Mail segment improved by € 0.3m (+1.5%), mainly due to:
The Express & Parcels segment with €62.8m of revenues recorded an increase of 4.8% (+€2.9m) compared to the same period of the previous year.
Services rendered increased €4.2m (+7.4%), reflecting a growth of €2.4m (+11.5%) in Spain and of €2.1m (+6.1%) in Portugal, of which €2.3m concern Transporta, with a volume increase of 17.1% and 13.1%, respectively, which were negatively affected by the decline in other services rendered to other business segments. In Mozambique services rendered recorded a decrease of €0.1 m (-9.7%) due to the evolution of the exchange rate, since in terms of MZN there was an increase of 9.3%, i.e. +4.8 million MZN in revenues mainly due to the baking business growth and the price increase.
On a year-on-year comparison basis, it is to be noted the negative impact on other operating revenues of the termination of the memorandum of understanding entered into with Altice for an amount of €1.7m, which no longer exist in 2017.
13 The memorandum of understanding with Altice impacted three segments (Mail, Express & Parcels and Financial Services).
The Financial Services segment, with €32.8m of revenues, registered a 1.8% (+€0.6m) increase when compared to the same period of last year. Services rendered increased by €2.5m (+8.5%), influenced by the €5.0m (+41.9%) growth of commissions related to the placement of public debt certificates due to the increase in the volume of subscriptions (+18.4%) and to the contract renegotiation with IGCP regarding the "Certificados do Tesouro Poupança Mais". This contract now provides for stable commissioning throughout the year, fully linked to the placement level at any moment.
Conversely, there was a decrease of €0.9 m (-83.8%) in PPR and life and health insurance products and of €0.8m (-35.3%) in mobile payment and ticketing solutions.
Other operating income decreased by €1.9m (-74.5%), with -€1.7 m (-100%) in the income resulting from the termination of the memorandum of understanding with Altice and -€0.3m (-48.9%) of income derived from the improvements made in the direct allocation method of VAT deduction, with a lower impact than in 2016.
The Banco CTT segment reached revenues of €3.5m, which translated into €1.2m in financial margin and €2.3m mainly related to commissions received. The net interest income shows the profitability of the available-for-sale financial assets portfolio and the growing focus on the credit to clients. Health insurance, commissions for attracting consumer credit agreements and credit cards, as well as transactionality revenues contributed for the commissions received.
| Thousand Euros | 1 H201 7 | 1 H201 6 | % 1 7/1 6 |
|---|---|---|---|
| Cost of sales | 4,968 | 6,781 | -26.7 |
| External supplies and services | 116,206 | 109,673 | 6.0 |
| Staff costs | 171,367 | 164,815 | 4.0 |
| Other operating costs | 6,956 | 5,627 | 23.6 |
| Operating costs | 299,497 | 286,896 | 4.4 |
Note: Excluding non-recurring items.
The recurring operating costs amounted to €299.5m, +4.4% (+€12.6m) compared to the previous year. This year-on-year growth was mostly the result of +€4.6m of recurring costs from Banco CTT segment and +€2.6m from Transporta.
The evolution in 2017 of the operating costs is broken down as follows:
14 Cost of sales + ES&S + Staff costs + other operating costs (excludes non-recurring items).
100% ) and to the distribution and transport/routes costs increase in Tourline (+€1.6 m, +11.4%) resulting from the volume growth and from the strengthening and the creation of new routes.
| 1H2017 - Operating costs by segment | |||||||
|---|---|---|---|---|---|---|---|
| Thousand Euros | Express & Parcels |
Financial Services |
Banco CTT | CTT Central Structure |
Intragroup eliminations |
Operating costs |
|
| External supplies and services | 49,880 | 50,436 | 4,520 | 6,644 | 20,523 | (15,797) | 1 1 6,206 |
| Staff costs | 124,097 | 10,401 | 2,019 | 5,855 | 29,088 | (92) | 1 7 1 ,367 |
| Other costs | 26,394 | 1,166 | 9,069 | 425 | 3,124 | (28,253) | 1 1 ,924 |
| Allocation to CTT central structure | 25,163 | - | 153 | - | - | (25,315) | - |
| Operating costs | 225,534 | 62,003 | 15,760 | 12,924 | 52,735 | (69,459) | 299,497 |
Note: excludes non-recurring items.
| 1H2016 - Operating costs by segment | ||||||||
|---|---|---|---|---|---|---|---|---|
| Thousand Euros | Express & Parcels |
Financial Services |
Banco CTT | CTT Central Structure |
Intragroup eliminations |
Operating costs |
||
| External supplies and services | 49,571 | 45,766 | 4,962 | 4,316 | 20,225 | (15,165) | 1 09,67 3 | |
| Staff costs | 121,043 | 10,954 | 2,216 | 3,864 | 26,740 | (2) | 1 64,81 5 | |
| Other costs | 27,206 | 1,233 | 8,949 | 100 | 3,453 | (28,532) | 1 2,408 | |
| Allocation to CTT central structure | 21,367 | - | 150 | - | - | (21,518) | - | |
| Operating costs | 219,187 | 57,953 | 16,277 | 8,280 | 50,418 | (65,218) | 286,896 |
Note: Excluding non-recurring items.
The Mail segment recorded a significant amount of operating costs as it includes the functions of mail sorting, transport, delivery, sales activity, as well as the retail network, areas of major significance in terms of operating costs, particularly due to the number of workers and assets. These operating activities also provide services to the other segments - sorting/transport and especially delivery of parcels for the Express & Parcels business unit, financial services and banking services rendered in the Retail Network, and commercial management and sales services provided to the Group – thus increasing synergies via the scalability of the unique assets, in both the distribution and retail networks.
In the first half of 2017 the Mail segment booked €225.5m of recurring operating costs, an increase of €6.3m (+2.9%) relative to the same period of last year, with special emphasis on fixed-term contract staff (+€1.2 m, +39.2%), unfavourable exchange rate differences (+€1.6m; 486.6%), electricity and fluids (+€1.0m; +19.4%), post office managers, delivery agencying and partnerships (+€0,2m;+3.4%). The main reasons for this are the increase in the services provided to other segments in both networks and the salary revision agreed with the organisations representing the workers.
The Express & Parcels segment recorded an increase of €4.1m (+7.0%) in recurring operating costs, of which it is worth mentioning:
The Financial Services segment reported a decrease of €0.5m (-3.2%) in recurring operating costs, with an emphasis on the reductions on the carriage of valuables (-€0.3m; -16.4%), on Payshop agents' commissions (-€0.2m; -20.3%) and on sales incentives (-€0.2m; -38.7%). Conversely, it is important to mention the cost increase with banking services (+€0.3m; +58.0%).
Banco CTT registered €12.9m in recurring costs in the first half of 2017, namely staff costs (€5.9m) and external supplies and services costs (€6.6m), the latter mainly in IT and transactionality costs (interbank commissions for transaction services rendered to clients). The comparison with the same period of 2016 does not allow an adequate reading given the still embryonic phase of Banco CTT at that time, but comparing with the recurring costs of the second half of 2016, which reached €13.5m, there is a stabilisation trend despite the growth of activity during this ramp-up phase.
The Central Structure showed a cost increase of €2.3m (+4.6%), of which €1.4m are related to the lower cut in the benefit associated with the "telephone subscription fee" (in 1H2016 a €1.8m decrease was recognized in that liability , while in 1H2017 only €0.4m were recognized) given the optimisation level already achieved.
The recurring EBITDA 15 amounted to €52.6m, -15.8% (-€9.8m) than the one recorded in the same period of last year.
| Thousand Euros | 1 H201 7 | 1 H201 6 | % 1 7/1 6 |
|---|---|---|---|
| Recurring revenues | 352,114 | 349,358 | 0.8 |
| Operating costs excluding impairments, provisions, depreciation and non-recurring |
299,497 | 286,896 | 4.4 |
| Recurring EBITDA | 52,61 6 | 62,462 | -1 5.8 |
| Recurring EBITDA margin | 14.9% | 17.9% | -2.9 p.p. |
15 Recurring EBITDA = Operating results + amortisation and depreciation + net change in provisions and impairment losses (does not include non-recurring revenues and expenses, such as company restructuring, impairment of investment properties, provisions for onerous contracts and labour contingencies).
| Thousand Euros | Express & Parcels |
Financial Services |
Banco CTT | ||||
|---|---|---|---|---|---|---|---|
| Revenues | 269,810 | 62,759 | 32,753 | 3,516 | |||
| Operating costs | 225,534 | 62,003 | 15,760 | 12,924 | |||
| Recurring EBITDA | 44,27 6 | 7 56 | 1 6,992 | (9,408) | |||
| Recurring EBITDA margin | 16.4% | 1.2% | 51.9% | n.a. |
| 1H2016 - Recurring EBITDA by segment | |||||||
|---|---|---|---|---|---|---|---|
| Thousand Euros | Express & Parcels |
Financial Services |
Banco CTT | ||||
| Revenues | 271,953 | 59,859 | 32,171 | 175 | |||
| Operating costs | 219,187 | 57,953 | 16,277 | 8,280 | |||
| Recurring EBITDA | 52,7 67 | 1 ,907 | 1 5,893 | (8,1 05) | |||
| Recurring EBITDA margin | 19.4% | 3.2% | 49.4% | n.a. | |||
The termination of the memorandum with Altice impacts the EBITDA of all segments with the exception of Banco CTT. The decline in the EBITDA margin of the Mail segment is due not only to this fact, but also to the impact of the fall in volumes not being offset in the first semester by the increase in prices and to the increase in costs resulting from salary increases, and the reorganisation and capacity building of distribution and retail networks.
In the first half of 2017 CTT recorded negative non-recurring results of €7.9m, which include:
| Thousand Euros | Express & Parcels |
Financial Services |
Banco CTT |
CTT Central Structure |
Intragroup eliminations |
Others non allocated |
Total | |
|---|---|---|---|---|---|---|---|---|
| Other operating revenues | 0 | - | - | - | - | - | - | 0 |
| External supplies and services | 618 | 195 | 7 | 2,127 | 883 | - | - | 3,830 |
| Staff Costs | 465 | 1,377 | - | - | 1,012 | - | - | 2,854 |
| Other costs | 10 | - | - | - | 175 | - | - | 185 |
| Non-recurring results that affect EBITDA |
(1 ,093) | (1 ,57 2) | (7 .2) | (2,1 27 ) | (2,07 0) | - | - | (6,869) |
| Depreciation/amortisation and impairment of investments, net |
721 | - | - | - | - | - | (7) | 715 |
| Impairment of accounts receivable, | ||||||||
| net | - | 415 | - | - | - | - | - | 415 |
| Impairment of non-depreciable | ||||||||
| assets | - | - | - | - | - | - | - | - |
| Provisions net | - | - | - | - | (115) | - | - | (115) |
| Non-recurring results that affect EBIT |
(1 ,81 4) | (1 ,988) | (7 .2) | (2,1 27 ) | (1 ,955) | - | 7 | (7 ,884) |
| Express & Parcels |
Financial Services |
Banco CTT |
CTT Central Structure |
Intragroup eliminations |
Others non allocated |
Total | |
|---|---|---|---|---|---|---|---|
| - | - | - | - | 1,726 | - | - | 1,726 |
| 883 | - | - | 3,282 | 700 | - | - | 4,865 |
| 2,211 | 45 | 0.1 | - | 3 | - | - | 2,259 |
| 43 | - | - | - | - | - | - | 43 |
| (3,1 37 ) | (45) | (0.1 ) | (3,2 82 ) | 1 ,02 3 | - | - | (5,441 ) |
| 110 | - | - | - | - | - | - | 110 |
| - | 282 | - | - | - | - | - | 282 |
| - | - | - | - | - | - | - | - |
| (6) | (95) | - | - | (3,703) | - | - | (3,805) |
| (2,02 8) | |||||||
| (3,2 40) | (232) | (0.1 ) | (3,2 82 ) | 1H2016 Non-recurring results 4,7 2 6 |
- | - |
The consolidated financial results reached a negative amount of €2.4m, representing an increase of 4.3% (+€0.1m) in relation to the same period of last year.
The interest income and financial revenues decreased by 38.4% (-€0.2 m) when compared to the first half of the previous year, due to the low remuneration rates of term deposits, to lower liquidity levels resulting from the investment in Banco CTT and to the preservation of a conservative policy regarding liquidity applications by CTT.
Financial costs incurred reached €2.7m, which include mainly costs related to the current amount of the liabilities from employee benefits in the amount of €2.6m and also, but of less relevance, interests related to financial leases and bank loans (€0.07m).
| Financial results | ||||||||
|---|---|---|---|---|---|---|---|---|
| Thousand Euros | 1 H201 7 | 1 H201 6 | % 1 7 /1 6 |
|||||
| Interest income | 285 | 463 | -38.4 | |||||
| Interest expenses | (2,685) | (3,201) | -16.1 | |||||
| Interest expenses (financial) | (72) | (40) | 80.0 | |||||
| Interest costs with employee benefits (accounting) |
(2,613) | (3,161) | -17.3 | |||||
| Gains/losses in associated companies | 0 | 230 | -100.0 | |||||
| Financial results | (2,400) | (2,508) | 4.3 |
In the first half of 2017, CTT achieved a consolidated net profit attributable to equity holders of €17.7m, 44.0% lower than the one obtained in the same period of last year, corresponding to consolidated earnings of €0.12 per share and a net margin of 5.0% (9.1% in the first half of 2016). If the non-recurring effects in both years were excluded, the net profit would have decreased by 22.8%.
The reported and recurring consolidated income statements for the first half of 2017 and 2016 is summarised below:
| Reported | Recurring * | |||||
|---|---|---|---|---|---|---|
| Thousand Euros | 1 H201 7 | 1 H201 6 | % 1 7 /1 6 |
1 H201 7 | 1 H201 6 | % 1 7 /1 6 |
| Revenues | 352,114 | 351,084 | 0.3 | 352,114 | 349,358 | 0.8 |
| Operating costs | 306,366 | 294,063 | 4.2 | 299,497 | 286,896 | 4.4 |
| EBITDA | 45,7 47 | 57 ,021 | -1 9.8 | 52,61 6 | 62,462 | -1 5.8 |
| EBITDA margin | 13.0% | 16.2% | -3.0 p.p. | 14.9% | 17.9% | -2.9 p.p. |
| EBIT | 30,555 | 47 ,433 | -35.6 | 38,439 | 49,461 | -22.3 |
| EBIT margin | 8.7% | 13.5% | -4.8 p.p. | 10.9% | 14.2% | -3.2 p.p. |
| Earnings Before taxes | 28,1 55 | 44,925 | -37 .3 | 36,039 | 46,953 | -23.2 |
| Income tax for the period | 10,460 | 13,375 | -21.8 | 9,737 | 12,956 | -24.8 |
| Non-controlling interests | (50) | (127) | -60.6 | (50) | (127) | -60.6 |
| Net profit for the period | 1 7 ,7 45 | 31 ,67 7 | -44.0 | 2 6,353 | 34,1 23 | -0.2 |
Note: Operating costs = cost of sales + external supplies and services + staff costs + other operating costs. * Recurring net profit excludes non-recurring revenues and costs and considers a theoretical (nominal) tax rate.
The capex of the Group amounted to €7.2m, -42.3% (-€5.3m) below the one in the same period of last year, given the launch of Banco CTT that took place in 2016 and involved significant investment in the opening of adapted post offices and IT systems (Core Banking System). In the first semester the investment in Banco CTT, although of a lesser amount, should be noted to, particularly in IT systems, ATMs, repairs, furniture and other equipment in order to adapt the post offices, accounting for a total of €4.0 m, as well as the investment made in Tourline with PDAs (Personal Digital Assistant) for an amount of €0.3m.
The company continues to invest on strategic IT systems development, such as management information, e-commerce and commercial excellence and on accounting and operational processes, which aim to provide the company with the necessary tools and agility to face the market challenges and the change, which occurs ever more rapidly and sometimes in a disruptive manner.
| Consolidated statement of financial position | |||
|---|---|---|---|
| % | |||
| Thousand Euros | 30.06.201 7 | 31 .1 2.201 6 | 1 7/1 6 |
| Non-current assets | 524,982 | 452,618 | 16.0 |
| Current assets | 1,022,828 | 864,080 | 18.4 |
| Total assets | 1 ,547 ,81 0 | 1 ,31 6,697 | 1 7 .6 |
| Equity | 179,659 | 233,327 | -23.0 |
| Total liabilities | 1,368,152 | 1,083,370 | 26.3 |
| Non-current liabilities | 267,100 | 269,533 | -0.9 |
| Current liabilities | 1,101,051 | 813,837 | 35.3 |
| Total equity and liabilities | 1 ,547 ,81 0 | 1 ,31 6,697 | 1 7 .6 |
Total assets reached €1,547.8m (+€231.m vs. 31.12.2016), of which €294.1m (+€126.4m vs. 31.12.2016) are related to applications, financial assets and credit held by Banco CTT, broken down as follows:
Total assets also include the increase in cash and cash equivalents by € 101.5m (+16.4%), as a result also of the banking activity.
Equity decreased by €53.7m (-23.0%) following the dividend distribution for the year 2016 (€72.0m), which occurred in May 2017.
On 31 January 2017, a total of 600,530 own shares were granted to the Executive Directors of the Company, as long-term variable remuneration, having reduced its reserve by €5.1m and recorded a non-recurring cost of €0.6m.
The liabilities increased by €284.8m (+26.3%), of which the increase of €170.3m in banking client deposits from Banco CTT should be emphasized, along with the increase of €110.7m related to financial services payables, mainly due to the payment of the holiday pay to the pensioners that occurs in the month of June.
Employee benefit liabilities (post-retirement and other long-term benefits) in the first half of 2017 amounted to €265.2m, a decrease of 2.6% when compared to December 2016, of which stands out the €0.4m liability decrease related to the "telephone subscription fee" benefit, the Pension plan of Transporta (€0.4m) and €1.1m reduction in the suspension agreements amount due to the payments effect, which are lower than those of the 1H2016 as a result of the exit plan carried out at the end of 2016.
| Thousand Euros | 30.06.201 7 | 31 .1 2.201 6 | % |
|---|---|---|---|
| Liabilities | 265,1 93 | 27 2,31 7 | 1 7/1 6 -2.6 |
| Healthcare | 247,786 | 249,110 | -0.5 |
| Staff (suspension agreements) | 4,362 | 5,495 | -20.6 |
| Other benefits | 12,651 | 13,231 | -4.4 |
| Share plan | 0 | 4,481 | -100.0 |
The net change in cash and cash equivalents amounted to +€101.5m, which is mainly the result of:
Excluding the changes in financial services receivables/payables (€114.0m), the CTT change in cash would be -€12.5 m, essentially resulting from the payment of dividends not offset by the cash flow of the period.
| Cash flow | ||||||
|---|---|---|---|---|---|---|
| Adjusted* | ||||||
| Thousand Euros | 1 H201 7 | 1 H201 6 | % 1 7 /1 6 |
1 H201 7 | 1 H201 6 | % 1 7 /1 6 |
| Cash flow from operating activities | 296,7 1 8 | 1 87 ,91 5 | 57 .9 | 1 82,691 | 62,967 | 1 90.1 |
| Cash flow CTT excluding FS and Banco CTT Banco CTT cash flow |
45,338 137,354 |
16,932 46,035 |
167.8 198.4 |
|||
| Cash flow from investment activities | (1 1 7 ,901 ) | (7 6,47 3) | -54.2 (1 1 7 ,901 ) | (7 6,47 3) | -54.2 | |
| Capex | (24,655) | (21,034) | -17.2 | (24,655) | (21,034) | -17.2 |
| of which Banco CTT | (4,084) | (7,818) | 47.8 | |||
| Banco CTT financial assets** | (96,687) | (61,058) | -58.4 | (96,687) | (61,058) | -58.4 |
| Other | 3,441 | 5,619 | -38.8 | 3,441 | 5,619 | -38.8 |
| Operating free cash flow | 1 7 8,81 6 | 1 1 1 ,442 | 60.5 | 64,7 90 | -1 3,506 | 57 9.7 |
| Cash flow from financing activities | (7 3,7 7 0) | (7 0,593) | -4.5 | (7 3,7 7 0) | (7 0,593) | -4.5 |
| of which dividends | (72,000) | (70,265) | -2.5 | (72,000) | (70,265) | -2.5 |
| Change in consolidation perimeter | (3,566) | - | n.a. | (3,566) | - | n.a. |
| Net change in cash and cash equivalents | 1 01 ,480 | 40,849 | 1 48.4 | (1 2,546) | (84,099) | 85.1 |
* Cash flow from operating activities excluding changes in financial services receivables/payables.
** Including financial assets available for sale, investments held to maturity and investments in credit institutions held by Banco CTT.
*** These figures were not considered under Cash and equivalents in the Cash flow Statement. However, they are included in Cash and equivalents in the Balance Sheet.
The company holds financial leasing operations (related to operating facilities, acquisition of basic equipment and vehicles), bank loans in Corre in order to fund operating activities and a cash pooling system used within CTT scope, particularly by Tourline to support the activity.
Net debt is negative by €84.2m, which means that CTT holds net cash after debt and employee benefit liabilities.
| Net debt | |||
|---|---|---|---|
| Thousand Euros | 30.06.201 7 | 31 .1 2.201 6 | % 1 7 /1 6 |
| Financial debt | 8,402 | 9,807 | -1 4.3 |
| Bank loans and other loans | 7,773 | 8,813 | -11.8 |
| Financial leasings | 629 | 994 | -36.7 |
| Net cash | 282,7 59 | 295,306 | -4.2 |
| Net financial debt | (27 4,357 ) | (285,499) | -3.9 |
| Liabilities with employee benefits | 265,193 | 272,317 | -2.6 |
| Deferred tax assets related to employee benefits |
(75,057) | (77,093) | -2.6 |
| Net debt (incl. Liabilities with employee benefits) |
(84,220) | (90,27 5) | -6.7 |
| Net cash | |||
|---|---|---|---|
| Thousand Euros | 30.06.201 7 | 31 .1 2.201 6 | % 1 7/1 6 |
| Net cash | |||
| (+) Cash and cash equivalents | 720,291 | 618,811 | 16.4 |
| (-) Net Financial Services payables | (437,532) | (323,506) | 35.2 |
| Net cash | 282,7 59 | 295,306 | -4.2 |
The analysis of the balance sheet and income statement without the full consolidation of Banco CTT allows a clear view of the CTT Group without the assets / liabilities related to the activity of Banco CTT.
The economic and financial position of CTT Group excluding Banco CTT from the consolidation perimeter, being accounted as a financial investment according to the equity method, would be as follows:
| Consolidated income statement | |||
|---|---|---|---|
| Thousand Euros | 1 H201 7 | 1 H201 6 | % 1 7 /1 6 |
| Revenues | 349,259 | 351,073 | -0.5 |
| Operating costs | (305,854) | (291,719) | 4.8 |
| Earnings before financial income and taxes | 43,405 | 59,354 | -26.9 |
| Financial results | -1 2,534 | -1 2,000 | -4.5 |
| Gains/losses in associated companies | -10,134 | -9,261 | 9.4 |
| Earnings before taxes | 30,87 1 | 47 ,354 | -34.8 |
| Income tax for the period | -13,176 | -15,804 | -16.6 |
| Net profit for the period | 1 7 ,695 | 31 ,550 | -43.9 |
| Non-controlling interests | -50 | -127 | -60.6 |
| Net profit for the period attributable to equity holders |
1 7 ,7 45 | 31 ,67 7 | -44.0 |
| EBITDA | 57 ,282 | 68,408 | -1 6.3 |
| Consolidated statement of financial position | |||
|---|---|---|---|
| Thousand Euros | 30.06.201 7 | 31 .1 2.201 6 | % 1 7 /1 6 |
| Non-current assets | 412,684 | 393,226 | 4.9 |
| Current assets | 708,259 | 669,901 | 5.7 |
| Total assets | 1 ,1 20,943 | 1 ,063,1 27 | 5.4 |
| Equity | 179,659 | 233,327 | -23.0 |
| Total liabilities | 941,284 | 829,800 | 13.4 |
| Non-current liabilities | 267,064 | 269,512 | -0.9 |
| Current liabilities | 674,220 | 560,288 | 20.3 |
| Total equity and liabilities | 1 ,1 20,943 | 1 ,063,1 27 | 5.4 |
Impact of the exclusion of Banco CTT from the consolidation perimeter on the economic position (Profit & Loss) in the first half of 2017:
Impact of the exclusion of Banco CTT from the consolidation perimeter on the financial position (Balance Sheet) in the first half of 2017:
During the first half of 2017, CTT paid a dividend of €0.48 per share and the CTT share price depreciated by 14.00%. Hence, the total shareholder return or TSR (capital gain + dividend, calculated on the basis of the share price as at 31 December 2016) in the period was -6.24%. During the same period, the PSI 20 had a total shareholder return of 13.87%.
From the date of CTT IPO until the end of the first half of 2017, the company shares gave a total shareholder return of 28.55%, outperforming the PSI 20, whose return was negative (-8.79%), and in line with the average performance of the EU postal sector peers (27.07%).
In terms of share price appreciation, the best performer of the EU postal sector in the first half of 2017 was Österreichische Post, whose shares appreciated by 19.27%. On the same basis, the PSI 20 index appreciated by 10.12% in the first half of 2017.
During the first half of 2017, circa 125 million CTT shares were traded, corresponding to a daily average of 976 thousand shares, which translates into an annualised turnover ratio of 167% of the share capital, which is a strong measure of the share liquidity. As at 30 June 2017 market close, the CTT share price was €5.543.
Human resource management continues to be driven by the following priorities: (i) definition and implementation of new, complete and consistent human resource development policies that promote skills and reward the organisation's performance and agility, (ii) maintaining a sound social climate; (iii) continued investment in training and qualification; and (iv) optimisation and adequacy of staff to meet the evolving needs and challenges of the markets CTT operates in.
On 30 June 2017, CTT headcount (permanent staff and employees on fixed-term contracts) was 12,911, corresponding to 189 more (+1.5%) than in the same period in 2016. This increase includes the integration of Transporta's 205 employees due to its acquisition in May 2017.
Permanent staff was increased by 15 and employees on fixed-term contracts rose by 174. Banco CTT and Express & Parcels business unit, due to the integration of Transporta, had a particular impact on this rise.
| 30.06.2017 | 30.06.2016 | Δ 2017/2016 | ||
|---|---|---|---|---|
| 10,417 | 10,260 | 157 | 1.5% | |
| Express & Parcels | 1,179 | 1,085 | 94 | 8.7% |
| Financial Services | 92 | 96 | -4 | -4.2% |
| Banco CTT | 176 | 136 | 40 | 29.4% |
| Other | 1,047 | 1,145 | -98 | -8.6% |
| Total, of which: | 1 2 ,91 1 | 1 2 ,7 2 2 | 1 89 | 1 .5 % |
| Permanent | 11,363 | 11,348 | 15 | 0.1% |
| Fixed-term contracts | 1,548 | 1,374 | 174 | 12.7% |
| Total in Portugal | 12,474 | 12,275 | 199 | 1.6% |
Excluding the number of Transporta employees, the total would have been 12,706 employees representing a year-on-year fall of 16 employees (-0.1%).
Due to their importance, we highlight two major areas: operations and delivery (with 7,214 employees, particularly delivery postmen and women in a total of 4,666) and the retail network (with 2,806 employees). Together, these areas represent nearly 78% of the CTT's workforce.
In terms of employee rotation in the first half of 2017 and without taking the integration of Transporta into account, more employees left than those that joined the company – 113 employees left, 69 due to termination of their contracts or similar situations (16 of which from Tourline Express and 4 from CORRE), 29 due to retirement and 15 due to death. On the other hand, 58 employees were hired, 45 in Portugal (3 in CTT Expresso, 13 in Banco CTT and 29 in CTT, S.A.) and 13 abroad (in Tourline Express). Hiring was motivated by the need to obtain lacking, but indispensable skills to implement the company's strategic options (banking business, commercial activities, IT, among other).
As regards, Hygiene, Safety and Ergonomics, 130 interventions were carried out to assess work conditions and risks in CTT premises. These were carried out by company technicians.
The welfare service for beneficiaries of CTT's Welfare Schemes observed the social and economic situations or social dysfunction of beneficiaries and their families and promoted the most adequate responses to meet detected needs. In this regard, welfare support to beneficiaries recorded situations of dependency, mental health, support to the elderly and welfare aid that were being accompanied. This led to 24 visits to institutions and homes, nearly 400 interviews and nearly 3,500 telephone calls.
On 28 June 2017, effective January 2017, hence with impact on the 1st half accounts, a Revision Agreement for CTT's 2016 Company Agreement was signed with eleven Trade Unions, wherein a raise in monthly base salaries was agreed as follows: monthly base salaries up to €1,267.20, were raised by 1.0%; monthly base salaries from €1,267.21 up to €1,889.60 were raised by 0.75%; monthly base salaries from €1,889.61 up to €2,772.30 were raised by 0.65%. An identical raise was applied to subsidiary employees.
In addition, the minimum amount of the monthly base salary was agreed at €600.00 throughout the various Group companies, effective as of 1 July 2017. This revision of fixed remuneration was an important adjustment for lower levels of remuneration.
This Revision Agreement takes into account the importance of a climate of social stability and peace within the Company, which is a goal of both CTT and the signing trade unions. The agreement seeks to value work, substantially via the performance-indexed variable remuneration policy.
Under the reinforcement and development of the human capital needed for CTT's growth, measures to promote the hiring of staff with new skills and resources have been continued, thereby reinforcing the units undergoing growth.
In this regard, the 3rd edition of the Trainee Programme was launched with a view to attract and retain young people of high-potential, promote their development within a structured overall programme, contribute to the rejuvenation of staff, foster a mobility culture and position CTT as an "employer of first choice". This programme is currently in the stage of identifying future trainees.
The annual performance assessment was carried out for the 2016 financial year under its two components - behaviour and goals. The overall assessment was the result of the weighing of those two components, in light of the various activities and functional groups. The performance management system is articulated with the business cycle in order to evaluate activities and communicate new goals to employees.
Following the organisational environment questionnaire carried out at the end of 2016, workshops and focus groups were held with management officers to present the main results thereof, after which the departments stipulated the measures to be carried out throughout the year in order to strengthen levels of commitment and empowerment.
In pursuing its policy of best practices in human resource management and under the structured talent management plan, CTT specified the principles and goals for its talent model and implemented the 2017 talent management programme. It identified potential candidates for a number of department heads and employees in various areas and functional groups, in order to prepare development plans throughout the 2nd half of 2017.
As one of the pillars of the remuneration policy and for the third consecutive year since CTT became a public company, annual variable remuneration was granted in light of the company's results and
performance in the 2016 financial year. This extraordinary bonus was allocated on a differentiated individual basis, in light of merit and various functional groups and performance and attendance levels and encompassed more than 7,750 employees totalling nearly 3.3 million euros.
Throughout the 1st half of 2017, more than 8 thousand employees participated in training sessions, of which 143 thousand hours were carried out. We highlight Banco CTT's continued training programme and the specific training undergone by teams in preparation for the launch of mortgage loans at Banco CTT's branches. Under the "Mais CTT" (meaning, "more CTT") programme that intends to stimulate sales and promote commercial excellence, the sales teams were given training on CTT's portfolio and the planning and organisation of commercial activity. The training project "Leading and involving through communication", which taught concepts fundamental to managing postal delivery offices, was drawn to a close. Road safety training continued to be offered by CTT.
Significant efficiency gains were obtained through the sharp growth in e-learning training, which already represents 26% of the total hours of training carried out in the semester.
In the first half of 2017, CTT client perception of the quality of service provided remained positive: 85.2% of customers that responded to the satisfaction survey said that CTT's overall quality of service was good or very good.
In terms of the quality of the Universal Postal Service and in the aftermath of the new Postal Law, quality indicators began to be measured as of the 4th quarter of 2016 through a measurement system carried out by an independent external entity, an international company. Following certain detected insufficiencies in the measurement process, this supplier is implementing a number of measures to improve the operation and stability of the new measurement system. Therefore, indicators relative to the second quarter of 2017 are still under revision. In the first three months of the year, the OQSI – Overall Quality of Service Indicator – registered 136.1 points, compared to a target of 100.
In the first quarter of 2017, seven of the quality indicators for the Universal Postal Service performed above the stipulated targets:
| Quality levels | Minimum | Target | Score |
|---|---|---|---|
| Priority Mail | |||
| % Delivered on the following day (Mainland) | 93.50 | 94.50 | 92.90 |
| % Delivered within two days (Azores and Madeira) | 84.00 | 87.00 | 91.10 |
| % Delivered within ten days | 99.75 | 99.85 | 99.69 |
| Ordinary Mail | |||
| % Delivered within three days | 95.50 | 96.30 | 96.10 |
| % Delivered within fifteen days | 99.77 | 99.86 | 99.92 |
| Newspapers and Periodicals | |||
| % Delivered within three days | 95.50 | 96.30 | 98.20 |
| International Mail | |||
| % Delivered within three days | 85.00 | 88.00 | 86.70 |
| % Delivered within five days | 95.00 | 97.00 | 97.30 |
| Parcels | |||
| % Delivered within three days | 90.50 | 92.00 | 96.60 |
| Waiting time at post offices | |||
| % Customers assisted within 10 minutes | 75.00 | 85.00 | 87.60 |
| Registered Mail | |||
| % Delivered on the following day | 89.00 | 91.00 | 91.90 |
In the 1st half of 2017, internal efforts were made to maintain all certified management systems. In parallel, new certification initiatives, expected to be concluded throughout 2017, were undertaken.
At the end of the 1st quarter, an external audit took place for the renewal of CTT Expresso's quality, environmental and safety and work healthcare certification, with favourable results. In the 2nd quarter, an external audit of Mailtec (quality, environment, FSC 16 and information safety) and of the production and logistics centres took place (quality, environment and safety and work healthcare), as a result of which those certifications were maintained.
During the 1st half of 2017, customer services received nearly 1.2 million contacts by telephone and email, a year-on-year increase of 14%. Although telephone continues to be the preferred method of contacting CTT (55% of clients use the telephone, as opposed to 45% who use email), there has been a growing preference in recent years for email. In general, contacts are made to obtain information on the location of items, customs clearance and complaints. As regards email, contacts are related to the client's need to obtain various forms of proof or scanned documents, namely for the customs clearance of items.
As referenced in the "Awards and Recognitions" section of this report, in the 1st half of 2017, CTT's and CTT Expresso's customer service lines were awarded the silver and bronze medals, respectively, in APCC's 2017 Best Awards in the category of "Transport, Delivery and Logistics".
CTT's mission and values define innovation as both a guarantee for the fulfilment of that mission and as a way of continuing to explore new ideas, procedures and solutions that contribute to CTT's present and future growth.
Thus, in the context of I&D, the highlights in the first half of 2017 are:
16 FSC – Forest Stewardship Council (Forest Management Certification and Liability Chain Certification).
CTT continued to implement its sustainability policy in the first half of 2017 by involving the stakeholders.
Quality (a topic addressed in its own specific section) attained 136.1 points in the 1st quarter of 2017, relative to the 100-point target set with the Regulator. Perceived quality remained unaltered and 85.2% of customers continue to claim to be satisfied or very satisfied with the services rendered.
In the 1st half of 2017, a Mystery Client assessment was carried out with the main goal of measuring the quality of service perceived by the customer. In that assessment, carried out between March and May, 615 post offices were evaluated with an overall result of 99.2% favourable opinions. Several variables were assessed, including the way the customer is served, the presentation of employees, their product knowledge, information available and presentation of the space.
Additionally, in order to obtain in-depth knowledge and improve satisfaction with the services provided, CTT periodically carries out studies and questionnaires with its customers from both the retail segment (customers that go to CTT post offices) and the business segment (contractual customers).
CTT was among the first Portuguese companies and first companies in the sector to integrate the United Nation's Sustainable Development Goals (SDGs) in its business strategy, having mapped and prioritised six SDGs (quality healthcare, quality education, renewable and accessible energy, dignified employment and economic growth, climate change and peace, justice and effective institutions) and identified a set of associated goals.
The new Board of Directors (BoD) elected in April for the 2017-2019 term of office includes four women (31% of the total), thereby complying with the goal set with the government concerning the presence of the underrepresented female gender on the BoD by 2018. In this area, CTT was distinguished by Human Resources Portugal 2016 with two awards in the categories of "Gender Equality", for the third time, and "Management of Older Employees", for the second time.
Training had a year-on-year decline of 21% to 143 thousand hours, mainly due to a lower volume of banking training in the current year. As regards work safety, there were 531 work related accidents, a year-on-year growth of 13%, mainly due to internalising the Express & Parcels operations previously carried out by external providers. CTT was distinguished in the Excellence in Road Safety Awards due to the breadth of its road safety programme. The level of absenteeism stood at 6.6%.
CTT renewed its membership to the Forum of Companies for Equality (IGEN – Fórum Empresas para a Igualdade), undertaking commitments regarding disclosure of parenting rights, supporting the reintegration of employees in the work force that interrupted their career following parental leave and improvement of information on recruitment and selection.
As has become customary, employees and their relatives were encouraged to participate in various activities, sponsored by the company, thereby reconciling work and family. Among these, we highlight the Lisbon Marathon, the CTT Cup, the Médis race, the Women's race, visits to Kidzania and the Zoo. Contests were launched and tickets given away for sporting, cultural and social events.
More than 60 CTT volunteers contributed to activities with reference partners, such as Banco Alimentar contra a Fome, Quercus, Just a Change and EPIS. Other activities were promoted, such as painting the facilities of Ajuda de Mãe and cleaning the Mafra Forest. Ten mentors and 13 CTT trainees continued to support students facing academic challenges under the partnership with EPIS. Other trainees participate in a volunteer programme that entails supporting isolated persons identified by CTT and the Vitae, Mão Amiga and União Zoófila associations.
Among other social and environmental initiatives, CTT sponsored the wheelchair race in the 27th Lisbon Half Marathon, the Serralves Foundation, the Salesian Foundation, Terra dos Sonhos, Associação Salvador, APCL and the Iberian lynx at the Zoo.
Under the "A Tree for the Forest" project developed in partnership with Quercus in order create more fire-resistant woodlands, CTT employees and their relatives came together with other volunteers to plant more than 5,000 trees in the Natural Park of Alvão. Eleven thousand trees have already been planted in total. CTT was also present in an initiative to stock fish species in the Alcabrichel Creek, promoted by Quercus.
CTT Expresso became the 1st Portuguese company in the sector and one of the few worldwide to completely offset CO2 emissions from its activities. The carbon offsetting projects were selected by votes collected on CTT's Facebook page, with more than half a million participants. The selected projects were a project for the conservation of river wildlife in the country's Southern rivers and an international project for the use of renewable biomass in Northern Brazil.
The green portfolio stabilised in terms of its weight in DM Eco volumes and revenues, with a slight increase in the case of Green Mail. With the full carbon neutrality of CTT Expresso's offer, CTT's green offer has expanded quite a bit and is currently about 12% of the company's total revenue. As for procurement, the weight of ecological purchases was 99% of the total.
Launched with the goal of reducing emissions from employee commutes, CTT's carpooling platform has already enabled 6.94 tons of CO2 to be saved since December 2015. This project was on the short-list of Posteurop's Coups de Coeur 2017 awards, in the environment category.
A slight increase in the group's consumption of electricity took place in the semester at an estimated +2.8% and +0.9% of fuel, associated with the banking business (which also explains the growth of paper consumption) and the increase in CTT's fleet activity. Scope 1 and 2 CO2 emissions increased by 1.7%.
Twenty-seven Paxster electric quadricycles were put to use, thereby reinforcing CTT's national leadership in alternative fleets. These will contribute to reduce CO2 emissions by more than 12 tons annually. Remote monitoring tests of energy consumption began in various postal delivery offices. Work in this area has been acknowledged this year with an honourable mention in the Efficient Resource Management award of the Green Projects Awards.
Throughout the semester, CTT spent 11.5 days in external meetings with investors, 4 of which in 4 conferences (organised by 4 different brokers in 3 different cities) and 7.5 days in 8 roadshows (organised by 8 different brokers in 8 different cities). The CEO of the Company spent 4 days on these activities and the CFO spent 10.5 days for the same purpose. Over the period, the Company met with 162 investors. Furthermore, CTT was visited by 3 investors in Lisbon.
As at 30 June 2017, coverage of CTT shares was provided by 14 research analysts from 5 Portuguese brokers (Caixa BI, BPI, Haitong, Intermoney and Banco BIG), 4 from North America (JP Morgan, Morgan Stanley, Goldman Sachs and Jefferies), 3 from Spain (BBVA, Santander and Fidentiis), 1 from Germany (MainFirst) and 1 from the United Kingdom (Barclays).
Throughout 2016, a risk assessment was undertaken in order to re-evaluate CTT's risk profile, by aligning it with new realities in the market and the postal sector and with new strategic goals and challenges in the short- and medium-term. The risk profile is the fundamental basis for selecting the best strategies to handle risk and will, in most cases, entail defining and implementing mitigation measures.
Under the pre-established criteria, the most relevant risks were selected and, as a result, the company gained an integrated view of the main events that could adversely affect its ability to attain its strategic goals, thereby compromising its sustainability, should they occur.
In January, in order to prioritise the relevant risks by importance, a survey was undertaken with the company's first-line managers. The priority exercise identified top risks which will be the immediate focus in defining and implementing the Risk Management Plan with specific mitigation measures.
| Strategic Risks | arise from uncertainties from CTT's stipulated strategy and the way in which it is implemented. |
|---|---|
| Large Customers | There is a limited number of large customers that represent a very significant percentage of CTT's operating revenues. This risk pertains to a drop in the amount of mail sent by CTT's large customers or their transfer to CTT's competition, which would have a negative impact on its revenues. |
| Response to Competition | Solutions offered by competing players may offer more competitive prices, in addition to simpler and more innovative characteristics. This may result in decreased value as perceived by the customer when compared to CTT's products/services. This risk pertains to a lack of agility/hurdles in presenting new solutions to the market and CTT's response to competition via the price lever. |
| Iberian CEP Challenge | CEP clients tend to prefer global solutions, both in the Iberian market and wider geographic areas. At the same time, there has been a rise in international parcel volumes. This risk pertains to CTT's possible difficulty in taking on a role as a relevant player in the international CEP market, with a focus on the Iberian Peninsula. |
| Conditions of Access to the Postal Network |
In 2016, a postal network access model was presented with its respective commercial conditions. This risk pertains to the possibility of the Regulator being called to intervene and invoke the need to protect the interests of users or promote effective competition, thereby deciding in favour of CTT's competition and against CTT's interests. |
Top risks are described below:
Other relevant strategic risks are being monitored, namely:
| Operational Risks | arise from breakdowns or deficiencies in the management of business processes, people and IT systems. |
|---|---|
| Operational Effectiveness/Efficiency |
The fact some processes are unsuitable to new business dynamics could constrain operational effectiveness/efficiency. This risk pertains to a drop in quality of service rendered to the customer and, at most, disruptions in providing that service, thereby resulting in operational ineffectiveness/ inefficiency, whether recurring or one-off. |
| Continued Delivery | The occurrence of certain events such as breakdown in IT systems, high absenteeism, replacement of human resources, labour disputes, among others, may have an impact on the normal operation of mail delivery. This risk pertains to the occurrence of local or general disturbances in mail delivery that may lead to a rise in complaints and negative publicity. |
| Continued Sorting and Transport | The occurrence of certain events such as labour disputes, supplier shortcomings, vehicle or equipment breakdown, among others, may have an impact on the normal operation of mail sorting and transport. This risk pertains to possible disturbances in sorting and/or transporting operations that may lead to worse quality of service. |
| Information Security | IT systems are essential to CTT's operation, efficiency and competitiveness and the information itself is one of its most valuable assets. It is a legal, ethical and essential duty that the business ensures confidentiality, integrity and availability of business information, whether the property of CTT, customers or other parties and regardless of its format (logical, physical or intellectual). This risk pertains to the commitment to confidentiality, integrity or availability of information that may result from behavioural shortcomings, whether deliberate or not, as well as non authorised access to premises and/or cyber attacks. |
Other relevant operational risks are being monitored, namely:
| Financial Risks | arise from external and internal factors that significantly and directly affect CTT's performance and financial condition. |
|---|---|
| Operational Investment | Investment consists of swapping present expenses for future returns and the consideration for that swap is a rise in the company's potential. This risk pertains to the possibility of operational investment projects earning less returns than initially expected. |
| Financial Investments | In a context of globalisation and increased competition, the focus on a growth strategy by way of acquiring financial stakes in other companies is a way of diversifying and harnessing new markets. This risk pertains to the total or partial loss of capital used by CTT in that(those) company(ies), regardless of the level of control or influence there over. |
Other relevant financial risks are being monitored, namely:
• Interest Rates
• Healthcare Plan
| External Risks | arise from more or less unpredictable factors that are beyond CTT's power of intervention or influence. |
|---|---|
| Digital Economy | The national economic climate puts companies under enormous pressure to reduce costs, whereby measures that increase efficiency (e.g.: Simplex) may accelerate the reduction and/or dematerialisation of documents and, as a result, reduce mail sent. In the context of the digital economy, e-commerce creates an opportunity that CTT should explore to its maximum potential. The risk pertains to a rise in the phenomenon of electronic substitution of mail, with the resulting fall in mail volumes and, thereby, in generated income and the inability to harness the e commerce business. |
Other relevant external risks are being monitored, namely:
During the first semester, all supporting documentation of the Risk Management System was revised and condensed in a single document called the "Internal Regulation of Risk Management". Simultaneously, a new Risk Management governance model was stipulated that adopts a
"3 defence line" model based on best practices of Auditing and Internal Control, with a description of the duties and responsibilities of intervening parties in the process.
Regarding the risk profile, a statistic model has been developed for quantitative assessment of the impact associated with top risks and the remaining risks relevant to the profile. The model is expected to be finalised by the third quarter of 2017.
During June, workshops to discuss and identify top risk mitigation measures began to be prepared. Officers responsible for the processes where those top risks are managed will be involved in those workshops, which will be carried out in July.
The Board of Directors ensures the effectiveness of the CTT Group's internal control and risk management systems, ensuring a culture of control based on defining, implementing and periodically revising the risk management model.
CTT's management and supervisory bodies, together with the department heads, are entrusted with ensuring that the internal control system in force enables the stipulated goals to be leveraged, while certifying that control duties are suitably independent from a structural perspective and allows the proper exercise of those duties.
The risk management system is supported by a number of rules and procedures and all relevant risks are assessed as to their probability and impact. This process determines the definition of mitigation strategies, in order to avoid, reduce, share and/or accept a certain level of risk.
The following bodies are responsible for identifying and addressing risk events:
In terms of the internal control system, procedures have been implemented to ensure the prudent management of the risks CTT is exposed to, ensuring the business is sustainable in the medium and long-term and the existence of timely, complete and trustworthy financial and management information and independent reporting mechanisms of that information to the management and supervisory bodies.
As a management tool across the entire organisation, the internal control system has the following components:
Information management activities that continuously and cyclically allow the identification, assessment, mitigation, monitoring, control and reporting of risk.
Human resources the organisation's basis of operation that, aligned with internal benchmarks, influences behaviour at the remaining levels.
The 1st half of 2017 confirmed the 1st quarter trend of revenues growth from the developing CTT growth levers, the business units Express & Parcels, Financial Services and Banco CTT, from an integrated perspective. This trend, together with the gradual and growing revenues that have been forecast for the next quarters and the business-generating initiatives over the last months, enable CTT to maintain its expectation of revenues growth for these levers in 2017. This assuming the revenue performance of the Mail business unit remains stable.
The fall in addressed mail volumes by 5.6% in this period, which was higher than expected from the normal substitution effect (-4% to -5%), puts some additional pressure on the 2nd semester, but, for now, this does not indicate a steeper dip in volumes, but only various effects in the period. We highlight that developments in addressed mail volumes for 2017 will be very material to the growth of consolidated revenues, given it is an essential condition for stable revenues in the Mail business unit, which will benefit from the positive impact of the April price update.
Growing integration and restructuring of Transporta throughout the 2nd half of 2017, after its effective acquisition in May, will allow CTT to expand its Express & Parcels offer, which will further enhance the growth of this lever. The results in the 1st semester reflect CTT's focus on this business unit, mainly in parcels.
Together with this Portugal-focused initiative, the restructuring project in Spain is underway and has already contributed with its strong revenues growth in the 1st half of 2017. Its positive contribution is expected to increase throughout the rest of the year, with break-even at EBITDA level expected to take place in the 4th quarter of 2017.
The comparatively positive contribution of Banco CTT's EBITDA as of the 3rd quarter (as compared to 2016) allows us to forecast improved profitability at consolidated EBITDA level. This shows the potential of the CTT Group's businesses to maximise profitability based on the use of their unique networks.
CTT is currently analysing non-organisational growth opportunities to consolidate its business units in terms of future growth. If these opportunities come to pass, they may accelerate the aforementioned growth and further maximise the Group's economies of scale and of scope.
Pursuant to article 246 of the Portuguese Securities Code, the members of the Board of Directors and the members of the Audit Committee of CTT identified below hereby state that, to the best of their knowledge, the interim condensed consolidated accounts relative to the first half of 2017 were prepared in accordance with the applicable accounting rules, providing a true and appropriate reflection of the assets and liabilities, the financial situation 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 2017 and their impact on the interim condensed consolidated accounts, as well as the main risks and uncertainties for the second half of this year.
Lisbon, 31 July 2017
The Board of Directors
António Sarmento Gomes Mota Non-Executive Chairman of the Board of Directors
Francisco José Queiroz de Barros de Lacerda Vice-Chairman of the Board of Directors and Chief Executive Officer (CEO)
André Manuel Pereira Gorjão de Andrade Costa Member of the Board of Directors and of the Executive Committee (CFO)
Dionizia Maria Ribeiro Farinha Ferreira Member of the Board of Directors and of the Executive Committee
Nuno de Carvalho Fernandes Thomaz Non-Executive Member of the Board of Directors and of the Audit Committee
José Manuel Baptista Fino Non-Executive Member of the Board of Directors
Céline Dora Judith Abecassis-Moedas Non-Executive Member of the Board of Directors
António Pedro Ferreira Vaz da Silva Member of the Board of Directors and of the Executive Committee
Francisco Maria da Costa de Sousa de Macedo Simão Member of the Board of Directors and of the Executive Committee
João Afonso Ramalho Sopas Pereira Bento Non-Executive Member of the Board of Directors
Mª Luísa Coutinho Ferreira Leite de Castro Anacoreta Correia Non-Executive Member of the Board of Directors and Chairman of the Audit Committee
Belén Amatriain Corbi Non-Executive Member of the Board of Directors and of the Audit Committee
Rafael Caldeira de Castel-Branco Valverde Non-Executive Member of the Board of Directors
CTT-CORREIOS DE PORTUGAL, S.A.
Euros
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2017 AND 31 DECEMBER 2016
| Unaudited | |||
|---|---|---|---|
| NOTES | 30.06.2017 | 31.12.2016 | |
| ASSETS | |||
| Non-current assets | |||
| Tangible fixed assets | 4 | 202,446,303 | 208,921,781 |
| Investment properties | 6 | 8,489,223 | 9,291,983 |
| Intangible assets | 5 | 39,681,838 | 38,916,723 |
| Goodwill Investments in associated companies |
7,835,640 296,260 |
7,700,739 296,260 |
|
| Other investments | 1,503,572 | 1,503,572 | |
| Investments held to maturity | 8 | 163,931,808 | 93,986,115 |
| Other non-current assets | 1,401,295 | 1,306,148 | |
| Credit to bank clients | 11 | 4,937,328 | - |
| Financial assets available for sale | 9 | 5,299,985 | 4,473,614 |
| Other banking financial assets | 10 | 4,630,939 | - |
| Deferred tax assets | 24 | 84,527,445 | 86,220,762 |
| Total non-current assets | 524,981,636 | 452,617,698 | |
| Current assets | |||
| Inventories | 5,660,843 | 5,407,685 | |
| Accounts receivable | 131,147,585 | 122,113,270 | |
| Credit to bank clients | 11 | 27,622,128 | 7,103,905 |
| Income taxes receivable | 21 | - | 3,587,614 |
| Deferrals | 12 | 7,134,432 | 6,128,931 |
| Investments held to maturity | 8 | 7,600,689 | 1,108,428 |
| Other current assets | 34,514,882 | 30,033,571 | |
| Financial assets available for sale | 9 | 9,259,396 | 1,973,711 |
| Other banking financial assets Cash and cash equivalents |
10 | 70,840,325 720,291,197 |
59,054,303 618,811,099 |
| 1,014,071,477 | 855,322,515 | ||
| Non-current assets held for sale | 8,756,999 | 8,756,999 | |
| Total current assets | 1,022,828,476 | 864,079,515 | |
| Total assets | 1,547,810,112 | 1,316,697,213 | |
| EQUITY AND LIABILITIES | |||
| Equity | |||
| Share capital | 14 | 75,000,000 | 75,000,000 |
| Own shares | 15 | (8) | (5,097,536) |
| Reserves Retained earnings |
15 15 |
79,940,086 34,244,962 |
34,891,671 93,589,211 |
| Other changes in equity | 15 | (27,137,824) | (27,137,824) |
| Net profit | 17,745,100 | 62,160,395 | |
| Equity attributable to equity holders | 179,792,315 | 233,405,918 | |
| Non-controlling interests | (133,734) | (79,135) | |
| Total equity | 179,658,580 | 233,326,782 | |
| Liabilities | |||
| Non-current liabilities | |||
| Accounts payable | 19 | 390,876 | 375,379 |
| Medium and long term debt | 160,090 | 127,145 | |
| Employee benefits | 247,990,575 | 250,445,608 | |
| Provisions | 18 | 14,232,757 | 14,127,483 |
| Deferrals Deferred tax liabilities |
12 24 |
325,542 4,000,478 |
334,191 4,123,146 |
| Total non-current liabilities | 267,100,318 | 269,532,952 | |
| Current liabilities | |||
| Accounts payable | 19 | 543,296,918 | 444,863,700 |
| Banking clients' deposits and other loans | 20 | 424,293,402 | 253,944,840 |
| Employee benefits | 17,202,356 | 17,390,573 | |
| Income taxes payable | 21 | 5,817,151 | - |
| Short term debt | 8,242,241 | 9,679,829 | |
| Deferrals | 12 | 2,230,773 | 4,177,609 |
| Other current liabilities | 96,498,170 | 82,562,725 | |
| Other banking financial liabilities | 10 | 3,470,203 | 1,218,205 |
| Total current liabilities | 1,101,051,214 | 813,837,479 | |
| Total liabilities | 1,368,151,532 | 1,083,370,431 | |
| Total equity and liabilities | 1,547,810,112 | 1,316,697,213 |
The attached notes are an integral part of these financial statements.
CONDENSED CONSOLIDATED INCOME STATEMENT FOR THE SIX MONTH PERIODS ENDED 30 JUNE 2017 AND 30 JUNE 2016
Euros
| Six months ended | Three months ended | |||||
|---|---|---|---|---|---|---|
| Unaudited | Unaudited | Unaudited | Unaudited | |||
| NOTES | 30.06.2017 | 30.06.2016 | 30.06.2017 | 30.06.2016 | ||
| Revenues | 352,113,592 | 351,083,561 | 175,157,996 | 171,483,691 | ||
| Sales and services rendered | 3 | 340,466,142 | 336,187,306 | 167,311,889 | 165,564,125 | |
| Financial margin | 1,161,179 | 15,510 | 755,953 | 7,407 | ||
| Other operating income | 22 | 10,486,271 | 14,880,745 | 7,090,154 | 5,912,159 | |
| Operating costs | (321,558,792) | (303,650,751) | (162,186,129) | (155,060,664) | ||
| Cost of sales | (4,968,503) | (6,781,770) | (2,771,830) | (3,425,954) | ||
| External supplies and services | (120,035,994) | (114,538,260) | (61,203,746) | (59,423,104) | ||
| Staff costs | 23 | (174,221,448) | (167,073,880) | (85,657,444) | (82,926,914) | |
| Impairment of accounts receivable, net | (305,009) | (259,667) | (232,216) | (234,006) | ||
| Provisions, net | 18 | 13,074 | 3,657,846 | 71,106 | 602,284 | |
| Depreciation/amortisation and impairment of investments, net | (14,900,430) | (12,986,278) | (7,721,878) | (6,766,262) | ||
| Other operating costs | (7,140,482) | (5,668,742) | (4,670,121) | (2,886,708) | ||
| Earnings before financial income and taxes | 30,554,800 | 47,432,810 | 12,971,867 | 16,423,027 | ||
| Financial results | (2,399,840) | (2,508,206) | (1,321,226) | (1,330,093) | ||
| Interest expenses | (2,684,908) | (3,201,441) | (1,340,516) | (1,601,219) | ||
| Interest income | 285,068 | 462,895 | 19,290 | 230,562 | ||
| Gains/losses in associated companies | - | 230,340 | - | 40,564 | ||
| Earnings before taxes | 28,154,960 | 44,924,604 | 11,650,641 | 15,092,934 | ||
| Income tax for the period | 24 | (10,459,815) | (13,374,753) | (4,260,062) | (4,170,618) | |
| Net profit for the period | 17,695,145 | 31,549,851 | 7,390,579 | 10,922,316 | ||
| Net profit for the period attributable to: | ||||||
| Equity holders | 17,745,100 | 31,676,537 | 7,410,608 | 11,004,572 | ||
| Non-controlling interests | (49,954) | (126,685) | (20,029) | (82,255) | ||
| Earnings per share: | 17 | 0.12 | 0.21 | 0.05 | 0.07 |
The attached notes are an integral part of these financial statements.
CTT-CORREIOS DE PORTUGAL, S.A.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTH PERIODS ENDED 30 JUNE 2017 AND 30 JUNE 2016 Euros
| Six months ended | Three months ended | ||||
|---|---|---|---|---|---|
| Unaudited | Unaudited | Unaudited | Unaudited | ||
| NOTES | 30.06.2017 | 30.06.2016 | 30.06.2017 | 30.06.2016 | |
| Net profit for the period | 17,695,145 | 31,549,851 | 7,390,579 | 10,922,316 | |
| Adjustments from application of the equity method (non re-classifiable adjustment to profit and loss) |
(4,644) | - | (15,062) | - | |
| Changes to fair value reserves | 29,052 | 6,521 | 18,871 | 8,058 | |
| Employee benefits (non re-classifiable adjustment to profit and loss) | - | - | - | (408,277) | |
| Deferred tax/Employee benefits (non re-classifiable adjustment to profit and loss) | - | - | - | 115,787 | |
| Other changes in equity | (4,644) | 67,576 | (15,062) | 78,710 | |
| Other comprehensive income for the period after taxes | 19,763 | 74,098 | (11,254) | (205,721) | |
| Comprehensive income for the period | 17,714,908 | 31,623,949 | 7,379,325 | 10,716,595 | |
| Attributable to non-controlling interests | (54,599) | (118,825) | (35,092) | (42,900) | |
| Attributable to shareholders of CTT | 17,769,507 | 31,742,774 | 7,414,417 | 10,759,495 |
The attached notes are an integral part of these financial statements.
| t | |
|---|---|
| j | |
| NOTES | Share capital | Own Shares | Reserves | Other changes in equity |
Retained earnings | Net profit for the year | Non-controlling interests |
Total | |
|---|---|---|---|---|---|---|---|---|---|
| Balance on 1 January 2016 | 75,000,000 | (1,873,125) | 33,384,112 | (18,644,832) | 91,727,994 | 72,065,283 | 175,322 | 251,834,754 | |
| Appropriation of net profit for the year of 2015 | - | - | - | - | 72,065,283 | (72,065,283) | - | - | |
| Dividends | - | - | - | - | (70,264,792) | - | - | (70,264,792) | |
| Acquisition of own shares | - | (3,224,411) | - | - | - | - | - | (3,224,411) | |
| Share plan | - - |
- (3,224,411) |
1,493,546 1,493,546 |
- - |
1,800,491 - |
- (72,065,283) |
- - |
1,493,546 (71,995,658) |
|
| Other movements | - | - | - | - | 40,906 | - | 8,871 | 49,777 | |
| Actuarial gains/losses - Health Care, net from deferred taxes | - | - | - | (8,492,992) | - | - | - | (8,492,992) | |
| Changes to fair value reserves | - | - | 14,014 | - | - | - | - | 14,014 | |
| Adjustments from the application of the equity method | - | - | - | - | 19,820 | - | - | 19,820 | |
| Net profit for the period | - | - | - | - | 62,160,395 | (263,328) | 61,897,067 | ||
| Comprehensive income for the period | - | - | 14,014 | (8,492,992) | 60,726 | 62,160,395 | (254,457) | 53,487,686 | |
| Balance on 31 December 2016 | 75,000,000 | (5,097,536) | 34,891,671 | (27,137,824) | 93,589,211 | 62,160,395 | (79,135) | 233,326,782 | |
| Balance on 1 January 2017 | 75,000,000 | (5,097,536) | 34,891,671 | (27,137,824) | 93,589,211 | 62,160,395 | (79,135) | 233,326,782 | |
| Share capital increase | 49,500,000 | - | - | - | (49,500,000) | - | - | - | |
| Share capital decrease | (49,500,000) | - | 49,500,000 | - | - | - | - | - | |
| Appropriation of net profit for the year of 2016 | - | - | - | - | 62,160,395 | (62,160,395) | - | - | |
| Dividends | - | - | - | - | (72,000,000) | - | - | (72,000,000) | |
| Attribution of own shares | - | 5,097,527 | (4,480,638) | - | - | - | - | 616,890 | |
| - | 5,097,527 | 45,019,362 | - | (59,339,605) | (62,160,395) | - | (71,383,110) | ||
| Other movements | - | - | - | - | - | - | (4,644) | (4,644) | |
| Changes to fair value reserves | - | - | 29,052 | - | - | - | - | 29,052 | |
| Adjustments from the application of the equity method | - | - | - | - | (4,644) | - | - | (4,644) | |
| Net profit for the period | - | - | - | - | - | 17,745,100 | (49,954) | 17,695,145 | |
| Comprehensive income for the period | - | - | 29,052 | - | (4,644) | 17,745,100 | (54,599) | 17,714,908 | |
| Balance on 30 June 2017 (unaudited) | 75,000,000 | (8) | 79,940,086 | (27,137,824) | 34,244,962 | 17,745,100 | (133,734) | 179,658,580 | |
CTT-CORREIOS DE PORTUGAL, S.A.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AS AT 30 JUNE 2017 AND 31 DECEMBER 2016
Euros
The attached notes are an integral part of these financial statements.
CONDENSED CONSOLIDATED CASH FLOW STATEMENT FOR THE SIX MONTH PERIODS ENDED 30 JUNE 2017 AND 30 JUNE 2016 Euro
| Unaudited | Unaudited | |||
|---|---|---|---|---|
| NOTES | 30.06.2017 | 30.06.2016 | ||
| Cash flow from operating activities | ||||
| Collections from customers | 325,692,517 | 329,215,851 | ||
| Payments to suppliers | (119,507,305) | (127,512,952) | ||
| Payments to employees | (154,598,461) | (154,399,313) | ||
| Banking customer deposits and other loans | 170,437,230 | 55,897,979 | ||
| Credit to bank clients | (25,502,790) | - | ||
| Cash flow generated by operations | 196,521,191 | 103,201,565 | ||
| Payments/receivables of income taxes | (901,032) | (7,994,869) | ||
| Other receivables/payments | 101,097,389 | 92,707,962 | ||
| Cash flow from operating activities (1) | 296,717,548 | 187,914,659 | ||
| Cash flow from investing activities | ||||
| Receivables resulting from: | ||||
| Tangible fixed assets | 3,040,720 | 180,064 | ||
| Investment properties | - | 4,839,750 | ||
| Financial assets available for sale | 5,600,000 | - | ||
| Investments held to maturity | 1,253,248 | - | ||
| Demand deposits at Bank of Portugal | 3,721,804 | - | ||
| Other banking financial assets | 62,965,000 | - | ||
| Interest income | 400,470 | 599,292 | ||
| Payments resulting from: | ||||
| Tangible fixed assets | (16,133,750) | (8,837,226) | ||
| Intangible assets | (6,793,156) | (12,196,452) | ||
| Financial investments | (1,728,091) | - | ||
| Financial assets available for sale | (13,733,418) | (3,006,121) | ||
| Investments held to maturity Other banking financial assets |
(77,279,085) (79,215,000) |
(28,343,223) (29,709,033) |
||
| Cash flow from investing activities (2) | (117,901,258) | (76,472,948) | ||
| Cash flow from financing activities | ||||
| Receivables resulting from: | ||||
| Loans obtained | 4,550,000 | 4,513,610 | ||
| Payments resulting from: | ||||
| Loans repaid | (5,506,409) | (1,500,000) | ||
| Interest expenses | (359,494) | (311,980) | ||
| Finance leases | (454,088) | (495,115) | ||
| Acquisition of own shares | - | (2,534,357) | ||
| Dividends | (72,000,000) | (70,264,792) | ||
| Cash flow from financing activities (3) | (73,769,991) | (70,592,634) | ||
| Net change in cash and cash equivalents (1+2+3) | 105,046,299 | 40,849,076 | ||
| Changes in the consolidation perimeter | 134,862 | - | ||
| Cash and equivalents at the beginning of the period | 613,845,248 | 603,649,717 | ||
| Cash and cash equivalents at the end of the period | 719,026,409 | 644,498,793 | ||
| Cash and cash equivalents at the end of the period | 719,026,409 | 644,498,793 | ||
| Sight deposits at Bank of Portugal | 70,529 | - | ||
| Outstanding checks of Banco CTT / Checks clearing of Banco CTT | 1,194,259 | - |
Cash and cash equivalents (Balance sheet) 720,291,197 644,498,793
The attached notes are an integral part of these financial statements.
| 1. | INTRODUCTION 72 | ||
|---|---|---|---|
| 2. | SIGNIFICANT ACCOUNTING POLICIES 72 | ||
| 2.1 | Basis of presentation 73 | ||
| 3. | SEGMENT REPORTING 73 | ||
| 4. | TANGIBLE FIXED ASSETS 76 | ||
| 5. | INTANGIBLE ASSETS 78 | ||
| 6. | INVESTMENT PROPERTIES 80 | ||
| 7. | COMPANIES INCLUDED IN THE CONSOLIDATION 81 | ||
| 8. | INVESTMENTS HELD TO MATURITY 83 | ||
| 9. | FINANCIAL ASSETS AVAILABLE FOR SALE 84 | ||
| 10. | OTHER BANKING FINANCIAL ASSETS AND LIABILITIES 85 | ||
| 11. | CREDIT TO BANK CLIENTS 85 | ||
| 12. | DEFERRALS 86 | ||
| 13. | ACCUMULATED IMPAIRMENT LOSSES 87 | ||
| 14. | EQUITY 88 | ||
| 15. | OWN SHARES, RESERVES, OTHER CHANGES IN EQUITY AND RETAINED EARNINGS 90 | ||
| 16. | DIVIDENDS 93 | ||
| 17. | EARNINGS PER SHARE 93 | ||
| 18. | PROVISIONS, GUARANTEES PROVIDED, CONTINGENT LIABILITIES AND COMMITMENTS 94 | ||
| 19. | ACCOUNTS PAYABLE 97 | ||
| 20. | BANKING CLIENTS' DEPOSITS AND OTHER LOANS 97 | ||
| 21. | INCOME TAXES RECEIVABLE /PAYABLE 98 | ||
| 22. | OTHER OPERATING INCOME 98 | ||
| 23. | STAFF COSTS 99 | ||
| 24. | INCOME TAX FOR THE PERIOD 100 | ||
| 25. | RELATED PARTIES 104 | ||
| 26. | OTHER INFORMATION 104 | ||
| 27. | SUBSEQUENT EVENTS 105 |
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 reorganisations 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 no. 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 onwards 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 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 detention 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 bookbuilding process. The Equity Offering was addressed exclusively to institutional investors.
The shares of CTT are listed on Euronext Lisbon.
The interim condensed consolidated 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 July 2017.
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 2016.
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 2017, 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 business of CTT is organised in the following segments:
The segments cover the three CTT business areas, as follows:
Besides the four above-mentioned segments, there are two sales channels, which are common to all businesses and products, the Retail Network and Sales Department. In this analysis, the Retail Network, which is connected to the obligations of the universal postal service concession, is incorporated in the Mail segment and integrates internal revenues related to the provision of services to other segments, as well as the sale in its network of third-party products and services.
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 in 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 refers 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.
Initially, CTT, S.A. operating costs are affected to the different segments by charging the internal transactions for the services mentioned above. After this initial allocation, cost relating to corporate
and support areas (Central Structure CTT) previously unallocated, are allocated among the segments Mail and Financial Services according to the average number of CTT, S.A. employees affected to each of these segments.
With the allocation of all costs, the earnings before depreciation, provisions, impairments, financial results and taxes by segment in the first half of 2017 and 2016 are analysed as follows:
| 30.06.2 01 7 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Euros | Express & Parcels | Financial Services |
Banco CTT | CTT Central Structure |
Intragroup eliminations |
Others non allocated |
Total | |
| Revenues | 269,809,611 | 62,758,747 | 32,752,664 | 3,515,795 | 54,805,193 | (71,528,417) | - | 352,113,592 |
| Sales and services rendered | 248,171,506 | 61,702,527 | 32,088,044 | - | - | (1,495,935) | - | 340,466,142 |
| Sales | 7,212,345 | 390,807 | - | - | - | - | - | 7,603,152 |
| Services rendered | 240,959,161 | 61,311,719 | 32,088,044 | - | - | (1,495,935) | - | 332,862,990 |
| Financial Margin | - | - | - | 1,161,179 | - | - | - | 1,161,179 |
| Operating revenues external customers | 13,680,193 | 1,056,221 | 623,391 | 2,354,616 | 7,167,363 | (14,395,512) | - | 10,486,271 |
| Internal services rendered | 7,957,911 | - | 41,229 | - | 20,252,700 | (28,251,841) | - | - |
| Allocation to CTT central structure | - | - | - | - | 27,385,129 | (27,385,129) | - | - |
| Operating costs | 228,684,076 | 63,574,748 | 15,779,802 | 15,051,025 | 54,805,193 | (71,528,417) | - | 306,366,427 |
| External supplies and services | 50,498,019 | 50,630,616 | 4,526,870 | 8,771,347 | 21,406,570 | (15,797,428) | - | 120,035,994 |
| Staff costs | 124,562,528 | 11,778,060 | 2,018,750 | 5,854,806 | 30,099,677 | (92,373) | - | 174,221,448 |
| Other costs | 6,935,101 | 1,166,073 | 785,398 | 424,871 | 2,799,188 | (1,646) | - | 12,108,985 |
| Internal services rendered | 19,468,269 | - | 8,283,814 | - | 499,758 | (28,251,841) | - | - |
| Allocation to CTT central structure | 27,220,159 | - | 164,971 | - | - | (27,385,129) | - | - |
| EBITDA(1 ) | 41 ,1 25,534 | (81 6,001 ) | 1 6,97 2,862 | (1 1 ,535,230) | - | - | - | 45,7 47 ,1 65 |
| Depreciation/amortisation and impairment of | ||||||||
| investments, net | (7,902,876) | (1,818,196) | (229,639) | (1,229,525) | (3,629,032) | - | (91,161) | (14,900,430) |
| Impairment of accounts receivable, net | (305,009) | |||||||
| Impairment of other financial banking assets | - | |||||||
| Provisions net | 13,074 | |||||||
| Interest expenses | (2,684,908) | |||||||
| Interest income | 285,068 | |||||||
| Gains/losses in associated companies | - | |||||||
| Earnings before taxes | 28,1 54,960 | |||||||
| Income tax for the period | (10,459,815) | |||||||
| Net profit for the period | 1 7 ,695,1 45 | |||||||
| Non-controlling interests | (49,954) | |||||||
| Equity holders of parent company | 1 7 ,7 45,1 00 | |||||||
| (1) Operating results + depreciation/amortisation + provisions and impairment losses, net. |
| 30.06.2 01 6 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Euros | Express & Parcels | Financial Services |
Banco CTT | CTT Central Structure |
Intragroup eliminations |
Others non allocated |
Total | |
| Revenues | 271,953,497 | 59,859,208 | 32,170,580 | 174,917 | 51,120,001 | (64,194,641) | - | 351,083,561 |
| Sales and services rendered | 250,645,480 | 57,510,444 | 29,564,116 | - | (57) | (1,532,676) | - | 336,187,306 |
| Sales | 8,906,610 | 398,013 | - | - | - | - | - | 9,304,623 |
| Services rendered | 241,738,870 | 57,112,431 | 29,564,116 | - | (57) | (1,532,676) | - | 326,882,684 |
| Financial Margin | - | - | - | 15,510 | - | - | - | 15,510 |
| Operating revenues external customers | 13,120,088 | 2,348,764 | 2,564,704 | 159,407 | 10,334,771 | (13,646,989) | - | 14,880,745 |
| Internal services rendered | 8,187,929 | - | 41,761 | - | 20,290,730 | (28,520,420) | - | - |
| Allocation to CTT central structure | - | - | - | - | 20,494,557 | (20,494,557) | - | - |
| Operating costs | 221,307,105 | 57,997,876 | 16,270,287 | 11,562,025 | 51,120,001 | (64,194,641) | - | 294,062,652 |
| External supplies and services | 50,454,059 | 45,765,619 | 4,961,547 | 7,598,243 | 20,924,140 | (15,165,348) | - | 114,538,260 |
| Staff costs | 123,253,531 | 10,999,361 | 2,216,021 | 3,864,185 | 26,743,139 | (2,356) | - | 167,073,880 |
| Other costs | 7,653,727 | 1,232,897 | 540,673 | 99,596 | 2,935,580 | (11,961) | - | 12,450,512 |
| Internal services rendered | 19,594,535 | - | 8,408,742 | - | 517,143 | (28,520,420) | - | - |
| Allocation to CTT central structure | 20,351,253 | - | 143,304 | - | - | (20,494,557) | - | - |
| EBITDA(1 ) | 50,646,392 | 1 ,861 ,331 | 1 5,900,294 | (1 1 ,387 ,1 08) | - | - | - | 57 ,020,909 |
| Depreciation/amortisation and impairment of investments, net |
(7,484,009) | (1,369,975) | (176,226) | (533,879) | (3,143,816) | - | (278,373) | (12,986,278) |
| Impairment of accounts receivable, net | (259,667) | |||||||
| Impairment of non-depreciable assets | - | |||||||
| Provisions net | 3,657,846 | |||||||
| Interest expenses | (3,201,441) | |||||||
| Interest income | 462,895 | |||||||
| Gains/losses in associated companies | 230,340 | |||||||
| Earnings before taxes | 44,924,604 | |||||||
| Income tax for the period | (13,374,753) | |||||||
| Net profit for the period | 31 ,549,851 | |||||||
| Non-controlling interests | (126,685) | |||||||
| Equity holders of parent company | 31 ,67 6,537 |
(1) Operating results + depreciation/amortisation + provisions and impairment losses, net.
| Thousand Euros | 30.06.201 7 | 30.06.201 6 |
|---|---|---|
| 269,810 | 271,953 | |
| Transactional mail | 208,122 | 208,539 |
| Editorial mail | 8,273 | 8,279 |
| Parcels (USO) | 3,543 | 2,971 |
| Advertising mail | 14,360 | 14,796 |
| Retail | 4,352 | 8,635 |
| Philately | 3,907 | 3,189 |
| Business Solutions | 4,242 | 4,671 |
| Other | 23,011 | 20,873 |
| Express & Parcels | 62,759 | 59,859 |
| Financial Services | 32,753 | 32,171 |
| Banco CTT | 3,516 | 175 |
| CTT Central Structure | 54,805 | 51,120 |
| Intragroup eliminations | (71,528) | (64,195) |
| 352,1 1 4 | 351 ,084 |
| 30.06.2 01 7 | |||||||
|---|---|---|---|---|---|---|---|
| Assets (Euros) | Express & Parcels |
Financial Services |
Banco CTT | CTT Central Structure |
Non allocated assets |
Total | |
| Intagible assets | 3,089,888 | 3,919,785 | 449,232 | 20,397,678 | 7,086,580 | 4,738,674 | 39,681,838 |
| Tangible fixed assets | 170,928,477 14,744,575 | 578,717 | 347,424 | 14,486,344 | 1,360,765 | 202,446,303 | |
| Investment properties | 8,489,223 | 8,489,223 | |||||
| Goodwill | 7,294,638 | 134,901 | 406,101 | 7,835,640 | |||
| Deferred tax assets | 84,527,445 | 84,527,445 | |||||
| Accounts receivable | 131,147,585 | 131,147,585 | |||||
| Credit to bank clients | 32,559,456 | 32,559,456 | |||||
| Investments held to maturity | 171,532,497 | 171,532,497 | |||||
| Financial assets available for sale | 14,559,381 | 14,559,381 | |||||
| Other banking financial assets | 75,471,264 | 75,471,264 | |||||
| Other assets | 50,511,284 | 50,511,284 | |||||
| Cash and cash equivalents | 720,291,197 | 720,291,197 | |||||
| Non-current assets held for sale | 8,756,999 | 8,756,999 | |||||
| 1 81 ,31 3,004 1 8,7 99,260 | 1 ,434,050 31 4,867 ,7 00 21 ,57 2,925 1 ,009,823,1 7 2 | 1 ,547 ,81 0,1 1 2 |
| 31 .1 2 .2 01 6 | |||||||
|---|---|---|---|---|---|---|---|
| Assets (Euros) | Express & Parcels |
Financial Services |
Banco CTT | CTT Central Structure |
Non allocated assets |
Total | |
| Intagible assets | 2,688,799 | 3,989,255 | 383,266 | 18,455,823 | 7,853,454 | 5,546,126 | 38,916,723 |
| Tangible fixed assets | 172,040,917 13,822,493 | 711,568 | 59,727 | 14,920,468 | 7,366,608 | 208,921,781 | |
| Investment properties | 9,291,983 | 9,291,983 | |||||
| Goodwill | 7,294,638 | 406,101 | 7,700,739 | ||||
| Deferred tax assets | 86,220,762 | 86,220,762 | |||||
| Accounts receivable | 122,113,270 | 122,113,270 | |||||
| Credit to bank clients | 7,103,905 | 7,103,905 | |||||
| Investments held to maturity | 95,094,543 | 95,094,543 | |||||
| Financial assets available for sale | 6,447,325 | 6,447,325 | |||||
| Other banking financial assets | 59,054,303 | 59,054,303 | |||||
| Other assets | 48,263,780 | 48,263,780 | |||||
| Cash and cash equivalents | 618,811,099 | 618,811,099 | |||||
| Non-current assets held for sale | 8,756,999 | 8,756,999 | |||||
| 1 82,024,355 1 7 ,81 1 ,7 48 | 1 ,500,934 1 86,21 5,627 | 22,7 7 3,922 | 906,37 0,627 | 1 ,31 6,697 ,21 3 |
| 30.06.2017 | ||||||
|---|---|---|---|---|---|---|
| Other information (Euros) | Express & Parcels | Financial Services |
Banco CTT | CTT Central Struture |
Total | |
| Medium and long-term debt | - | 160,090 | - | - | - | 160,090 |
| Bank loans | - | 94,271 | - | - | - | 94,271 |
| Leasings | - | 65,819 | - | - | - | 65,819 |
| Short-term debt | 492,721 | 7,749,520 | - | - | - | 8,242,241 |
| Bank loans | - | 7,679,119 | - | - | - | 7,679,119 |
| Leasings | 492,721 | 70,402 | - | - | - | 563,122 |
| 492,721 | 7,909,610 | - | - | - | 8,402,331 |
| 31.12.2016 | ||||||
|---|---|---|---|---|---|---|
| Other information (Euros) | Express & Parcels | Financial Services |
Banco CTT | CTT Central Struture |
Total | |
| Medium and long-term debt | - | 127,145 | - | - | - | 127,145 |
| Bank loans | - | 87,202 | - | - | - | 87,202 |
| Leasings | - | 39,943 | - | - | - | 39,943 |
| Short-term debt | 724,749 | 8,955,080 | - | - | - | 9,679,829 |
| Bank loans | - | 8,726,161 | - | - | - | 8,726,161 |
| Leasings | 724,749 | 228,919 | - | - | - | 953,668 |
| 724,749 | 9,082,224 | - | - | - | 9,806,973 |
The Group CTT is domiciled in Portugal. The result of its Sales and services rendered by geographical segment is disclosed below:
| Thousand Euros | 30.06.2 01 7 | 30.06.2 01 6 |
|---|---|---|
| Revenue - Portugal | 298,488 | 298,676 |
| Revenue - other countries | 41,978 | 37,511 |
| 340,466 | 336,187 |
The financial statements are subject to seasonality, however this does not affect comparability between identical periods in a given year. There are 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 six-month period ended 30 June 2017 and the year ended 31 December 2016, the movements occurred in Tangible fixed assets, as well as in the respective accumulated depreciation and accumulated impairment, were as follows:
| 30.06.2017 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 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 |
Total | |
| Tangible fixed assets | |||||||||
| Opening balance | 36,903,717 | 334,909,767 | 140,435,199 | 3,269,073 | 59,021,936 | 25,037,425 | 5,016,467 | 3,351,405 | 607,944,990 |
| Acquisitions | - | 230,470 | 594,720 | 432 | 424,199 | 141,898 | 809,468 | 44,713 | 2,245,899 |
| Disposals | - | - | (156,926) | - | (40,687) | (137) | - | - | (197,750) |
| Transfers and write-offs | - | 5,402,584 | 817,800 | - | 784,423 | 178,424 | (4,736,492) | (3,031,694) | (584,955) |
| Adjustments | - | (44,779) | 30,429 | 1,237 | 13,489 | 2,096 | - | (10,570) | (8,098) |
| Changes in the consolidation perimeter | 197,025 | 1,102,206 | 731,285 | 30,889 | 417,295 | 1,151,444 | - | - | 3,630,144 |
| Closing balance | 37,100,742 | 341,600,248 | 142,452,506 | 3,301,631 | 60,620,655 | 26,511,150 | 1,089,443 | 353,854 | 613,030,230 |
| Accumulated depreciation | |||||||||
| Opening balance | 3,851,494 | 197,359,750 | 121,934,623 | 3,208,997 | 52,255,805 | 20,239,484 | - | - | 398,850,154 |
| Depreciation for the period | - | 4,892,817 | 3,494,240 | 18,772 | 1,676,151 | 538,412 | - | - | 10,620,393 |
| Disposals | - | - | (150,989) | - | (40,236) | (137) | - | - | (191,361) |
| Transfers and write-offs | - | - | (302,199) | - | (28,678) | (201,302) | - | - | (532,178) |
| Adjustments | - | 415 | 18,897 | 722 | 1,763 | 1,776 | - | - | 23,574 |
| Changes in the consolidation perimeter | - | 422,804 | 459,736 | 28,437 | 218,784 | 572,388 | - | - | 1,702,149 |
| Closing balance | 3,851,494 | 202,675,785 | 125,454,310 | 3,256,929 | 54,083,590 | 21,150,621 | - | - | 410,472,729 |
| Accumulated impairment | |||||||||
| Opening balance | - | - | - | - | - | 173,055 | - | - | 173,055 |
| Other variations | - | - | - | - | - | (61,857) | - | - | (61,857) |
| Closing balance | - | - | - | - | - | 111,197 | - | - | 111,197 |
| Net Tangible fixed assets | 33,249,248 | 138,924,462 | 16,998,196 | 44,703 | 6,537,065 | 5,249,331 | 1,089,443 | 353,854 | 202,446,303 |
| 31.12.2016 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 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 |
Total | |
| Tangible fixed assets | |||||||||
| Opening balance | 37,306,577 | 337,982,013 | 138,002,341 | 3,273,327 | 54,961,400 | 23,252,352 | 1,971,616 | 1,398,408 | 598,148,034 |
| Acquisitions | - | 313,458 | 6,625,240 | 9,719 | 4,156,018 | 1,937,614 | 8,381,884 | 2,888,955 | 24,312,888 |
| Disposals | (526,637) | (3,885,980) | (1,503,859) | - | (52,919) | - | - | - | (5,969,395) |
| Transfers and write-offs | 123,778 | 675,516 | (2,289,200) | (8,174) | 51,751 | (115,897) | (5,337,034) | (812,692) | (7,711,951) |
| Adjustments | - | (175,240) | (399,323) | (5,800) | (94,314) | (36,644) | - | (123,265) | (834,586) |
| Closing balance | 36,903,717 | 334,909,766 | 140,435,200 | 3,269,073 | 59,021,936 | 25,037,425 | 5,016,467 | 3,351,405 | 607,944,989 |
| Accumulated depreciation | |||||||||
| Opening balance | 3,888,322 | 192,743,987 | 118,629,681 | 3,154,422 | 50,187,217 | 19,306,751 | - | - | 387,910,380 |
| Depreciation for the period | - | 9,180,124 | 7,410,835 | 66,457 | 2,621,487 | 1,111,546 | - | - | 20,390,450 |
| Disposals | (36,827) | (2,390,937) | (1,481,994) | - | (52,919) | - | - | - | (3,962,677) |
| Transfers and write-offs | - | (2,172,820) | (2,533,931) | (8,174) | (487,515) | (173,533) | - | - | (5,375,973) |
| Adjustments | - | (604) | (89,968) | (3,709) | (12,465) | (5,280) | - | - | (112,027) |
| Closing balance | 3,851,494 | 197,359,750 | 121,934,624 | 3,208,996 | 52,255,806 | 20,239,484 | - | - | 398,850,154 |
| Accumulated impairment | |||||||||
| Opening balance | - | - | - | - | - | 296,769 | - | - | 296,769 |
| Other variations | - | - | - | - | - | (123,714) | - | - | (123,714) |
| Closing balance | - | - | - | - | - | 173,055 | - | - | 173,055 |
| Net Tangible fixed assets | 33,052,223 | 137,550,016 | 18,500,576 | 60,077 | 6,766,130 | 4,624,886 | 5,016,467 | 3,351,405 | 208,921,781 |
During the six-month period ended 30 June 2017, Land and natural resources and Buildings and other constructions include 643,812 Euros (650,717 Euros as at 31 December 2016), related to land and property in co-ownership with MEO – Serviços de Comunicações e Multimédia, S.A..
During 2016, an exchange of 4 properties in co-ownership was made with MEO – Serviços de Comunicações e Multimédia, S.A., resulting in gains in the amount of 485,134 Euros.
During the six-month period ended 30 June 2017, 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, Banco CTT and Tourline.
The amount of acquisitions mainly relates to the purchase of ATM's in the amount of 51 thousand Euros and IT equipment worth approximately 194 thousand Euros by CTT. Tourline acquired pallets in the amount of 9 thousand Euros, IT equipment worth approximately 20 thousand Euros and PDA's amounting to 274 thousand Euros.
The amount of acquisitions relates essentially to the purchase of various administrative equipment, namely safes and security doors totaling 59 thousand Euros, various office furniture worth about 50 thousand Euros by CTT. Banco CTT acquired several office and IT equipment in the amount of 209 thousand Euros. In addition, Tourline acquired office furniture worth 20 thousand Euros and several micro-computing equipment for approximately 12 thousand Euros.
The amount of acquisitions mainly relates to prevention and safety equipment for approximately 70 thousand Euros by CTT.
The amounts under this heading are related to the capitalisation of improvements in own and thirdparty properties.
In the six-month period ended 30 June 2017, the amounts recorded under changes in the consolidation perimeter refer to the balances of Transporta at the acquisition date.
In the year ended 31 December 2016, the amounts recorded under write-offs, with particular emphasis on Basic equipment, are mainly due to the write-offs of CTT assets that were fully depreciated.
The depreciation recorded of 10,620,393 Euros (9,622,875 Euros on 30 June 2016), is booked under the heading Depreciation/amortisation and impairment of investments, net.
Contractual commitments related to Tangible fixed assets are as follows:
| 30.06.2017 | |
|---|---|
| Hardware firewall networks | 280,353 |
| Safes and security doors | 209,920 |
| Upgrades to mail sorting machines | 47,312 |
| Labeller TOP | 7,815 |
| 545,400 |
During the six-month period ended 30 June 2017 and the year ended 31 December 2016, the movements which occurred in the main categories of Intangible assets, as well as the respective accumulated amortisation, were as follows:
| 30.06.2017 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Development projects |
Computer Software | Industrial property | Other intangible assets |
Intangible assets in progress |
Total | |||
| Intangible assets | ||||||||
| Opening balance | 4,372,923 | 69,732,469 | 11,722,559 | 444,739 | 8,870,277 | 95,142,968 | ||
| Acquisitions | - | 2,320,178 | 2,175 | - | 2,575,203 | 4,897,556 | ||
| Disposals | - | - | - | - | - | - | ||
| Transfers and write-offs | - | 3,926,242 | (16,833) | - | (5,256,974) | (1,347,565) | ||
| Adjustments | - | - | 31,008 | - | - | 31,008 | ||
| Changes in the consolidation perimeter | - | 7,629 | - | - | 19,281 | 26,910 | ||
| Closing balance | 4,372,923 | 75,986,519 | 11,738,909 | 444,739 | 6,207,786 | 98,750,876 | ||
| Accumulated amortisation | ||||||||
| Opening balance | 4,360,060 | 43,021,166 | 8,400,280 | 444,739 | - | 56,226,245 | ||
| Amortisation for the period | 4,824 | 4,018,703 | 165,349 | - | - | 4,188,876 | ||
| Transfers and write-offs | - | (1,340,356) | (16,833) | - | - | (1,357,189) | ||
| Adjustments | - | (454) | 10,880 | - | - | 10,427 | ||
| Changes in the consolidation perimeter | - | 679 | - | - | - | 679 | ||
| Closing balance | 4,364,883 | 45,699,739 | 8,559,677 | 444,739 | - | 59,069,038 | ||
| Net intangible assets | 8,039 | 30,286,781 | 3,179,232 | - | 6,207,786 | 39,681,838 |
| 31.12.2016 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Development projects |
Computer Software | Industrial property | Other intangible assets |
Intangible assets in progress |
Total | |||
| Intangible assets | ||||||||
| Opening balance | 4,372,923 | 48,455,024 | 12,004,296 | 444,739 | 12,175,413 | 77,452,395 | ||
| Acquisitions | - | 7,715,502 | 17,573 | - | 10,114,453 | 17,847,528 | ||
| Disposals | - | (15,490) | - | - | - | (15,490) | ||
| Transfers and write-offs | - | 13,235,156 | 1,893 | - | (13,419,588) | (182,539) | ||
| Adjustments | - | (15,640) | (301,202) | - | - | (316,843) | ||
| Other movements | - | 357,918 | - | - | - | 357,918 | ||
| Closing balance | 4,372,923 | 69,732,469 | 11,722,559 | 444,739 | 8,870,277 | 95,142,968 | ||
| Accumulated amortisation | ||||||||
| Opening balance | 4,350,412 | 36,912,898 | 8,120,329 | 444,739 | - | 49,828,379 | ||
| Amortisation for the period | 9,647 | 6,277,006 | 336,578 | - | - | 6,623,231 | ||
| Disposals | - | (15,490) | - | - | - | (15,490) | ||
| Transfers and write-offs | - | (150,959) | (454) | - | - | (151,413) | ||
| Adjustments | - | (2,289) | (56,173) | - | - | (58,463) | ||
| Closing balance | 4,360,060 | 43,021,166 | 8,400,280 | 444,739 | - | 56,226,245 | ||
| Net intangible assets | 12,863 | 26,711,303 | 3,322,280 | - | 8,870,277 | 38,916,723 |
The caption Industrial property includes the license of the trademark "Payshop Internacional" of CTT Contacto, S.A., of 1,200,000 Euros. This license has an indefinite useful life, therefore it is not being amortised.
The transfers occurred in the six-month period ended 30 June 2017 in Intangible assets in progress to Computer software refer to IT projects which were completed during the period.
The amounts of 424,936 Euros and 317,778 Euros that were capitalised in Computer software or in Intangible assets in progress as at 30 June 2017 and 30 June 2016, respectively, related to the staff costs incurred in the development of these projects.
In the six-month period ended 30 June 2017, the amounts recorded under changes in the consolidation perimeter refer to the balances of Transporta at the acquisition date.
As at 30 June 2017, Intangible assets in progress relate to IT projects which are under development, of which the most relevant are:
| 30.06.2017 | |
|---|---|
| Management information - Software | 1,090,759 |
| International (E-CIP) | 745,902 |
| CBS - Core banking system | 725,835 |
| Mail products evolution | 482,125 |
| NAVE evolution | 453,857 |
| RAID - Software | 194,824 |
| Business Excellence - Software | 133,248 |
| CTT Mobile | 121,569 |
| SAP Hana & Hybris Billing-Setup | 113,959 |
| SADIP - Dynamics Change Plans | 106,684 |
| Payment platform | 100,830 |
| DOL - Treatment and generation of schedules | 94,522 |
| OPICS - Treasury management | 76,878 |
| 4,440,992 |
The amortisation for the period, of 4,188,876 Euros (3,085,030 Euros as at 30 June 2016), was recorded under Depreciation / amortisation and impairment of investments, net.
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.
Contractual commitments relative to Intangible assets are as follows:
| 30.06.2017 | |
|---|---|
| CBS - Core Banking System | 6,318,780 |
| SAP S/4 Hana e SAP Hybris | 2,510,642 |
| APP Mobile CTT 2.0 | 94,710 |
| Intranet CTT | 85,340 |
| Riposte – NAVe | 84,881 |
| CRM - Microsoft Dynamics | 59,000 |
| Management Mortgage Loans | 45,170 |
| APP Mobility Android | 20,295 |
| Videoconferencing upgrade | 29,608 |
| Intranet Banco CTT | 26,800 |
| SADIP - Dynamics Change Plans | 9,335 |
| 9,284,562 |
As at 30 June 2017 and 31 December 2016, the Group has the following assets classified as investment properties:
| 30.06.2017 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Land and natural resources |
Buildings and other constructions |
Investment properties in progress |
Total | |||||
| Investment properties | ||||||||
| Opening balance | 3,921,049 | 18,372,780 | - | 22,293,828 | ||||
| Additions | - | - | 43,152 | 43,152 | ||||
| Disposals | (267,628) | (1,004,321) | - | (1,271,949) | ||||
| Transfers and write-offs | - | 43,152 | (43,152) | - | ||||
| Closing balance | 3,653,421 | 17,411,611 | - | 21,065,031 | ||||
| Accumulated depreciation | ||||||||
| Opening balance | 210,097 | 11,500,249 | - | 11,710,347 | ||||
| Depreciation for the period | - | 159,781 | - | 159,781 | ||||
| Disposals | (19,022) | (560,032) | - | (579,055) | ||||
| Transfers and write-offs | - | - | - | - | ||||
| Closing balance | 191,075 | 11,099,998 | - | 11,291,073 | ||||
| Accumulated impairment | ||||||||
| Opening balance | - | 1,291,498 | - | 1,291,498 | ||||
| Transfers/Adjustments | - | (6,762) | - | (6,762) | ||||
| Closing balance | - | 1,284,736 | - | 1,284,736 | ||||
| Net Investment properties | 3,462,346 | 5,026,877 | - | 8,489,223 | ||||
| 31.12.2016 | |||||||
|---|---|---|---|---|---|---|---|
| Land and natural resources |
Buildings and other constructions |
Investment properties in progress |
Total | ||||
| Investment properties | |||||||
| Opening balance | 7,079,433 | 40,895,219 | - | 47,974,653 | |||
| Additions | - | - | - | - | |||
| Disposals | (890,140) | (8,088,615) | - | (8,978,754) | |||
| Transfers and write-offs | (2,268,245) | (14,433,825) | - | (16,702,070) | |||
| Closing balance | 3,921,049 | 18,372,780 | - | 22,293,828 | |||
| Accumulated depreciation | |||||||
| Opening balance | 239,427 | 26,669,509 | - | 26,908,936 | |||
| Depreciation for the period | - | 569,250 | - | 569,250 | |||
| Disposals | (25,824) | (5,432,025) | - | (5,457,848) | |||
| Transfers and write-offs | (3,506) | (10,306,485) | - | (10,309,991) | |||
| Closing balance | 210,097 | 11,500,249 | - | 11,710,347 | |||
| Accumulated impairment | |||||||
| Opening balance | - | 1,282,622 | - | 1,282,622 | |||
| Transfers/Adjustments | - | 8,876 | - | 8,876 | |||
| Closing balance | - | 1,291,498 | - | 1,291,498 | |||
| Net Investment properties | 3,710,951 | 5,581,032 | - | 9,291,983 |
These assets are not allocated to the Group's operating activities, nor have a specific future use.
During the six-month period ended 30 June 2017, the amount of disposals relates to the sale of four properties, having the corresponding gains, of 679 thousand Euros, been recorded in the caption Other operating income.
During the year ended 31 December 2016, the amount of disposals relates to the sale of six properties, having the corresponding gains, of 1.2 million Euros, been recorded in the caption Other operating income.
Depreciation for the period, of 159,781 Euros (343,845 Euros on 30 June 2016), was recorded in the caption Depreciation / amortisation and impairment of investments (losses / reversals).
As at 30 June 2017 and 31 December 2016, the parent company, CTT - Correios de Portugal, S.A. and the following subsidiaries in which it holds control were included in the consolidation:
| 30.06.2017 | 31.12.2016 | |||||||
|---|---|---|---|---|---|---|---|---|
| Percentage of ownership | Percentage of ownership | |||||||
| Company name | Place of business | Head office | Direct | Indirect | Total | Direct | Indirect | Total |
| Parent company: CTT - Correios de Portugal, S.A. |
Portugal | Av. D. João II N.º 13 1999-001 Lisboa |
- | - | - | - | - | - |
| Subsidiaries: | ||||||||
| CTT Expresso - Serviços Postais e Logística, S.A. ("CTT Expresso") |
Portugal | Lugar do Quintanilho 2664-500 São Julião do Tojal |
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 |
| Mailtec Comunicação , S.A. ("Mailtec TI") |
Portugal | Av. D. João II N.º 13 1999-001 Lisboa |
100 | - | 100 | 100 | - | 100 |
| Tourline Express Mensajería, SLU. ("TourLine") |
Spain | Calle Pedrosa C, 38-40 Hospitalet de Llobregat (08908)- Barcelona - Spain |
100 | - | 100 | 100 | - | 100 |
| Correio Expresso de Moçambique, S.A. ("CORRE") |
Mozambique | Av. Zedequias Manganhela, 309 Maputo - Mozambique |
50 | - | 50 | 50 | - | 50 |
| Escrita Inteligente , S.A. ("RONL") |
Portugal | Av. D. João II N.º 13 1999-001 Lisboa |
100 | - | 100 | 100 | - | 100 |
| Banco CTT, S.A. ("BancoCTT") |
Portugal | Av. D. João II N.º 11 1999-001 Lisboa |
100 | - | 100 | 100 | - | 100 |
| Transporta - Transportes Porta a Porta, S.A. ("Transporta") |
Portugal | Estrada de São Marcos N.º 15 2735-521 Cacém |
100 | - | 100 | - | - | - |
On 27 May 2017 the share capital of Banco CTT, S.A. was increased by 40,000,000 Euros, currently totaling 125,000,000 Euros.
On 4 May 2017, CTT – Correios de Portugal, S.A., acquired 100% of the share capital of the company Transporta – Transportes Porta a Porta, S.A. for the amount of 1,728,091 Euros.
As at 30 June 2017 and 31 December 2016, the Group held the following interests in joint ventures, accounted for by the equity method:
| 30.06.2017 | 31.12.2016 | |||||||
|---|---|---|---|---|---|---|---|---|
| Percentage of ownership | Percentage of ownership | |||||||
| Company name | Place of business | Head office | Direct | Indirect | Total | Direct | Indirect | Total |
| Ti-Post Prestção de Serviços informáticos, ACE (" Ti-Post") (a) |
Portugal | R. do Mar da China, Lote 1.07.2.3 Lisboa |
- | - | - | - | - | - |
| NewPost, ACE | Portugal | Av. Fontes Pereira de Melo, 40 Lisboa |
49 | - | 49 | 49 | - | 49 |
| PTP & F, ACE | Portugal | Estrada Casal do Canas Amadora |
- | 51 | 51 | - | 51 | 51 |
| (a) The joint-venture has been dissolved during the year 2016. |
As at 30 June 2017 and 31 December 2016, the Group held the following interests in associated companies accounted for by the equity method:
| 30.06.2017 | 31.12.2016 | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Percentage of ownership | Percentage of ownership | ||||||||
| Company name | Place of business | Head office | Direct | Indirect | Total | Direct | Indirect | Total | |
| Multicert - Serviços de Certificação Electrónica, S.A. ("Multicert") |
Portugal | R. do Centro Cultural, 2 Lisboa |
20 | - | 20 | 20 | - | 20 | |
| Payshop Moçambique, S.A. (a) | Mozambique | R. da Sé, 114-4º. Maputo - Mozambique |
- | 35 | 35 | - | 35 | 35 | |
| Mafelosa, SL (b) | Spain | Castellon - Spain | - | 25 | 25 | - | 25 | 25 | |
| Urpacksur, SL (b) | Spain | Málaga - Spain | - | 30 | 30 | - | 30 | 30 | |
(a) Company held by Payshop Portugal, S.A., which is currently under liquidation. (b) Company held by Tourline Mensajeria, SLU, which currently has no activity.
During the six-month period ended 30 June 2017, the consolidation perimeter was changed following the acquisition of the company Transporta – Transportes Porta a Porta, S.A. on 4 May 2017, with a corresponding goodwill of 134,901 Euros.
The following table summarizes the impacts on the balance sheet at the acquisition date:
| Caption | Amount |
|---|---|
| Non-current assets | 2,075,180 |
| Current assets | 3,426,473 |
| Total assets | 5,501,653 |
| Equity Non-current liabilities Current liabilities |
1,593,190 461,277 3,447,186 |
| Total liabilities | 3,908,463 |
| Total equity and liabilities | 5,501,653 |
The main impacts on results at 30 June 2017 are as follows and refer to the months of May and June:
| Caption | Amount |
|---|---|
| Revenues | 2,338,559 |
| Operating costs | (3,788,037) |
| Earnings before financial income and taxes | (1,449,478) |
| Other captions | 310,542 |
| Net profit for the period | (1,138,936) |
As at 30 June 2017 and 31 December 2016, this caption showed the following composition:
| 30.06.2017 | 31.12.2016 | |
|---|---|---|
| Non-current | ||
| Debt securities and other fixed-income securities | ||
| Public issuers | 150,120,299 | 78,863,164 |
| Other issuers | 13,811,509 | 15,122,951 |
| 163,931,808 | 93,986,115 | |
| Current | ||
| Debt securities and other fixed-income securities | ||
| Public issuers | 7,371,979 | 878,115 |
| Other issuers | 228,710 | 230,313 |
| 7,600,689 | 1,108,428 | |
| 171,532,497 | 95,094,543 |
The analysis of the residual maturity of the investments held to maturity as at 30 June 2017 and 31 December 2016, is detailed as follows:
| 30.06.2017 | ||||||
|---|---|---|---|---|---|---|
| Current | Non-current | |||||
| Due within 3 months |
Over 3 months and less than 1 year |
Over 1 year and less than 3 years |
Over 3 years | Undetermined | Total | |
| Debt securities and other fixed-income securities | ||||||
| Public issuers | 2,199,351 | 5,172,628 | 17,058,720 | 133,061,579 | - | 157,492,278 |
| Other issuers | 228,710 | - | - | 13,811,509 | - | 14,040,219 |
| 2,428,061 | 5,172,628 | 17,058,720 | 146,873,088 | - | 171,532,497 | |
| 31.12.2016 | ||||||
| Current | Non-current | |||||
| Due within 3 months |
Over 3 months and less than 1 year |
Over 1 year and less than 3 years |
Over 3 years | Undetermined | Total | |
| Debt securities and other fixed-income securities | ||||||
| Public issuers | 878,115 | - | 12,256,862 | 66,606,302 | - | 79,741,279 |
| Other issuers | 22,818 | 207,495 | - | 15,122,951 | - | 15,353,264 |
| 900,933 | 207,495 | 12,256,862 | 81,729,253 | - | 95,094,543 |
As at 30 June 2017 and 31 December 2016, the composition of this heading is as follows:
| 30.06.2017 | 31.12.2016 | |
|---|---|---|
| Non-current | ||
| Debt securities and other fixed-income securities | ||
| Public issuers | 560,010 | 540,400 |
| Other issuers | 4,739,975 | 3,933,214 |
| 5,299,985 | 4,473,614 | |
| Current | ||
| Debt securities and other fixed-income securities | ||
| Public issuers | 5,134,985 | 139,180 |
| Other issuers | 4,124,411 | 1,834,531 |
| 9,259,396 | 1,973,711 | |
| 14,559,381 | 6,447,325 |
The analysis of the Financial assets available for sale and the corresponding residual maturity is detailed as follows:
| 30.06.2017 | ||||
|---|---|---|---|---|
| Cost (1) | Fair value reserve | Impairment losses | Total | |
| Debt securities and other fixed-income securities | ||||
| Public-debt securities | ||||
| National | 5,669,658 | 25,337 | - | 5,694,995 |
| Foreign | - | - | - | - |
| Other issuers | ||||
| National | 2,550,062 | - | - | 2,550,062 |
| Foreign | 6,297,135 | 17,189 | - | 6,314,324 |
| 14,516,855 | 42,526 | - | 14,559,381 |
(1) Acquisition cost regarding shares and other equity instruments and amortised cost regarding debt securities.
| 30.06.2017 | ||||||
|---|---|---|---|---|---|---|
| Current | Non-current | |||||
| Due within 3 months |
Over 3 months and less than 1 year |
Over 1 year and less than 3 years |
Over 3 years | Undetermined | Total | |
| Debt securities and other fixed-income securities | ||||||
| Public-debt securities | ||||||
| National | 7,751 | 5,127,234 | - | 560,010 | - | 5,694,995 |
| Foreign | - | - | - | - | - | - |
| Other issuers | ||||||
| National | 2,550,062 | - | - | - | - | 2,550,062 |
| Foreign | 621,057 | 953,292 | 4,626,864 | 113,111 | - | 6,314,324 |
| 3,178,870 | 6,080,526 | 4,626,864 | 673,121 | - | 14,559,381 |
| 31.12.2016 | ||||
|---|---|---|---|---|
| Cost (1) | Fair value reserve | Impairment losses | Total | |
| Debt securities and other fixed-income securities | ||||
| Public-debt securities | ||||
| National | 679,406 | 174 | - | 679,580 |
| Foreign | - | - | - | - |
| Other issuers | ||||
| National | - | - | - | - |
| Foreign | 5,754,445 | 13,300 | - | 5,767,745 |
| 6,433,851 | 13,474 | - | 6,447,325 |
(1) Acquisition cost regarding shares and other equity instruments and amortised cost regarding debt securities.
| 31.12.2016 | ||||||
|---|---|---|---|---|---|---|
| Current | Non-current | |||||
| Due within 3 months |
Over 3 months and less than 1 year |
Over 1 year and less than 3 years |
Over 3 years | Undetermined | Total | |
| Debt securities and other fixed-income securities | ||||||
| Public-debt securities | ||||||
| National | 14,866 | 124,314 | - | 540,400 | - | 679,580 |
| Foreign | - | - | - | - | - | - |
| Other issuers | ||||||
| National | - | - | - | - | - | - |
| Foreign | 562,258 | 1,272,273 | 3,614,529 | 318,685 | - | 5,767,745 |
| 577,124 | 1,396,587 | 3,614,529 | 859,085 | - | 6,447,325 | |
As at 30 June 2017 and 31 December 2016, the headings Other banking financial assets and Other banking financial liabilities showed the following composition:
| 30.06.2017 | 31.12.2016 | |
|---|---|---|
| Non-current assets | ||
| Investments in credit institutions | 4,630,939 | - |
| 4,630,939 | - | |
| Current assets | ||
| Investments in credit institutions | 70,358,487 | 58,718,171 |
| Other | 481,838 | 336,132 |
| 70,840,325 | 59,054,303 | |
| 7 5,47 1 ,2 64 | 59,054,303 | |
| Current liabilities | ||
| Other | 3,470,203 | 1,218,205 |
| 3,47 0,2 03 | 1 ,2 1 8,205 |
Regarding the caption Investments in credit institutions, the scheduling by maturity is as follows:
| 30.06.2017 | 31.12.2016 | |
|---|---|---|
| Up to 3 months | 32,709,982 | 42,111,692 |
| From 3 to 6 months | 21,921,820 | 4,500,135 |
| From 6 to 12 months | 15,726,685 | 12,106,344 |
| From 1 to 3 years | 2,983,386 | - |
| Over 3 years | 1,647,553 | - |
| 74,989,426 | 58,718,171 |
As at 30 June 2017 and 31 December 2016, the caption Credit to bank clients was detailed as follows:
| 30.06.2017 | 31.12.2016 | |
|---|---|---|
| Domestic credit | 32 ,580,51 4 | 7 ,1 04,32 2 |
| Overdrafts | 139,056 | 69,498 |
| Factoring | 27,498,971 | 7,034,824 |
| Mortgage loans | 4,942,487 | - |
| Credit risk impairment | (60,520) | (41 7 ) |
| Overdue loans | 39,462 | - |
| 32,559,456 | 7,103,905 | |
The maturity analysis of the Credit to bank clients is detailed as follows:
| 30.06.2017 | ||||||
|---|---|---|---|---|---|---|
| Current | Non-current | |||||
| No defined maturity | Due within 3 months |
Over 3 months and less than 1 year |
Over 1 year and less than 3 years |
Over 3 years | Total | |
| Overdrafts | 120,353 | - | - | - | - | 120,353 |
| Factoring | - | 27,498,971 | - | - | - | 27,498,971 |
| Mortgage loans | - | - | - | - | 4,937,328 | 4,937,328 |
| Overdue loans | - | 2,804 | - | - | - | 2,804 |
| 120,353 | 27,501,775 | - | - | 4,937,328 | 32,559,456 | |
| 31.12.2016 | ||||||
| Current | Non-current | |||||
| No defined maturity | Due within 3 months |
Over 3 months and less than 1 year |
Over 1 year and less than 3 years |
Over 3 years | Total | |
| Overdrafts | 69,498 | - | - | - | - | 69,498 |
| Factoring | - | 7,034,407 | - | - | - | 7,034,407 |
| Mortgage loans | - | - | - | - | - | - |
| Overdue loans | - | - | - | - | - | - |
| 69,498 | 7,034,407 | - | - | - | 7,103,905 |
During the six-month period ended 30 June 2017 and the year ended 31 December 2016, the movement in the Credit risk impairment caption was as follows:
| 30.06.2017 | |||||
|---|---|---|---|---|---|
| Opening balance | Increases | Reversals | Utilisations | Closing balance | |
| Non-current assets | |||||
| Credit to bank clients | - | 5,169 | (8) | - | 5,161 |
| - | 5,169 | (8) | - | 5,161 | |
| Current assets | |||||
| Credit to bank clients | 417 | 55,562 | (619) | - | 55,360 |
| 417 | 55,562 | (619) | - | 55,360 | |
| 417 | 60,731 | (627) | - | 60,521 | |
| 31.12.2016 | |||||
| Opening balance | Increases | Reversals | Utilisations | Closing balance | |
| Current assets | |||||
| Credit to ban clients | - | 417 | - | - | 417 |
| - | 417 | - | - | 417 |
As at 30 June 2017 and 31 December 2016, the Deferrals included in Current assets and Current and Non-current liabilities showed the following composition:
| 30.06.2017 | 31.12.2016 | |
|---|---|---|
| Assets deferrals | ||
| Current | ||
| Rents payable | 1,362,338 | 1,293,963 |
| Meal allowances | 1,649,919 | 1,668,745 |
| Other | 4,122,175 | 3,166,223 |
| Diferimentos | 7,134,432 | 6,128,931 |
| Liabilities deferrals | ||
| Non-current | ||
| Investment subsidy | 325,542 | 334,191 |
| Diferimentos | 325,542 | 334,191 |
| Current | ||
| Deferred capital gains | 1,071,689 | 2,143,378 |
| Phone-ix top ups | 143,780 | 158,698 |
| Deferred comissions | 246,058 | 799,062 |
| Investment subsidy | 17,299 | 17,299 |
| Other | 751,947 | 1,059,172 |
| Diferimentos | 2,230,773 | 4,177,609 |
| 2,556,315 | 4,511,800 |
In the years 2001 and 2002, CTT sold certain properties, which it subsequently leased. The gains on these sales were deferred and are being recognised over the period of the lease contracts.
During the six-month period ended 30 June 2017 and the year ended 31 December 2016, the amounts of 1,071,689 Euros and 3,394,833 Euros, respectively, were recognised under Other operating income in the consolidated income statement, related to the above-mentioned gains. The amount recognised in the year ended 31 December 2016 includes the amount of 1,725,642 Euros regarding Conde Redondo building as a result of the lease contract's termination.
In 2014, CTT signed an agreement with Cetelem, according to which CTT received an amount of 3 million Euros on the signing date. An amount of 1 million Euros, related to an entry fee was recognised at the beginning of the contract and the remaining 2 million Euros, for non-refundable fees, will be recognised over the period of the contract. As at 30 June 2017 an amount of 246,058 Euros is being related to this contract was deferred (799,062 Euros as at 31 December 2016).
During the six-month period ended 30 June 2017 and the year ended 31 December 2016, the following movements occurred in the impairment losses:
| 30.06.2017 | ||||||
|---|---|---|---|---|---|---|
| Opening balance | Increases | Reversals | Utilisations | Changes in the consolidation perimeter |
Closing balance | |
| Non-current assets | ||||||
| Tangible fixed assets | 173,055 | - | (61,858) | - | - | 111,197 |
| Investment properties | 1,291,498 | - | (6,762) | - | - | 1,284,736 |
| 1,464,553 | - | (68,620) | - | - | 1,395,933 | |
| Credit to bank clients | - | 5,169 | (8) | - | - | 5,161 |
| Other non-current assets | 1,748,286 | 24,595 | - | - | - | 1,772,881 |
| 1,748,286 | 29,764 | (8) | - | - | 1,778,042 | |
| 3,212,839 | 29,764 | (68,628) | - | - | 3,173,975 | |
| Current assets | ||||||
| Accounts receivable | 30,309,524 | 1,303,286 | (668,123) | (492,610) | 2,278,091 | 32,730,168 |
| Credit to bank clients | 417 | 55,562 | (619) | - | - | 55,360 |
| Other current assets | 8,173,677 | 46,431 | (461,284) | (67,444) | 326,796 | 8,018,176 |
| 38,483,618 | 1,405,279 | (1,130,026) | (560,054) | 2,604,887 | 40,803,704 | |
| Merchandise | 1,565,187 | 223,029 | (456) | (81,240) | - | 1,706,520 |
| Raw, subsidiary and consumable | 579,327 | 78,458 | - | - | - | 657,785 |
| 2,144,514 | 301,487 | (456) | (81,240) | - | 2,364,305 | |
| 40,628,132 | 1,706,766 | (1,130,482) | (641,294) | 2,604,887 | 43,168,009 | |
| 43,840,971 | 1,736,530 | (1,199,110) | (641,294) | 2,604,887 | 46,341,984 |
| 31.12.2016 | ||||||
|---|---|---|---|---|---|---|
| Opening balance | Increases | Reversals | Utilisations | Transfers | Closing balance | |
| Non-current assets | ||||||
| Tangible fixed assets | 296,769 | - | (123,714) | - | - | 173,055 |
| Investment properties | 1,282,622 | 12,491 | (3,615) | - | - | 1,291,498 |
| 1,579,391 | 12,491 | (127,329) | - | - | 1,464,553 | |
| Other non-current assets | 1,472,836 | 83,597 | - | - | 191,853 | 1,748,286 |
| INESC loan | 347,021 | - | (347,021) | - | - | - |
| TA105019 - Imparidade | 1,819,857 | 83,597 | (347,021) | - | 191,853 | 1,748,286 |
| 3,399,248 | 96,088 | (47 4,350) | - | 1 91 ,853 | 3,21 2,839 | |
| Current assets | ||||||
| Accounts receivable | 31,737,169 | 2,875,921 | (2,267,005) | (2,036,561) | - | 30,309,524 |
| Credit to bank clients | - | 417 | - | - | - | 417 |
| Other current assets | 8,622,168 | 440,664 | (691,210) | (6,092) | (191,853) | 8,173,677 |
| INESC loan | 49,740 | - | (49,740) | - | - | - |
| 40,409,077 | 3,317,002 | (3,007,955) | (2,042,653) | (191,853) | 38,483,618 | |
| Merchandise | 1,397,098 | 198,203 | (438) | (29,676) | - | 1,565,187 |
| Raw, subsidiary and consumable | 565,513 | 21,592 | (7,778) | - | - | 579,327 |
| 1,962,611 | 219,795 | (8,216) | (29,676) | - | 2,144,514 | |
| 42,37 1 ,688 | 3,536,7 97 | (3,01 6,1 7 1 ) | (2,07 2,329) | (1 91 ,853) | 40,628,1 32 | |
| 45,7 7 0,936 | 3,632,885 | (3,490,521 ) | (2,07 2,329) | - | 43,840,97 1 |
In the six-month period ended 30 June 2017, the caption changes in the consolidation perimeter refers to the balances of Transporta at the acquisition date.
The net amount between increases and reversals of impairment losses of inventories was recorded in the consolidated income statement under the caption Cost of sales.
As at 30 June 2017, the Company's 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 30 June 2017 and 31 December 2016 the Company's shareholders with greater than or equal to 2% shareholdings, according to the information reported, are as follows:
| 30.06.2 01 7 | ||||
|---|---|---|---|---|
| Shareholder | No. of shares | % | Nominal value | |
| Gestmin SGPS, S.A. (1) | 15,072,519 | 10.048% | 7,536,260 | |
| Manuel Carlos de Melo Champalimaud | Total | 1 5,357 ,404 | 1 0.238% | 7 ,67 8,7 02 |
| Allianz Global Investors GmbH (2) | Total | 7 ,552,637 | 5.035% | 3,7 7 6,31 9 |
| BNP Paribas Asset Management SAS (3) (4) | 3.710% | |||
| BNP Paribas Investment Partners S.A. (4) | Total | 7 ,27 4,095 | 4.849% | 3,637 ,048 |
| Norges Bank | Total | 3,333,7 92 | 2.223% | 1 ,666,896 |
| F&C Asset Management plc (5) | 3,124,801 | 2.083% | 1,562,401 | |
| Banco de Montreal (5) | Total | 3,1 24,801 | 2.083% | 1 ,562,401 |
| Wilmington Capital, S.L. (6) | 3,020,368 | 2.014% | 1,510,184 | |
| Indumenta Pueri, S.L. (6) | Total | 3,020,368 | 2.01 4% | 1 ,51 0,1 84 |
| CTT, S.A. (own shares) (7 ) | Total | 1 | 0.000% | 0.50 |
| Other shareholders | Total | 1 1 0,336,902 | 7 3.558% | 55,1 68,451 |
| Total | 1 50,000,000 | 1 00.000% | 7 5,000,000 |
(1) Includes GestminSGPS, S.A. with 15,000,000 shares and members of the Board of Directors of Gestmin with 72,519 shares, the latter attributable to Gestmin. Qualifying shareholding directly and indirectly attributable to Manuel Carlos de Melo Champalimaud, who holds a controlling interest in Gestmin and also holds directly 284,885 shares corresponding to 0.190% of the share capital and voting rights in CTT.
(2) Previously, Allianz Global Investors Europe GmbH.
(3) Company controlled by BNP Paribas Investment Partners S.A..
(4) Percentages indicatedby the shareholder in the last notification of qualifying holdings, disclosed through a press release of 4 May 2017 available at CTT website (www.ctt.pt) and CMVM website (www.cmvm.pt): BNP Paribas Asset Management - 1.86% directly; BNP Paribas Investment Partners Belgium SA - 1.09% directly (proxy voting by BNP Paribas Investment Partners UK Ltd); BNP Paribas Investment Partners Luxembourg - 1.90% indirectly (proxy voting by BNP Paribas Asset Management 1.846% + BNP Paribas Investment Partners Nederland N.V. 0.055%).
(5) This qualified shareholding is imputable to F&C Asset Management plc, as the entity with whom each of F&C Management Limited, F&C Investment Business Limited and F&C Managers Limited are in a dominion relationship. F&C Asset Management plc is under the dominion of BMO Global Asset Management (Europe) Limited which in turn is under the dominion of the Bank of Montreal.
(6) Wilmington Capital, S.L. is controlled by Indumenta Pueri, S.L..
(7) On 31 January 2017 and in execution of the Remuneration Committee's approved remuneration policy for the 2014-2016 term of office and the Company's Executive Director Share Award Plan approved by the General Meeting held on 5 May 2015, a total of 600,530 own shares representing 0.400% of the share capital was awarded to the Company's Executive Directors, as long-term variable remuneration. At the present date, CTT holds thus 1 own share corresponding to 0.000% of the share capital and with the nominal value of €0.50; the rights inherent to this share remain suspended pursuant to article 324 of the Portuguese Companies Code.
| ь |
|---|
| Γľ Ľ ٠ |
| 31 .1 2.2 01 6 | ||||
|---|---|---|---|---|
| Shareholder | No. of shares | % | Nominal value | |
| Gestmin SGPS, S.A. (1) | 14,576,115 | 9.717% | 7,288,058 | |
| Manuel Carlos de Melo Champalimaud | 284,885 | 0.190% | 142,443 | |
| Manuel Carlos de Melo Champalimaud | Total | 1 4,861 ,000 | 9.907% | 7 ,430,500 |
| Standard Life Investments Limited (2) | 9,910,580 | 6.607% | 4,955,290 | |
| Ignis Investment Services Limited (2) | 97,073 | 0.065% | 48,537 | |
| Standard Life Investments (Holdings) Limited | Total | 1 0,007,653 | 6.67 2% | 5,003,827 |
| Allianz Global Investors GmbH (3) | Total | 7,552,637 | 5.035% | 3,776,31 9 |
| BNP Paribas Investment Partners Belgium S.A. (4) | 0.833% | |||
| BNP Paribas Investment Partners Luxembourg S.A. (4) | 2.972% | |||
| BNP Paribas Asset Management SAS (4) | 1.197% | |||
| BNP Paribas Investment Partners S.A. | Total | 7,502,430 | 5.002% | 3,751 ,21 5 |
| Norges Bank | Total | 7,422,099 | 4.948% | 3,71 1 ,050 |
| BlackRock, Inc. (5) | Total | 4,961 ,965 | 3.308% | 2,480,983 |
| F&C Asset Management plc (6) | 3,124,801 | 2.083% | 1,562,401 | |
| Banco de Montreal (6) | Total | 3,1 24,801 | 2.083% | 1 ,562,401 |
| Kames Capital PLC (7) | Total | 3,022,1 70 | 2.01 5% | 1 ,51 1 ,085 |
| Wilmington Capital, S.L. (8) | 3,020,368 | 2.014% | 1,510,184 | |
| Indumenta Pueri, S.L. (8) | Total | 3,020,368 | 2.01 4% | 1 ,51 0,1 84 |
| CTT, S.A. (own shares) (9) | Total | 600,531 | 0.400% | 300,266 |
| Other shareholders | Total | 87,924,346 | 58.61 6% | 43,962,1 7 3 |
| Total | 1 50,000,000 | 1 00.000% | 7 5,000,000 |
(1) Shareholding directly and indirectly attributable to Manuel Carlos de Melo Champalimaud.
(2) Company held by Standard Life Investments (Holdings) Limited.
(3) Previously, Allianz Global Investors Europe GmbH.
(4) Companies controlled by BNP Paribas Investment Partners S.A..
(5) The full chain of BlackRock, Inc. controlled undertakings through which the voting rights and/or financial instruments are effectively held may be consulted at the attachments of the qualifying holding press releases, available at: http://www.ctt.pt/ctt-e-investidores/relacoes-com-
investidores/comunicados.html?com.dotmarketing.htmlpage.language=1#panel2-1
(6) This qualified shareholding is imputable to F&C Asset Management plc, as the entity with whom each of F&C Management Limited, F&C Investment Business Limited and F&C Managers Limited are in a dominion relationship. F&C Asset Management plc is under the dominion of BMO Global Asset Management (Europe) Limited which in turn is under the dominion of the Bank of Montreal.
(7) Kames Capital PLC is acting as investment manager for Scottish Equitable PLC, Royal County of Berkshire Pension Fund, Kames Capital Investment Company (Ireland) PLC and Kames Capital ICVC and is the nominated holder of the voting rights and custodian of the shares to which voting rights are attached.
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.
On 31 January 2017, and pursuant to the remuneration policy approved by the Remuneration Committee for the 2014-2016 term of office and the Share Plan to the executive members of the Board of Directors approved by the General Meeting on 5 May 2015, CTT granted a total of 600,530
own shares, representing 0.400% of the corresponding share capital, to the Company's executive members of the Board of Directors, as long-term variable remuneration.
As at 30 June 2017, CTT held 1 own share, corresponding to 0.000% of the Company's share capital, 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.
During the six-month period ended 30 June 2017 and the year ended 31 December 2016, the movements that occurred in this caption were as follows:
| Quantity | Value | Average price | |
|---|---|---|---|
| Balance at 31 December 2016 | 600,531 | 5,097,536 | 8.488 |
| Acquisitions Attribution |
- (600,530) |
- (5,097,527) |
- 8.488 |
| Balance at 30 June 2017 | 1 | 8 | 8.488 |
| Quantity | Value | Average price | |
|---|---|---|---|
| Balance at 31 December 2015 Acquisitions |
200,177 400,354 |
1,873,125 3,224,411 |
9.357 8.054 |
| Disposals | - | - | - |
| Balance at 31 December 2016 | 600,531 | 5,097,536 | 8.488 |
As at 30 June 2017 and 31 December 2016, the heading Reserves is detailed as follows:
| 30.06.2017 | |||||
|---|---|---|---|---|---|
| Legal reserves | Own shares reserves |
Fair Value reserves |
Other reserves | Total | |
| Opening balance | 18,072,559 | 5,097,536 | 13,474 | 11,708,102 | 34,891,671 |
| Share capital decrease | - | - | - | 49,500,000 | 49,500,000 |
| Transfers | (3,072,559) | - | - | 3,072,559 | - |
| Own shares attribution | - | (5,097,527) | - | 5,097,527 | - |
| Assets fair value | - | - | 29,052 | - | 29,052 |
| Share Plan (attribution) | - | - | - | (4,480,638) | (4,480,638) |
| Closing balance | 15,000,000 | 8 | 42,526 | 64,897,551 | 79,940,086 |
| 31.12.2016 | |||||
|---|---|---|---|---|---|
| Legal reserves | Own shares reserves |
Fair Value reserves |
Other reserves | Total | |
| Opening balance | 18,072,559 | 1,873,125 | (540) | 13,438,968 | 33,384,112 |
| Own shares acquisitions | - | 3,224,411 | - | (3,224,411) | - |
| Assets fair value | - | - | 14,014 | - | 14,014 |
| Share Plan | - | - | - | 1,493,546 | 1,493,546 |
| Closing balance | 18,072,559 | 5,097,536 | 13,474 | 11,708,102 | 34,891,671 |
As deliberated at the General Meeting of Shareholders, which was held on 20 April 2017, an operation of reduction and increase of CTT's share capital was performed according to the following terms:
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.
Following the attribution of own shares to executive members of the Board of Directors within the scope of the remuneration policy established by the Remuneration Committee for the 2014-2016 term of office, the correspondent reserve was, during the six-month period ended 30 June 2017, reduced in the amount of 5,097,527 Euros.
As at 30 June 2017, 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.
As at 31 December 2016, it also recorded the amount recognised in each year related to the Share Plan that constituted the long-term variable remuneration to be paid to the executive members of the Board of Directors under the new remuneration model of the Statutory Bodies defined by the Remuneration Committee, in the amount of 4,480,638 Euros.
During the six-month period ended 30 June 2017 and the year ended 31 December 2016, the following movements were made in the heading Retained earnings:
| 30.06.2017 | 31.12.2016 | |
|---|---|---|
| Opening balance | 93,589,211 | 91,727,994 |
| Application of the net profit of the prior year | 62,160,395 | 72,065,283 |
| Distribution of dividends (Note 16) | (72,000,000) | (70,264,792) |
| Share capital increase | (49,500,000) | - |
| Adjustments from the application of the equity method | - | 19,820 |
| Other movements | (4,644) | 40,906 |
| Closing balance | 34,244,962 | 93,589,211 |
The Actuarial gains/losses associated to post-employment benefits, as well as the corresponding deferred taxes, are recognised in this heading.
Thus, for the six-month period ended 30 June 2017 and the year ended 31 December 2016, the movements occurred in this heading were as follows:
| 30.06.2017 | 31.12.2016 | |
|---|---|---|
| Opening balance | (27,137,824) | (18,644,832) |
| Actuarial gains/losses - Healthcare | - | (11,827,990) |
| Tax effect - Healthcare | - | 3,334,998 |
| Closing balance | (27,137,824) | (27,137,824) |
According to the dividends distribution proposal included in the 2016 Annual Report, at the General Meeting of Shareholders, which was held on 20 April 2017, a dividend distribution of 72,000,000 Euros regarding the financial year ended 31 December 2016 was proposed and approved. The dividend amount assigned to own shares was transferred to Retained earnings, totaling 0,48 Euros.
On 28 April 2016 a dividend distribution of 70,500,000 Euros regarding the financial year ended 31 December 2015 and corresponding to a dividend per share of 0.47 Euros, was also approved at the General Meeting of Shareholders. The dividend was paid on 25 May 2016. The dividend amount assigned to own shares was transferred to Retained earnings, totaling 235,208 Euros.
| 30.06.2017 | 31.12.2016 | ||
|---|---|---|---|
| Assigned dividends | 72,000,000 | 70,500,000 | |
| Dividends assigned to own shares | (0.48) | (235,208) | |
| Dividends paid | 72,000,000 | 70,264,792 |
During the six-month periods ended 30 June 2017 and 30 June 2016, the earnings per share were calculated as follows:
| 30.06.2017 | 30.06.2016 | ||
|---|---|---|---|
| Net income for the period | 17,745,100 | 31,676,537 | |
| Average number of ordinary shares | 149,900,464 | 149,627,286 | |
| Earnings per share | |||
| Basic | 0.12 | 0.21 | |
| Diluted | 0.12 | 0.21 |
The average number of shares is detailed as follows:
| 30.06.2017 | 30.06.2016 | |
|---|---|---|
| Shares issued at begining of the period | 150,000,000 | 150,000,000 |
| Own shares effect | 99,536 | 372,714 |
| Average number of shares during the period | 149,900,464 | 149,627,286 |
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 2017, the number of own shares held by the Group is 1 and its average number for the period ended 30 June 2017 is 99,536, reflecting the fact that the acquisition of own shares occurred in previous years and their attribution occurred on 31 January 2017.
There are no dilutive factors of earnings per share.
For the six-month period ended 30 June 2017 and the year ended 31 December 2016, in order to face legal proceedings and other liabilities arising from past events, the Group recognised provisions, which showed the following movement:
| 30.06.2017 | |||||||
|---|---|---|---|---|---|---|---|
| Opening balance | Increases | Reversals | Utilisations | Transfers | Changes in the consolidation perimeter |
Closing balance | |
| Non-current provisions | |||||||
| Litigations | 4,838,552 | 1,368,599 | (1,406,751) | (831,277) | 89,801 | 30,000 | 4,088,924 |
| Other provisions | 9,288,931 | 25,078 | - | (278,793) | (89,801) | - | 8,945,415 |
| 14,127,483 | 1,393,677 | (1,406,751) | (1,110,070) | - | 30,000 | 13,034,339 | |
| Restructuring | - | 1,198,418 | - | - | - | - | 1,198,418 |
| Provisões | 14,127,483 | 2,592,095 | (1,406,751) | (1,110,070) | - | 30,000 | 14,232,757 |
| 31.12.2016 | ||||||
|---|---|---|---|---|---|---|
| Opening balance | Increases | Reversals | Utilisations | Transfers | Closing balance | |
| Non-current provisions | ||||||
| Litigations | 9,102,699 | 1,929,078 | (5,715,244) | (2,093,786) | 1,615,805 | 4,838,552 |
| Onerous contracts | 14,358,103 | 139,058 | (6,613,918) | (7,883,243) | - | - |
| Other provisions | 17,035,233 | 180,942 | (6,263,597) | (47,842) | (1,615,805) | 9,288,931 |
| 40,496,035 | 2,249,078 | (18,592,759) | (10,024,871) | - | 14,127,483 | |
| Investments in subsidiary and associated compan | 189,775 | - | (189,775) | - | - | - |
| Restructuring | 46,522 | - | - | (46,522) | - | - |
| Provisões | 40,732,332 | 2,249,078 | (18,782,534) | (10,071,393) | - | 14,127,483 |
In the six-month period ended 30 June 2017, the caption changes in the consolidation perimeter refers to the balances of Transporta at the acquisition date.
The net amount between increases and reversals of provisions was recorded in the consolidated income statement under the caption Provisions, net and amounted to 13,074 Euros (3,657,846 Euros as at 30 June 2016).
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 its lawyers.
Following the termination of the Conde Redondo building lease contract, CTT recorded, in the first quarter of 2016, a reversal of the provision for onerous contracts regarding the lease contract of this building, in the amount of 2,913,557 Euros.
The utilisations, during the year ended 31 December 2016, in the amount of 7,883,243 Euros relate to the payment of rents due during the period as well as part of the outstanding rents of the Conde Redondo building.
As a result of the restructuring of CTT's retail network and the new sublease contracts, the associated profitability now exceeds the amount of the rents paid under the lease contracts in force, therefore, these contracts are no longer considered as onerous contracts.
Consequently, as at 30 June 2017 and 31 December 2016 there are no amounts recognised as onerous contracts.
For the six-month period ended 30 June 2017, the provision to cover contingencies relating to employment litigation actions not included in the current court proceedings and related to remuneration differences that can be claimed by workers, amounts to 8,040,678 Euros (8,130,479 Euros as at 31 December 2016).
In the period ended 31 December 2016 reversals in the amount of 6,263,597 Euros were recorded as a result of the following situations:
As at 30 June 2017, in addition to the previously mentioned situations, this heading also includes:
The provision for investments in associated companies corresponds to the assumption by the Group of legal or constructive obligations regarding the associated company Payshop Moçambique, S.A.. The reversal recorded in the year ended 31 December 2016 results from the Group's assessment in which it concluded that the previously existing obligations are no longer maintained.
During the six-month period ended 30 June 2017, a provision for restructuring was recognised in the accounts of the subsidiary Transporta – Transportes Porta a Porta, S.A., for 1,198,418 Euros, following the human resources optimisation and restructuring process. This provision was recorded under the heading Staff costs in the consolidated income statement (Note 23).
As at 30 June 2017 and 31 December 2016, the Group had provided bank guarantees to third parties as follows:
| Description | 30.06.2017 | 31.12.2016 |
|---|---|---|
| FUNDO DE PENSÕES DO BANCO SANTANDER TOTTA | 3,030,174 | 3,030,174 |
| PLANINOVA - Soc. Imobiliária, S.A. | 2,033,582 | 2,033,582 |
| LandSearch, Compra e Venda de Imóveis | 1,792,886 | 1,792,886 |
| NOVIMOVESTE - Fundo de Investimento Imobiliário | 1,523,201 | 1,523,201 |
| LUSIMOVESTE - Fundo de Investimento Imobiliário | 1,274,355 | 1,274,355 |
| Autoridade Tributária e Aduaneira | 590,000 | 590,000 |
| Municipal autarchy | 185,681 | 183,677 |
| Courts | 157,107 | 167,107 |
| Solred | 80,000 | 80,000 |
| TIP - Transportes Intermodais do Porto, ACE | 50,000 | 50,000 |
| INCM - Imprensa Nacional da Casa da Moeda | 46,167 | 46,167 |
| Fonavi, Nave Hospitalet | 40,477 | 40,477 |
| ACT Autoridade Condições Trabalho | 35,538 | 58,201 |
| ANA - Aeroportos de Portugal | 34,000 | 34,000 |
| SPMS - Serviços Partilhados do Ministério da Saúde | 30,180 | 30,180 |
| EMEL, S.A. | 26,984 | 19,384 |
| Águas do Norte | 23,804 | - |
| EPAL - Empresa Portuguesa de Águas Livres | 21,433 | 21,433 |
| Direção Geral do Tesouro e Finanças | 16,867 | 16,867 |
| Portugal Telecom, S.A. | 16,658 | 16,658 |
| Instituto de Gestão Financeira Segurança Social | 16,406 | 16,406 |
| Other entities | 29,992 | 29,992 |
| Administração Regional de Saúde LVT | 13,086 | - |
| Águas do Porto, E.M | 10,720 | 10,720 |
| SMAS Torres Vedras | 9,909 | 9,909 |
| Instituto de Segurança Social | 8,190 | - |
| Inmobiliaria Ederkin | 7,998 | 7,998 |
| Promodois | 6,273 | 6,273 |
| TNT Express Worldwide | 6,010 | 6,010 |
| Consejeria Salud | 4,116 | 4,116 |
| Instituto do emprego e formação profissional | 3,718 | 3,718 |
| Casa Pia de Lisboa, I.P. | 1,863 | - |
| IFADAP | 1,746 | 1,746 |
| Águas de Coimbra | 870 | 870 |
| Lisboagás, S.A. | - | 190,000 |
| Record Rent a Car (Cataluña, Levante) | - | 40,000 |
| SetGás, S.A. | - | 30,000 |
| Estradas de Portugal, EP | - | 5,000 |
| 11,129,989 | 11,371,107 |
According to the terms of some lease contracts of the buildings occupied by the Group'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 9,654,198 Euros as at 30 June 2017 and 31 December 2016.
As at 30 June 2017, the Group had subscribed promissory notes amounting to approximately 43.5 thousand Euros, for various credit institutions intended to secure complete and timely compliance with the corresponding financing contracts.
The Group assumed financial commitments (comfort letters) in the amount of 1,170,769 Euros for the subsidiary Tourline and regarding the subsidiary CORRE in the amount of 94,271 Euros, which are still active as at 30 June 2017.
As at 30 June 2017, the commitments assumed by the Group regarding the sponsoring of "Taça da Liga" (Football League Cup) for three seasons amount to 0.8 million Euros.
In addition, the Group also assumed commitments relating to real estate rents under lease contracts and rents for operating and financial leases.
The contractual commitments related to Tangible fixed assets and Intangible assets are detailed respectively in Notes 4 and 5.
As at 30 June 2017 and 31 December 2016, the heading Accounts payable showed the following composition:
| 30.06.2017 | 31.12.2016 | |
|---|---|---|
| Non-current | ||
| Other accounts payable | 390,876 | 375,379 |
| 390,876 | 375,379 | |
| Current | ||
| Advances from customers | 2,989,632 | 3,039,657 |
| CNP money orders | 371,410,090 | 200,238,100 |
| Suppliers | 62,856,796 | 65,044,068 |
| Invoices pending confirmation | 11,477,895 | 8,559,890 |
| Fixed assets suppliers | 2,063,246 | 13,684,684 |
| Invoices pending confirmation (fixed assets) | 2,321,284 | 6,206,806 |
| Amounts collected on behalf of third parties | 9,249,609 | 8,955,667 |
| Postal financial services | 71,406,662 | 131,878,955 |
| Other accounts payable | 9,521,704 | 7,255,873 |
| Contas a pagar | 543,296,918 | 444,863,700 |
| 543,687,794 | 445,239,079 |
The value of CNP money orders refers to the money orders received from the National Pensions Centre (CNP), whose payment date to the corresponding pensioners must occur in the month after the closing of the period. The increase in this caption is due to the payment of the holiday pay to the pensioners that occurs in the month of June.
This heading records mainly the amounts collected related to taxes, insurance, savings certificates and other money orders.
As at 30 June 2017 and 31 December 2016, the composition of the heading Banking clients' deposits and other loans is as follows:
| 30.06.2017 | 31.12.2016 | |
|---|---|---|
| Sight deposits | 252,252,021 | 114,041,001 |
| Term deposits | 130,395,797 | 131,417,483 |
| Savings deposits | 41,645,584 | 8,486,356 |
| 424,293,402 | 253,944,840 |
The above-mentioned amounts relate to Banco CTT clients' deposits. As at 30 June 2017 and 31 December 2016, the residual maturity of banking clients' deposits and other loans, is detailed as follows:
| 30.06.2017 | ||||||
|---|---|---|---|---|---|---|
| No defined maturity | Due within 3 months |
Over 3 months and less than 1 year |
Over 1 year and less than 3 years |
Over 3 years | Total | |
| Sight deposits | 252,252,021 | - | - | - | - | 252,252,021 |
| Term deposits | - | 58,374,910 | 72,020,887 | - | - | 130,395,797 |
| Savings deposits | 41,645,584 | - | - | - | - | 41,645,584 |
| 293,897,605 | 58,374,910 | 72,020,887 | - | - | 424,293,402 | |
| 31.12.2016 | ||||||
| No defined maturity | Due within 3 months |
Over 3 months and less than 1 year |
Over 1 year and less than 3 years |
Over 3 years | Total | |
| Sight deposits | 114,041,001 | - | - | - | - | 114,041,001 |
| Term deposits | - | 73,693,366 | 57,724,117 | - | - | 131,417,483 |
122,527,357 73,693,366 57,724,117 - - 253,944,840
Savings deposits 8,486,356 - - - - 8,486,356
As at 30 June 2017, the caption reflects the estimated income tax regarding the six-month period ended 30 June 2017.
During the six-month periods ended 30 June 2017 and 30 June 2016, the composition of the heading Other operating income was as follows:
| 30.06.2017 | 30.06.2016 | |
|---|---|---|
| Supplementary revenues | 2,211,602 | 1,478,661 |
| Altice agreement | - | 5,000,000 |
| Early settlement discounts received | 32,475 | 23,835 |
| Favourable exchange rate differences of assets and liabilities other than financing |
1,829,350 | 459,982 |
| Income from financial investments | 441,070 | 322,481 |
| Income from non-financial investments | 1,761,857 | 4,226,737 |
| Income from services and commissions | 2,270,582 | 52,011 |
| Interest income and expenses - financial services | 102,216 | 154,672 |
| VAT adjustments | 1,581,229 | 1,967,568 |
| Other | 255,890 | 1,194,799 |
| 10,486,271 | 14,880,745 |
Following the Memorandum of understanding signed with Altice and being the acquisition of PT Portugal completed by Altice, CTT received from Altice the agreed initial payment, which was recognised in the consolidated income statement over the exclusive period for the negotiation of the partnerships, as provided in the Memorandum. This recognition ended in December 2016.
The caption Income from non-financial investments includes, in the period ended 30 June 2016, the gain in the amount of 1.7 million Euros regarding Conde Redondo building as a result of the lease contract's termination.
The amount related to VAT adjustments mainly results from the improvements made in the procedures of the VAT deduction methodology.
During the six-month periods ended 30 June 2017 and 30 June 2016, the composition of the heading Staff Costs was as follows:
| 30.06.2017 | 30.06.2016 | |
|---|---|---|
| Statutory bodies remuneration | 2,399,512 | 2,372,966 |
| Staff remuneration | 132,050,792 | 129,100,779 |
| Employee benefits | 2,266,612 | 718,266 |
| Indemnities | 2,672,975 | 834,199 |
| Social Security charges | 29,450,246 | 28,907,861 |
| Occupational accident and health insurance | 1,664,875 | 1,567,318 |
| Social welfare costs | 3,638,948 | 3,541,979 |
| Other staff costs | 77,488 | 30,512 |
| 174,221,448 | 167,073,880 |
In the six-month periods ended 30 June 2017 and 30 June 2016, the fixed and variable remunerations attributed to the members of the statutory bodies of the different companies of the Group were as follows:
| 30.06.2017 | |||||
|---|---|---|---|---|---|
| Board of Directors | Audit Comittee | Remuneration Board |
General Meeting of Shareholders |
Total | |
| Short-term remuneration | |||||
| Fixed remuneration | 1,729,397 | 198,714 | 18,720 | 4,500 | 1,951,331 |
| Annual variable remuneration | 448,181 | - | - | - | 448,181 |
| 2,177,578 | 198,714 | 18,720 | 4,500 | 2,399,512 | |
| Long-term remuneration | |||||
| Defined contribution plan RSP | 113,889 | - | - | - | 113,889 |
| Long-term variable remuneration - Share Plan | 616,890 | - | - | - | 616,890 |
| 730,779 | - | - | - | 730,779 | |
| 2,908,357 | 198,714 | 18,720 | 4,500 | 3,130,291 | |
| 30.06.2016 | |||||
| Board of Directors | Audit Comittee | Remuneration Board |
General Meeting of Shareholders |
Total | |
| Short-term remuneration | |||||
| Fixed remuneration | 1,557,512 | 109,286 | 15,104 | 4,500 | 1,686,401 |
| Annual variable remuneration | 686,565 | - | - | - | 686,565 |
| 2,244,076 | 109,286 | 15,104 | 4,500 | 2,372,966 |
| Long-term remuneration | |||||
|---|---|---|---|---|---|
| Defined contribution plan RSP | 111,750 | ||||
| Long-term variable remuneration - Share Plan | 746,773 | - | - | - | 746,773 |
| 858,523 | - | - | - | 858,523 | |
| 3,102,599 | 109,286 | 15,104 | 4,500 | 3,231,489 | |
Following the new remuneration model for the statutory bodies defined by the Remuneration Committee for the 2014-2016 term of office and in compliance with the Share Plan to the executive members of the Board of Directors, 600,530 own shares were granted to the Company's executive members of the Board of Directors. The amount of 616,890 Euros recorded under the caption "Long-term variable remuneration – Share Plan" results from the derecognition of the liability after the attribution of the shares, reflecting the difference between that liability, estimated on 31 December 2014, and the value of the own shares recorded in Equity granted to the statutory bodies on 31 January 2017.
Following the remuneration model approved by the Remuneration Committee, it was decided to allocate a fixed monthly amount for an Open Pension Fund or Retirement Savings Plan to be granted to the executive members of the Board of Directors.
The annual variable remuneration will be determined and paid on an annual basis.
The variation registered under Employee benefits mainly reflects the liability reduction related to the Telephone subscription fee due to the adjustment to the actual cost of the beneficiaries in the six-month period ended 30 June 2017 and 30 June 2016, in the amount of 425,298 Euros and 1,815,868 Euros respectively.
During the six-month period ended 30 June 2017, this caption includes the amount of 1,038,993 Euros related to compensation paid for termination of employment contracts by mutual agreement.
It also includes the amount of 1,198,418 Euros related to the provision for restructuring recorded in Transporta following the human resources optimisation process.
Social welfare costs relate almost entirely to health costs incurred by the Group with active workers, as well as expenses related to Health and Safety at Work.
During the six-month periods ended 30 June 2017 and 30 June 2016, the heading Staff costs includes the amounts of 401,109 Euros and 287,333 Euros, respectively, related to expenses with workers' representative bodies.
For the six-month periods ended 30 June 2017 and 30 June 2016, the average number of staff of the Group was 12,402 and 12,243, respectively.
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 Euros up to 35,000,000 Euros and 7% of the taxable profit above 35,000,000 Euros. Tourline 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 the Group and its subsidiaries CTT – Expresso, S.A., Mailtec Comunicação, 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.
In the six-month periods ended 30 June 2017 and 30 June 2016, the reconciliation between the nominal rate and the effective income tax rate is as follows:
| 30.06.2017 | 30.06.2016 | |
|---|---|---|
| Earnings before taxes | 28,154,960 | 44,924,604 |
| Nominal tax rate | 21.0% | 21.0% |
| 5,912,542 | 9,434,167 | |
| Tax Benefits | (179,010) | (99,683) |
| Accounting capital gains/(losses) | (144,476) | (127,692) |
| Tax capital gains/(losses) | 73,646 | (856,478) |
| Equity method | - | (8,518) |
| Provisions not considered in the calculation of deferred taxes | - | (96,330) |
| Impairment losses and reversals | (91,271) | 390,130 |
| Other situations, net | 858,306 | 1,515,717 |
| Adjustments related with - autonomous taxation | 792,586 | 769,940 |
| Adjustments related with - Municipal Surcharge | 553,056 | 530,492 |
| Adjustments related with - State Surcharge | 1,870,241 | 1,749,794 |
| Tax losses without deferred tax | 849,309 | 814,070 |
| Excess estimated income tax | (35,114) | (640,857) |
| Income taxes for the period | 10,459,815 | 13,374,753 |
| Effective tax rate | 37.15% | 29.77% |
| Income taxes for the period | ||
| Current tax | 8,809,790 | 8,748,067 |
| Deferred tax | 1,685,139 | 5,267,543 |
| Excess estimated income tax | (35,114) | (640,857) |
| Imposto sobre o rendimento do período | 10,459,815 | 13,374,753 |
During the six-month period ended 30 June 2017, the heading Insufficiency/(Excess) estimated income tax relates to the reimbursement of Autonomous Taxation of 2011 and 2012 in the amount of 347,036 Euros, the insufficiency of the income tax estimate of 2016 amounting to 1,391,132 Euros and to the tax credit related to SIFIDE of 2015 in the amount of 1,079,208 Euros. In the sixmonth period ended 30 June 2016 the same caption includes the amount of 268,898 Euros regarding the tax credit allocated under the SIFIDE program of 2014 of CTT – Correios de Portugal, S.A..
As at 30 June 2017 and 31 December 2016, the balance of deferred tax assets and liabilities was composed as follows:
| 30.06.2017 | 31.12.2016 | |
|---|---|---|
| Deferred tax assets | ||
| Employee benefits - healthcare | 70,148,161 | 70,523,096 |
| Employee benefits - pension plan | 91,831 | - |
| Employee benefits - other long-term benefits | 4,816,518 | 5,301,326 |
| Deferred accounting capital gains | 303,395 | 606,790 |
| Impairment losses and provisions | 3,334,975 | 3,030,558 |
| Tax losses carried forward | 387,068 | 327,183 |
| Impairment losses in tangible fixed assets | 333,906 | 360,333 |
| Share Plan | - | 1,268,470 |
| Land and buildings | 1,752,922 | 1,847,637 |
| Tangible assets' tax revaluation regime | 2,680,786 | 2,680,786 |
| Other | 677,883 | 274,583 |
| Ativos por impostos diferidos | 84,527,445 | 86,220,762 |
| Deferred tax liabilities | ||
| Revaluation of tangible fixed assets before IFRS | 3,046,613 | 3,151,709 |
| Suspended capital gains | 917,249 | 934,821 |
| Other | 36,616 | 36,616 |
| Passivos por impostos diferidos | 4,000,478 | 4,123,146 |
As at 30 June 2017, the expected amount of deferred tax assets and liabilities to be settled within 12 months is 4.1 million Euros and 0.2 million Euros, respectively.
During the six-month period ended 30 June 2017 and the year ended 31 December 2016, the movements which occurred under the deferred tax headings were as follows:
| 30.06.2017 | 31.12.2016 | |
|---|---|---|
| Deferred tax assets | ||
| Opening balances | 86,220,762 | 87,535,941 |
| Effect on net profit | ||
| Employee benefits - healthcare | (374,935) | 29,917 |
| Employee benefits - pension plan | 91,831 | - |
| Employee benefits - other long-term benefits | (484,808) | (1,230,552) |
| Deferred accounting gains | (303,395) | (1,116,452) |
| Impairment losses and provisions | 304,418 | (5,967,001) |
| Tax losses carried forward | 59,885 | 2,857 |
| Impairment losses in tangible fixed assets | (26,427) | (45,040) |
| Share plan | (1,268,470) | 421,330 |
| Land and buildings | (94,715) | 454,713 |
| Tangible assets' tax revaluation regime | ||
| Other | 403,299 | 119,265 |
| Effect on equity | ||
| Employee benefits - healthcare | - | 3,334,998 |
| Closing balance | 84,527,445 | 86,220,762 |
| 30.06.2017 | 31.12.2016 | |
| Deferred tax liabilities | ||
| Opening balances | 4,123,146 | 4,576,598 |
| Effect on net profit | ||
| Revaluation of tangible fixed assets before IFRS adoption |
(105,096) | (410,811) |
| Suspended capital gains | (17,572) | (36,858) |
| Other | - | (5,783) |
| Closing balance | 4,000,478 | 4,123,146 |
The tax losses carried forward are related to the losses of the subsidiaries Tourline, Escrita Inteligente and Transporta, and are detailed as follows:
| Company | Tax losses | Deferred tax assets |
|---|---|---|
| Tourline | 41,317,944 | 320,408 |
| Escrita Inteligente | 48,042 | 10,089 |
| Transporta | 269,384 | 56,571 |
| Total | 41,635,370 | 387,068 |
Regarding 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 year 2015 have no time limit for deduction. As far as Escrita Inteligente is concerned the tax losses refer to the years 2015, 2016 which may be carried forward in the next 12 years and the tax losses regarding the six-month period ended 30 June 2017 may be carried forward in the next 5years. Transporta's tax losses refer to the six-month period ended 30 June 2017 and may be carried forward in the next 5years.
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 2.4 million Euros.
The Group policy for recognition of fiscal credits regarding SIFIDE is to recognise the credit at the moment of the effective receipt of the commission certification statement, certifying the eligibility of expenses presented in the applications for tax benefits.
In relation to the expenses incurred with R&D during 2014 of 736,033 Euros and according to the notification dated 18 January 2016 of the Certification Commission, a tax credit of 268,898 Euros was attributed to CTT.
Regarding the year ended 31 December 2015, for the expenses incurred with R&D of 3,358,151 Euros, the Group will have the possibility of benefiting from a tax deduction in corporate income tax estimated at 2,556,380 Euros. According to the notification dated 6 April 2017 of the Certification Commission, a tax credit of 1,079,209 Euros was attributed to CTT.
For the year ended 31 December 2016, the expenses incurred with R&D, of 1,895,281 Euros, the Group will have the possibility of benefiting from a tax deduction in corporate income tax estimated at 1,006,271 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 periods are extended or suspended. Therefore, the Group's income tax returns from 2013 may still be reviewed and corrected, since the income tax returns prior to this date have already been inspected.
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 interim condensed consolidated financial statements as at 30 June 2017.
The Regulation on Assessment and Control of transactions with CTT's related parties defines related party as a qualified shareholder, officer, or even a third party related by any commercial or relevant personal interest and subsidiaries or associates or jointly controlled entities (joint ventures).
According to the Regulation, the significant transactions with related parties must be previously approved by the Audit Committee of CTT as well as transactions that members of the Board of Directors of CTT and/or its subsidiaries conduct with CTT and/or its subsidiaries.
The other transactions with related parties are communicated to the Audit Committee for the purpose of subsequent examination.
During the six-month periods ended 30 June 2017 and 30 June 2016, the following transactions took place and the following balances existed with related parties:
| 30.06.2017 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Accounts receivable | Accounts payable | Revenues | Costs | Dividends | ||||||
| Shareholders | - | - | - | - | 72,000,000 | |||||
| Other shareholders of Group companies | ||||||||||
| Associated companies | 2,247 | 25,281 | 6,110 | 34,391 | - | |||||
| Jointly controlled | 140,067 | - | 255,130 | 216 | - | |||||
| Members of the | ||||||||||
| Board of Directors | - | - | - | 2,177,578 | - | |||||
| Audit Committee | - | - | - | 198,714 | - | |||||
| Remuneration Committee | - | - | - | 18,720 | - | |||||
| General Meeting | - | - | - | 4,500 | - | |||||
| 142,315 | 25,281 | 261,240 | 2,434,120 | 72,000,000 | ||||||
| 30.06.2016 | ||||||||||
| Accounts receivable | Accounts payable | Revenues | Costs | Dividends |
| Shareholders | - | - | - | - | 70,264,792 |
|---|---|---|---|---|---|
| Other shareholders of Group companies | |||||
| Associated companies | 11,533 | - | 6,795 | 30,186 | - |
| Jointly controlled | 136,419 | - | 134,596 | 18,664 | - |
| Members of the | |||||
| Board of Directors | - | - | - | 2,244,076 | - |
| Audit Committee | - | - | - | 109,286 | - |
| Remuneration Committee | - | - | - | 15,104 | - |
| General Meeting | - | - | - | 4,500 | - |
| 147,952 | - | 141,391 | 2,421,816 | 70,264,792 |
The transactions and balances between subsidiaries are eliminated in the consolidation process and are not disclosed in this note.
CTT's activity is regularly subject to inquiry and check-up procedures from the supervisory entities for verification of effective compliance with the rules and regulations in force. In this framework, the Company adopts an attitude of collaboration by providing the necessary clarifications and due answer.
Following a thorough analysis of the "statement of objections" that the Company received from the Competition Authority on 16 August 2016 concerning an infraction proceeding on the basis of an alleged obstruction of access of its competitors to the postal network infrastructure, CTT gave its answer within the legal deadline, which refuted those allegations and considered them as unfounded for the following main reasons:
The case is still under instruction phase and there is no decision by the Competition Authority yet. A final decision of this entity to impose a potential fine and / or penalties is still subject to a court appeal.
As anticipated, on 4 May 2017, the acquisition by CTT of the entire share capital of "Transporta - Transportes Porta a Porta S.A." was completed. The purchase and sale agreement with the Barraqueiro Group had been announced on 15 December 2016, and CTT was subsequently notified of the Competition Authority's decision not to oppose it on 2 March 2017.
This acquisition is part of the expansion and diversification strategy of CTT, through which it intends to capture growth opportunities in adjacent markets and with business synergies with the CEP market. Recently, the integration process has focused on the migration of items between networks and the optimization of human resources. Within the scope of the gradual integration process in the CTT universe, the optimization of human resources was already planned, and aims at the sustainability of the company as well as its productive and operational efficiency.
After the end of the year and up to the present date, no relevant or material fact has occurred in the Group's activity that has not been disclosed in the notes to the financial statements.
THE DIRECTOR OF ACCOUNTING & TREASURY THE BOARD OF DIRECTORS
In the 1st half of 2017, 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 June 2017, CTT shareholder structure in terms of qualifying holdings was as follows:
At the end of the 1st half of 2017, based on the communications made to the Company, the qualifying holdings in CTT, as calculated in accordance with the provisions of article 20 of the Portuguese Securities Code, were as follows:
| Shareholders | No. of shares | % Share capital |
% Voting rights |
|
|---|---|---|---|---|
| Gestmin SGPS, S.A. (1) | 15,072,519 | 10.048% | 10.048% | |
| Manuel Carlos de Melo Champalimaud (1) | Total | 15,357,404 | 10.238% | 10.238% |
| Allianz Global Investors GmbH(2) | Total | 7,552,637 | 5.035% | 5.035% |
| BNP Paribas Asset Management SAS (3)(4) | 3.71% | 3.71% | ||
| BNP Paribas Investment Partners S.A. (4) | Total | 7,274,095 | 4.849% | 4.849% |
| Norges Bank | Total | 3,333,792 | 2.223% | 2.223% |
| F&C Asset Management plc (5) | 3,124,801 | 2.083% | 2.083% | |
| Banco de Montreal (5) | Total | 3,124,801 | 2.083% | 2.083% |
| Wilmington Capital, S.L. (6) | 3,020,368 | 2.014% | 2.014% | |
| Indumenta Pueri, S.L. (6) | Total | 3,020,368 | 2.014% | 2.014% |
| CTT, S.A. (own shares)(7) | Total | 1 | 0.000% | 0.000% |
| Other shareholders | Total | 110,336,902 | 73.558% | 73.558% |
| TOTAL | 150,000,000 | 100.000% | 100.000% |
(1) Includes Gestmin SGPS, S.A. with 15,000,000 shares and members of the Board of Directors of Gestmin with 72,519 shares, the latter attributable to Gestmin. Qualifying shareholding directly and indirectly attributable to Manuel Carlos de Melo Champalimaud, who holds a controlling interest in Gestmin and also holds directly 284,885 shares corresponding to 0.190% of the share capital and voting rights in CTT.
(2) Previously, Allianz Global Investors Europe GmbH.
(3) Company controlled by BNP Paribas Investment Partners S.A..
(4) Percentages indicated by the shareholder in the last notification of qualifying holdings, disclosed through a press release of 4 May 2017 available at CTT website (www.ctt.pt) and CMVM website (www.cmvm.pt): BNP Paribas Asset Management - 1.86% directly; BNP Paribas Investment Partners Belgium SA - 1.09% directly (proxy voting by BNP Paribas Investment Partners UK Ltd); BNP Paribas Investment Partners Luxembourg - 1.90% indirectly (proxy voting by BNP Paribas Asset Management 1.846% + BNP Paribas Investment Partners Nederland N.V. 0.055%).
(5) This qualified shareholding is imputable to F&C Asset Management plc, as the entity with whom each of F&C Management Limited, F&C Investment Business Limited and F&C Managers Limited are in a dominion relationship. F&C Asset Management plc is under the dominion of BMO Global Asset Management (Europe) Limited which in turn is under the dominion of the Bank of Montreal.
(6) Wilmington Capital, S.L. is controlled by Indumenta Pueri, S.L..
(7) On 31 January 2017 and in execution of the Remuneration Committee's approved remuneration policy for the 2014-2016 term of office and the Company's Executive Director Share Award Plan approved by the General Meeting held on 5 May 2015, a total of 600,530 own shares representing 0.400% of the share capital was awarded to the Company's Executive Directors, as long-term variable remuneration. At the present date, CTT holds thus 1 own share corresponding to 0.000% of the share capital and with the nominal value of €0.50; the rights inherent to this share remain suspended pursuant to article 324 of the Portuguese Companies Code.
The 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 31 December 2016, following the acquisition of own shares held in various tranches during the years 2015 and 2016, CTT owned 600,531 treasury shares, representing 0.400% of the company's share capital. These shares were intended to comply with the remuneration policy defined by the Remuneration Committee for the 2014/2016 term of office and the Share Allocation Plan for Executive Directors approved by the General Meeting of Shareholders.
Accordingly, on 31 January 2017 and pursuant to the aforementioned remuneration policy, a total of 600,530 own shares representing 0.400% of the Company's share capital were attributed to the Executive Directors of the Company as long-term variable remuneration ("LTVR").
As at the present date, CTT is thus the holder of one own share corresponding to 0.000% of the share capital, with a nominal value of €0.50, all rights inherent to it being suspended under said terms.
On 20 April 2017 the Annual General Meeting ("AGM") of CTT - Correios de Portugal was held during which the Company's corporate bodies were elected for the 2017/2019 three-year period. As a result of this election, the composition of the Board of Directors of CTT ("BoD") changed, therefore the tables below show the number of shares held by the members that constituted the BoD before and after the AGM referred to above, as well as by the supervisory body of the company and entities closely related to them, including all their acquisitions, encumbrances or disposals of said shares carried out during the 1st half of 2017, based on the communications made to the Company, pursuant to the terms of article 447, paragraph 5 of the Portuguese Companies Code and article 14 of CMVM Regulation no. 5/2008.
| Board of Directors (a) | No. of shares as at 31.12.2016 |
Date | Acquisition | Encum brance |
Disposal | Price | No. of shares as at 30.06.2017 |
|---|---|---|---|---|---|---|---|
| António Sarmento Gomes Mota | 0 | 0 | |||||
| Francisco José Queiroz de Barros de Lacerda | 3,110 | 31.01.2017 | 148,142 | 0 €(b) | |||
| 01.02.2017 | 83,270 | 5.016 €(c) | 67,982 | ||||
| Manuel Cabral de Abreu Castelo-Branco | 1,550 | 31.01.2017 | 111,504 | 0 € (b) | |||
| 01.02.2017 | 62,676 | 5.016 €(c) | 50,378(d) | ||||
| André Manuel Pereira Gorjão de Andrade Costa | 3,890 | 31.01.2017 | 117,876 | 0 €(b) | |||
| 01.02.2017 | 66,258 | 5.016 €(c) | 50,378 | ||||
| Dionizia Maria Ribeiro Farinha Ferreira | 0 | 31.01.2017 | 111,504 | 0 € (b) | |||
| 01.02.2017 | 62,676 | 5.016 €(c) | 48,828 | ||||
| Ana Mª Carvalho Jordão Ribeiro Monteiro de Macedo | 0 | 31.01.2017 | 111,504 | 0 € (b) | |||
| 01.02.2017 | 62,676 | 5.016 €(c) | 48,828(d) | ||||
| Rui Miguel de Oliveira Horta e Costa (e) | 0 (e) | 08.02.2017 | 0 | ||||
| António Pedro Ferreira Vaz da Silva (f) | 0 (f) | 20.04.2017 | 0 | ||||
| Francisco Maria da Costa de Sousa Macedo Simão (f) | 0 (f) | 20.04.2017 | 0 | ||||
| Nuno de Carvalho Fernandes Thomaz | 0 | 0 | |||||
| José Manuel Baptista Fino | 0 | 0 | |||||
| Céline Dora Judith Abecassis-Moedas (g) | 0 | 0 | |||||
| Manuel Carlos de Melo Champalimaud (h) | 284,885 | 284,885(h) | |||||
| João Afonso Ramalho Sopas Pereira Bento (i) | 9,550 | 9,550 |
| Board of Directors (a) | No. of shares as at 31.12.2016 |
Date | Acquisition | Encum brance |
Disposal | Price | No. of shares as at 30.06.2017 |
|---|---|---|---|---|---|---|---|
| Mª Luísa Coutinho F. L. de Castro Anacoreta Correia(i) | 0 | 20.04.2017 | 0 | ||||
| Belén Amatriain Corbi (i) | 0 | 20.04.2017 | 0 | ||||
| Rafael Caldeira de Castel-Branco Valverde (i) | 0 | 20.04.2017 | 0 |
(a) Includes the members of the Executive Committee and the Audit Committee.
(b) Acquired as long-term variable remuneration (LTVR) regarding the 2014-2016 term of office.
(c) Weighted average price. The details of the transactions are included in Annex i of Part III of this Report.
(d) Number of shares as at the date of the Annual General Meeting (AGM) of 20 April 2017. On this date he/she ceased his/her duties as Executive Director.
(e) Resigned from the post of Non-Executive Director on 08 February 2017. Number of shares held as at that date.
(f) Elected Executive Director at the AGM of 20 April 2017.
(g) Co-opted by a Board of Directors resolution of 04 August 2016 ratified by the AGM of 20 April 2017 where she was elected to the position of Non-Executive Director.
(h) Ceased his duties as Non-Executive Director on the date of the AGM of 20 April 2017. Number of shares held as at that date.
(i) Elected to the position of Non-Executive Director at the AGM of 20 April 2017. Number of shares held as at that date.
| Closely Related Parties | No. of shares as at 31.12.2016 |
Date | Acquisition | Encum brance |
Disposal | Price | No. of shares as at 30.06.2017 |
|---|---|---|---|---|---|---|---|
| Susana Gorjão Costa (j) | 3,110 | 3,110 | |||||
| Gestmin SGPS, S.A.(k) | 14,576,115 | 06.02.2017 | 60,000 | 5.043 € 14,636,115(l) | |||
| 10.03.2017 | 200,000 | 4.830 € 14,836,115(l) | |||||
| 13.03.2017 | 163,885 | 4.862 € | 15,000,000 |
(j) Person closely related to André Manuel Pereira Gorjão de Andrade Costa.
(k) Person/entity closely related to Manuel Carlos de Melo Champalimaud and João Afonso Ramalho Sopas Pereira Bento. The details of the transactions are included in Annex ii of Part III of this Report.
(l) Number of shares held following the transaction.
| Statutory Auditor and External Auditor | No. of shares as at 31.12.2016 |
Date | Acquisition | Encum brance |
Disposal | Price | Nº de Ações em 30.06.2017 |
|---|---|---|---|---|---|---|---|
| KPMG & Associados, SROC, S.A. | 0 | 0 | |||||
| Maria Cristina Santos Ferreira (m) | 0 | 0 | |||||
| Paulo Manuel Martins Quintas Paixão | 0 | 0 | |||||
| Vítor Manuel da Cunha Ribeirinho | 0 | 0 |
(m) As of 1 May 2017 she was replaced as representative of the Statutory Auditor by Mr. Paulo Manuel Martins Quintas Paixão.
Other than those indicated above, as at 30 June 2017, the members of the managing and supervisory bodies of CTT did not hold any securities issued by the Company or by companies in a group or control relationship with CTT, or have they performed any other transactions in respect of such securities during the 1st half of 2017.
During the 1st half of 2017, no authorisations were given by the Board of Directors to any of its members to carry out business with the Company or with companies in a group or control relationship with CTT.
By a resolution of the AGM of 20 April 2017, António Pedro Ferreira Vaz da Silva and Francisco Maria da Costa de Sousa de Macedo Simão were elected as Executive Directors of the Company. At the date of their election, they were exercising the duties of Head of the Retail Network and Head of Strategy & Development, respectively. These duties were performed under individual employment contracts entered into between them and CTT. These contracts are suspended as of the date of their election pursuant to article 398(2) of the ("PCC").
Except for the Director referred to in the previous paragraph, none of the remaining members of the Board of Directors of CTT has held any temporary or permanent position subject to an employment or self-employment contract at CTT or at any Company in a group or control relationship with CTT during the 1st half of 2017.
The list shown below indicates the internal and external appointments of the members of the managing and supervisory bodies of the Company as at the date of approval of this Interim Report:
| Members of the Board of Directors |
Internal Appointments | External Appointments |
|---|---|---|
| António Sarmento Gomes Mota |
• Non-Executive Chairman of the Board of Directors of CTT – Correios de Portugal, S.A. (from 2014 to 2016 he held the positions of Vice-Chairman, Non Executive Director of the Board of Directors and Lead Independent Director of CTT) • Chairman of the Corporate Governance, Evaluation and Nominating Committee of CTT Correios de Portugal, S.A. (appointed for the 2017-2019 term of office) • Chairman of the Selection Committee of Banco CTT, S.A. • Member of the Remuneration Committee of Banco CTT, S.A. (elected at the General Meeting) |
• Member of the General and Supervisory Board and since 2015 Chairman of the Audit Committee of EDP - Energias de Portugal, S.A. • Member of the Remuneration Committee of PHAROL, SGPS, S.A. • Vice-Chairman of the Portuguese Institute of Corporate Governance and Chairman of same since 2016 |
| Francisco José Queiroz de Barros de Lacerda |
• Vice-Chairman of the Board of Directors and Chief Executive Officer (CEO) of CTT (from 2012 to 2016 he held the positions of Chairman & CEO of CTT) • Non-Executive Chairman of the Board of Directors of Banco CTT, S.A. • Chairman of the Board of CTT Expresso – Serviços Postais e Logística, S.A. • Chairman of the Board of Tourline Express Mensajería, S.L.U. • Chairman of the Remuneration Committee (elected at the General Meeting) of Banco CTT, S.A. |
• Non-Executive Member of the Board of Directors and of the Audit & Compliance Committee and the Nominating & Remunerations Committee of Endesa Energia, S.A. • Chairman of the Board of COTEC Portugal - Associação Empresarial para a Inovação • Chairman of the Board of Directors of Fundação Portuguesa das Comunicações (former Supervisory Board) • Member of the Advisory Board of Nova School of Business & Economics • Member of the Remuneration Committee of PHAROL, SGPS, S.A. (suspended these |
| Members of the Board of Directors |
Internal Appointments | External Appointments | |||
|---|---|---|---|---|---|
| • Chairman of the Remuneration Committee (within the Board of Directors) and Member of the Selection Committee of Banco CTT, S.A. • Chairman of the Board of the General Meeting of Correio Expresso de Moçambique, S.A. |
functions from August 2012 to March 2014) • Member of the Advisory Board of the Master in Finance of Católica Lisbon School of Business & Economics • Member of the Supervisory Board of the Cascais Yacht Club; appointed Deputy Commodore of this Board in 2016 |
||||
| André Manuel Pereira Gorjão de Andrade Costa |
• Member of the Board of Directors and Chief Financial Officer (CFO) of CTT (holds the position since 2012, reelected for the 2017-2019 term of office) • Non-Executive Member of the Board of Directors of Banco CTT, S.A. • Member of the Board of Directors of CTT Expresso – Serviços Postais e Logística, S.A. • Member of the Board of Directors of Tourline Express Mensajería, S.L.U. • Chairman of the Board of Directors of Payshop (Portugal), S.A. |
• Member of the Board of AEM Associação de Empresas Emitentes de Valores Cotados em Mercado (Association of Portuguese Issuers of Listed Securities) • Non-Executive Member of the Board of Eurogiro A/S and its Non-Executive Vice Chairman since 2015 |
|||
| Dionizia Maria Ribeiro Farinha Ferreira |
• Member of the Board of Directors and of the Executive Committee of CTT (holds the position since 2012, reelected for the 2017-2019 term of office) • Chairwoman of the Board of Directors of Transporta – Transportes Porta a Porta, S.A. • Chairwoman of the Board of Directors of CTT Contacto, S.A. • Chairwoman of the Board of Directors of Mailtec Comunicação, S.A. • Chairwoman of the Boards of Directors of CTT Expresso – Serviços Postais e Logística, S.A. and Tourline Express Mensajería, S.L.U. • Member of the Board of Directors of Correio Expresso de Moçambique, S.A. |
||||
| Nuno de Carvalho Fernandes Thomaz |
• Non-Executive Member of the Board of Directors of CTT (holds the position since 2014, re-elected for the 2017-2019 term of office). • Member of the Audit Committee of CTT (holds the position since 2014, re-elected for the 2017-2019 term of office) • Chairman of the Ethics Committee of CTT (re-elected for the 2017-2019 term of office) |
• Chairman of the Fiscal Board da Sagasta Finance, STC, S.A. • Chairman of Sociedade Gestora do Fundo de Capital de Risco Bem Comum • Manager of I Cook - Organização de Eventos, Lda. • Member of the Advisory Committee of Luz Saúde, S.A. • Member of the Advisory Committee of the Portuguese Institute of Corporate Governance • Chairman ofNova School of Business and Economics |
| Members of the Board of Directors |
Internal Appointments | External Appointments |
|---|---|---|
| • Member of the International and European Boards of UNIAPAC – Union des Entrepreneurs Chrétiens • Vice-Chairman of the Competitiveness Forum |
||
| José Manuel Baptista Fino |
• Non-Executive Member of the Board of Directors of CTT (holds the position since 2014, re-elected for the 2017-2019 term of office). • Member of the Corporate Governance, Evaluation and Nominating Committee of CTT (holds the position since 2014, re elected for the 2017-2019 term of office) • Member of the Selection Committee of Banco CTT, S.A. |
• Chairman of the Board of Directors of Ramada Energias Renováveis, S.A. • Member of the Board of Directors of SDC – Investimentos, SGPS, S.A. • Sole Director of Dignatis - Investimentos Imobiliários e Turísticos, SGPS, S.A. • Chairman of the Board of Directors of Ramada Holdings SGPS, S.A. • Managing Partner of Nova Algodoeira, Lda. • Sole Director of Dorfino Imobiliário, S.A. • Non-Executive Member of the Board of Directors of Specialty Minerals (Portugal) Especialidades Minerais, S.A. |
| Céline Dora Judith Abecassis-Moedas |
• Non-Executive Member of the Board of Directors of CTT (co-opted in 2016, re elected for the 2017-2019 term of office) • Member of the Corporate Governance, Evaluation and Nominating Committee of CTT (appointed for the 2017-2019 term of office) |
• Non-Executive Member of the Board of Directors of José de Mello Saúde, S.A. • Member of the Audit Committee of Europac (Papeles y Cartones de Europa, S.A.) • Lead Independent Director and Chairwoman of the Nominations and Remuneration Committee of Europac (Papeles y Cartones de Europa, S.A.) • Non-Executive Member of the Board of Directors of Europac (Papeles y Cartones de Europa, S.A.) |
| António Pedro Ferreira Vaz da Silva |
• Member of the Board of Directors and of the Executive Committee of CTT (appointed for the 2017-2019 term of office) • Member of the Board of Directors of CTT Expresso – Serviços Postais e Logística, S.A. (appointed to complete the 2015- 2017 term of office) |
|
| Francisco Maria da Costa de Sousa de Macedo Simão |
• Member of the Board of Directors and of the Executive Committee of CTT (appointed for the 2017-2019 term of office) • Non-Executive Member of the Board of Directors of CTT Expresso – Serviços Postais e Logística, S.A. (appointed to complete the 2015-2017 term of office) • Chairman of the Board of Directors of Escrita Inteligente, S.A. (start-up of the digital area acquired by CTT) |
• Non-Executive Member of the Board of Directors of Almonda S.A. (main shareholder of Renova) |
| Members of the Board of Directors |
Internal Appointments | External Appointments |
|---|---|---|
| João Afonso Ramalho Sopas Pereira Bento |
• Non-Executive Member of the Board of Directors of CTT (appointed for the 2017- 2019 term of office) • Member of the Corporate Governance, Evaluation and Nominating Committee of CTT (appointed for the 2017-2019 term of office) |
• Member of the Board of Directors of Sogestão, S.A. • Manager of Gestmin Serviços, Unipessoal, Lda. • Member of the Board of Directors of OZ Energia, S.A • Vice-Chairman of the Board of Directors and Chief Executive Officer (CEO) of Gestmin, SGPS, S.A. • Member of the Advisory Committee of the Portuguese Institute of Corporate Governance • Member of the Board of COTEC Portugal – Associação Empresarial para a Inovação (Chairman in 2012-2015) • Chairman of the Quinta do Peru Golf Club • Member of the Advisory Board of ANI – Agência Nacional de Inovação • Member of the Advisory Board of the University of Lisbon • Permanent Member of the Advisory Board of AICEP – Agência para o Investimento e Comércio Externo de Portugal • Vice-Chairman of the Engineering Academy • Honorary President of ASECAP – Association of the European Tolled Motorways |
| Maria Luísa Coutinho Ferreira Leite de Castro Anacoreta Correia |
• Non-Executive Member of the Board of Directors of CTT (appointed for the 2017- 2019 term of office) • Chairman of the Audit Committee of CTT (appointed for the 2017-2019 term of office) |
• Chairwoman of the Fiscal Board of Sogrape, SGPS, S.A. • Partner of Novais, Anacoreta & Associado, SROC • Non-Executive Member of the Board of Directors and of the Audit Committee of Impresa, S.A. • Chairwoman of the Portuguese Institute of Statutory Auditors and its representative within the Fédération des Experts-Comptables Européens • Member of the Scientific Board of the Portuguese Tax Association • Arbitrator in tax-related matters of CAAD –Administrative Arbitration Board |
| Belén Amatriain Corbi | • Non-Executive Member of the Board of Directors of CTT (appointed for the 2017- 2019 term of office) • Member of the Audit Committee of CTT (appointed for the 2017-2019 term of office) |
• Non-Executive Member of the Board of Directors and Chairman of the Audit Committee of PRIM (listed company in the area of healthcare technology) • Non-Executive Member of the Board of Directors and Member of the Appointments and Remuneration Committee of Euskaltel (listed company in the area of telecommunications) |
| Members of the Board of Directors |
Internal Appointments | External Appointments |
|---|---|---|
| • Non-Executive Member of the Board of Directors, Chairman of the Appointments and Remuneration Committee and Member of the Audit and Compliance Committee of SolidQ (Business Intelligence) |
||
| • Non-Executive Member of the Board of Directors and Member of the Audit and Compliance Committee and of the Risk Committee and Chairman of the Appointments and Remuneration Committee of Banco Evo (Spain) |
||
| • Non-Executive Member of the Board of Directors and Member of the Appointments and Remuneration Committee of IC-A Instituto de Consejeros-Administradores |
||
| • Non-Executive Member of the Board of Directors of CTT (appointed for the 2017- 2019 term of office) |
• Non-Executive Member of the Board of Directors of Empark – Aparcamientos y Servicios, S.A. |
|
| Rafael Caldeira de Castel Branco Valverde |
• Member of the Corporate Governance, Evaluation and Nominating Committee of CTT (appointed for the 2017-2019 term of office) |
Detail of the transactions of CTT shares carried out by the CEO Francisco José Queiroz de Barros de Lacerda during the 1st half of 2017, according to the communications sent to the Company:
| Type of transaction |
Venue | Price | Volume | Date of the transaction |
|---|---|---|---|---|
| Sale | XLIS | 4.950 € | 618 | 01-02-2017 |
| Sale | XLIS | 4.951 € | 284 | 01-02-2017 |
| Sale | XLIS | 4.952 € | 700 | 01-02-2017 |
| Sale | XLIS | 4.955 € | 869 | 01-02-2017 |
| Sale | XLIS | 4.956 € | 1,234 | 01-02-2017 |
| Sale | XLIS | 4.960 € | 1,319 | 01-02-2017 |
| Sale | XLIS | 4.963 € | 371 | 01-02-2017 |
| Sale | XLIS | 4.965 € | 370 | 01-02-2017 |
| Sale | XLIS | 4.970 € | 2,590 | 01-02-2017 |
| Sale | XLIS | 4.980 € | 4,262 | 01-02-2017 |
| Sale | XLIS | 4.981 € | 158 | 01-02-2017 |
| Sale | XLIS | 4.982 € | 446 | 01-02-2017 |
| Sale | XLIS | 4.983 € | 554 | 01-02-2017 |
| Sale | XLIS | 4.984 € | 587 | 01-02-2017 |
| Sale | XLIS | 4.985 € | 1,074 | 01-02-2017 |
| Sale | XLIS | 4.986 € | 1,564 | 01-02-2017 |
| Sale | XLIS | 4.987 € | 247 | 01-02-2017 |
| Sale | XLIS | 4.989 € | 25 | 01-02-2017 |
| Sale | XLIS | 4.990 € | 4,542 | 01-02-2017 |
| Sale | XLIS | 4.991 € | 2,988 | 01-02-2017 |
| Sale | XLIS | 4.992 € | 439 | 01-02-2017 |
| Sale | XLIS | 4.993 € | 295 | 01-02-2017 |
| Sale | XLIS | 4.994 € | 4,403 | 01-02-2017 |
| Sale | XLIS | 4.995 € | 3,507 | 01-02-2017 |
| Sale | XLIS | 4.999 € | 3,517 | 01-02-2017 |
| Sale | XLIS | 5.000 € | 12,246 | 01-02-2017 |
| Sale | XLIS | 5.001 € | 299 | 01-02-2017 |
| Sale | XLIS | 5.005 € | 1,592 | 01-02-2017 |
| Sale | XLIS | 5.010 € | 1,295 | 01-02-2017 |
| Sale | XLIS | 5.011 € | 389 | 01-02-2017 |
| Sale | XLIS | 5.013 € | 119 | 01-02-2017 |
| Sale | XLIS | 5.014 € | 95 | 01-02-2017 |
| Sale | XLIS | 5.015 € | 1,974 | 01-02-2017 |
| Sale | XLIS | 5.016 € | 197 | 01-02-2017 |
| Sale | XLIS | 5.020 € | 297 | 01-02-2017 |
| Sale | XLIS | 5.023 € | 104 | 01-02-2017 |
| Type of transaction |
Venue | Price | Volume | Date of the transaction |
|---|---|---|---|---|
| Sale | XLIS | 5.026 € | 203 | 01-02-2017 |
| Sale | XLIS | 5.027 € | 72 | 01-02-2017 |
| Sale | XLIS | 5.029 € | 133 | 01-02-2017 |
| Sale | XLIS | 5.030 € | 1,700 | 01-02-2017 |
| Sale | XLIS | 5.031 € | 417 | 01-02-2017 |
| Sale | XLIS | 5.034 € | 740 | 01-02-2017 |
| Sale | XLIS | 5.035 € | 1,282 | 01-02-2017 |
| Sale | XLIS | 5.040 € | 2,232 | 01-02-2017 |
| Sale | XLIS | 5.042 € | 132 | 01-02-2017 |
| Sale | XLIS | 5.043 € | 133 | 01-02-2017 |
| Sale | XLIS | 5.044 € | 119 | 01-02-2017 |
| Sale | XLIS | 5.045 € | 1,577 | 01-02-2017 |
| Sale | XLIS | 5.049 € | 987 | 01-02-2017 |
| Sale | XLIS | 5.050 € | 1,734 | 01-02-2017 |
| Sale | XLIS | 5.051 € | 669 | 01-02-2017 |
| Sale | XLIS | 5.055 € | 300 | 01-02-2017 |
| Sale | XLIS | 5.056 € | 1,119 | 01-02-2017 |
| Sale | XLIS | 5.060 € | 3,674 | 01-02-2017 |
| Sale | XLIS | 5.065 € | 246 | 01-02-2017 |
| Sale | XLIS | 5.070 € | 1,974 | 01-02-2017 |
| Sale | XLIS | 5.075 € | 493 | 01-02-2017 |
| Sale | XLIS | 5.080 € | 1,418 | 01-02-2017 |
| Sale | XLIS | 5.090 € | 863 | 01-02-2017 |
| Sale | XLIS | 5.100 € | 1,442 | 01-02-2017 |
| Sale | XLIS | 5.101 € | 318 | 01-02-2017 |
| Sale | XLIS | 5.102 € | 369 | 01-02-2017 |
| Sale | XLIS | 5.104 € | 126 | 01-02-2017 |
| Sale | XLIS | 5.120 € | 493 | 01-02-2017 |
| Sale | XLIS | 5.140 € | 290 | 01-02-2017 |
| Sale | XLIS | 5.160 € | 1,110 | 01-02-2017 |
| Sale | XLIS | 5.163 € | 247 | 01-02-2017 |
| Sale | XLIS | 5.168 € | 149 | 01-02-2017 |
| Sale | XLIS | 5.170 € | 494 | 01-02-2017 |
| Sale | XLIS | 5.171 € | 247 | 01-02-2017 |
| Sale | XLIS | 5.175 € | 75 | 01-02-2017 |
| Sale | XLIS | 5.180 € | 123 | 01-02-2017 |
Detail of the transactions of CTT shares carried out by the Executive Director Manuel Cabral de Abreu Castelo-Branco during the 1st half of 2017, according to the communications sent to the Company:
| Type of transaction |
Venue | Price | Volume | Date of the transaction |
|---|---|---|---|---|
| Sale | XLIS | 4.950 € | 466 | 01-02-2017 |
| Sale | XLIS | 4.951 € | 215 | 01-02-2017 |
| Sale | XLIS | 4.952 € | 527 | 01-02-2017 |
| Sale | XLIS | 4.955 € | 654 | 01-02-2017 |
| Sale | XLIS | 4.956 € | 928 | 01-02-2017 |
| Sale | XLIS | 4.960 € | 994 | 01-02-2017 |
| Sale | XLIS | 4.963 € | 278 | 01-02-2017 |
| Sale | XLIS | 4.965 € | 279 | 01-02-2017 |
| Sale | XLIS | 4.970 € | 1,949 | 01-02-2017 |
| Sale | XLIS | 4.980 € | 3,208 | 01-02-2017 |
| Sale | XLIS | 4.981 € | 119 | 01-02-2017 |
| Sale | XLIS | 4.982 € | 336 | 01-02-2017 |
| Type of transaction |
Venue | Price | Volume | Date of the transaction |
|---|---|---|---|---|
| Sale | XLIS | 4.983 € | 417 | 01-02-2017 |
| Sale | XLIS | 4.984 € | 442 | 01-02-2017 |
| Sale | XLIS | 4.985 € | 808 | 01-02-2017 |
| Sale | XLIS | 4.986 € | 1,179 | 01-02-2017 |
| Sale | XLIS | 4.987 € | 186 | 01-02-2017 |
| Sale | XLIS | 4.989 € | 20 | 01-02-2017 |
| Sale | XLIS | 4.990 € | 3,418 | 01-02-2017 |
| Sale | XLIS | 4.991 € | 2,250 | 01-02-2017 |
| Sale | XLIS | 4.992 € | 331 | 01-02-2017 |
| Sale | XLIS | 4.993 € | 221 | 01-02-2017 |
| Sale | XLIS | 4.994 € | 3,314 | 01-02-2017 |
| Sale | XLIS | 4.995 € | 2,639 | 01-02-2017 |
| Type of transaction |
Venue | Price | Volume | Date of the transaction |
|---|---|---|---|---|
| Sale | XLIS | 4.999 € | 2,647 | 01-02-2017 |
| Sale | XLIS | 5.000 € | 9,217 | 01-02-2017 |
| Sale | XLIS | 5.001 € | 224 | 01-02-2017 |
| Sale | XLIS | 5.005 € | 1,198 | 01-02-2017 |
| Sale | XLIS | 5.010 € | 974 | 01-02-2017 |
| Sale | XLIS | 5.011 € | 293 | 01-02-2017 |
| Sale | XLIS | 5.013 € | 89 | 01-02-2017 |
| Sale | XLIS | 5.014 € | 73 | 01-02-2017 |
| Sale | XLIS | 5.015 € | 1,485 | 01-02-2017 |
| Sale | XLIS | 5.016 € | 149 | 01-02-2017 |
| Sale | XLIS | 5.020 € | 223 | 01-02-2017 |
| Sale | XLIS | 5.023 € | 79 | 01-02-2017 |
| Sale | XLIS | 5.026 € | 154 | 01-02-2017 |
| Sale | XLIS | 5.027 € | 53 | 01-02-2017 |
| Sale | XLIS | 5.029 € | 99 | 01-02-2017 |
| Sale | XLIS | 5.030 € | 1,279 | 01-02-2017 |
| Sale | XLIS | 5.031 € | 315 | 01-02-2017 |
| Sale | XLIS | 5.034 € | 558 | 01-02-2017 |
| Sale | XLIS | 5.035 € | 966 | 01-02-2017 |
| Sale | XLIS | 5.040 € | 1,681 | 01-02-2017 |
| Sale | XLIS | 5.042 € | 100 | 01-02-2017 |
| Sale | XLIS | 5.043 € | 99 | 01-02-2017 |
| Sale | XLIS | 5.044 € | 89 | 01-02-2017 |
| Sale | XLIS | 5.045 € | 1,188 | 01-02-2017 |
| Type of transaction |
Venue | Price | Volume | Date of the transaction |
|---|---|---|---|---|
| Sale | XLIS | 5.049 € | 743 | 01-02-2017 |
| Sale | XLIS | 5.050 € | 1,306 | 01-02-2017 |
| Sale | XLIS | 5.051 € | 504 | 01-02-2017 |
| Sale | XLIS | 5.055 € | 226 | 01-02-2017 |
| Sale | XLIS | 5.056 € | 842 | 01-02-2017 |
| Sale | XLIS | 5.060 € | 2,766 | 01-02-2017 |
| Sale | XLIS | 5.065 € | 186 | 01-02-2017 |
| Sale | XLIS | 5.070 € | 1,485 | 01-02-2017 |
| Sale | XLIS | 5.075 € | 371 | 01-02-2017 |
| Sale | XLIS | 5.080 € | 1,067 | 01-02-2017 |
| Sale | XLIS | 5.090 € | 650 | 01-02-2017 |
| Sale | XLIS | 5.100 € | 1,085 | 01-02-2017 |
| Sale | XLIS | 5.101 € | 239 | 01-02-2017 |
| Sale | XLIS | 5.102 € | 277 | 01-02-2017 |
| Sale | XLIS | 5.104 € | 94 | 01-02-2017 |
| Sale | XLIS | 5.120 € | 371 | 01-02-2017 |
| Sale | XLIS | 5.140 € | 217 | 01-02-2017 |
| Sale | XLIS | 5.160 € | 835 | 01-02-2017 |
| Sale | XLIS | 5.163 € | 186 | 01-02-2017 |
| Sale | XLIS | 5.168 € | 111 | 01-02-2017 |
| Sale | XLIS | 5.170 € | 371 | 01-02-2017 |
| Sale | XLIS | 5.171 € | 186 | 01-02-2017 |
| Sale | XLIS | 5.175 € | 56 | 01-02-2017 |
| Sale | XLIS | 5.180 € | 92 | 01-02-2017 |
Detail of the transactions of CTT shares carried out by the Executive Director André Manuel Pereira Gorjão de Andrade Costa during the 1st half of 2017, according to the communications sent to the Company:
| Type of transaction |
Venue | Price | Volume | Date of the transaction |
|---|---|---|---|---|
| Sale | XLIS | 4.950 € | 492 | 01-02-2017 |
| Sale | XLIS | 4.951 € | 226 | 01-02-2017 |
| Sale | XLIS | 4.952 € | 557 | 01-02-2017 |
| Sale | XLIS | 4.955 € | 692 | 01-02-2017 |
| Sale | XLIS | 4.956 € | 982 | 01-02-2017 |
| Sale | XLIS | 4.960 € | 1,049 | 01-02-2017 |
| Sale | XLIS | 4.963 € | 295 | 01-02-2017 |
| Sale | XLIS | 4.965 € | 295 | 01-02-2017 |
| Sale | XLIS | 4.970 € | 2,061 | 01-02-2017 |
| Sale | XLIS | 4.980 € | 3,391 | 01-02-2017 |
| Sale | XLIS | 4.981 € | 126 | 01-02-2017 |
| Sale | XLIS | 4.982 € | 355 | 01-02-2017 |
| Sale | XLIS | 4.983 € | 441 | 01-02-2017 |
| Sale | XLIS | 4.984 € | 467 | 01-02-2017 |
| Sale | XLIS | 4.985 € | 855 | 01-02-2017 |
| Sale | XLIS | 4.986 € | 1,245 | 01-02-2017 |
| Sale | XLIS | 4.987 € | 197 | 01-02-2017 |
| Sale | XLIS | 4.989 € | 20 | 01-02-2017 |
| Sale | XLIS | 4.990 € | 3,613 | 01-02-2017 |
| Sale | XLIS | 4.991 € | 2,378 | 01-02-2017 |
| Sale | XLIS | 4.992 € | 349 | 01-02-2017 |
| Sale | XLIS | 4.993 € | 234 | 01-02-2017 |
| Sale | XLIS | 4.994 € | 3,504 | 01-02-2017 |
| Sale | XLIS | 4.995 € | 2,790 | 01-02-2017 |
| Sale | XLIS | 4.999 € | 2,799 | 01-02-2017 |
| Sale | XLIS | 5.000 € | 9,744 | 01-02-2017 |
| Sale | XLIS | 5.001 € | 238 | 01-02-2017 |
| Sale | XLIS | 5.005 € | 1,267 | 01-02-2017 |
| Sale | XLIS | 5.010 € | 1,030 | 01-02-2017 |
| Sale | XLIS | 5.011 € | 310 | 01-02-2017 |
| Type of transaction |
Venue | Price | Volume | Date of the transaction |
|---|---|---|---|---|
| Sale | XLIS | 5.013 € | 94 | 01-02-2017 |
| Sale | XLIS | 5.014 € | 75 | 01-02-2017 |
| Sale | XLIS | 5.015 € | 1,571 | 01-02-2017 |
| Sale | XLIS | 5.016 € | 157 | 01-02-2017 |
| Sale | XLIS | 5.020 € | 236 | 01-02-2017 |
| Sale | XLIS | 5.023 € | 83 | 01-02-2017 |
| Sale | XLIS | 5.026 € | 161 | 01-02-2017 |
| Sale | XLIS | 5.027 € | 57 | 01-02-2017 |
| Sale | XLIS | 5.029 € | 106 | 01-02-2017 |
| Sale | XLIS | 5.030 € | 1,353 | 01-02-2017 |
| Sale | XLIS | 5.031 € | 332 | 01-02-2017 |
| Sale | XLIS | 5.034 € | 588 | 01-02-2017 |
| Sale | XLIS | 5.035 € | 1,020 | 01-02-2017 |
| Sale | XLIS | 5.040 € | 1,777 | 01-02-2017 |
| Sale | XLIS | 5.042 € | 105 | 01-02-2017 |
| Sale | XLIS | 5.043 € | 106 | 01-02-2017 |
| Sale | XLIS | 5.044 € | 94 | 01-02-2017 |
| Sale | XLIS | 5.045 € | 1,255 | 01-02-2017 |
| Sale | XLIS | 5.049 € | 786 | 01-02-2017 |
| Sale | XLIS | 5.050 € | 1,380 | 01-02-2017 |
| Sale | XLIS | 5.051 € | 533 | 01-02-2017 |
| Sale | XLIS | 5.055 € | 239 | 01-02-2017 |
| Sale | XLIS | 5.056 € | 891 | 01-02-2017 |
| Sale | XLIS | 5.060 € | 2,923 | 01-02-2017 |
| Sale | XLIS | 5.065 € | 196 | 01-02-2017 |
| Sale | XLIS | 5.070 € | 1,571 | 01-02-2017 |
| Sale | XLIS | 5.075 € | 392 | 01-02-2017 |
| Sale | XLIS | 5.080 € | 1,128 | 01-02-2017 |
| Sale | XLIS | 5.090 € | 687 | 01-02-2017 |
| Sale | XLIS | 5.100 € | 1,147 | 01-02-2017 |
| Type of transaction |
Venue | Price | Volume | Date of the transaction |
|---|---|---|---|---|
| Sale | XLIS | 5.101 € | 253 | 01-02-2017 |
| Sale | XLIS | 5.102 € | 293 | 01-02-2017 |
| Sale | XLIS | 5.104 € | 99 | 01-02-2017 |
| Sale | XLIS | 5.120 € | 392 | 01-02-2017 |
| Sale | XLIS | 5.140 € | 231 | 01-02-2017 |
| Sale | XLIS | 5.160 € | 883 | 01-02-2017 |
| Type of transaction |
Venue | Price | Volume | Date of the transaction |
|---|---|---|---|---|
| Sale | XLIS | 5.163 € | 197 | 01-02-2017 |
| Sale | XLIS | 5.168 € | 118 | 01-02-2017 |
| Sale | XLIS | 5.170 € | 393 | 01-02-2017 |
| Sale | XLIS | 5.171 € | 197 | 01-02-2017 |
| Sale | XLIS | 5.175 € | 59 | 01-02-2017 |
| Sale | XLIS | 5.180 € | 98 | 01-02-2017 |
| Type of transaction |
Venue | Price | Volume | Date of the transaction |
|---|---|---|---|---|
| Sale | XLIS | 4.950 € | 466 | 01-02-2017 |
| Sale | XLIS | 4.951 € | 215 | 01-02-2017 |
| Sale | XLIS | 4.952 € | 526 | 01-02-2017 |
| Sale | XLIS | 4.955 € | 653 | 01-02-2017 |
| Sale | XLIS | 4.956 € | 928 | 01-02-2017 |
| Sale | XLIS | 4.960 € | 993 | 01-02-2017 |
| Sale | XLIS | 4.963 € | 278 | 01-02-2017 |
| Sale | XLIS | 4.965 € | 278 | 01-02-2017 |
| Sale | XLIS | 4.970 € | 1,951 | 01-02-2017 |
| Sale | XLIS | 4.980 € | 3,207 | 01-02-2017 |
| Sale | XLIS | 4.981 € | 118 | 01-02-2017 |
| Sale | XLIS | 4.982 € | 339 | 01-02-2017 |
| Sale | XLIS | 4.983 € | 418 | 01-02-2017 |
| Sale | XLIS | 4.984 € | 443 | 01-02-2017 |
| Sale | XLIS | 4.985 € | 812 | 01-02-2017 |
| Sale | XLIS | 4.986 € | 1,178 | 01-02-2017 |
| Sale | XLIS | 4.987 € | 185 | 01-02-2017 |
| Sale | XLIS | 4.989 € | 20 | 01-02-2017 |
| Sale | XLIS | 4.990 € | 3,418 | 01-02-2017 |
| Sale | XLIS | 4.991 € | 2,250 | 01-02-2017 |
| Sale | XLIS | 4.992 € | 332 | 01-02-2017 |
| Sale | XLIS | 4.993 € | 221 | 01-02-2017 |
| Sale | XLIS | 4.994 € | 3,313 | 01-02-2017 |
| Sale | XLIS | 4.995 € | 2,641 | 01-02-2017 |
| Sale | XLIS | 4.999 € | 2,648 | 01-02-2017 |
| Sale | XLIS | 5.000 € | 9,217 | 01-02-2017 |
| Sale | XLIS | 5.001 € | 224 | 01-02-2017 |
| Sale | XLIS | 5.005 € | 1,197 | 01-02-2017 |
| Sale | XLIS | 5.010 € | 974 | 01-02-2017 |
| Sale | XLIS | 5.011 € | 292 | 01-02-2017 |
| Sale | XLIS | 5.013 € | 89 | 01-02-2017 |
| Sale | XLIS | 5.014 € | 72 | 01-02-2017 |
| Sale | XLIS | 5.015 € | 1,485 | 01-02-2017 |
| Sale | XLIS | 5.016 € | 148 | 01-02-2017 |
| Sale | XLIS | 5.020 € | 222 | 01-02-2017 |
| Sale | XLIS | 5.023 € | 79 | 01-02-2017 |
| Type of transaction |
Venue | Price | Volume | Date of the transaction |
|---|---|---|---|---|
| Sale | XLIS | 5.026 € | 153 | 01-02-2017 |
| Sale | XLIS | 5.027 € | 53 | 01-02-2017 |
| Sale | XLIS | 5.029 € | 99 | 01-02-2017 |
| Sale | XLIS | 5.030 € | 1,281 | 01-02-2017 |
| Sale | XLIS | 5.031 € | 314 | 01-02-2017 |
| Sale | XLIS | 5.034 € | 557 | 01-02-2017 |
| Sale | XLIS | 5.035 € | 966 | 01-02-2017 |
| Sale | XLIS | 5.040 € | 1,681 | 01-02-2017 |
| Sale | XLIS | 5.042 € | 99 | 01-02-2017 |
| Sale | XLIS | 5.043 € | 99 | 01-02-2017 |
| Sale | XLIS | 5.044 € | 89 | 01-02-2017 |
| Sale | XLIS | 5.045 € | 1,188 | 01-02-2017 |
| Sale | XLIS | 5.049 € | 742 | 01-02-2017 |
| Sale | XLIS | 5.050 € | 1,306 | 01-02-2017 |
| Sale | XLIS | 5.051 € | 505 | 01-02-2017 |
| Sale | XLIS | 5.055 € | 225 | 01-02-2017 |
| Sale | XLIS | 5.056 € | 842 | 01-02-2017 |
| Sale | XLIS | 5.060 € | 2,766 | 01-02-2017 |
| Sale | XLIS | 5.065 € | 186 | 01-02-2017 |
| Sale | XLIS | 5.070 € | 1,485 | 01-02-2017 |
| Sale | XLIS | 5.075 € | 373 | 01-02-2017 |
| Sale | XLIS | 5.080 € | 1,068 | 01-02-2017 |
| Sale | XLIS | 5.090 € | 650 | 01-02-2017 |
| Sale | XLIS | 5.100 € | 1,085 | 01-02-2017 |
| Sale | XLIS | 5.101 € | 238 | 01-02-2017 |
| Sale | XLIS | 5.102 € | 277 | 01-02-2017 |
| Sale | XLIS | 5.104 € | 94 | 01-02-2017 |
| Sale | XLIS | 5.120 € | 372 | 01-02-2017 |
| Sale | XLIS | 5.140 € | 217 | 01-02-2017 |
| Sale | XLIS | 5.160 € | 836 | 01-02-2017 |
| Sale | XLIS | 5.163 € | 185 | 01-02-2017 |
| Sale | XLIS | 5.168 € | 111 | 01-02-2017 |
| Sale | XLIS | 5.170 € | 371 | 01-02-2017 |
| Sale | XLIS | 5.171 € | 185 | 01-02-2017 |
| Sale | XLIS | 5.175 € | 55 | 01-02-2017 |
| Sale | XLIS | 5.180 € | 93 | 01-02-2017 |
Detail of the transactions of CTT shares carried out by the Executive Director Ana Mª Carvalho Jordão Ribeiro Monteiro de Macedo during the 1st half of 2017, according to the communications sent to the Company:
| Type of transaction |
Venue | Price | Volume | Date of the transaction |
|---|---|---|---|---|
| Sale | XLIS | 4.950 € | 466 | 01-02-2017 |
| Sale | XLIS | 4.951 € | 215 | 01-02-2017 |
| Sale | XLIS | 4.952 € | 527 | 01-02-2017 |
| Type of transaction |
Venue | Price | Volume | Date of the transaction |
|---|---|---|---|---|
| Sale | XLIS | 4.955 € | 654 | 01-02-2017 |
| Sale | XLIS | 4.956 € | 928 | 01-02-2017 |
| Sale | XLIS | 4.960 € | 993 | 01-02-2017 |
| Type of transaction |
Venue | Price | Volume | Date of the transaction |
|---|---|---|---|---|
| Sale | XLIS | 4.963 € | 278 | 01-02-2017 |
| Sale | XLIS | 4.965 € | 278 | 01-02-2017 |
| Sale | XLIS | 4.970 € | 1,949 | 01-02-2017 |
| Sale | XLIS | 4.980 € | 3,207 | 01-02-2017 |
| Sale | XLIS | 4.981 € | 119 | 01-02-2017 |
| Sale | XLIS | 4.982 € | 336 | 01-02-2017 |
| Sale | XLIS | 4.983 € | 417 | 01-02-2017 |
| Sale | XLIS | 4.984 € | 444 | 01-02-2017 |
| Sale | XLIS | 4.985 € | 808 | 01-02-2017 |
| Sale | XLIS | 4.986 € | 1,178 | 01-02-2017 |
| Sale | XLIS | 4.987 € | 185 | 01-02-2017 |
| Sale | XLIS | 4.989 € | 20 | 01-02-2017 |
| Sale | XLIS | 4.990 € | 3,418 | 01-02-2017 |
| Sale | XLIS | 4.991 € | 2,250 | 01-02-2017 |
| Sale | XLIS | 4.992 € | 332 | 01-02-2017 |
| Sale | XLIS | 4.993 € | 221 | 01-02-2017 |
| Sale | XLIS | 4.994 € | 3,314 | 01-02-2017 |
| Sale | XLIS | 4.995 € | 2,641 | 01-02-2017 |
| Sale | XLIS | 4.999 € | 2,649 | 01-02-2017 |
| Sale | XLIS | 5.000 € | 9,217 | 01-02-2017 |
| Sale | XLIS | 5.001 € | 224 | 01-02-2017 |
| Sale | XLIS | 5.005 € | 1,197 | 01-02-2017 |
| Sale | XLIS | 5.010 € | 974 | 01-02-2017 |
| Sale | XLIS | 5.011 € | 292 | 01-02-2017 |
| Sale | XLIS | 5.013 € | 89 | 01-02-2017 |
| Sale | XLIS | 5.014 € | 72 | 01-02-2017 |
| Sale | XLIS | 5.015 € | 1,485 | 01-02-2017 |
| Sale | XLIS | 5.016 € | 149 | 01-02-2017 |
| Sale | XLIS | 5.020 € | 222 | 01-02-2017 |
| Sale | XLIS | 5.023 € | 79 | 01-02-2017 |
| Sale | XLIS | 5.026 € | 154 | 01-02-2017 |
| Sale | XLIS | 5.027 € | 53 | 01-02-2017 |
| Sale | XLIS | 5.029 € | 99 | 01-02-2017 |
| Type of transaction |
Venue | Price | Volume | Date of the transaction |
|---|---|---|---|---|
| Sale | XLIS | 5.030 € | 1,280 | 01-02-2017 |
| Sale | XLIS | 5.031 € | 315 | 01-02-2017 |
| Sale | XLIS | 5.034 € | 557 | 01-02-2017 |
| Sale | XLIS | 5.035 € | 966 | 01-02-2017 |
| Sale | XLIS | 5.040 € | 1,681 | 01-02-2017 |
| Sale | XLIS | 5.042 € | 100 | 01-02-2017 |
| Sale | XLIS | 5.043 € | 99 | 01-02-2017 |
| Sale | XLIS | 5.044 € | 89 | 01-02-2017 |
| Sale | XLIS | 5.045 € | 1,188 | 01-02-2017 |
| Sale | XLIS | 5.049 € | 742 | 01-02-2017 |
| Sale | XLIS | 5.050 € | 1,306 | 01-02-2017 |
| Sale | XLIS | 5.051 € | 505 | 01-02-2017 |
| Sale | XLIS | 5.055 € | 226 | 01-02-2017 |
| Sale | XLIS | 5.056 € | 842 | 01-02-2017 |
| Sale | XLIS | 5.060 € | 2,766 | 01-02-2017 |
| Sale | XLIS | 5.065 € | 186 | 01-02-2017 |
| Sale | XLIS | 5.070 € | 1,485 | 01-02-2017 |
| Sale | XLIS | 5.075 € | 371 | 01-02-2017 |
| Sale | XLIS | 5.080 € | 1,069 | 01-02-2017 |
| Sale | XLIS | 5.090 € | 650 | 01-02-2017 |
| Sale | XLIS | 5.100 € | 1,085 | 01-02-2017 |
| Sale | XLIS | 5.101 € | 238 | 01-02-2017 |
| Sale | XLIS | 5.102 € | 277 | 01-02-2017 |
| Sale | XLIS | 5.104 € | 94 | 01-02-2017 |
| Sale | XLIS | 5.120 € | 372 | 01-02-2017 |
| Sale | XLIS | 5.140 € | 217 | 01-02-2017 |
| Sale | XLIS | 5.160 € | 836 | 01-02-2017 |
| Sale | XLIS | 5.163 € | 185 | 01-02-2017 |
| Sale | XLIS | 5.168 € | 111 | 01-02-2017 |
| Sale | XLIS | 5.170 € | 371 | 01-02-2017 |
| Sale | XLIS | 5.171 € | 185 | 01-02-2017 |
| Sale | XLIS | 5.175 € | 55 | 01-02-2017 |
| Sale | XLIS | 5.180 € | 94 | 01-02-2017 |
Detail of the transactions of CTT shares carried out by Gestmin SGPS, S.A. on 10 March 2017, according to the communications sent to the Company:
| Type of transaction |
Venue | Price | Volume | Date of the transaction |
|---|---|---|---|---|
| Purchase | XLIS | 4.745 € | 200 10-03-2017 | |
| Purchase | XLIS | 4.748 € | 1,000 10-03-2017 | |
| Purchase | XLIS | 4.750 € | 1,000 10-03-2017 | |
| Purchase | XLIS | 4.756 € | 1,000 10-03-2017 | |
| Purchase | XLIS | 4.760 € | 1,000 10-03-2017 | |
| Purchase | XLIS | 4.781 € | 1,000 10-03-2017 | |
| Purchase | XLIS | 4.782 € | 1,000 10-03-2017 | |
| Purchase | XLIS | 4.785 € | 5,000 10-03-2017 | |
| Purchase | XLIS | 4.786 € | 800 10-03-2017 | |
| Purchase | XLIS | 4.787 € | 4,000 10-03-2017 | |
| Purchase | XLIS | 4.790 € | 3,500 10-03-2017 | |
| Purchase | XLIS | 4.791 € | 2,500 10-03-2017 | |
| Purchase | XLIS | 4.792 € | 7,500 10-03-2017 | |
| Purchase | XLIS | 4.793 € | 1,000 10-03-2017 | |
| Purchase | XLIS | 4.794 € | 1,000 10-03-2017 | |
| Purchase | XLIS | 4.795 € | 11,000 10-03-2017 | |
| Purchase | XLIS | 4.797 € | 2,400 10-03-2017 | |
| Purchase | XLIS | 4.798 € | 2,583 10-03-2017 | |
| Purchase | XLIS | 4.799 € | 1,440 10-03-2017 | |
| Purchase | XLIS | 4.800 € | 9,072 10-03-2017 | |
| Purchase | XLIS | 4.801 € | 2,500 10-03-2017 | |
| Purchase | XLIS | 4.802 € | 1,500 10-03-2017 | |
| Purchase | XLIS | 4.803 € | 150 10-03-2017 | |
| Purchase | XLIS | 4.804 € | 3,350 10-03-2017 | |
| Purchase | XLIS | 4.805 € | 1,605 10-03-2017 | |
| Purchase | XLIS | 4.806 € | 2,500 10-03-2017 | |
| Purchase | XLIS | 4.807 € | 1,000 10-03-2017 | |
| Purchase | XLIS | 4.808 € | 792 10-03-2017 | |
| Purchase | XLIS | 4.809 € | 991 10-03-2017 | |
| Purchase | XLIS | 4.810 € | 25,536 10-03-2017 | |
| Purchase | XLIS | 4.812 € | 500 10-03-2017 | |
| Purchase | XLIS | 4.813 € | 2,500 10-03-2017 | |
| Purchase | XLIS | 4.815 € | 12,750 10-03-2017 |
| Type of transaction |
Venue | Price | Volume | Date of the transaction |
|---|---|---|---|---|
| Purchase | XLIS | 4.820 € | 10,000 | 10-03-2017 |
| Purchase | XLIS | 4.825 € | 10,927 | 10-03-2017 |
| Purchase | XLIS | 4.827 € | 3,494 | 10-03-2017 |
| Purchase | XLIS | 4.830 € | 3,000 | 10-03-2017 |
| Purchase | XLIS | 4.835 € | 5,000 | 10-03-2017 |
| Purchase | XLIS | 4.842 € | 300 | 10-03-2017 |
| Purchase | XLIS | 4.843 € | 400 | 10-03-2017 |
| Purchase | XLIS | 4.844 € | 518 | 10-03-2017 |
| Purchase | XLIS | 4.848 € | 600 | 10-03-2017 |
| Purchase | XLIS | 4.849 € | 870 | 10-03-2017 |
| Purchase | XLIS | 4.850 € | 6,893 | 10-03-2017 |
| Purchase | XLIS | 4.855 € | 5,000 | 10-03-2017 |
| Purchase | XLIS | 4.860 € | 1,000 | 10-03-2017 |
| Purchase | XLIS | 4.864 € | 1,000 | 10-03-2017 |
| Purchase | XLIS | 4.865 € | 2,500 | 10-03-2017 |
| Purchase | XLIS | 4.870 € | 4,000 | 10-03-2017 |
| Purchase | XLIS | 4.875 € | 3,000 | 10-03-2017 |
| Purchase | XLIS | 4.880 € | 2,000 | 10-03-2017 |
| Purchase | XLIS | 4.902 € | 500 | 10-03-2017 |
| Purchase | XLIS | 4.904 € | 2,109 | 10-03-2017 |
| Purchase | XLIS | 4.905 € | 2,391 | 10-03-2017 |
| Purchase | XLIS | 4.911 € | 300 | 10-03-2017 |
| Purchase | XLIS | 4.912 € | 2,386 | 10-03-2017 |
| Purchase | XLIS | 4.913 € | 9,143 | 10-03-2017 |
| Purchase | XLIS | 4.915 € | 1,500 | 10-03-2017 |
| Purchase | XLIS | 4.973 € | 500 | 10-03-2017 |
| Purchase | XLIS | 4.981 € | 500 | 10-03-2017 |
| Purchase | XLIS | 4.990 € | 500 | 10-03-2017 |
| Purchase | XLIS | 4.993 € | 500 | 10-03-2017 |
| Purchase | XLIS | 4.995 € | 1,000 | 10-03-2017 |
| Purchase | XLIS | 5.015 € | 1,500 | 10-03-2017 |
| Purchase | XLIS | 5.020 € | 3,000 | 10-03-2017 |
Detail of the transactions of CTT shares carried out by Gestmin SGPS, S.A. on 13 March 2017, according to the communications sent to the Company:
| Type of transaction |
Venue | Price | Volume | Date of the transaction |
|---|---|---|---|---|
| Purchase | XLIS | 4.825 € | 2,987 | 13-03-2017 |
| Purchase | XLIS | 4.829 € | 2,500 | 13-03-2017 |
| Purchase | XLIS | 4.830 € | 4,000 | 13-03-2017 |
| Purchase | XLIS | 4.833 € | 3,000 | 13-03-2017 |
| Purchase | XLIS | 4.835 € | 9,500 | 13-03-2017 |
| Purchase | XLIS | 4.836 € | 2,000 | 13-03-2017 |
| Purchase | XLIS | 4.840 € | 11,000 | 13-03-2017 |
| Purchase | XLIS | 4.845 € | 28,069 | 13-03-2017 |
| Purchase | XLIS | 4.850 € | 1,500 | 13-03-2017 |
| Purchase | XLIS | 4.854 € | 431 | 13-03-2017 |
| Purchase | XLIS | 4.855 € | 2,500 | 13-03-2017 |
| Purchase | XLIS | 4.859 € | 1,343 | 13-03-2017 |
| Type of transaction |
Venue | Price | Volume | Date of the transaction |
|---|---|---|---|---|
| Purchase | XLIS | 4.860 € | 13,046 | 13-03-2017 |
| Purchase | XLIS | 4.864 € | 893 | 13-03-2017 |
| Purchase | XLIS | 4.865 € | 4,607 | 13-03-2017 |
| Purchase | XLIS | 4.868 € | 2,000 | 13-03-2017 |
| Purchase | XLIS | 4.870 € | 3,000 | 13-03-2017 |
| Purchase | XLIS | 4.874 € | 2,500 | 13-03-2017 |
| Purchase | XLIS | 4.875 € | 18,794 | 13-03-2017 |
| Purchase | XLIS | 4.878 € | 250 | 13-03-2017 |
| Purchase | XLIS | 4.880 € | 9,795 | 13-03-2017 |
| Purchase | XLIS | 4.885 € | 17,500 | 13-03-2017 |
| Purchase | XLIS | 4.890 € | 22,670 | 13-03-2017 |
PART IV - AUDIT REPORT
KPMG & Associados - Sociedade de Revisores Oficiais de Contas, S.A. Edifício Monumental - Av. Praia da Vitória, 71 - A, 8º 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 Entity), which comprise the condensed consolidated statement of financial position as of 30 June 2017 (that presents a total of Euro 1,547,810,112 and total equity attributable to the shareholders of Euro 179,658,580, including negative non-controlling interests of Euro 133,734 and a consolidated net profit attributable to the shareholders of the Entity of Euro 17,745,100), 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.
The Executive Board of Director is responsible for the preparation of these condensed consolidated financial statements in accordance with International Accounting Standard 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 ISRE 2410 – Review of Interim Financial Information Performed by the Independent Auditor of the Entity and further technical and ethical standards and guidelines 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 International Accounting Standard 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. as at 30 June 2017, are not prepared in all material respects, in accordance with the International Accounting Standard 34 – Interim Financial Reporting as adopted by the European Union.
Lisbon, 31 July 2017
SIGNED ON THE ORIGINAL
KPMG & Associados - Sociedade de Revisores Oficiais de Contas, S.A. (nr 189) represented by Paulo Alexandre Martins Quintas Paixão (ROC nr 1427)
Avenida D. João II, N. 13 1999-001 Lisbon PORTUGAL Telephone: +351 210 471 836 Fax: +351 210 471 994
E-mail: [email protected] CTT Line 707 26 26 26 Business days and Saturdays from 8:00 am to 10:00 pm
André Gorjão Costa
Peter Tsvetkov E-mail: [email protected] Telephone: +351 210 471 087 Fax: +351 210 471 994
Brand and Communication Department Press Advisor Fernando Marante E-mail: [email protected] Telephone: +351 210 471 800
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