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CTT-Correios de Portugal
Investor Presentation • Oct 29, 2024
1911_iss_2024-10-29_cc905da7-e040-4415-bb38-24d25379282a.pdf
Investor Presentation
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Table of Contents
| 9 Months 2024 Consolidated Results | 3 | |
|---|---|---|
| 1. | Operational performance | 4 |
| 2. | Financial performance | 9 |
| 3. | Other highlights | 15 |
| 4. | Interim condensed consolidated financial statements | 21 |
In the first 9 months of 2024 (9M24), revenues1 reached €792.3m (+€76.8m; +10.7% y.o.y2 ). This evolution reflects a record performance by Express & Parcels and sustained growth at Banco CTT.
- • Logistics totalled €678.6m in 9M24 (+19.7% y.o.y), accounting for 86% of CTT's total revenues.
- Express & Parcels (E&P) amounted to €330.5m, an increase of 44.0% y.o.y or €101.0m. 3Q24 was a record quarter in terms of volumes, revenue and margin, and a strong peak season performance is anticipated in 4Q24.
- • Bank & Financial Services totalled €113.6m (-23.5% y.o.y). Public debt placement volumes have been recovering over the last few quarters and have increased significantly since the ceilings were raised at the beginning of October.
Recurring EBIT stood at €54.6m in 9M24 (-€13.4m; -19.7% y.o.y), with a margin of 6.9%.
- • Logistics reached €26.9m, an increase of €6.3m or 30.5% y.o.y. This performance was driven by Express & Parcels, with €24.1m (+€12.0m; +99.3% y.o.y), underpinned by growth and margin increase.
- • Bank & Financial Services posted €27.7m (-41.5% y.o.y). Banco CTT reached €18.5m with an expansion of 25.9% y.o.y, achieving a record RoTE as a result of increased activity and resources. Financial Services (-71.9% y.o.y) reflected the lower volume of public debt placements.
Operating cash flow stood at €29.1m in 9M24 (compared to €20.0m in 1H24).
Net profit3 reached €27.8m in 9M24 (-€7.8m compared to 9M23).
| € million | ||||||||
|---|---|---|---|---|---|---|---|---|
| 9M23 | 9M24 | Δ | Δ% | 3Q23 | 3Q24 | Δ | Δ% | |
| Revenues1 | 715.4 | 792.3 | 76.8 | 10.7% | 235.0 | 267.9 | 32.9 | 14.0% |
| Logistics | 566.8 | 678.6 | 111.8 | 19.7% | 193.1 | 227.6 | 34.5 | 17.9% |
| Express & Parcels | 229.5 | 330.5 | 101.0 | 44.0% | 88.1 | 120.1 | 31.9 | 36.2% |
| Bank & Financial Services | 148.6 | 113.6 | (34.9) | (23.5%) | 41.9 | 40.4 | (1.6) | (3.7%) |
| Operating costs | 599.8 | 681.7 | 81.9 | 13.6% | 199.5 | 228.1 | 28.6 | 14.3% |
| EBITDA1 | 115.6 | 110.6 | (5.0) | (4.3%) | 35.5 | 39.8 | 4.3 | 12.2% |
| Depreciation & amortisation | 47.5 | 55.9 | 8.4 | 17.7% | 15.8 | 20.2 | 4.4 | 27.8% |
| Recurring EBIT | 68.1 | 54.6 | (13.4) | (19.7%) | 19.7 | 19.6 | (0.1) | (0.4%) |
| Logistics | 20.6 | 26.9 | 6.3 | 30.5% | 7.5 | 8.2 | 0.7 | 9.4% |
| Express & Parcels | 12.1 | 24.1 | 12.0 | 99.3% | 6.2 | 10.4 | 4.2 | 67.5% |
| Bank & Financial Services | 47.4 | 27.7 | (19.7) | (41.5%) | 12.2 | 11.5 | (0.8) | (6.4%) |
| EBIT | 57.1 | 48.0 | (9.1) | (16.0%) | 17.8 | 15.5 | (2.3) | (12.8%) |
| Net profit for the period3 | 35.5 | 27.8 | (7.8) | (21.9%) | 9.5 | 7.9 | (1.5) | (16.2%) |
| 31.12.23 | 30.09.24 | Δ | Δ% | |||||
| Equity | 253.3 | 276.2 | 22.9 | 9.1% | ||||
| Net Debt | (39.0) | 2.7 | 41.7 | » | ||||
| Net debt with Banco CTT under equity method |
177.3 | 245.5 | 68.2 | 38.4% | ||||
| Net debt/EBITDA (LTM) with Banco CTT under equity method |
1.44 | 2.16 | 0.71 | 49.5% |
1 Excluding specific items.
2 y.o.y - year on year.
3 Attributable to equity holders.
4
9 Months 2024 Consolidated Results
1. Operational performance
Logistics
Logistics revenues totalled €678.6m in 9M24 (+€111.8m; +19.7% y.o.y). This solid performance was driven by growth in Express & Parcels (+44.0% y.o.y).
Mail & Other revenues grew by 3.2% y.o.y, due to the good performance of addressed mail (+2.1% y.o.y), business solutions (+13.0% y.o.y) and payments (+9.1% y.o.y).
| € million | ||||||||
|---|---|---|---|---|---|---|---|---|
| Logistics | 9M23 | 9M24 | ∆ | ∆% | 3Q23 | 3Q24 | ∆ | ∆% |
| Revenues | 566.8 | 678.6 | 111.8 | 19.7% | 193.1 | 227.6 | 34.5 | 17.9% |
| Operating costs | 504.1 | 602.0 | 97.9 | 19.4% | 171.7 | 201.5 | 29.9 | 17.4% |
| EBITDA | 62.7 | 76.6 | 13.9 | 22.2% | 21.4 | 26.1 | 4.6 | 21.5% |
| Recurring EBIT | 20.6 | 26.9 | 6.3 | 30.5% | 7.5 | 8.2 | 0.7 | 9.4% |
| EBIT | 9.8 | 20.3 | 10.5 | 107.2% | 5.8 | 4.2 | (1.6) | (27.7%) |
Express & Parcels
Express & Parcels revenues amounted to €330.5m in 9M24 (+€101.0m; +44.0% y.o.y). This growth was driven by the growth in volumes (+45.9% y.o.y), which exceeded 98 million items in the first nine months of the year, of which 35 million in 3Q24, thus surpassing the levels of the 4Q23 peak season.
3Q24 volumes above 2023 peak season levels.
The business in Spain and Portugal has been unified into a single Iberian offer. In particular, the product portfolio, commercial approach, customer segmentation and pricing methodology have been harmonised. Commercial coordination between Portugal and Spain has also been strengthened in the management of large international accounts. This harmonisation is crucial, given that a large number of clients operate throughout the Iberian Peninsula and therefore prefer an integrated service that covers the entire region.
The expansion of the Express & Parcels segment results from the growth in the e-commerce market and the gain in market share, which reflects the investments made in the expansion and capacity of the network, in the extension and differentiation of the portfolio of services offered and in the quality of delivery.
In terms of the strategic customer segment (international e-sellers, with daily volumes above 20,000 items), there continues to be strong growth, as a result of the incorporation of new customers, reflecting commercial proactivity, the wide range and quality of the services offered, and the increase in average volumes, as CTT is intensifying its relationship with these customers. It should also be noted that CTT's performance reflects as well the increased dominance of these customers in the Iberian e-commerce landscape. The other customer segments also registered strong growth, as a result of a commercial strategy that prioritises customer diversification and the expansion and granularity of the geographical presence in Spain.
CTT is prepared for a strong peak season in 2024.
Despite the high growth, the quality of service has improved (+2.6 p.p in Portugal and +2.1 p.p in Spain in 9M24). This growth demonstrates the trust placed by current and new customers in the quality of the service offered by CTT. This is a differentiating factor compared to the competition and underpins the continuous increase in volumes handed out to CTT.
The customs clearance service continues to gain traction with large international clients. Integrated in last-mile delivery, it contributes significantly to reducing delivery times for extra-EU volumes and increasing CTT's differentiation from its competitors.
The fulfilment business recorded revenues of €3.8m in 9M24 (+29.3% y.o.y). This evolution was based on the growth of business from existing clients and the capture of a new business of significant size in a new segment.
At the end of 9M24, CTT's Locky network comprised 990 lockers installed in Portugal (1,182 contracted) and maintained an upward trend in the number of lockers installed. In Spain, where Locky recently began its expansion, there are already 8 lockers installed and 54 contracted. Locky lockers are part of the CTT delivery points network, whereby customers can pick up, send and return their parcels with maximum convenience, 24 hours a day in most lockers, every day of the week. The Locky locker network is an agnostic network and, since 4Q23, another carrier, in addition to CTT, has been using it. CTT continues to invest in expanding the Locky locker network both in Portugal and in Spain, where this offer is already present. In the context of the PUDO network, it should be noted that CTT in Spain already has a network of 21,200 convenience points, which, when added to approximately 3,700 of the network in Portugal, represent over 24,900 delivery points, ensuring extensive coverage of the Iberian Peninsula.
Record recurring EBIT margin of 8.7% in 3Q24.
Recurring EBIT generated by the E&P business increased from €12.1m in 9M23 to €24.1m in 9M24. As a result, the margin increased from 5.3% to 7.3% (+2.0pp y.o.y). Recurring EBIT performance benefited from increased business activity in Iberia. Strong volume growth is fuelling rapid margin expansion due to operational leverage of the business.
Mail & Other
Mail & Other revenues amounted to €348.2m in 9M24 (+€10.8m; +3.2% y.o.y). This growth was mainly due to the revenue performance of €272.3m in addressed mail (+2.1% y.o.y), €37.0m in business solutions (+13.0% y.o.y) and €15.6m in payments (+9.1% y.o.y).
In 9M24, the mail business benefited from the volumes generated by the legislative elections that took place in March. Excluding this effect, addressed mail business revenues would have declined by 0.9% y.o.y in 9M24, in a context where working days fell by 0.5% compared to 9M23. It should be noted that the 4Q24 will see a 6.8% increase in working days compared to the same period of the previous year.
Mail will benefit from 6.8% more working days in 4Q24.
The overall average price change of the universal postal service4 in 9M24 was +9.03% y.o.y. Mail revenues benefited from an increase in the average revenue per item, as a result of the price increase and the evolution of the mix, which almost entirely offset the drop in volumes.
In 9M24, business solutions continued to record growth in the Business Process Outsourcing (BPO) and Contact Centre areas as new businesses in different sectors were won and implemented.
Recurring EBIT declined to €2.8m (-66.9%) in 9M24, penalised by (i) cost inflation, which was not fully offset by the price increase, (ii) the decline in mail volumes, and (ii) the decrease in financial services activity as a result of lower subscriptions of savings certificates. It should be noted that in 4Q24, the recurring EBIT of Mail & Other should benefit from +6.8% working days and the increase in the ceilings of public debt subscriptions.
The cost efficiency programme is underway and contributed to savings of €8.9m in 9M24, partially offsetting the €11.4m impact of inflation mentioned above.
4 Includes letter mail, editorial mail and parcels of the universal postal service, excluding international inbound mail.
Bank & Financial Services
Bank & Financial Services revenues totalled €113.6m in 9M24 (-€34.9m; -23.5% y.o.y), penalised by the performance of public debt, while Banco CTT continued to grow in assets and customers.
Public debt placement volumes increased significantly since October, thanks to the change in the maximum investment limit for subscription of Savings Certificates per subscriber (from €50,000 to €100,000).
| € million | ||||||||
|---|---|---|---|---|---|---|---|---|
| Bank & Financial Services | 9M23 | 9M24 | ∆ | ∆% | 3Q23 | 3Q24 | ∆ | ∆% |
| Revenues | 148.6 | 113.6 | (34.9) | (23.5%) | 41.9 | 40.4 | (1.6) | (3.7%) |
| Recurring EBIT | 47.4 | 27.7 | (19.7) | (41.5%) | 12.2 | 11.5 | (0.8) | (6.4%) |
| Recurring EBIT margin (p.p.) | 31.9 | 24.4 | (7.5) | 29.2 | 28.4 | (0.8) |
Financial Services
Financial Services revenues amounted to €17.4m in 9M24 (-€37.3m; -68.2% y.o.y). This performance is explained by the lower placement of public debt, and it should be noted that after the change in subscription ceilings at the beginning of October, the volumes placed have been increasing significantly.
Subscriptions of public debt certificates increased significantly following the increase in ceilings.
At the beginning of October 2024, the Government announced a change in the marketing conditions for Savings Certificates, with the maximum subscription limit per subscriber rising from €50,000 to €100,000 for the F series and from €250,000 to €350,000 for the accumulated E and F series. This change in ceilings triggered a significant increase in subscriptions in October.
CTT carried out marketing campaigns over the last few months, highlighting the attractiveness of Savings Certificates when compared to other alternatives. In July, the company also launched an online platform for subscribing to public debt certificates via the CTT app, which has grown significantly in terms of the number of users, given its high level of convenience for savers.
Public debt certificates (Savings Certificates and Treasury Certificates Savings Growth) posted revenues of €7.2m in 9M24 (-€33.6m; -82.4% y.o.y).
In 9M24, subscriptions of these certificates amounted to €1,053.8m which compares to €12.3 billion in 9M23. However, it should be noted that the 9M24 performance has been strongly hampered by the limitations imposed on the sale of this product introduced in June 2023.
The strategy defined for the retail network is to reposition it as a retail services platform.
In addition to the distribution of public debt, CTT has been repositioning its retail network for the distribution of services (retail as a service). This strategy includes the distribution of: (i) public debt; (ii) insurance products; (iii) mail and express & parcels services, mostly in self-service; and (iv) convenience services for citizens.
In this context, CTT reinforced the commercial drive in the area of non-life insurance, including auto, health, personal accidents, multi-risk, among others, based on the distribution partnership with Generali, while also benefiting from other distribution agreements, namely in terms of healthcare plans.
Given the above-mentioned framework in terms of public debt placements, recurring EBIT in the 9M24 totalled €9.2m.
Bank
Banco CTT revenues amounted to €96.3m in 9M24 (+ €2.3m; +2.5% y.o.y). Excluding the impact of the withdrawal from the Universo card partnership, revenue growth would have been 14.5%. The growth in revenues was driven by the positive performance of the net interest income, which totalled €73.1m in 9M24 (€1.0m; +1.4% y.o.y). Interest received increased by €39.3m compared to the same period last year, benefiting from higher interest rates and volume growth. Interest paid increased by €38.3m vis-à-vis the same period in 2023 due to higher rates of return on customer deposits and securitisations of auto loans.
Banco CTT revenues increased by 14.5% in 9M24, excluding the impact of the Universo credit card.
At end of 3Q24, the number of current accounts was 676k (29k more than in December 2023).
Retail customer deposits (Banco CTT consolidated) stood at €3,967.9m in 3Q24 (+28.4% vs. December 2023). There was a 60.0% increase in term deposits and a slight increase of 2.1% in sight deposits compared to December 2023.
Interest from auto loans amounted to €45.1m in 9M24 (+€6.1m; +15.8% y.o.y) and reached a loan portfolio net of impairments of €908.0m (+5.6% vs. December 2023). Auto loans production stood at €196.7m in 9M24 (-3.5% y.o.y).
Interest from mortgage loans stood at €21.9m in the period (+€6.2m; +39.5% y.o.y), which is in line with the positive evolution of Euribor rates since 1H23. The mortgage loan portfolio net of impairments totalled €766.0m in 3Q24 (+5.3% vs. December 2023). Mortgage loan production amounted to €124.1m in 9M24 (-€25.1m; -16.8% y.o.y).
Also worthy of note is other interest received, which increased by €11.6m in 9M24 compared to 9M23, to which contributed mainly the liquidity surplus at Banco de Portugal.
Record RoTE of 12.4%5 in 9M24, in line with CMD objectives.
Commissions received in this business unit reached €21.5m in 9M24, (+€1.5m; +7.5% y.o.y). Noteworthy are the following positive contributions in the period: (i) from commissions received from accounts and cards, which amounted to €9.8m (+€0.4m; +4.7% y.o.y); (ii) from mortgage loans, in the amount of €0.8m (+€0.6m; +208.2% y.o.y); and (iii) from consumer credit (mostly auto loans) for €2.2m (+€0.5m; +31.3% y.o.y).
The loan-to-deposit ratio reached 42.3% at the end of 3Q24.
The cost of risk (consolidated and accumulated) in the period stood at 0.8%, down by 0.5 p.p. compared to December 2023, influenced by lower levels of risk in the consumer credit portfolios.
Recurring EBIT amounted to €18.5m (+25.9% y.o.y) in 9M24, thanks to strong growth in business volumes, namely in deposits and mortgage and car loans, which also drove an increase in commissions. The quarter was marked by a positive impact of around €1 million from the sale of non-performing loans.
Banco CTT is therefore well positioned to achieve the 2025 objectives announced in September 2023:
- Reach 700k to 750k accounts (compared to 676k in 9M24);
- Grow in customer resources and loans to customers to business volumes of over €7 billion (compared to €6.8 billion at the end of 3Q24);
- Deliver on profitability, with pre-tax profits between €25m and €30m (compared to €21.0m in 2023 and €18.4m in 9M24).
5 Accumulated recurring RoTE which excludes specific items, being normalised assuming tangible capital of 15% of RWAs, compatible with the target disclosed in CMD 2022. With the current capital structure, RoTE is 9.6% for 9M24.
9
2. Financial performance
Income statement
| € million | ||||||||
|---|---|---|---|---|---|---|---|---|
| 9M23 | 9M24 | ∆ | ∆% | 3Q23 | 3Q24 | ∆ | Δ% | |
| Revenues | 715.4 | 792.3 | 76.8 | 10.7% | 235.0 | 267.9 | 32.9 | 14.0% |
| Logistics | 566.8 | 678.6 | 111.8 | 19.7% | 193.1 | 227.6 | 34.5 | 17.9% |
| Express & Parcels | 229.5 | 330.5 | 101.0 | 44.0% | 88.1 | 120.1 | 31.9 | 36.2% |
| Mail & Other | 337.3 | 348.2 | 10.8 | 3.2% | 105.0 | 107.5 | 2.6 | 2.4% |
| Bank & Financial Services | 148.6 | 113.6 | (34.9) | (23.5%) | 41.9 | 40.4 | (1.6) | (3.7%) |
| Financial Services | 54.6 | 17.4 | (37.3) | (68.2%) | 8.5 | 6.2 | (2.3) | (27.2%) |
| Banco CTT | 94.0 | 96.3 | 2.3 | 2.5% | 33.4 | 34.1 | 0.8 | 2.3% |
| Operating costs | 599.8 | 681.7 | 81.9 | 13.6% | 199.5 | 228.1 | 28.6 | 14.3% |
| Staff costs | 282.8 | 299.0 | 16.1 | 5.7% | 89.4 | 96.6 | 7.2 | 8.1% |
| ES&S | 271.0 | 349.0 | 78.0 | 28.8% | 98.0 | 122.5 | 24.5 | 25.0% |
| Impairments and provisions | 20.6 | 13.1 | (7.5) | (36.6%) | 5.3 | 2.5 | (2.8) | (53.4%) |
| Other costs | 25.4 | 20.7 | (4.7) | (18.6%) | 6.9 | 6.5 | (0.3) | (4.9%) |
| EBITDA | 115.6 | 110.6 | (5.0) | (4.3%) | 35.5 | 39.8 | 4.3 | 12.2% |
| Depreciation and amortisation | 47.5 | 55.9 | 8.4 | 17.7% | 15.8 | 20.2 | 4.4 | 27.8% |
| Recurring EBIT | 68.1 | 54.6 | (13.4) | (19.7%) | 19.7 | 19.6 | (0.1) | (0.4%) |
| Logistics | 20.6 | 26.9 | 6.3 | 30.5% | 7.5 | 8.2 | 0.7 | 9.4% |
| Express & Parcels | 12.1 | 24.1 | 12.0 | 99.3% | 6.2 | 10.4 | 4.2 | 67.5% |
| Mail & Other | 8.5 | 2.8 | (5.7) | (66.9%) | 1.3 | (2.2) | (3.5) | « |
| Bank & Financial Services | 47.4 | 27.7 | (19.7) | (41.5%) | 12.2 | 11.5 | (0.8) | (6.4%) |
| Financial Services | 32.7 | 9.2 | (23.5) | (71.9%) | 4.9 | 3.6 | (1.3) | (26.6%) |
| Banco CTT | 14.7 | 18.5 | 3.8 | 25.9% | 7.3 | 7.9 | 0.5 | 7.2% |
| Specific items | 11.0 | 6.7 | (4.3) | (39.2%) | 1.9 | 4.1 | 2.2 | 117.1% |
| Business restructuring and strategic projects |
6.1 | 4.1 | (2.1) | (33.6%) | 1.6 | 3.1 | 1.5 | 91.9% |
| Other non-recurring income and expenses |
4.8 | 2.6 | (2.2) | (46.3%) | 0.3 | 1.0 | 0.7 | » |
| EBIT | 57.1 | 48.0 | (9.1) | (16.0%) | 17.8 | 15.5 | (2.3) | (12.8%) |
| Financial results (+/-) | (11.6) | (13.1) | (1.5) | (12.9%) | (4.5) | (4.9) | (0.4) | (9.6%) |
| Financial income, net | (11.6) | (13.1) | (1.5) | (12.9%) | (4.5) | (4.9) | (0.4) | (9.6%) |
| Financial costs and losses | (12.3) | (13.4) | (1.1) | (8.8%) | (4.6) | (5.0) | (0.4) | (9.8%) |
| Financial income | 0.7 | 0.2 | (0.4) | (64.5%) | 0.0 | 0.1 | 0.0 | 37.5% |
| Gains/losses in subsidiaries, associated companies and joint ventures |
0.0 | 0.0 | 0.0 | « | 0.0 | 0.0 | 0.0 | 10.9% |
| Income tax | 10.0 | 6.4 | (3.5) | (35.4%) | 3.8 | 2.4 | (1.5) | (37.9%) |
| Non-controlling interest | 0.0 | 0.7 | 0.7 | » | 0.0 | 0.3 | 0.3 | » |
| Net profit for the period | 35.5 | 27.8 | (7.8) | (21.9%) | 9.5 | 7.9 | (1.5) | (16.2%) |
Revenues
Revenues totalled €792.3m in 9M24 (+€76.8m; +10.7% y.o.y), underpinned by Logistics (+€111.8m; +19.7% y.o.y), more specifically by Express & Parcels (+€101.0m; +44.0% y.o.y).
Bank & Financial Services (-€34.9m; -23.5% y.o.y) recorded a negative variation, given the extraordinarily high level of public debt placement in 1H23, partly offset by the performance of Banco CTT (+ €2.3m; +2.5% y.o.y).
Operating Costs
In 9M24, operating costs (relative to EBITDA) totalled €681.7m (+€81.9m; +13.6% y.o.y), with the growth essentially explained by the increase in the Logistics activity, especially Express & Parcels.
Staff costs increased by €16.1m (+5.7% y.o.y) in the period, mostly due to the salary increase (+€10.2m), including the increase in the national minimum wage, which reflects an additional effort on the part of the company due to the current economic situation. The evolution of this caption also reflects the growth in the Express & Parcels business, as well as the contact centre and document management activity in the corporate solutions business line.
External supplies & services costs increased by €78.0m (+28.8% y.o.y), essentially due to the direct costs of services associated with growing businesses, such as Express & Parcels (+€77.9m).
Impairments and provisions decreased by €7.5m (-36.6% y.o.y) as a result of the reduction in impairments in the Banco CTT business (-€8.4m), mainly due to the end of the Universo credit card partnership.
Other costs decreased by €4.7m (-18.6% y.o.y.), with a significant contribution from the retail business (-€4.8m) due to the repositioning of the network to a services platform, discontinuing some products.
Depreciation & amortisation increased by €8.4m (+17.7% y.o.y), essentially due to investments in information systems (+€2.4m), buildings and facilities (+€2.4m) and fleet (+€2.9m).
Specific items amounted to €6.7m (-39.2% y.o.y), mostly due to: (i) restructuring, including employment contracts suspension agreements (€2.6m); (ii) costs associated with strategic projects (€1.4m); and (iii) transaction costs associated with the start-up of the Real Estate business (€1.2m).
Recurring EBIT
Recurring EBIT stood at €54.6m in 9M24 (-€13.4m; -19.7% y.o.y), with a margin of 6.9% (9.5% in 9M23), penalised by the lower level of public debt placements and the performance of Mail & Other, but benefiting from the growth in Express & Parcels (+€12.0m; +99.3% y.o.y) and Banco CTT (+€3.8m; +25.9% y.o.y).
Net profit
The consolidated financial results amounted to -€13.1m (-€1.5m; -12.9% y.o.y) in 9M24.
Financial costs and losses incurred amounted to €13.4m (-€1.1m; -8.8% y.o.y), mainly incorporating financial costs related to post-employment and longterm employee benefits of €4.4m, interest expense associated with finance leases liabilities linked to the implementation of IFRS 16 for an amount of €3.8m and interest expense on bank loans for an amount of €4.7m, the increase of which is largely due to the new loans contracted in 2023.
In 9M24, CTT obtained a consolidated net profit attributable to CTT Group equity holders of €27.8m, which is €7.8m below 9M23. Income tax showed a positive trend (-€3.5m; -35.4% y.o.y) .
Staff
On 30 September 2024, the number of CTT employees (permanent employees and fixed-term employees) was 13,815, up by 357 vs 30.09.23 (+2.7% y.o.y.), as shown in the table below.
| 30.09.23 | 30.09.24 | ∆ | ∆% | |
|---|---|---|---|---|
| Express & Parcels | 1,621 | 1,971 | 350 | 21.6% |
| Mail & Other | 11,316 | 11,237 | (79) | (0.7%) |
| Financial Services | 38 | 32 | (6) | (15.8%) |
| Banco CTT | 483 | 575 | 92 | 19.0% |
| Total, of which: | 13,458 | 13,815 | 357 | 2.7% |
| Permanent | 11,324 | 11,723 | 399 | 3.5% |
| Fixed-term contracts | 2,134 | 2,092 | (42) | (2.0%) |
| Portugal | 12,499 | 12,571 | 72 | 0.6% |
| Other geographies | 959 | 1,244 | 285 | 29.7% |
Cash flow statement
| € million | ||||||||
|---|---|---|---|---|---|---|---|---|
| 9M23 | 9M24 | ∆ | ∆% | 3Q23 | 3Q24 | Δ | Δ% | |
| EBITDA | 115.6 | 110.6 | (5.0) | (4.3%) | 35.5 | 39.8 | 4.3 | 12.2% |
| Non-cash items* | (3.2) | (16.9) | (13.7) | « | (2.3) | (9.0) | (6.7) | « |
| Specific items** | (11.0) | (6.7) | 4.3 | 39.2% | (1.9) | (4.1) | (2.2) | (117.1%) |
| Capex | (16.6) | (26.2) | (9.6) | (57.5%) | (5.3) | (11.0) | (5.6) | (105.5%) |
| Δ Working capital | (8.6) | (31.8) | (23.2) | « | (5.4) | (6.7) | (1.2) | (22.6%) |
| Operating cash flow | 76.2 | 29.1 | (47.2) | (61.9%) | 20.6 | 9.1 | (11.5) | (55.8%) |
| Employee benefits | (12.7) | (13.6) | (0.9) | (7.0%) | (4.4) | (5.1) | (0.7) | (16.6%) |
| Tax | 1.1 | (6.9) | (8.0) | « | 0.5 | (6.0) | (6.5) | « |
| Free cash flow | 64.5 | 8.5 | (56.0) | (86.8%) | 16.6 | (2.1) | (18.7) | (112.4%) |
| Debt (principal + interest) | 19.1 | (75.1) | (94.2) | « | (8.1) | (2.7) | 5.3 | 66.1% |
| Dividends | (17.9) | (23.3) | (5.5) | (30.5%) | 0,0 | 0.0 | 0.0 | 0.0% |
| Acquisition of own shares | (4.5) | (14.1) | (9.5) | « | (4.4) | (4.2) | 0.1 | 2.9% |
| Disposal of buildings | 0.0 | 0.1 | 0.0 | » | 0.0 | 0.0 | 0.0 | 0.0% |
| Investments in associated companies and joint ventures |
(0.3) | 30.5 | 30.8 | » | 0.5 | 0.0 | (0.5) | (99.9%) |
| Change in adjusted cash | 61.0 | (73.4) | (134.4) | « | 4.6 | (9.0) | (13.7) | « |
| Δ Liabilities related to Financial Serv. & others and Banco CTT, net6 |
(234.2) | (75.7) | 158.5 | 67.7% | (73.4) | (55.0) | 18.4 | 25.0% |
| Δ Other7 | (12.2) | 7.2 | 19.4 | » | 3.5 | 3.6 | 0.1 | 3.0% |
| Net change in cash | (185.4) | (141.9) | 43.6 | 23.5% | (65.3) | (60.5) | 4.8 | 7.4% |
*Impairments, Provisions and IFRS 16 affecting EBITDA.
**Specific items affecting EBITDA.
In 9M24, the Company generated an operating cash flow of €29.1m (-€47.2m; -61.9% y.o.y). The decrease in operating cash flow is primarily explained by the unfavourable performance in terms of generated EBITDA (-€5.0m; -4.3% y.o.y), the negative evolution of working capital (-€23.2m) and the €9.6m increase in investment, which stood at €26.2m in 9M24 against €16.6m in 9M23. This evolution is explained above all by the investment made in the express & parcels business in Spain, particularly in sorters and minisorters in order to support the strong growth that has been taking place in the activity and is expected to continue in the future. The CTT Group maintains its focus on improving its IT systems, especially in Banco CTT, reinforcing its investment in business support computer systems.
In terms of working capital, in 9M24 investment stood at -€31.8m, mostly as a result of the phasing of collections from E&P customers (-€17.8m) following the significant increase in activity in this business segment, which have since been recovered in October, as well as the increase in VAT recoverables due to the development of intra-EU operations (-€7.3m) within the scope of the express business. In addition, the negative impact of investment-related items (-€4.1m) remains, reflecting the high level realised in 4Q23 as well as the investment made in the year itself.
Adjusted cash was significantly affected by: (i) the amortisation, at the beginning of January, of short-term financing and the ordinary payment of several bank loans (-€75.1m); (ii) the payment of dividends (-€23.3m); and (iii) the acquisition of own shares (-€14.1m). These movements were partially offset by the cash flow generated in 9M24 (€8.5m) and by the sale of a 26.3% shareholding position in CTT IMO Yield, which translated into a receipt of €32.4m.
6 The change in net liabilities of Financial Services and Banco CTT reflects the evolution of credit balances with third parties, depositors or other banking financial liabilities, net of the amounts invested in credit or investments in securities/banking financial assets, of entities of the CTT Group providing financial services, namely the financial services of CTT, Payshop, Banco CTT and 321 Crédito.
7 The change in other cash items reflects the evolution of Banco CTT's sight deposits at Banco de Portugal, outstanding cheques/clearing of Banco CTT cheques, and impairment of sight and term deposits and bank applications.
| € million | ||||
|---|---|---|---|---|
| 31.12.23 | 30.09.24 | Δ | Δ% | |
| Non-current assets | 2,354.7 | 2,451.1 | 96.4 | 4.1% |
| Current assets | 2,402.0 | 3,085.2 | 683.3 | 28.4% |
| Assets | 4,756.6 | 5,536.3 | 779.7 | 16.4% |
| Equity | 253.3 | 276.2 | 22.9 | 9.1% |
| Liabilities | 4,503.4 | 5,260.2 | 756.8 | 16.8% |
| Non-current liabilities | 689.6 | 626.2 | (63.4) | (9.2%) |
| Current liabilities | 3,813.8 | 4,633.9 | 820.2 | 21.5% |
| Equity and consolidated liabilities | 4,756.6 | 5,536.3 | 779.7 | 16.4% |
Consolidated statement of financial position
The key aspects of the comparison between the balance sheet as at 30.09.2024 and that as at 31.12.2023 are as follows:
Assets grew by €779.7m, mainly due to the increase in debt securities at amortised cost (+€1,354.1m) and credit to banking clients (+€85.3m), partially offset by the decrease in other banking financial assets (-€625.7m) as a result of the reduction of Banco CTT's investments in central banks.
Equity increased by €22.9m following the net profit attributable to shareholders of the CTT Group in 9M24 in the amount of €27.8m, the acquisition of own shares in the amount of €14.1m, the payment of dividends amounting to €23.3m, and the recognition of noncontrolling interests amounting to €34.3m following the sale of 26.3% of CTT IMO Yield.
Liabilities increased by €756.8m, mostly due to the increase in Banking clients' deposits and other loans (€877.0m), the decrease in short and long-term debt (-€31.7m) largely as a result of the amortisation of short-term financing at the start of the year, and a decrease in debt securities issued at amortised cost (-€72.8m) following the withdrawals made.
Consolidated net debt
The key aspects of the comparison between the consolidated net debt as at 30.09.2024 and that as at 31.12.2023 are as follows:
On 30 September 2024, adjusted cash stood at €234.6m, a decrease of €73.4m compared to 31 December 2023). The performance in terms of adjusted cash is the result of the operating cash flow generated (€29.1m) and the receipt of €32.4m following the sale of 26.3% of CTT IMO Yield, which were more than offset by (i) payments of employee benefits (-€13.6m), (ii) tax payments (-€6.9m), (iii) the payment of dividends (-€23.3m), (iv) the acquisition of own shares (-€14.1m), and (v) the settlement of bank loans (-€75.1m).
Short-term & long-term debt decreased by €31.7m (-11.8% y.o.y), essentially due to the effect of the reduction in bank loans following the settlement of short-term financing and the payment of two tranches of long-term financing. On the other hand, there was an increase in financial lease liabilities (+€39.2m; +33.2% y.o.y).
| € million | ||||
|---|---|---|---|---|
| 31.12.23 | 30.09.24 | Δ | Δ% | |
| Net debt | (39.0) | 2.7 | 41.7 | » |
| ST & LT debt | 269.0 | 237.3 | (31.7) | (11.8%) |
| of which Finance leases (IFRS16) | 118.3 | 157.5 | 39.2 | 33.2% |
| Adjusted cash (I+II) | 308.0 | 234.6 | (73.4) | (23.8%) |
| Cash & cash equivalents | 351.6 | 209.8 | (141.9) | (40.3%) |
| Cash & cash equivalents at the end of the period (I) | 315.2 | 166.2 | (149.1) | (47.3%) |
| Other cash items | 36.4 | 43.6 | 7.2 | 19.8% |
| Other Financial Services liabilities, net (II) | (7.2) | 68.4 | 75.7 | » |
Consolidated balance sheet with Banco CTT under equity method
| € million | ||||
|---|---|---|---|---|
| 31.12.23 | 30.09.24 | Δ | Δ% | |
| Non-current assets | 713.0 | 758.0 | 45.0 | 6.3% |
| Current assets | 506.7 | 455.3 | (51.3) | (10.1%) |
| Assets | 1,219.6 | 1,213.3 | (6.3) | (0.5%) |
| Equity | 253.4 | 276.3 | 22.9 | 9.0% |
| Liabilities | 966.2 | 937.0 | (29.2) | (3.0%) |
| Non-current liabilities | 333.8 | 342.9 | 9.1 | 2.7% |
| Current liabilities | 632.4 | 594.1 | (38.3) | (6.1%) |
| Equity and consolidated liabilities | 1,219.6 | 1,213.3 | (6.3) | (0.5%) |
Consolidated net debt with Banco CTT under equity method
| € million | ||||
|---|---|---|---|---|
| 31.12.23 | 30.09.24 | Δ | Δ% | |
| Net debt with Banco CTT under equity method | 177.3 | 245.5 | 68.2 | 38.4% |
| ST & LT debt | 265.7 | 232.8 | (32.9) | (12.4%) |
| of which Finance leases (IFRS16) | 114.9 | 153.0 | 38.1 | 33.2% |
| Adjusted cash (I+II) | 88.3 | (12.7) | (101.0) (114.4%) | |
| Cash & cash equivalents | 276.3 | 136.4 | (139.9) | (50.6%) |
| Cash & cash equivalents at the end of the period (I) | 276.3 | 136.4 | (139.9) | (50.6%) |
| Other cash items | 0,0 | 0,0 | 0,0 | 85.2% |
| Other Financial Services liabilities, net (II) | (188.0) | (149.1) | 38.9 | 20.7% |
Liabilities related to employee benefits
| € million | ||||
|---|---|---|---|---|
| 31.12.23 | 30.09.24 | Δ | Δ% | |
| Total liabilities | 173.5 | 180.4 | 6.9 | 4.0% |
| Healthcare | 154.2 | 152.1 | (2.1) | (1.4%) |
| Healthcare (321 Crédito) | 1.1 | 1.1 | 0.1 | 8.4% |
| Suspension agreements | 11.4 | 18.3 | 6.8 | 59.9% |
| Other long-term employee benefits | 4.7 | 4.5 | (0.2) | (3.7%) |
| Other long-term benefits (321 Crédito) | 0.2 | 0.2 | 0.0 | 8.2% |
| Pension plan | 0.2 | 0.2 | -0,0 | (6.6%) |
| Other benefits | 1.7 | 3.9 | 2.3 | 134.3% |
| Deferred tax assets | (49.4) | (50.7) | (1.3) | (2.6%) |
| Current amount of after-tax liabilities | 124.1 | 129.7 | 5.6 | 4.5% |
Liabilities related to employee benefits (postemployment and long-term benefits) stood at €180.4m in September 2024, up by €6.9m compared to December 2023.
These liabilities related to employee benefits are associated with deferred tax assets amounting to €50.7m, which brings the current amount of liabilities related to employee benefits net of deferred tax assets associated with them to €129.7m.
15
3. Other highlights
Postal regulatory issues
On 23 September 2024, the Ordinance governing the quality of service indicators applicable to the provision of the Universal Postal Service to be complied with by CTT in the period from 1 January 2025 until the end of this Concession Contract was published in the Official Gazette. The Ordinance sets out the quality of service parameters (QSP), the respective quality of service indicators (QSI) and the performance targets associated with the provision of the universal postal service, which CTT, as the universal postal service provider, is obliged to fulfil. Although a high level of demand is maintained, this decision translates into the introduction of a very positive flexibility compared to the current framework.
The new QSPs, which are to be applied from 1 January 2025, are in line with best practices in the European Union, reducing the number of indicators from 24 to 7, simplifying their definition and implementation, and ensuring greater stability and predictability in the provision of the Universal Postal Service.
The current QSIs and performance targets shall remain in force until 31 December 2024, with the new QSIs being applied from 1 January 2025.
Within the regulatory framework in force since February 2022 and the Convention on the criteria to be met for the pricing of postal services that make up the basket of services within the universal service obligation (Universal Postal Service Price Convention) for the 2023-2025 period, of 27 July 2022, the prices of these services were updated on 1 February 2024. The update corresponds to an average annual price variation of 9.49%. The overall average annual price variation, also reflecting the effect of the update of special prices for bulk mail, is 8.91%.
Main ESG milestones achieved
CTT continued on its path towards achieving its ESG strategic goals, promoting decarbonisation, the diversity and well-being of the CTT people, proximity to the local community and a corporate governance of reference. Likewise, during this period CTT continued to implement the new corporate sustainability reporting directive (CSRD), which will be included in the next integrated report.
On the environmental front, to be noted is the completion of the installation of 581 chargers in various delivery offices throughout the country, which will enable the company's reinforced last-mile electric fleet to be supplied. This fleet now numbers 1,021 vehicles (31.5% of the total for this segment of the company's own fleet). With regard to CO2e emissions, these increased by 15.5% compared to the same period last year, mainly due to the increase in express activity in Portugal (31.6%) and Spain (72.2%). Even so, there was an improvement in the carbon footprint per item delivered in terms of mail and express services in both countries.
With regard to promoting the circular economy, CTT reinforced the incorporation of recycled materials in its mail, express & parcels offer, reaching the 90.1% mark. Also noteworthy was the launch of the philatelic issue in honour of the Pinhal de Leiria (Leiria Pine Forest), which stands out for being the first issue in the world to use pine cone dust in the printing ink of a philatelic item.
In the Social dimension, there were various initiatives for the well-being of employees, including the invitation to CTT to take part in the efr Forum, organised by the Christian Association of Entrepreneurs and Managers (ACEGE), which represents Fundación MásFamilia in Portugal, where its good practices were shared. The Code of Ethics training and dissemination programme was completed, with the participation of efr, Ethics and DEI - Diversity, Equity and Inclusion Ambassadors. Also noteworthy was the opening of the 2nd phase of Mortgage Loan applications, promoting the continuity of conciliation measures aimed at CTT People.
Regarding gender parity, specifically in the Company's top and middle management, the percentage of women in leadership positions decreased to 37.5% (-2.4 p.p. compared to 3Q23) due to the increase in the representation of the male gender in 2nd level directors in office.
In terms of work-related accidents involving CTT workers, 636 incidents were recorded in the period (+4% y.o.y), with no associated fatalities.
With the aim of promoting a positive impact on communities, CTT donations to social institutions totalled €676k, corresponding to 1.24% of recurring EBIT.
At the beginning of July, CTT celebrated the launch of the 11th edition of the ''A Tree for the Forest'' campaign by making available a new physical kit, which is now an ecological tote bag made from organic cotton, that is equivalent to a native tree to be planted in Portugal.
Also within this scope, a total of 29 corporate volunteering actions were organised, with 1,388 participations (+1,135 compared to the same period in 2023), as a result of the higher prevalence of one-off actions compared to ongoing ones. Also noteworthy was the participation, for the 2nd consecutive year, in the global initiative World Cleanup Day, which promotes clean-up actions around the world and mobilised 250 CTT volunteers and their families in various actions across the country. The reinforcement of these initiatives, in partnership with various NGOs and associations, signals a greater investment in actions that add value to the teams and promote their greater commitment to the Company's values, particularly proximity to the population.
In the field of Ethics and the organisation's good governance principles, the ESG Steering and Board Committees met twice each, with the topic of nonfinancial reporting taking centre stage. The respective implementation work and preparation of the response to the latest European directives on the subject were monitored.
The close relationship with the International Post Corporation (IPC) led to participation in the 6th edition of the Green Postal Day, an international sector event aimed at showcasing the commitment and leadership of postal operators in mitigating climate change.
At national level, CTT was honoured for the third time with the Empresa 2024 Logistics Excellence Award by the Portuguese Logistics Association (APLOG). This is a clear demonstration of CTT's consistent path of innovation and transformation in the logistics sector.
Share buyback programme
On 10 May 2024, CTT communicated to the market the conclusion of the Company's share buyback programme announced on 21 June 2023. Under this programme, 5,475,000 shares were acquired from 26 June 2023 to 9 May 2024 for a total amount of €19,978,144.
From 2022 to that date, CTT carried out two share buyback programmes for an overall amount of €41.6m, having acquired 11.5608 million shares representing 7.71% of CTT's share capital prior to the two programmes9 . Of these 11.560 million shares, 6.08510 were cancelled, corresponding to the first programme.
The Annual General Meeting held on 23 April 2024 (AGM 2024) approved the cancellation of the 5.475 million shares acquired under the 2023 buyback programme and the corresponding reduction of the company's share capital.
Following this resolution of the AGM 2024, on 17 July 2024, the Company reduced its share capital in the amount of €2,737,500.00 through the cancellation of 5.475 million own shares representing 3.80% of CTT's share capital and which were acquired within the framework of the share buyback programme carried out from 26 June 2023 to 9 May 2024. Hence, CTT's share capital currently stands at €69,220,000.00, represented by 138,440,000 shares with a nominal value of fifty cents per share.
On 19 July 2024, the Executive Committee, based on the delegation of powers granted by the Board of Directors at the meeting of 20 June 2024 and within the maximum pecuniary amount defined in that delegation, in the amount of 25 million Euros, and the resolution adopted at the Annual General Meeting of Shareholders held on 23 April 2024, approved a share buyback programme to be carried out from 22 July 2024, with the sole objective of reducing CTT's share capital through the cancellation of own shares acquired within its scope, as communicated to the market on 19 July 2024.
On 22 July 2024, transactions began under the share buyback programme announced on the 19th of the same month, so that on 24 October 2024, the date of the last transactions carried out and disclosed to the market, the Company held an accumulated total of 2,481,990 own shares, representing 1.79% of the share capital, including 1,288,483 own shares previously held.
8 6.085 million shares acquired under the programme announced on 16 March 2022 and concluded on 8 September 2022 and 5.475 million shares acquired under the programme announced on 21 June 2023 and concluded on 9 May 2024.
9 The figure of 150.000 million shares is used as a reference and is equivalent to the shares issued prior to the implementation of the aforementioned programmes.
10 These 6.085 million shares were cancelled on 7 November 2022 (4.650 million shares) and 21 April 2023 (1.435 million shares).
Outlook for 2024
In the first nine months of 2024, CTT successfully continued on its path of transformation, achieving record volumes in the Express & Parcels segment. The increase in volumes, as well as the consequent gain in market share, was driven by the growth of the e-commerce market and the high capacity and quality of service derived from the investments made, which made it possible to incorporate new customers. The focus continues to be on expanding the presence in the Iberian express & parcels market in order to capitalise on the growing e-commerce trend in Portugal and Spain.
Banco CTT continues to increase the number of accounts, grow in business volume and profitability, achieving a record RoTE of 12.4%11 in 9M24. Banco CTT will continue to invest in improving the customer experience (IT systems and new ways, including applications, of contact with the customer) with the aim of deepening and intensifying the relationship with the client and thus increasing engagement with current and future customers.
In Financial Services, the ceiling per subscriber of Savings Certificates was increased from €50,000 to €100,000. In October there was already a significant increase in daily subscriptions to this product. The new feature of the CTT app, which makes it possible to manage savings certificates digitally and more conveniently for customers, has been very popular. CTT continues to grow in retail service products such as insurance (Generali) and health plans.
Finally, in Mail, a price increase was successfully implemented in 2024 in order to counter the natural downward trend in volumes due to increased digitalisation. The focus is still on controlling costs and selling business solutions to our customers.
The company remains attentive to inorganic growth opportunities that may arise, particularly in the logistics and fulfilment segments.
In this context, CTT's ambition for 2024 is to continue to grow, with consolidated revenues increasing by "mid-single digit". The strong growth of the Iberian Express & Parcels and Banco CTT business units will enable recurring EBIT, excluding Financial Services, to grow from €51m in 2023 to above €70m in 2024 (>36% y.o.y). The expectation of consolidated recurring EBIT between €80m and €90m is therefore reiterated.
CTT's balance sheet leverage offers growth optionality, including organic and inorganic. CTT will maintain the focus on costs and profitability while stepping up investments in E&P in Iberia to keep improving its competitive position.
The last quarter of 2024 should continue to be marked by high levels of uncertainty, both at (i) economic level, including a possible global slowdown, the evolution of inflation, and the consequent reaction of central banks with regard to interest rates, and (ii) geopolitical level, including conflicts in the Middle East and Europe, which should continue to pose risks to global supply chains.
In addition, and in response to growing pressure from customers for less polluting solutions, CTT will continue to decarbonise its offer and to focus on integrating solutions that create economic and environmental value.
11 Accumulated recurring RoTE which excludes specific items, being normalised assuming tangible capital of 15% of RWAs, compatible with the target disclosed in CMD 2022. With the current capital structure, RoTE is 9.6% for 9M24.
Final Note
This press release is based on CTT – Correios de Portugal, S.A. interim condensed consolidated financial statements for the nine months of 2024.
Lisbon, 29 October 2024
The Board of Directors
This information to the market and the general public is made under the terms and for the purposes of article 29-Q of the Portuguese Securities Code. It is also available on CTT website at: https://www.ctt.pt/grupo-ctt/investidores/ comunicados/index?language_id=1
CTT – Correios de Portugal, S.A.
Guy Pacheco Market Relations Representative of CTT
Nuno Vieira Director of Investor Relations of CTT
Contacts:
Email: [email protected] Telephone: + 351 210 471 087
Disclaimer
This document has been prepared by CTT – Correios de Portugal, S.A. (the "Company" or "CTT") exclusively for communication of the financial results of the nine months of 2024 (9M24) and has a mere informative nature. This document does not constitute, nor must it be interpreted as, an offer to sell, issue, exchange or buy any financial instruments (namely any securities issued by CTT or by any of its subsidiaries or affiliates), nor any kind of solicitation, recommendation or advice to (dis)invest by CTT, its subsidiaries or affiliates.
Distribution of this document in certain jurisdictions may be prohibited, and recipients into whose possession this document comes shall be solely responsible for informing themselves about and observing any such restrictions. In particular, this press release and the information contained herein is not for publication, distribution or release in, or into, directly or indirectly, the United States of America (including its territories and possessions), Canada, Japan or Australia or to any other jurisdiction where such an announcement would be unlawful.
Hence, neither this press release nor any part of it, nor its distribution, constitute the basis of, or may be invoked in any context as, a contract, or compromise or decision of investment, in any jurisdiction. Thus being, the Company does not assume liability for this document if it is used with a purpose other than the above.
This document (i) may contain summarised information and be subject to amendments and supplements and (ii) the information contained herein has neither been independently verified, nor audited or reviewed by any of the Company's advisors or auditors. Thus being, given the nature and purpose of the information herein and, except as required by applicable law, CTT does not undertake any obligation to publicly update or revise any of the information contained in this document. This document does not contain all the information disclosed to the market about CTT, thus its recipients are invited and advised to consult the public information disclosed by CTT in www.ctt.pt and in www.cmvm.pt. In particular, the contents of this press release shall be read and understood in light of the financial information disclosed by CTT, through such means.
By reading this document, you agree to be bound by the foregoing restrictions.
Forward-looking statements
This document contains forward-looking statements. All the statements herein which are not historical facts, including, but not limited to, statements expressing our current opinion or, as applicable, those of our directors regarding the financial performance, the business strategy, the management plans and objectives concerning future operations and investments are forward-looking statements. Statements that include the words "expects", "estimates", "foresees", "predicts", "intends", "plans", "believes", "anticipates", "will", "targets", "may", "would", "could", "continues" and similar statements of a future or forward-looking nature identify forward-looking statements.
All forward-looking statements included herein involve known and unknown risks and uncertainties. Accordingly, there are or will be important factors that could cause our actual results, performance or achievements to differ materially from those indicated in these statements. Any forward-looking statements in this document reflect our current views with respect to future events and are subject to these and other risks, uncertainties and assumptions relating to the results of our operations, growth strategy and liquidity, and the wider environment (specifically, market developments, investment opportunities and regulatory conditions).
Although CTT believes that the assumptions beyond such forward-looking statements are reasonable when made, any third parties are cautioned that forward-looking information and statements are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond the control of CTT, what could cause the models, objectives, plans, estimates and / or projections to be materially reviewed and / or actual results and developments to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements.
Forward-looking statements (in particular, the objectives, estimates and projections as well as the corresponding assumptions) do neither represent a commitment regarding the models and plans to be implemented, nor are they guarantees of future performance, nor have they been reviewed by the auditors of CTT. You are cautioned not to place undue reliance on the forward-looking statements herein. All forward-looking statements included herein speak only as at the date of this document. Except as required by applicable law, CTT does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
9 Months Report 2024
Interim condensed consolidated
financial statements
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CTT-CORREIOS DE PORTUGAL, S.A.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2023 AND 30 SEPTEMBER 2024 (Euros)
| Unaudited | |||
|---|---|---|---|
| NOTES | 31.12.2023 | 30.09.2024 | |
| ASSETS | |||
| Non-current assets | |||
| Tangible fixed assets | 4 | 296,994,666 | 333,791,793 |
| Investment properties | 6 | 5,975,987 | 6,051,199 |
| Intangible assets | 5 | 70,639,785 | 70,293,576 |
| Goodwill | 80,256,739 | 80,256,739 | |
| Investments in associated companies | 481 | 481 | |
| Investments in joint ventures | 22,174 | 21,543 | |
| Other investments | 3,200,797 | 3,142,501 | |
| Prepayments | 11 | — | 2,280,929 |
| Financial assets at fair value through profit or loss | 13,532,000 | 7,554,411 | |
| Debt securities at amortised cost | 8 | 364,706,177 | 361,425,453 |
| Other non-current assets | 3,533,009 | 3,747,067 | |
| Credit to banking clients | 10 | 1,444,412,021 | 1,516,939,877 |
| Deferred tax assets | 26 | 71,395,868 | 65,608,716 |
| Total non-current assets | 2,354,669,703 | 2,451,114,284 | |
| Current assets | |||
| Inventories | 6,663,470 | 7,706,723 | |
| Accounts receivable | 153,061,555 | 205,889,062 | |
| Credit to banking clients | 10 | 148,801,874 | 161,597,161 |
| Income taxes receivable | 23 | 8,268 | — |
| Prepayments | 11 | 9,946,772 | 14,246,088 |
| Debt securities at amortised cost | 8 | 364,759,821 | 1,722,134,868 |
| Other current assets | 92,545,537 | 115,050,708 | |
| Other banking financial assets | 9 | 1,274,575,121 | 648,849,232 |
| Cash and cash equivalents | 12 | 351,609,634 | 209,758,455 |
| 2,401,972,052 | 3,085,232,297 | ||
| Non-current assets held for sale | 200 | 200 | |
| Total current assets | 2,401,972,251 | 3,085,232,497 | |
| Total assets | 4,756,641,954 | 5,536,346,781 | |
| EQUITY AND LIABILITIES | |||
| Equity | |||
| Share capital | 14 | 71,957,500 | 69,220,000 |
| Own shares | 15 | (15,624,632) | (8,947,643) |
| Reserves | 15 | 48,113,244 | 30,510,494 |
| Retained earnings | 15 | 83,269,152 | 119,950,704 |
| Other changes in equity | 15 | 3,402,039 | 3,409,002 |
| Net profit | 60,511,368 | 27,751,600 | |
| Equity attributable to equity holders of the Parent Company | 251,628,671 | 241,894,157 | |
| Non-controlling interests | 1,624,181 | 34,286,301 | |
| Total equity | 253,252,852 | 276,180,457 | |
| Liabilities | |||
| Non-current liabilities | |||
| Medium and long term debt | 18 | 161,080,105 | 178,209,467 |
| Employee benefits | 149,740,115 | 158,929,987 | |
| Provisions | 19 | 26,338,865 | 11,228,160 |
| Debt securities issued at amortised cost | 21 | 347,131,609 | 274,278,427 |
| Prepayments | 11 | 671,689 | 665,428 |
| Deferred tax liabilities | 26 | 4,670,707 | 2,930,985 |
| Total non-current liabilities Current liabilities |
689,633,090 | 626,242,454 | |
| Accounts payable | 20 | 373,961,102 | 400,600,045 |
| Banking clients' deposits and other loans | 22 | 3,090,962,551 | 3,967,918,324 |
| Employee benefits | 22,049,283 | 19,991,652 | |
| Income taxes payable | 23 | 6,666,412 | 2,107,375 |
| Short term debt | 18 | 107,934,852 | 59,075,406 |
| Financial liabilities at fair value through profit or loss | 13,744,154 | 7,772,932 | |
| Debt securities issued at amortised cost | 21 | 243,468 | 278,699 |
| Prepayments | 11 | 5,110,098 | 5,267,801 |
| Other current liabilities | 145,324,271 | 141,634,449 | |
| Other banking financial liabilities | 9 | 47,759,822 | 29,277,188 |
| Total current liabilities | 3,813,756,012 | 4,633,923,870 | |
| Total liabilities | 4,503,389,102 | 5,260,166,324 | |
| Total equity and liabilities | 4,756,641,954 | 5,536,346,781 |
CTT-CORREIOS DE PORTUGAL, S.A.
CONSOLIDATED INCOME STATEMENT FOR THE NINE-MONTHS PERIODS ENDED 30 SEPTEMBER 2023 AND 30 SEPTEMBER 2024 Euros
| Nine-months periods ended | Three months ended | ||||
|---|---|---|---|---|---|
| NOTES | Unaudited | Unaudited | Unaudited | Unaudited | |
| 30.09.2023 | 30.09.2024 | 30.09.2023 | 30.09.2024 | ||
| Sales and services rendered | 3 | 614,127,877 | 688,124,268 | 198,303,478 | 231,655,666 |
| Financial margin | 72,095,705 | 73,081,371 | 26,045,920 | 25,150,612 | |
| Other operating income | 29,198,657 | 31,001,844 | 10,669,392 | 10,989,449 | |
| 715,422,239 | 792,207,482 | 235,018,790 | 267,795,727 | ||
| Cost of sales | (10,881,537) | (5,290,876) | (2,233,501) | (1,708,238) | |
| External supplies and services | (272,981,419) | (352,138,229) | (98,757,030) | (123,263,739) | |
| Staff costs | 24 | (287,360,078) | (301,594,906) | (90,544,153) | (99,228,394) |
| Impairment of accounts receivable, net | (1,471,909) | (1,771,049) | 1,221,509 | 723,530 | |
| Impairment of other financial banking assets | (18,083,406) | (10,418,981) | (5,732,805) | (2,984,373) | |
| Provisions, net | 19 | (1,019,736) | (1,201,336) | (746,850) | (191,900) |
| Depreciation/amortisation and impairment of investments, net | (51,910,588) | (55,945,436) | (15,618,636) | (20,191,371) | |
| Net gains/(losses) of assets and liabilities at fair value through profit or loss |
493,584 | (42,364) | 15,681 | (61,983) | |
| Fair value, net | (550,000) | — | (550,000) | ||
| Net gains/(losses) of other financial assets at fair value through other comprehensive income |
— | 418 | — | 418 | |
| Other operating costs | (15,176,600) | (15,351,599) | (4,831,620) | (4,815,154) | |
| Gains/losses on disposal/ remeasurement of assets | 55,167 | 67,534 | 29,018 | 15,336 | |
| (658,336,522) | (744,236,824) | (217,198,387) | (252,255,868) | ||
| 57,085,717 | 47,970,659 | 17,820,403 | 15,539,859 | ||
| Interest expenses | 25 | (12,287,136) | (13,364,608) | (4,551,071) | (4,998,998) |
| Interest income | 25 | 650,159 | 231,016 | 41,557 | 57,135 |
| Gains/losses in subsidiary, associated companies and joint ventures |
(6) | (631) | (1,674) | (1,491) | |
| (11,636,983) | (13,134,224) | (4,511,188) | (4,943,354) | ||
| Earnings before taxes | 45,448,734 | 34,836,435 | 13,309,215 | 10,596,505 | |
| Income tax for the period | 26 | (9,950,101) | (6,431,681) | (3,832,551) | (2,380,701) |
| Net profit for the period | 35,498,633 | 28,404,754 | 9,476,664 | 8,215,804 | |
| Net profit for the period attributable to: | |||||
| Equity holders | 35,527,387 | 27,751,600 | 9,478,553 | 7,939,266 | |
| Non-controlling interests | (28,754) | 653,154 | (1,890) | 276,538 | |
| Earnings per share: | 17 | 0.25 | 0.20 | 0.07 | 0.06 |
The attached notes are an integral part of these financial statements.
CTT-CORREIOS DE PORTUGAL, S.A.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE NINE-MONTHS PERIODS ENDED 30 SEPTEMBER 2023 AND 30 SEPTEMBER 2024
Euros
| Nine-months periods ended | Three months ended | ||||
|---|---|---|---|---|---|
| NOTES | Unaudited | Unaudited | Unaudited | Unaudited | |
| 30.09.2023 | 30.09.2024 | 30.09.2023 | 30.09.2024 | ||
| Net profit for the period | 35,498,633 | 28,404,754 | 9,476,664 | 8,215,803 | |
| Adjustments from application of the equity method (non re-classifiable adjustment to profit and loss) |
15 | 1,771 | (9,312) | 8,518 | (20,104) |
| Other changes in equity | 15 | 1,771 | (514,506) | 8,518 | (20,104) |
| Other comprehensive income for the period after taxes | 3,542 | (523,818) | 17,036 | (40,208) | |
| Comprehensive income for the period | 35,502,175 | 27,880,936 | 9,493,700 | 8,175,595 | |
| Attributable to non-controlling interests | (26,983) | 643,842 | 6,628 | 256,434 | |
| Attributable to shareholders of CTT | 35,529,158 | 27,237,094 | 9,487,072 | 7,919,161 |
CTT-CORREIOS DE PORTUGAL, S.A.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AS AT 31 DECEMBER 2023 AND 30 SEPTEMBER 2024
Euros
| NOTES | Share capital | Own Shares | Reserves | Other changes in equity |
Retained earnings |
Net profit for the year |
Non controlling interests |
Total | |
|---|---|---|---|---|---|---|---|---|---|
| Balance on 31 December 2022 | 72,675,000 | (10,826,390) | 53,844,057 | 6,857,207 | 64,647,067 | 36,406,519 | 1,326,016 | 224,929,476 | |
| Share capital decrease | 14 | (717,500) | 5,293,313 | (4,575,813) | — | — | — | — | — |
| Appropriation of net profit for the year of 2022 | — | — | — | — | 36,406,519 | (36,406,519) | — | — | |
| Dividends | 16 | — | — | — | — | (17,817,109) | — | — | (17,817,109) |
| Acquisition of own shares | 15 | — | (10,541,092) | — | — | — | — | — | (10,541,092) |
| Attribution of own shares | 15 | — | 449,537 | (1,155,000) | 705,463 | — | — | — | — |
| Other movements | — | — | — | — | — | — | 408,000 | 408,000 | |
| (717,500) | (4,798,242) | (5,730,813) | 705,463 | 18,589,410 | (36,406,519) | 408,000 | (27,950,201) | ||
| Other movements | — | — | — | — | — | — | (40,907) | (40,907) | |
| Actuarial gains/losses - Health Care, net from deferred taxes | 15 | — | — | — | (4,160,631) | — | — | — | (4,160,631) |
| Adjustments from the application of the equity method | 15 | — | — | — | — | 32,674 | — | — | 32,674 |
| Net profit for the period | — | — | — | — | — | 60,511,368 | (68,929) | 60,442,439 | |
| Comprehensive income for the period | — | — | — | (4,160,631) | 32,674 | 60,511,368 | (109,836) | 56,273,576 | |
| Balance on 31 December 2023 | 71,957,500 | (15,624,632) | 48,113,244 | 3,402,039 | 83,269,152 | 60,511,368 | 1,624,181 | 253,252,852 | |
| Share capital decrease | 15 | (2,737,500) | 20,111,920 | (17,374,420) | — | — | — | — | — |
| Appropriation of net profit for the year of 2023 | — | — | — | — | 60,511,368 | (60,511,368) | — | — | |
| Dividends | — | — | — | — | (23,315,758) | — | — | (23,315,758) | |
| Acquisition of own shares | 15 | — | (13,762,774) | — | — | — | — | — | (13,762,774) |
| Attribution of own shares | — | 327,844 | (840,000) | 512,156 | — | — | — | — | |
| Share plan | — | — | 611,670 | — | — | — | — | 611,670 | |
| Shareholdings sale | 7 | — | — | — | — | — | — | 32,952,531 | 32,952,531 |
| Shareholdings acquisition | — | — | — | — | (504,747) | — | (934,253) | (1,439,000) | |
| (2,737,500) | 6,676,990 | (17,602,750) | 512,156 | 36,690,864 | (60,511,368) | 32,018,278 | (4,953,331) | ||
| Other movements | 15 | — | — | — | (505,194) | — | — | (9,312) | (514,506) |
| Adjustments from the application of the equity method | 15 | — | — | — | — | (9,312) | — | — | (9,312) |
| Net profit for the period | — | — | — | — | — | 27,751,600 | 653,154 | 28,404,754 | |
| Comprehensive income for the period | — | — | — | (505,194) | (9,312) | 27,751,600 | 643,842 | 27,880,936 | |
| Balance on 30 September 2024 (Unaudited) | 69,220,000 | (8,947,643) | 30,510,494 | 3,409,002 | 119,950,704 | 27,751,600 | 34,286,301 | 276,180,457 |
9 Months 2024 Consolidated Report
CTT-CORREIOS DE PORTUGAL, S.A.
CONSOLIDATED CASH FLOW STATEMENT FOR THE NINE-MONTHS PERIODS ENDED 30 SEPTEMBER 2023 AND 30 SEPTEMBER 2024 Euros
| Unaudited | Unaudited | ||
|---|---|---|---|
| NOTES | 30.09.2023 | 30.09.2024 | |
| Cash flow from operating activities | |||
| Collections from customers | 634,704,531 | 710,663,192 | |
| Payments to suppliers | (325,854,214) | (428,258,973) | |
| Payments to employees | (259,310,779) | (282,895,712) | |
| Banking customer deposits and other loans | 466,236,843 | 862,968,525 | |
| Credit to banking clients | (68,781,433) | (74,611,546) | |
| Cash flow generated by operations | 446,994,947 | 787,865,486 | |
| Payments/receivables of income taxes | 1,057,992 | (6,930,143) | |
| Other receivables/payments | (108,578,573) | (12,802,068) | |
| Cash flow from operating activities (1) | 339,474,366 | 768,133,275 | |
| Cash flow from investing activities | |||
| Receivables resulting from: | |||
| Tangible fixed assets | 10,080 | 54,080 | |
| Financial investments | 7 | — | 32,447,343 |
| 73,647 | 2,479 | ||
| Investment subsidies | |||
| Investment in securities at amortised cost | 8 | 126,300,000 | 671,500,000 |
| Demand deposits at Bank of Portugal | 9 | — | — |
| Applications at the Central Bank | 9 | — | 626,342,000 |
| Other banking financial assets | 9 | 7,420,000 | 960,000 |
| Interest income | 2,104,562 | 995,734 | |
| Payments resulting from: | |||
| Tangible fixed assets | (10,748,803) | (14,647,130) | |
| Intangible assets | (12,048,596) | (12,156,370) | |
| Financial investments | 8 | (741,605) | (1,930,706) |
| Investment in securities at amortised cost | 8 | (49,877,352) (1,996,497,323) | |
| Demand deposits at Bank of Portugal | 9 | (2,465,800) | (10,524,700) |
| Applications at the Central Bank | (457,847,000) | — | |
| Other banking financial assets | 9 | (10,600,000) | (1,050,000) |
| Cash flow from investing activities (2) | (408,420,866) | (704,504,594) | |
| Cash flow from financing activities | |||
| Receivables resulting from: | |||
| Loans obtained | 18 | 34,780,874 | 49,486,223 |
| Capital realisations and other equity instruments | 408,000 | — | |
| Other credit institutions' deposits | 9 | — | 259,900,832 |
| Payments resulting from: | |||
| Loans repaid | 18 | (15,935,400) | (123,297,291) |
| Other credit institutions' deposits | — | (256,278,716) | |
| Interest expenses | (1,872,175) | (2,270,938) | |
| Lease liabilities | 18 | (27,684,142) | (29,937,006) |
| Debt securities issued | 21 | (71,586,282) | (72,894,684) |
| Acquisition of own shares | 15 | (4,510,815) | (14,050,820) |
| Dividends | 16 | (17,888,170) | (23,345,261) |
| Cash flow from financing activities (3) | (104,288,110) | (212,687,661) | |
| Net change in cash and cash equivalents (1+2+3) | (173,234,610) | (149,058,980) | |
| Cash and equivalents at the beginning of the period | 410,798,975 | 315,229,314 | |
| Cash and cash equivalents at the end of the period | 12 | 237,564,365 | 166,170,334 |
| Cash and cash equivalents at the end of the period | 237,564,365 | 166,170,334 | |
| Sight deposits at Bank of Portugal | 25,651,700 | 39,150,200 | |
| Outstanding checks of Banco CTT / Checks clearing of Banco CTT | 7,817,209 | 4,438,464 | |
| Impairment of slight and term deposits | (11,490) | (544) | |
| Cash and cash equivalents (Statement of Financial Position) | 271,021,783 | 209,758,455 |
CTT – CORREIOS DE PORTUGAL, S.A.
Notes to the interim condensed consolidated financial statements (Amounts expressed in Euros)
TABLE OF CONTENTS
| INTERIM CONSOLIDATED FINANCIAL STATEMENTS | 21 |
|---|---|
| 1. INTRODUCTION |
28 |
| 2. MATERIAL ACCOUNTING POLICIES |
29 |
| 2.1 New standards or amendments adopted by the Group | 29 |
| 2.2 Basis of Presentation |
30 |
| 3. SEGMENT REPORTING |
30 |
| 4. TANGIBLE FIXED ASSETS |
38 |
| 5. INTANGIBLE ASSETS |
42 |
| 6. INVESTMENT PROPERTIES |
44 |
| 7. COMPANIES INCLUDED IN THE CONSOLIDATION |
46 |
| 8. DEBT SECURITIES |
50 |
| 9. OTHER BANKING FINANCIAL ASSETS AND LIABILITIES |
53 |
| 10. CREDIT TO BANKING CLIENTS | 55 |
| 11. PREPAYMENTS | 59 |
| 12. CASH AND CASH EQUIVALENTS | 60 |
| 13. ACCUMULATED IMPAIRMENT LOSSES | 61 |
| 14. EQUITY | 62 |
| 15. OWN SHARES, RESERVES, OTHER CHANGES IN EQUITY AND RETAINED | 64 |
| EARNINGS | |
| 16. DIVIDENDS | 67 |
| 17. EARNINGS PER SHARE | 68 |
| 18. DEBT | 68 |
| 19. PROVISIONS, GUARANTEES PROVIDED, CONTINGENT LIABILITIES AND | 71 |
| COMMITMENTS | |
| 20. ACCOUNTS PAYABLE | 75 |
| 21. DEBT SECURITIES AT AMORTISED COST | 76 |
| 22. BANKING CLIENTS' DEPOSITS AND OTHER LOANS | 79 |
| 23. INCOME TAXES RECEIVABLE /PAYABLE | 80 |
| 24. STAFF COSTS | 80 |
| 25. INTEREST EXPENSES AND INTEREST INCOME | 84 |
| 26. INCOME TAX FOR THE PERIOD | 85 |
| 27. RELATED PARTIES | 90 |
| 28. OTHER INFORMATION | 91 |
1. Introduction
CTT – Correios de Portugal, S.A. ("CTT" or "Company"), with head office at Avenida dos Combatentes, 43, 14th floor, 1643-001 in Lisbon, had its origin in the "Administração Geral dos Correios Telégrafos e Telefones" government department and its legal form is the result of successive re-organisations carried out by the Portuguese state business sector in the communications area.
Decree-Law no. 49 368, of 10 November 1969, founded the state-owned company CTT - Correios e Telecomunicações de Portugal, E. P., which started operating on 1 January 1970. By Decree-Law no. 87/92, of 14 May, CTT – Correios e Telecomunicações de Portugal, E. P., was transformed into a legal entity governed by private law, with the status of a state-owned public limited company. Finally, with the foundation of the former Telecom Portugal, S.A. by spin-off from Correios e Telecomunicações de Portugal, S.A. under Decree-Law no. 277/92, of 15 December, the Company's name was changed to the current CTT – Correios de Portugal, S.A.
On 31 January 2013, the Portuguese State through the Order 2468/12 – SETF, of 28 December, determined the transfer of the investment owned by the Portuguese State in CTT to Parpública – Participações Públicas, SGPS, S.A.
At the General Meeting held on 30 October 2013, the registered capital of CTT was reduced to 75,000,000 Euros, being from that date onward represented by 150,000,000 shares, as a result of a stock split which was accomplished through the reduction of the nominal value from 4.99 Euros to 0.50 Euros.
During the financial year ended 31 December 2013, CTT's capital was opened to the private sector. Supported by Decree-Law no. 129/2013, of 6 September, and the Resolution of the Council of Ministers ("RCM") no. 62-A/2013, of 10 October, the RCM no. 62-B/2013, of 10 October, and RCM no. 72- B/2013, of 14 November, the first phase of privatisation of the capital of CTT took place on 5 December 2013. From this date onward, 63.64% of the shares of CTT (95.5 million shares) were owned by the private sector, of which 14% (21 million shares) were sold in a Public Offering and 49.64% (74.5 million shares) by Institutional Direct Selling. On 31 December 2013 the Portuguese State, through Parpública - Participações Públicas, SGPS, S.A. held 36.36% of the shares of CTT, 30.00% by holding and 6.36% by allocation.
On 5 September 2014, the second phase of the privatisation of CTT took place. The shares held by Parpública - Participações Públicas, SGPS, S.A., which on that date represented 31.503% of CTT's capital, were subject to a private offering of shares ("Equity Offering") via an accelerated book-building process. The Equity Offering was addressed exclusively to institutional investors.
At the meeting of the Company's Board of Directors held on 16 March 2022, it was unanimously decided to approve the implementation of a Buy-back programme for the Company's own shares, including the related terms and conditions, with the sole purpose of reducing the Company's share capital through the cancellation of shares acquired under the aforementioned programme, subject to prior approval by the General Meeting.
At the General Meeting held on 21 April 2022, a resolution was approved regarding the maximum number of shares to be acquired under the Share Buy-back Programme.
On 7 November 2022, the Company's share capital reduction in the amount of 2,325,000 euros, through the cancellation of 4,650,000 shares representing 3.1% of the share capital, was registered in the Commercial Register Office, with the Company's share capital to be composed of 145,350,000 shares with the nominal value of 0.50 Euros each.
Subsequently, at the Annual General Meeting held on 20 April 2023 and still following the share buyback programme mentioned above, the share capital reduction of 717,500 Euros was approved. On 21 April 2023, the share capital reduction of the aforementioned amount was entered in the commercial register, through the extinction of 1,435,000 shares representing 0.997% of the acquired CTT share capital.
On 17 July 2024, a reduction of CTT's share capital in the amount of 2,737,500 Euros was registered before the Commercial Registry Office through the cancellation of 5,475,000 shares held by the Company, representing 3.80% of its share capital and acquired under the share buyback programme carried out from 26 June 2023 to 9 May 2024. This share capital reduction was carried out following a resolution of the Annual General Meeting of CTT Shareholders held on 23 April 2024 which approved the share capital reduction in the amount of up to 3,825,000 Euros corresponding to the cancellation of up to 7,650,000 own shares already acquired or to be acquired by 25 June 2024 for the special purpose of implementing the share buyback programme and corresponding release of excess capital.
Thus, as at 30 June 2024, CTT's share capital now amounts to 69,220,000 Euros, represented by 138,440,000 shares with a nominal value of fifty cents per share, with the Company's Articles of Association being consequently amended.
The financial statements attached herewith are expressed in Euros, as this is the main currency of the Group's operations.
The shares of CTT are listed on Euronext Lisbon.
These financial statements were approved by the Board of Directors and authorised for issue on 29 October 2024.
2. Material accounting policies
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 2023, except for the new standards and amendments effective from 1 January 2024.
2.1 New standards or amendments adopted by the Group
The standards and amendments recently issued, already effective and adopted by the Group in the preparation of these financial statements, are as follows:
- Amendments to IAS 1 Presentation of financial statements Classification of current and non-current liabilities – This amendment aims to clarify the classification of liabilities as current or non-current balances depending on the rights that an entity has to defer their payment, at the end of each reporting period. The classification of liabilities is not affected by the entity's expectations (the assessment should determine whether a right exists, but should not consider whether or not the entity will exercise that right), or by events occurring after the reporting date, such as default of a "covenant". However, if the right to defer settlement for at least twelve months is subject to compliance with certain conditions after the balance sheet date, these criteria do not affect the right to defer settlement the purpose of which is to classify a liability as current or non-current. This change also includes a new definition of "settlement" of a liability and is applicable retrospectively.
- Amendments to IFRS 16 Lease liabilities in sale and leaseback transactions This amendment to IFRS 16 introduces guidance regarding the subsequent measurement of lease
liabilities related to sale and leaseback transactions that qualify as "sale " in accordance with the principles of IFRS 15, with greater impact when some or all of the lease payments are variable lease payments that do not depend on an index or a rate. When subsequently measuring lease liabilities, seller-lessees must determine "lease payments" and "revised lease payments" in such a way that they will not recognise gains/(losses) in relation to the right of use they retain.
• Amendments to IAS 7 and IFRS 7 - Disclosures: Supplier financing agreements - These amendments to IAS 7 - Statement of Cash Flows and IFRS 7 - Financial Instruments: Disclosures, aim to clarify the characteristics of a supplier financing agreement and introduce additional disclosure requirements where such agreements exist. Disclosure requirements are intended to help users of financial statements understand the effects of supplier financing arrangements on the entity's liabilities, cash flows and liquidity risk exposure.
The Group did not register significant changes with the adoption of these standards and interpretations.
2.2 Basis of preparation
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 2024, and in accordance with IAS 34 - Interim Financial Reporting.
The consolidated financial statements were prepared under the assumption of going concern and are prepared under the historical cost convention, except for the financial assets and liabilities accounted at fair value.
3. Segment 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.
As of 30 June 2024, the Group began reporting on two new aggregating areas: "Logistics" and "Bank & Financial Services", in order to align with the existing business lines and simplifying business reporting.
These two areas aggregate the business segments "Mail & Others" and "Express & Parcels" as "Logistics", and "Bank" and "Financial Services & Retail" as "Bank and Financial Services", maintaining the same level of disclosure of all relevant business drivers and captions.
"Payments" business was migrated to the "Mail & Others" in order to align all B2B commercial streams under the same ownership, ensuring only bank statutory entities in the "Banco" business segment.
Other small adjustments were also made as part of the reorganization of the company's commercial portfolio, namely the migration of the "Tax Payments" and "Money Transfers" from "Financial Services & Retail" segment to "Mail & Others".
The comparative information, as of 30 September 2023, has been restated in accordance with the changes described.
Thus, Logistics is made up of the following entities:
- Mail & Others CTT Contacto, S.A., CTT Soluções Empresariais, S.A., New Spring Services S.A., CTT IMO - Sociedade Imobiliária, S.A. MedSpring, S.A., CTT IMO Yield, S.A., CTT Services, S.A, Payshop, S.A. and CTT, S.A. excluding:
- Business related to postal financial services and retail products Financial Services & Retail;
- The money transfer business of both CTT, S.A. and Payshop S.A.
- Express & Parcels includes CTT Expresso S.A., CORRE S.A., 1520 Innovation Fund and Open Lockers, S.A.;
Bank & Financial Services includes:
- Financial Services & Retail Postal Financial Services and the sale of products and services in the retail network of CTT, S.A. and the money transfer business of both CTT S.A. and Payshop S.A.
- Bank Banco CTT S.A., S.A. and 321 Crédito S.A.
The business segregation by segment is based on management information produced internally and presented to the Extended Executive Committee ("chief operating decision maker").
The segments cover the three CTT business areas, as follows:
- Postal Market, covered by the Mail segment;
- Express and Parcels Markets, covered by the Express & Parcels segment; and
- Financial Market, covered by the Financial Services and Bank segments.
The amounts reported in each business segment result from the aggregation of the subsidiaries and business units defined in each segment perimeter and the elimination of transactions between companies of the same segment.
The statement of financial position of each subsidiary and business unit is determined based on the amounts booked directly in the companies that compose the segment, including the elimination of balances between companies of the same segment, and excluding the allocation in the segments of the adjustments between segments.
The income statement for each business segment is based on the amounts booked directly in the companies' financial statements and related business units, adjusted by the elimination of transactions between companies of the same segment.
However, as CTT, S.A. has assets in more than one segment it was necessary to split its income and costs by the several operating segments. The Internal Services Rendered refer to services provided across the different CTT, S.A. business areas, and the income is calculated according to standard activities valued through internally set transfer prices. The Mail segment provides internal services essentially related to the retail network (included in the Mail segment). Additionally, the Financial Services Segment uses the Retail network to sell its products. The use of the Retail network by other segments, as Express & Parcels and CTT Bank is, equally, presented in the line "Internal Services Rendered".
Initially, CTT, S.A. operating costs are allocated to the different segments by charging the internal transactions for the services mentioned above. After this initial allocation, costs relating to corporate and support areas (CTT Central Structure) are allocated by nature to the Mail segment and others.
The consolidated income statement by nature, aggregators and segment of the nine-months periods ended 30 September 2023 and 30 September 2024 are as follows:
| 30.09.2023 "Restated" | ||||||||
|---|---|---|---|---|---|---|---|---|
| Thousand Euros | Mail & Others |
Express & Parcels |
Logistics | Financial Services & Retail |
Bank | Bank & Financial Services |
Total | |
| Revenues | 337,340 | 229,488 | 566,828 | 54,629 | 93,966 | 148,594 | 715,422 | |
| Sales and services rendered | 332,350 | 228,994 | 561,344 | 52,784 | — | 52,784 | 614,128 | |
| Services rendered | 326,680 | 228,979 | 555,658 | 47,493 | — | 47,493 | 603,151 | |
| Sales | 5,670 | 16 | 5,686 | 5,291 | — | 5,291 | 10,976 | |
| Financial Margin | — | — | — | — | 72,096 | 72,096 | 72,096 | |
| Other operating income | 4,990 | 494 | 5,484 | 1,845 | 21,870 | 23,715 | 29,199 | |
| Operating costs - EBITDA | 298,400 | 205,725 | 504,126 | 21,806 | 73,914 | 95,720 | 599,846 | |
| Staff costs | 230,825 | 28,578 | 259,403 | 2,739 | 20,700 | 23,438 | 282,841 | |
| External supplies and services |
66,966 | 174,936 | 241,902 | 980 | 28,145 | 29,125 | 271,027 | |
| Other costs | 12,675 | 1,483 | 14,159 | 5,436 | 5,808 | 11,244 | 25,402 | |
| Impairment and provisions | (382) | 2,025 | 1,642 | 7 | 18,926 | 18,933 | 20,575 | |
| Internal services rendered | (11,684) | (1,296) | (12,980) | 12,645 | 335 | 12,980 | — | |
| EBITDA | 38,940 | 23,762 | 62,702 | 32,823 | 20,052 | 52,874 | 115,577 | |
| Depreciation/amortisation and impairment of investments, net |
30,404 | 11,678 | 42,082 | 101 | 5,339 | 5,440 | 47,522 | |
| EBIT recurring | 8,536 | 12,084 | 20,621 | 32,722 | 14,713 | 47,434 | 68,055 | |
| Specific items | 10,191 | 613 | 10,804 | — | 165 | 165 | 10,969 | |
| Business restructurings | 4,213 | 306 | 4,519 | — | — | — | 4,519 | |
| Strategic studies and projects costs |
1,277 | 330 | 1,607 | — | — | — | 1,607 | |
| Other non-recurring income and expenses |
4,701 | (23) | 4,678 | — | 165 | 165 | 4,843 | |
| EBIT | (1,655) | 11,472 | 9,817 | 32,721 | 14,548 | 47,269 | 57,086 | |
| Financial results | (11,637) | |||||||
| Interest expenses | (12,287) | |||||||
| Interest income | 650 | |||||||
| Gains/losses in subsidiary, associated companies and joint ventures |
— | |||||||
| Earnings before taxes (EBT) | 45,449 | |||||||
| Income tax for the period | 9,950 | |||||||
| Net profit for the period | 35,499 | |||||||
| Non-controlling interests | (29) | |||||||
| Equity holders of parent company |
35,527 |
| 30.09.2024 | |||||||
|---|---|---|---|---|---|---|---|
| Thousand Euros | Mail & Others |
Express & Parcels |
Logistics | Financial Services & Retail |
Bank | Bank & Financial Services |
Total |
| Revenues | 348,157 | 330,465 | 678,622 | 17,361 | 96,283 | 113,645 | 792,267 |
| Sales and services rendered | 343,041 | 329,482 | 672,523 | 15,818 | — | 15,818 | 688,341 |
| Services rendered | 338,593 | 329,458 | 668,051 | 14,989 | — | 14,989 | 683,040 |
| Sales | 4,448 | 24 | 4,472 | 829 | — | 829 | 5,301 |
| Financial Margin | — | — | — | — | 73,081 | 73,081 | 73,081 |
| Other operating income | 5,116 | 983 | 6,099 | 1,544 | 23,202 | 24,746 | 30,845 |
| Operating costs - EBITDA | 310,082 | 291,895 | 601,978 | 8,034 | 71,688 | 79,722 | 681,700 |
| Staff costs | 236,938 | 36,533 | 273,471 | 985 | 24,496 | 25,481 | 298,952 |
| External supplies and services | 64,662 | 252,835 | 317,497 | 1,629 | 29,890 | 31,519 | 349,016 |
| Other costs | 11,174 | 1,758 | 12,933 | 974 | 6,770 | 7,745 | 20,677 |
| Impairment and provisions | 1,452 | 1,103 | 2,555 | — | 10,500 | 10,500 | 13,054 |
| Internal services rendered | (4,143) | (334) | (4,478) | 4,447 | 31 | 4,478 | — |
| EBITDA | 38,075 | 38,570 | 76,644 | 9,327 | 24,595 | 33,923 | 110,567 |
| Depreciation/amortisation and impairment of investments, net |
35,245 | 14,488 | 49,733 | 129 | 6,067 | 6,195 | 55,928 |
| EBIT recurring | 2,830 | 24,082 | 26,912 | 9,199 | 18,529 | 27,727 | 54,639 |
| Specific items | 5,144 | 1,427 | 6,571 | 4 | 93 | 98 | 6,669 |
| Business restructurings | 2,526 | 117 | 2,643 | — | — | — | 2,643 |
| Strategic studies and projects costs |
1,081 | 266 | 1,347 | — | 80 | 80 | 1,427 |
| Other non-recurring income and expenses |
1,538 | 1,043 | 2,581 | 4 | 13 | 18 | 2,599 |
| EBIT | (2,314) | 22,655 | 20,341 | 9,195 | 18,435 | 27,630 | 47,971 |
| Financial results | (13,134) | ||||||
| Interest expenses | (13,365) | ||||||
| Interest income | 231 | ||||||
| Gains/losses in subsidiary, associated companies and joint ventures |
(1) | ||||||
| Earnings before taxes and non-controlling interests (EBT) |
34,836 | ||||||
| Income tax for the period | 6,432 | ||||||
| Net profit for the period | 28,405 | ||||||
| Non-controlling interests | 653 | ||||||
| Equity holders of parent company |
27,752 |
As at 30 September 2024, specific items amounted to 6.7 million euros, mainly due to: (i) restructuring, including agreements to suspend employment contracts (+2.6 million euros) (ii) costs associated with strategic projects (+1.4 million euros) and (iii) transaction costs associated with the start-up of the Real Estate business (+1.2 million euros).
The revenues are detailed as follows:
| Thousand Euros | 30.09.2023 "Restated" |
30.09.2024 |
|---|---|---|
| Logistics | 566,828 | 678,622 |
| Mail & others | 337,340 | 348,157 |
| Transactional mail | 257,408 | 263,185 |
| Editorial mail | 8,657 | 8,417 |
| Parcels (USO) | 5,481 | 5,196 |
| Advertising mail | 9,290 | 9,178 |
| Philately | 3,145 | 2,944 |
| Business Solutions | 32,731 | 36,990 |
| Payments | 14,283 | 15,580 |
| Other | 6,345 | 6,667 |
| Express & Parcels | 229,488 | 330,465 |
| Portugal | 106,211 | 117,016 |
| Parcels | 96,361 | 107,473 |
| Cargo | 3,046 | 2,096 |
| Banking network | 3,218 | 3,388 |
| Logistics | 2,931 | 3,789 |
| Other businesses | 655 | 270 |
| Spain | 119,858 | 209,236 |
| Mozambique | 3,419 | 4,214 |
| Bank & Financial Services | 148,594 | 113,645 |
| Financial Services & Retail | 54,629 | 17,361 |
| Savings & Insurance products | 41,071 | 7,918 |
| Money transfers | 4,069 | 4,460 |
| Credit products | 171 | 93 |
| Retail | 8,150 | 4,049 |
| Other | 1,167 | 842 |
| Bank | 93,966 | 96,283 |
| Net interest income | 72,096 | 73,081 |
| Interest income (+) | 92,878 | 132,131 |
| Interest expense (-) | (20,782) | (59,049) |
| Commissions income (+) | 19,953 | 21,455 |
| Credits | 3,713 | 4,519 |
| Savings & Insurance | 5,843 | 6,231 |
| Accounts and Cards | 10,327 | 10,703 |
| Other comissions received | 70 | 2 |
| Other | 1,917 | 1,747 |
| 715,422 | 792,267 |
The revenue detail, related to sales and services rendered and financial margin, for the nine-months periods ended 30 September 2023 and 30 September 2024, by revenue sources, are detailed as follows:
| 30.09.2023 "restated" | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Nature | Mail & others |
Express & Parcels |
Logistics | Financial Services & Retail |
Bank | Bank & Financial Services |
Total | ||
| Postal Services | 305,961,687 | — | 305,961,687 | — | — | — | 305,961,687 | ||
| Express services | — | 228,994,307 | 228,994,307 | — | — | — | 228,994,307 | ||
| Merchandising products sales |
— | — | — | 944,916 | — | 944,916 | 944,916 | ||
| PO Boxes | — | — | — | 1,106,593 | — | 1,106,593 | 1,106,593 | ||
| International mail services (*) |
12,136,929 | — | 12,136,929 | — | — | — | 12,136,929 | ||
| Financial Services fees | 14,251,101 | — | 14,251,101 | 50,732,344 | 72,095,705 | 122,828,049 | 137,079,149 | ||
| "Sales and Services rendered" and "Financial Margin" total |
332,349,717 | 228,994,307 | 561,344,024 | 52,783,853 | 72,095,705 | 124,879,558 | 686,223,582 |
(*) Inbound Mail
| 30.09.2024 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Nature | Mail & others |
Express & Parcels |
Logistics | Financial Services & Retail |
Bank | Bank & Financial Services |
Total | ||
| Postal Services | 316,321,464 | — | 316,321,464 | — | — | — | 316,321,464 | ||
| Express services | — | 329,482,223 | 329,482,223 | — | — | — | 329,482,223 | ||
| Merchandising products sales |
— | — | — | 807,689 | — | 807,689 | 807,689 | ||
| PO Boxes | — | — | — | 1,057,574 | — | 1,057,574 | 1,057,574 | ||
| International mail services (*) |
11,404,640 | — | 11,404,640 | — | — | — | 11,404,640 | ||
| Financial Services fees | 15,314,893 | — | 15,314,893 | 13,952,452 | 73,081,371 | 87,033,823 | 102,348,715 | ||
| "Sales and Services rendered" and "Financial Margin" total |
343,040,996 | 329,482,223 | 672,523,220 | 15,817,715 | 73,081,371 | 88,899,085 | 761,422,305 |
(*) Inbound Mail
The assets by segment are detailed as follows:
| 31.12.2023 - restated | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Assets (Euros) | Mail & others | Express & Parcels |
Logistics | Financial Services & Retail |
Bank | Bank & Financial Services |
Non allocated assets |
Total | |
| Intangible assets | 36,911,202 | 9,372,295 | 46,283,497 | 370,257 | 21,270,246 | 21,640,503 | 2,715,785 | 70,639,785 | |
| Tangible fixed assets | 211,579,132 | 78,938,956 290,518,089 | 2,440 | 5,338,284 | 5,340,724 | 1,135,853 | 296,994,666 | ||
| Investment properties | — | — | — | — | — | — | 5,975,987 | 5,975,987 | |
| Goodwill | 16,622,338 | 2,955,753 | 19,578,091 | — | 60,678,648 | 60,678,648 | — | 80,256,739 | |
| Deferred tax assets | — | — | — | — | — | — | 71,395,868 | 71,395,868 | |
| Accounts receivable | — | — | — | — | — | — 153,061,555 | 153,061,555 | ||
| Credit to bank clients | — | — | — | — | 1,593,213,895 1,593,213,895 | — 1,593,213,895 | |||
| Financial assets at fair value through profit or loss |
— | — | — | — | 13,532,000 | 13,532,000 | — | 13,532,000 | |
| Debt securities at amortised cost |
— | — | — | — | 729,465,998 729,465,998 | — | 729,465,998 | ||
| Other banking financial assets |
— | — | — | — | 1,274,575,121 1,274,575,121 | — 1,274,575,121 | |||
| Other assets | 21,167,800 | 33,497,865 | 54,665,666 | 14,756,030 | 32,571,217 | 47,327,248 | 16,136,151 | 118,129,065 | |
| Cash and cash equivalents |
— | 34,360,429 | 34,360,429 | — | 90,545,373 | 90,545,373 226,703,832 | 351,609,635 | ||
| Non-current assets held for sale |
— | — | — | — | 200 | 200 | — | 200 | |
| 286,280,472 159,125,299 445,405,772 | 15,128,727 | 3,821,190,982 3,836,319,709 477,125,031 4,758,850,513 |
| 30.09.2024 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Assets (Euros) | Mail & others |
Express & Parcels |
Logistics | Financial Services & Retail |
Bank | Bank & Financial Services |
Non allocated assets |
Total |
| Intangible assets | 32,977,221 | 10,519,031 | 43,496,251 | 554,816 | 21,309,831 | 21,864,647 | 4,932,677 | 70,293,576 |
| Tangible fixed assets | 219,816,402 | 105,969,062 | 325,785,465 | 22,405 | 6,483,063 | 6,505,468 | 1,500,860 | 333,791,793 |
| Investment properties | — | — | — | — | — | — | 6,051,199 | 6,051,199 |
| Goodwill | 16,622,338 | 2,955,753 | 19,578,091 | — | 60,678,648 | 60,678,648 | — | 80,256,739 |
| Deferred tax assets | — | — | — | — | — | — | 65,608,716 | 65,608,716 |
| Accounts receivable | — | — | — | — | — | — | 205,889,062 | 205,889,062 |
| Credit to bank clients | — | — | — | — 1,678,537,038 1,678,537,038 | — 1,678,537,038 | |||
| Financial assets at fair value through profit or loss |
— | — | — | — | 7,554,411 | 7,554,411 | — | 7,554,411 |
| Debt securities at amortised cost |
— | — | — | — 2,083,560,321 2,083,560,321 | — 2,083,560,321 | |||
| Other banking financial assets |
— | — | — | — | 648,849,232 | 648,849,232 | — | 648,849,232 |
| Other assets | 20,970,365 | 42,137,460 | 63,107,824 | 19,418,999 | 27,119,345 | 46,538,344 | 36,549,871 | 146,196,040 |
| Cash and cash equivalents |
— | 36,932,193 | 36,932,193 | — | 86,188,760 | 86,188,760 | 86,637,502 | 209,758,455 |
| Non-current assets held for sale |
— | — | — | — | 200 | 200 | — | 200 |
| 290,386,326 | 198,513,499 | 488,899,824 | 19,996,220 4,620,280,849 4,640,277,069 407,169,887 5,536,346,781 |
The non-current assets acquisitions by segment, are detailed as follows:
| 31.12.2023 "restated" | |||||||
|---|---|---|---|---|---|---|---|
| Mail & others |
Express & Parcels |
Logistics | Financial Services & Retail |
Bank | Bank & Financial Services |
Total | |
| Intangible assets | 9,271,573 | 3,417,750 | 12,689,323 | 173,119 | 5,537,646 | 5,710,764 18,400,088 | |
| Tangible fixed assets | 13,652,763 | 15,872,734 | 29,525,497 | 26,888 | 1,770,322 | 1,797,210 31,322,707 | |
| 22,924,337 | 19,290,484 | 42,214,821 | 200,006 | 7,307,968 | 7,507,974 49,722,794 |
| 30.09.2024 | |||||||
|---|---|---|---|---|---|---|---|
| Mail & others |
Financial Bank & Express & Logistics Services & Bank Financial Parcels Retail Services |
Total | |||||
| Intangible assets | 6,935,342 | 1,620,178 | 8,555,520 | 107,827 | 4,604,362 | 4,712,189 13,267,709 | |
| Tangible fixed assets | 31,604,873 | 40,045,481 | 71,650,354 | 21,943 | 2,670,007 | 2,691,950 74,342,304 | |
| 38,540,215 | 41,665,659 | 80,205,874 | 129,770 | 7,274,369 | 7,404,139 87,610,013 |
The detail of the underlying reasons to the non-allocation of the following assets to any segment, is as follows:
- "Intangible assets" (4,932,677 Euros): the unallocated amount is related to part of the intangible assets in progress, which are allocated to the underlying segment in the moment they become firm assets;
- "Tangible fixed assets" (1,500,860 Euros): This amount corresponds to a part of the tangible fixed assets in progress and advances payments to suppliers, which are allocated to the related segment at the time of the transfer to firm assets;
- "Investment properties" (6,051,199 Euros): These assets are not allocated to the operating activity, which is why they are not allocated to any segment;
- "Deferred tax assets" (65,608,716 Euros): These assets are mainly comprised of deferred tax assets associated with employee benefits, being those related to the CTT, S.A. Health Plan the most relevant amount, as detailed in note 26 - Income tax for the period. CTT, S.A. is allocated to different segments, as already mentioned, the allocation of these assets to the different segments does not seem possible to be carried out reliably;
- "Accounts receivables" (205,889,062 Euros): This amount cannot be allocated, due to the existence of multi-products customers, whose receivable amounts correspond to more than one segment;
- "Other assets" (36,549,871 Euros): This amount is mainly related to prepayments and other current and non-current assets, mostly related to CTT S.A., which are allocated to different segments and this allocation is not possible to be carried out reliably;
- "Cash and cash equivalents (86,637,502 Euros): the unallocated amount is related, essentially, to the cash and cash equivalents of CTT S.A., as this company concentrates the business segments' Mail, Financial Services & Retail and Bank, and it is not possible to split the amounts of cash and bank deposits by each CTT's businesses.
Debt by segment is detailed as follows:
| 31.12.2023 "restated" | |||||||
|---|---|---|---|---|---|---|---|
| Other information | Mail & others |
Express & Parcels |
Logistics | Financial Services & Retail |
Bank | Bank & Financial Services |
Total |
| Non-current debt | 112,610,378 | 46,244,965 158,855,343 | 18,990 | 2,205,773 | 2,224,763 161,080,105 | ||
| Bank loans | 33,390,061 | — | 33,390,061 | — | — | — | 33,390,061 |
| Commercial Paper | 34,947,466 | — | 34,947,466 | — | — | — | 34,947,466 |
| Lease liabilities | 44,272,851 | 46,244,965 | 90,517,816 | 18,990 | 2,205,773 | 2,224,763 | 92,742,578 |
| Current debt | 89,590,406 | 17,185,189 106,775,595 | 6,940 | 1,152,317 | 1,159,257 107,934,852 | ||
| Bank loans | 74,541,219 | 7,854,338 | 82,395,558 | — | — | — | 82,395,558 |
| Commercial Paper | 22,067 | — | 22,067 | — | — | — | 22,067 |
| Lease liabilities | 15,027,119 | 9,330,851 | 24,357,970 | 6,940 | 1,152,317 | 1,159,257 | 25,517,227 |
| 202,200,784 | 63,430,153 265,630,938 | 25,930 | 3,358,090 | 3,384,020 269,014,958 |
| 30.09.2024 | |||||||
|---|---|---|---|---|---|---|---|
| Other information | Mail & others | Express & Parcels |
Logistics | Financial Services & Retail |
Bank | Bank & Financial Services |
Total |
| Non-current debt | 108,443,955 | 66,756,580 175,200,535 | 29,481 | 2,979,451 | 3,008,932 | 178,209,467 | |
| Bank loans | 16,688,799 | — | 16,688,799 | — | — | — | 16,688,799 |
| Commercial Paper | 34,971,674 | — | 34,971,674 | — | — | — | 34,971,674 |
| Lease liabilities | 56,783,482 | 66,756,580 123,540,062 | 29,481 | 2,979,451 | 3,008,932 | 126,548,994 | |
| Current debt | 46,264,183 | 11,276,161 | 57,540,344 | 14,871 | 1,520,191 | 1,535,062 | 59,075,406 |
| Bank loans | 27,261,122 | — | 27,261,122 | — | — | — | 27,261,122 |
| Commercial Paper | 870,449 | — | 870,449 | — | — | — | 870,449 |
| Lease liabilities | 18,132,612 | 11,276,161 | 29,408,773 | 14,871 | 1,520,191 | 1,535,062 | 30,943,835 |
| 154,708,138 | 78,032,742 232,740,879 | 44,352 | 4,499,642 | 4,543,994 | 237,284,873 |
The Group is domiciled in Portugal. The result of its Sales and services rendered by geographical segment is disclosed below:
| Thousand Euros | 30.09.2023 | 30.09.2024 |
|---|---|---|
| Revenue - Portugal | 441,420 | 422,061 |
| Revenue - other countries | 172,708 | 266,063 |
| 614,128 | 688,124 |
The revenue rendered in other countries, includes the revenue from the Express & Parcels rendered in Spain by CTT Expresso branch in this country, in the amount of 202,142 thousand Euros (30 September 2023: 114 471 thousands of euros).
4. Tangible fixed assets
During the year ended 31 December 2023 and the nine-months period ended 30 September 2024, the movements occurred in Tangible fixed assets, as well as the respective accumulated depreciation, were as follows:
| 31.12.2023 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Land and natural resources |
Buildings and other constructions |
Basic equipment |
Transport equipment |
Office equipment |
Other tangible fixed assets |
Tangible fixed assets in progress |
Advance payments to suppliers |
Rights of use |
Total | |
| Tangible fixed assets | ||||||||||
| Opening balance | 35,608,901 | 343,254,451 | 181,158,903 | 3,649,503 | 74,307,835 | 28,567,252 | 4,018,810 | 152,577 257,604,568 | 928,322,799 | |
| Acquisitions | — | 377,331 | 5,907,723 | 38,854 | 4,397,337 | 992,122 | 5,963,623 | 18,583 | — | 17,695,573 |
| New contracts | — | — | — | — | — | — | — | — 13,627,135 | 13,627,135 | |
| Disposals | — | — | (988,366) | (4,053) | (502) | — | — | — | — | (992,921) |
| Transfers and write offs |
— | 3,575,999 | 2,315,415 | — | 195,229 | (208,079) | (8,175,333) | (100,908) (14,766,030) | (17,163,708) | |
| Terminated contracts |
— | — | — | — | — | — | — | — | (1,667,586) | (1,667,586) |
| Remeasurements | — | — | — | — | — | — | — | — 21,942,433 | 21,942,433 | |
| Adjustments | — | (1,000) | (85,934) | (1,893) | (1,903) | 22,119 | 52,144 | — | 150,020 | 133,554 |
| Closing balance | 35,608,901 | 347,206,781 | 188,307,741 | 3,682,410 | 78,897,996 | 29,373,413 | 1,859,244 | 70,252 276,890,540 | 961,897,279 | |
| Accumulated depreciation | ||||||||||
| Opening balance | 3,561,803 | 238,669,491 | 145,112,462 | 3,505,640 | 68,299,578 | 22,570,731 | — | — 139,745,187 | 621,464,892 | |
| Depreciation for the period |
— | 10,259,034 | 4,874,132 | 65,497 | 1,820,743 | 1,469,622 | — | — 33,667,816 | 52,156,843 | |
| Disposals | — | — | (685,376) | (3,725) | (309) | — | — | — | — | (689,410) |
| Transfers and write offs |
— | (1,203,258) | (24,940) | — | (12,843) | (101,548) | — | — | (5,151,501) | (6,494,090) |
| Terminated contracts |
— | — | — | — | — | — | — | — | (1,574,152) | (1,574,152) |
| Adjustments | — | (461) | (30,400) | (1,268) | (1,514) | (1,315) | — | — | 59,681 | 24,724 |
| Closing balance | 3,561,803 | 247,724,805 | 149,245,878 | 3,566,144 | 70,105,656 | 23,937,490 | — | — 166,747,031 | 664,888,807 | |
| Accumulated impairment | ||||||||||
| Opening balance | — | 218,840 | — | — | — | 16,125 | — | — | 3,417,162 | 3,652,127 |
| Increases | — | 280,550 | — | — | — | — | — | — | 4,896,310 | 5,176,860 |
| Reversals | — | (499,390) | — | — | — | (2,319) | — | — | (8,313,472) | (8,815,181) |
| Closing balance | — | — | — | — | — | 13,806 | — | — | — | 13,806 |
| Net Tangible fixed assets |
32,047,098 | 99,481,976 | 39,061,863 | 116,266 | 8,792,340 | 5,422,117 | 1,859,244 | 70,252 110,143,510 | 296,994,666 |
| 30.09.2024 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Land and natural resources |
Buildings and other constructions |
Basic equipment |
Transport equipment |
Office equipment |
Other tangible fixed assets |
Tangible fixed assets in progress |
Advance payments to suppliers |
Rights of use |
Total | |
| Tangible fixed assets | ||||||||||
| Opening balance | 35,608,901 | 347,206,781 | 188,307,741 | 3,682,410 | 78,897,996 | 29,373,413 | 1,859,244 | 70,252 | 276,890,540 | 961,897,279 |
| Acquisitions | — | 43,430 | 1,584,395 | 9,738 | 532,305 | 630,115 | 10,101,530 | 28,586 | — | 12,930,099 |
| New contracts | — | — | — | — | — | — | — | — | 61,412,205 | 61,412,205 |
| Disposals | — | — | (683,947) | — | (85,696) | — | (22,322) | — | — | (791,964) |
| Transfers and write-offs | — | 2,392,897 | 720,362 | — | 353,655 | (3,896) | (4,275,333) | — | (1,459,932) | (2,272,247) |
| Terminated contracts | — | — | — | — | — | — | — | — | (194,492) | (194,492) |
| Remeasurements | — | — | — | — | — | — | — | — | 4,297,123 | 4,297,123 |
| Adjustments | (90,151) | (270,863) | (116,936) | (1,022) | (74,919) | 785,326 | (17,369) | — | 113,995 | 328,061 |
| Closing balance | 35,518,750 | 349,372,245 | 189,811,615 | 3,691,126 | 79,623,340 | 30,784,958 | 7,645,751 | 98,838 | 341,059,441 1,037,606,064 | |
| Accumulated depreciation | ||||||||||
| Opening balance | 3,561,803 | 247,724,805 | 149,245,878 | 3,566,144 | 70,105,656 | 23,937,490 | — | — | 166,747,031 | 664,888,807 |
| Depreciation for the period |
— | 7,604,012 | 4,181,932 | 42,304 | 1,817,313 | 1,001,909 | — | — | 26,904,217 | 41,551,687 |
| Disposals | — | — | (614,947) | — | (80,862) | — | — | — | — | (695,809) |
| Transfers and write-offs | — | (133,372) | (30,852) | — | (9,397) | (35,669) | — | — | (1,185,494) | (1,394,784) |
| Terminated contracts | — | — | — | — | — | — | — | — | (273,127) | (273,127) |
| Adjustments | — | (12,424) | (24,335) | (723) | (643) | (377) | — | — | (237,111) | (275,613) |
| Closing balance | 3,561,803 | 255,183,021 | 152,757,677 | 3,607,725 | 71,832,067 | 24,903,353 | — | — | 191,955,517 | 703,801,162 |
| Accumulated impairment | ||||||||||
| Opening balance | — | — | — | — | — | 13,806 | — | — | — | 13,806 |
| Reversals | — | — | — | — | — | (697) | — | — | — | (697) |
| Closing balance | — | — | — | — | — | 13,109 | — | — | — | 13,109 |
| Net Tangible fixed assets |
31,956,947 | 94,189,224 | 37,053,939 | 83,401 | 7,791,273 | 5,868,496 | 7,645,751 | 98,838 | 149,103,924 | 333,791,793 |
The depreciation recorded in the Group amounting to 41,551,687 Euros (38,707,718 Euros on 30 September 2023), is booked under the caption Depreciation/amortisation and impairment of investments, net.
As at 31 December 2023, as part of the real estate asset transaction, described in detail in note 7, CTT transferred 360 properties to CTT IMO Yield, resulting in the derecognition of tangible fixed assets at a
net book value of 83,163 thousand Euros and investment properties with a net book value of 4,691 thousand Euros (note 6). The Company then carried out a leaseback operation for the properties used within the scope of its operational activity. This operation resulted in the recognition of a right of use of 54,050 thousand euros, as well as the respective lease liability of 85,578 thousand euros. The capital gains generated in the operation total 1,625 thousand euros for the Company. Considering that this is an operation between group companies, no impacts were recognised on the Company's results for the period. It should also be noted that this operation had no impact on the Group's consolidated accounts.
According to the concession contract in force (Note 1), at the end of the concession, the assets included in the public and private domain of the State revert automatically, at no cost, to the conceding entity. As the postal network belongs exclusively to CTT, not being a public domain asset, only the assets that belong to the State revert to it, and as such, at the end of the concession CTT will continue to own its assets. The Board of Directors, supported by CTT's accounting records and the statement of Directorate General of Treasury and Finance ("Direção Geral do Tesouro e Finanças"), the entity responsible for the Information System of Public Buildings ("Sistema de Informação de Imóveis do Estado" – SIIE) concludes that CTT's assets do not include any public or private domain assets of the Portuguese State.
As under the concession contract, the grantor does not control any significant residual interest in CTT's postal network and CTT being free to dispose of, replace or encumber the assets that integrate the postal network, IFRIC 12 - Service Concession Agreements is not applicable to the universal postal service concession contract.
During the nine-months periods ended 30 September 2024, the most significant movements in the Tangible Fixed Assets caption were the following:
Buildings and other constructions:
The movements associated with acquisitions and transfers concern to capitalisation works in own and third-party buildings in several CTT and CTT Expresso facilities.
Basic equipment:
The amount relating to acquisitions mainly concerns to the acquisition of computer equipment amounting to 24 thousand Euros, the acquisition of racks and containers amounting to 246 thousand Euros and the acquisition of pallet racks amounting to 11 thousand Euros by CTT Expresso, the acquisition of distribution vehicles worth 450 thousand Euros by CORRE and the acquisition of lockers worth 161 thousand Euros by Open Lockers.
Office equipment:
The amount relating to acquisitions mainly relates to the acquisition of various computer equipment worth 285 thousand Euros by CTT.
Other tangible fixed assets:
The acquisitions caption essentially records prevention and safety equipment amounting to approximately 227 thousand Euros at CTT and in the amount of 164 thousand Euros by CTT Expresso.
Tangible fixed assets in progress:
Under the caption tangible fixed assets in progress acquisitions, essentially, concerns to capitalisation works in own and third-party buildings in several facilities, as well as sorters development by CTT Expresso, branch in Spain, which will be transferred to the captions of the respective nature after its completion.
Rights of Use
The rights of use recognised are detailed as follows, by type of underlying asset:
| 31.12.2023 | |||||||
|---|---|---|---|---|---|---|---|
| Buildings | Vehicles | Other assets |
Total | ||||
| Tangible fixed assets | |||||||
| Opening balance | 214,083,554 | 38,787,250 | 4,733,764 257,604,568 | ||||
| New contracts | 11,501,538 | 2,125,596 | — | 13,627,135 | |||
| Transfers and write-offs | (14,678,516) | (87,514) | — (14,766,030) | ||||
| Terminated contracts | (1,398,631) | (268,955) | — | (1,667,586) | |||
| Remeasurements | 20,056,802 | 1,885,631 | — | 21,942,433 | |||
| Adjustments | 143,433 | 6,588 | — | 150,020 | |||
| Closing balance | 229,708,181 | 42,448,596 | 4,733,764 276,890,540 | ||||
| Accumulated depreciation | |||||||
| Opening balance | 113,723,712 | 24,204,805 | 1,816,670 139,745,187 | ||||
| Depreciation for the period | 24,192,899 | 8,421,222 | 1,053,695 | 33,667,816 | |||
| Transfers and write-offs | (5,053,679) | (97,821) | — | (5,151,501) | |||
| Terminated contracts | (1,316,765) | (257,387) | — | (1,574,152) | |||
| Adjustments | 59,681 | — | — | 59,681 | |||
| Closing balance | 131,605,848 | 32,270,818 | 2,870,365 166,747,031 | ||||
| Accumulated impairment | |||||||
| Opening balance | 3,417,162 | — | — | 3,417,162 | |||
| Increases | 4,896,310 | — | — | 4,896,310 | |||
| Decreases | (8,313,472) | — | — | (8,313,472) | |||
| Closing balance | — | — | — | — | |||
| Net Tangible fixed assets | 98,102,333 | 10,177,778 | 1,863,399 110,143,510 |
| 30.09.2024 | |||||||
|---|---|---|---|---|---|---|---|
| Buildings | Vehicles | Other assets |
Total | ||||
| Tangible fixed assets | |||||||
| Opening balance | 229,708,181 | 42,448,596 | 4,733,764 276,890,540 | ||||
| New contracts | 32,142,085 | 28,041,294 | 1,228,826 | 61,412,205 | |||
| Transfers and write-offs | (1,227,994) | (231,938) | — | (1,459,932) | |||
| Terminated contracts | (91,141) | (103,351) | — | (194,492) | |||
| Remeasurements | 1,848,433 | 2,448,690 | — | 4,297,123 | |||
| Adjustments | 113,995 | — | — | 113,995 | |||
| Closing balance | 262,493,560 | 72,603,291 | 5,962,590 341,059,441 | ||||
| Accumulated depreciation | |||||||
| Opening balance | 131,605,848 | 32,270,818 | 2,870,365 166,747,031 | ||||
| Depreciation for the period | 17,035,379 | 9,069,276 | 799,562 | 26,904,217 | |||
| Transfers and write-offs | (1,055,735) | (129,759) | — | (1,185,494) | |||
| Terminated contracts | (101,236) | (171,891) | — | (273,127) | |||
| Adjustments | (237,111) | — | — | (237,111) | |||
| Closing balance | 147,247,145 | 41,038,444 | 3,669,928 191,955,517 | ||||
| Net Tangible fixed assets | 115,246,414 | 31,564,847 | 2,292,662 149,103,924 |
The depreciation recorded, in the amount of 26,904,217 Euros (25,138,411 Euros on 30 September 2023), is booked under the caption "Depreciation/amortisation and impairment of investments, net."
As at 31 December 2023, the initial balance of "Accumulated Impairment" booked an amount relating to the right of use associated with the lease contract of the previous CTT Head Office building - "Edifício Báltico", corresponding to the period in which the expectation existed that the right of use did not generate economic benefits for the Group due to the fact that the building was unoccupied. In 2023, the amount recorded in "Reversals" corresponded to the contract period that had already elapsed, with the impairment loss being reversed in proportion to the depreciation of the right of use. As the building was not occupied during the year, the impairment loss initially recognized on 31 December 2022 was, on 30 June 2023, increased by 5,177 thousand Euros. Still on 31 December 2023, an early termination of this lease agreement was agreed with the counterparty, which resulted in the derecognition of the existing lease and the reversal of the remaining amount of impairment loss recorded and which had been partially reversed during the year in proportion to the depreciation of the right of use.
The information on the liabilities associated with these leases as well as the interest expenses can be found disclosed on Debt (Note 18) and Interest expenses and income (Note 25), respectively.
For the nine-months period ended 30 September 2024, no interest on loans was capitalised, as no loans were directly identified attributable to the acquisition or construction of an asset that requires a substantial period of time (greater than one year) to reach its status of use.
According to the analysis of impairment triggers as at 30 September 2024, no events or circumstances were identified that indicate that the amount for which the Group's tangible fixed assets are recorded may not be recovered.
There are no tangible fixed assets with restricted ownership or any carrying value relative to any tangible fixed assets which have been given as a guarantee of liabilities.
The contractual commitments related to Tangible fixed assets at 30 September 2024, amount to 5,899,507 Euros (31 December 2023: 6 136 083 Euros).
5. Intangible assets
During the year ended 31 December 2023 and the nine-months period ended 30 September 2024, the movements which occurred in the main categories of the Intangible assets, as well as the respective accumulated amortisation, were as follows:
| 31.12.2023 | |||||||
|---|---|---|---|---|---|---|---|
| Development projects |
Computer Software |
Industrial property |
Other intangible assets |
Intangible assets in progress |
Total | ||
| Intangible assets | |||||||
| Opening balance | 4,380,552 | 169,466,935 | 19,591,397 | 2,309,070 | 9,434,984 205,182,938 | ||
| Acquisitions | — | 2,025,284 | 699,454 | — | 15,675,350 | 18,400,088 | |
| Transfers and write-offs | — | 21,508,320 | (440,115) | — | (21,198,220) | (130,015) | |
| Adjustments | — | — | (14,639) | — | — | (14,639) | |
| Closing balance | 4,380,552 | 193,000,538 | 19,836,097 | 2,309,070 | 3,912,114 223,438,371 | ||
| Accumulated amortisation | |||||||
| Opening balance | 4,380,552 | 115,896,437 | 14,571,483 | 925,857 | — 135,774,330 | ||
| Amortisation for the period | — | 15,455,209 | 1,217,770 | 360,838 | — | 17,033,818 | |
| Transfers and write-offs | — | 418,966 | (418,966) | — | — | — | |
| Adjustments | — | — | (9,561) | — | — | (9,561) | |
| Closing balance | 4,380,552 | 131,770,613 | 15,360,727 | 1,286,695 | — 152,798,587 | ||
| Net intangible assets | — | 61,229,926 | 4,475,370 | 1,022,375 | 3,912,114 | 70,639,785 |
| 30.09.2024 | |||||||
|---|---|---|---|---|---|---|---|
| Development projects |
Computer Software |
Industrial property |
Other intangible assets |
Intangible assets in progress |
Total | ||
| Intangible assets | |||||||
| Opening balance | 4,380,552 | 193,000,538 | 19,836,097 | 2,309,070 | 3,912,114 223,438,371 | ||
| Acquisitions | — | 520,488 | 46,972 | — | 12,700,249 | 13,267,709 | |
| Transfers and write-offs | — | 9,895,507 | — | — | (9,269,502) | 626,005 | |
| Adjustments | — | — | (5,587) | — | — | (5,587) | |
| Closing balance | 4,380,552 | 198,859,297 | 19,877,482 | 2,309,070 | 7,342,862 232,769,263 | ||
| Accumulated amortisation | |||||||
| Opening balance | 4,380,552 | 131,770,613 | 15,360,727 | 1,286,695 | — 152,798,587 | ||
| Amortisation for the period | — | 13,147,276 | 820,655 | 270,629 | — | 14,238,559 | |
| Adjustments | — | — | (4,223) | — | — | (4,223) | |
| Closing balance | 4,380,552 | 140,360,653 | 16,177,159 | 1,557,324 | — 162,475,687 | ||
| Net intangible assets | — | 58,498,644 | 3,700,324 | 751,746 | 7,342,862 | 70,293,576 |
The amortisation for the period ended 30 September 2024, amounting to 14,238,559 Euros (12,414,010 Euros as at 30 September 2023) was recorded under Depreciation / amortisation and impairment of investments, net.
As at 30 June 2024, the core banking system (Banco CTT's main operating software) had a net book value of 7,884 thousand euros (31 December 2023: 8,987 thousand euros). As at 31 December 2023, this asset had an estimated remaining useful life of 7 years. During the first half of 2024, the Group changed the estimated remaining useful life of this asset to approximately 2 years, assigning it an estimated residual value of approximately 6,000 thousand euros. This change is the result of the signing of a service provision agreement with the current licensing provider, which provides for the migration and upgrade of the current license (on premises) to access a software as a service license, which will incorporate a set of customizations and configurations that will be transferred from the current on premises system and to which a value similar to the aforementioned residual value is attributed, which is estimated to come into effect at the end of 2025.
The transfers occurred in the period ended 30 September 2024 from Intangible assets in progress to Computer software refer to IT projects, which were completed during the year.
The amounts of 1,550,479 Euros and 2,205,754 Euros were capitalised in computer software and in Intangible assets in progress as at 31 December 2023 and 30 September 2024, respectively, and are related to staff costs incurred in the development of these projects.
The intangible assets in progress as at 30 September 2024 refer to IT projects that are being developed, the most significant being the following:
| 30.09.2024 | |
|---|---|
| New Ofert B2B - Software | 1,303,540 |
| Client Area B2B - Software | 809,333 |
| New FrontEnd - Software | 713,054 |
| MB Cards at Agents | 564,808 |
| VIA CTT - Software | 327,790 |
| 3,718,525 |
The Group has not identified any relevant uncertainties regarding the conclusion of ongoing projects, nor about their recoverability.
Most of the projects are expected to be completed in 2024.
The amount of research and development expenses incurred by the Group in 2023, in the amount of 5,990,704 Euros, was disclosed in Note 26.
There are no Intangible assets with restricted ownership or any carrying value relative to any Intangible assets which have been given as a guarantee of liabilities.
In the nine-months period ended 30 September 2024, no interest on loans was capitalised, as no loans were directly identified attributable to the acquisition or construction of an asset that requires a substantial period of time (greater than one year) to reach its status of use.
Contractual commitments related intangible assets amounted to 8,917,987 Euros at 30 September 2024 (31 December 2023: 6 892 706 Euros)
6. Investment properties
During the year ended 31 December 2023 and the nine-months period ended 30 September 2024, the Group has the following assets classified as investment properties:
| 31.12.2023 | |||||||
|---|---|---|---|---|---|---|---|
| Land and natural resources |
Buildings and other constructions |
Total | |||||
| Investment properties | |||||||
| Opening balance | 2,862,247 | 11,052,892 | 13,915,139 | ||||
| Closing balance | 2,862,247 | 11,052,892 | 13,915,139 | ||||
| Accumulated depreciation | |||||||
| Opening balance | 155,569 | 7,322,410 | 7,477,979 | ||||
| Depreciation for the period | — | 183,591 | 183,591 | ||||
| Other movements | — | 25,189 | 25,189 | ||||
| Closing balance | 155,569 | 7,531,191 | 7,686,759 | ||||
| Accumulated impairment | |||||||
| Opening balance | — | 253,181 | 253,181 | ||||
| Impairment for the period | — | (788) | (788) | ||||
| Closing balance | — | 252,393 | 252,393 | ||||
| Net Investment properties | 2,706,679 | 3,269,308 | 5,975,987 |
| 30.09.2024 | ||||||
|---|---|---|---|---|---|---|
| Land and natural resources |
Buildings and other constructions |
Total | ||||
| Investment properties | ||||||
| Opening balance | 2,862,247 | 11,052,892 | 13,915,139 | |||
| Disposals | (45,086) | (170,786) | (215,871) | |||
| Transfers and write-offs | 90,151 | 270,453 | 360,604 | |||
| Closing balance | 2,907,313 | 11,152,560 | 14,059,872 | |||
| Accumulated depreciation | ||||||
| Opening balance | 155,569 | 7,531,191 | 7,686,759 | |||
| Depreciation for the period | — | 155,887 | 155,887 | |||
| Disposals | (628) | (97,910) | (98,538) | |||
| Transfers and write-offs | — | 12,172 | 12,172 | |||
| Closing balance | 154,941 | 7,601,340 | 7,756,280 | |||
| Accumulated impairment | ||||||
| Opening balance | — | 252,393 | 252,393 | |||
| Closing balance | — | 252,393 | 252,393 | |||
| Net Investment properties | 2,752,372 | 3,298,827 | 6,051,199 |
These assets are not allocated to the Group operating activities, being in the market available for lease.
The market value of these assets, which are classified as investment property, in accordance with the valuations obtained at the end of the fiscal year 2023 which were conducted by independent entities, amounts to 10,437,353 Euros.
The depreciation for the nine-months period ended 30 September 2024, of 155,887 Euros (156,313 Euros on 30 September 2023) was recorded in the caption Depreciation/amortisation and impairment of investments, net.
For the nine-months period ended 30 September 2024, the rents amount charged by the Group for properties and equipment leases classified as investment properties was 4,475 Euros (30 September 2023: 26,652 Euros).
7. Companies included in the consolidation
Subsidiary companies
As at 31 December 2023 and 30 September 2024, the parent company, CTT - Correios de Portugal, S.A. and the following subsidiaries were included in the consolidation:
| 31.12.2023 | 30.09.2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| Company name | Place of business |
Head office | Percentage of ownership | Percentage of ownership | ||||
| Direct | Indirect | Total | Direct | Indirect | Total | |||
| Parent company: | ||||||||
| CTT - Correios de Portugal, S.A. | Portugal | Avenida dos Combatentes 43, 14º Floor 1643-001 Lisbon |
— | — | — | — | — | — |
| Subsidiaries: | ||||||||
| CTT Expresso - Serviços Postais e Logística, S.A. ("CTT Expresso") |
Portugal | Avenida dos Combatentes 43, 14º Floor 1643-001 Lisbon |
100 | — | 100 | 100 | — | 100 |
| Payshop Portugal, S.A. ("Payshop") |
Portugal | Avenida dos Combatentes 43, 14º Floor 1643-001 Lisbon |
100 | — | 100 | 100 | — | 100 |
| CTT Contacto, S.A. ("CTT Con") |
Portugal | Avenida dos Combatentes 43, 14º Floor 1643-001 Lisbon |
100 | — | 100 | 100 | — | 100 |
| CTT Soluções Empresariais, S.A. ("CTT Sol") |
Portugal | Avenida dos Combatentes 43, 14º Floor 1643-001 Lisbon |
100 | — | 100 | 100 | — | 100 |
| Correio Expresso de Moçambique, S.A. ("CORRE") |
Mozambique | Av. 24 de Julho, Building 24, 1097, 3rd floor, Bairro da Polana Maputo - Mozambique |
50 | — | 50 | 50 | — | 50 |
| Banco CTT, S.A. ("BancoCTT") |
Portugal | Building Atrium Saldanha 1 Floor 3 1050 -094 Lisbon |
100 | — | 100 | 100 | — | 100 |
| 1520 Innovation Fund ("TechTree") |
Portugal | Av Conselheiro Fernando de Sousa, 19 13º Left 1070-072 Lisbon |
37.5 | 62.5 | 100 | 37.5 | 62.5 | 100 |
| 321 Crédito - Instituição Financeira de Crédito, S.A. ("321 Crédito") |
Portugal | Avenida da Boavista, 772, 1.º, Boavista Prime Bulding 4100-111 Oporto |
— | 100 | 100 | — | 100 | 100 |
| NewSpring Services, S.A. ("NSS") |
Portugal | Avenida dos Combatentes 43, 14º Floor 1643-001 Lisbon |
— | 100 | 100 | — | 100 | 100 |
| CTT IMO - Sociedade Imobiliária, S.A. ("CTTi") |
Portugal | Avenida dos Combatentes 43, 14º Floor 1643-001 Lisbon |
100 | — | 100 | 100 | — | 100 |
| Open Lockers, S.A. ("Lock") |
Portugal | Avenida dos Combatentes 43, 14º Floor 1643-001 Lisbon |
— | 66 | 66 | — | 100 | 100 |
| MedSpring, S.A. ("MEDS") |
Portugal | Avenida dos Combatentes 43, 14º Floor 1643-001 Lisbon |
— | 100 | 100 | — | 100 | 100 |
| CTT Services, S.A. ("Serv") |
Portugal | Avenida dos Combatentes 43, 14º Floor 1643-001 Lisbon |
— | 100 | 100 | — | 100 | 100 |
| CTT Imo Yield, S.A. ("IMOY") |
Portugal | Lugar do Espido, Via Norte, 4470-177 Maia-Oporto |
100 | — | 100 | 73.7 | — | 73.7 |
Regarding to the company CORRE, as the Group has the right to variable returns arising from its involvement and the ability to affect those returns, it is included in the consolidation.
As part of a corporate reorganisation in the Group, on 8 July 2022 the Board of Directors of Banco CTT approved the sale of its subsidiary Payshop Portugal, and its terms, to CTT. The completion of this
operation was dependent on the regulator's non-opposition, a fact that occurred on 7 July 2023. The transfer of shares occurred 11 on August 2023. The sale of the investment in Payshop to CTT will allow synergies to be captured with the remaining areas of CTT, namely product areas, commercial forces (B2B and store networks, outlets and agents), as well as full integration into the Group's strategy of a comprehensive value proposition for e-commerce and business solutions. The sale of Payshop investment by Banco CTT to CTT was carried out based on its equity book value and had no impact on the Group consolidated accounts.
On 29 March 2023 and 29 May 2023, Open Lockers was subject to capital increases in the form of a supplementary capital in the amount of 396,000 Euros in each of the periods.
CTT IMO Yield
Real Estate Assets
CTT's real estate assets are organised into two different portfolios, depending on their respective characteristics and functionality (Yield Portfolio and Development Portfolio).
Yield Portfolio
In 2022, CTT began exclusive negotiations, with a third party, to manage this portfolio, which essentially comprised:
-
- properties associated with CTT's retail network; and
-
- warehouses and logistics and distribution centres of CTT's operational network in Portugal.
As a result of this negotiation, the company CTT IMO Yield was created on 31 October 2022, with the purpose of holding and managing this yield portfolio.
On 4 May 2023, CTT entered into a Share Sale and Purchase Agreement with Sierra Investments, SGPS, S.A. ("Sierra"), under which Sierra and a group of institutional investors would acquire an investment of 30.1% of the share capital of CTT IMO Yield (assuming the carve-in of all properties in the yield portfolio), an operation that was concluded at the beginning of 2024.
On 10 October 2023, and applying the provisions of paragraph b) of number 3 of article 22 of the Asset Management Regime, CMVM issued the SIC (collective investment company) registration code for CTT IMO Yield.
On 17 October 2023, the AdC (Competition Authority) also adopted a decision according to which the Transaction is not covered by the merger control procedure.
On 27 November 2023, the Company transferred its yield real estate portfolio, corresponding to 332 properties, to CTT IMO Yield in the form of a capital contribution in kind, in the amount of 116,858,055 Euros. This operation resulted in the issuance of 116,858,055 new shares with a nominal value of 1 Euro each. The remaining 31 properties were transferred to CTT IMO Yield through a purchase and sale transaction.
The amount of the contribution in kind corresponded to the fair value of the properties determined through an external assessment carried out by two independent experts. For each property subject to transfer, the average amount of the two valuations prepared by each of the independent experts was considered to determine its fair value. Subsequently, this operation was subject to evaluation by an Official Auditor independent of the Company, as established in the Commercial Companies Code.
On 9 November 2023 and 27 December 2023, CTT IMO Yield was subject to a capital increase through a cash contribution, in the amount of 17,600,000 Euros and 576,945 Euros, respectively. The capital increases resulted in the issuance of new shares in the amount of 17,600,000 shares and 576,945 shares, respectively, with a nominal value of 1 Euro each.
On 27 December 2023, the conversion of shareholders loans into share capital at CTT Expresso and CTT Soluções Empresariais was decided, through the conversion of 14,950,000 Euros of shareholders loans into capital at CTT Expresso and 14,500,000 of shareholders loans into capital at CTT Soluções Empresariais. The capital increase in CTT Expresso was achieved through an increase in the nominal amount of the 1,150,000 shares, which increased from 5 Euros to 18 Euros each, with their global nominal amount being 20,700,000 Euros. The capital increase of CTT Soluções Empresariais took place through the issuance of 14,500,000 new shares with a nominal amount of 1 Euro each, with the global nominal value of the share capital as of 31 December 2023 being 14,750,000 Euros.
On 4 January 2024, CTT IMO Yield concluded a conversion process into an alternative real estate investment organization (OIA) in a corporate form with fixed capital and private subscription, managed by a management entity that includes the business universe of Sierra Investments, the company Sierra IG - SGOIC, S.A. On the same date, CTT completed the sale of a 26.3% shareholder position in CTT IMO Yield to Sonae Investment SGPS, S.A. and other investors, as planned in the Share Purchase and Sale Agreement, which translated into a gross receipt of 32,447,343 Euros. Following this operation, the amount of 32,959,531 Euros was recognized under the caption minority interests in equity.
On 18 April 2024, CTT Expresso acquired the minority stake in Open Lockers held by the entity's remaining shareholders, in the amount of 1,439,000 Euros. The Group will therefore hold a 100% stake in Open Lockers from that date onwards.
On 26 June 2024, Banco CTT subscribed an increase in the share capital in the subsidiary 321 Crédito, by making a cash contribution, in the amount of 5,000,000 Euros, resulting in the issuance of 5,000,000 new book-entry shares, ordinary, nominative shares with an issue value of 1 euro each. The amount of share capital of 321 Crédito in the amount of 30,000,000 Euros increased to 35,000,000 Euros.
Joint ventures
As at 31 December 2023 and 30 September 2024, the Group held the following interests in joint ventures, registered through the equity method:
| Head office | 31.12.2023 | 30.09.2024 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Company name | Place of business |
Percentage of ownership | Percentage of ownership | ||||||
| Direct | Indirect | Total | Direct | Indirect | Total | ||||
| NewPost, ACE | Portugal | Av. Fontes Pereira de Melo, 40 Lisbon |
49 | — | 49 | 49 | — | 49 | |
| PTP & F, ACE | Portugal | Estrada Casal do Canas Amadora |
51 | — | 51 | 51 | — | 51 | |
| Wolfspring, ACE | Portugal | Urbanização do Passil, nr 100-A 2890-1852 Alcochete |
— | 50 | 50 | — | 50 | 50 |
Associated companies
As at 31 December 2023 and 30 September 2024, the Group held the following interests in associated companies accounted for by the equity method:
| Company name | Place of business |
Head office | 31.12.2023 | 30.09.2024 | ||||
|---|---|---|---|---|---|---|---|---|
| Percentage of ownership | Percentage of ownership | |||||||
| Direct | Indirect | Total | Direct | Indirect | Total | |||
| Mafelosa, SL (a) | Spain | Castellon - Spain | — | 25 | 25 | — | 25 | 25 |
| Urpacksur, SL (a) | Spain | Málaga - Spain | — | 30 | 30 | — | 30 | 30 |
(a) Company held by CTT Expresso - Serviços Postais e Logística, S.A., branch in Spain (until 2018 was held by Tourline Mensajeria, SLU), which currently has no activity.
Structured entities
Additionally, considering the requirements of IFRS 10, the Group's consolidation perimeter includes the following structured entities:
| Name | Constitution Year | Place of issue | Consolidation Method |
|---|---|---|---|
| Ulisses Finance No.1 () (*) | 2017 | Portugal | Full |
| Ulisses Finance No.2 (*) | 2021 | Portugal | Full |
| Ulisses Finance No.3 (*) | 2022 | Portugal | Full |
| Chaves Funding No.8 (*) | 2019 | Portugal | Full |
| Next Funding No.1 () (*) | 2021 | Portugal | Full |
(*) Entities incorporated in the scope of securitisation operations, recorded in the consolidated financial statements in accordance with the Group's continued involvement, determined based on the percentage held in the residual interests (equity piece) of the respective vehicles and to the extent that the Group substantially owns the risks and rewards associated with the underlying assets and has the ability to affect these same risks and rewards.
(**) Entities left the consolidation perimeter during the period of 2023.
The credit securitisation operation Ulisses No1, originated by 321 Crédito in 2017, included a consumer credit portfolio amounting to 141.2 million euros. The operation included a clean-up call option clause that could be exercised by the originator when the securitised portfolio dropped below 10% of the initial amount, i.e., 14.1 million euros. This occurred after the IPD ("interest payment date") of June 2023, with the clean-up call being exercised at the IPD of July 2023, with the Company reacquiring the entire securitised portfolio, closing the operation.
Following the termination of the partnership with Universo, in December 2023, Banco CTT sold the note Next Funding Nº1 to Universo, IME, S.A. leaving on that date no exposure to this portfolio. Additionally, the overdraft line (Liquidity Facility) was cancelled. As part of the sale agreement, Banco CTT no longer granted this line of credit to the aforementioned securitisation operation.
The main impacts of the consolidation of these structured entities on the Group's accounts are the following:
| 31.12.2023 | 30.09.2024 | |
|---|---|---|
| Cash and cash equivalents | 14,947,776 | 17,261,505 |
| Financial assets at fair value through profit and loss (Derivatives) | 13,532,000 | 7,554,411 |
Changes in the consolidation perimeter
In the period ended 31 December 2023, the structured entities Ulisses Finance Nº.1 and Next Funding Nº. 1 left the consolidation perimeter. There were no other changes to the consolidation perimeter.
During nine-months period ended 30 September 2024, with the sale of 26.3% of the investment in CTT IMO Yield, the group now holds 73.7% of the entity. At the same time, with the acquisition of the minority investment in Open Lockers held by the entity's remaining shareholders, the Group now holds 100% of this entity.
8. Debt securities
As at 31 December 2023 and 30 September 2024, the caption Debt securities, showed the following composition:
| 31.12.2023 | 30.09.2024 | |
|---|---|---|
| Non-current | ||
| Financial assets at amortised cost | ||
| Government bonds | 364,773,835 | 361,485,993 |
| Impairment | (67,657) | (60,540) |
| 364,706,177 | 361,425,453 | |
| 364,706,177 | 361,425,453 | |
| Current | ||
| Financial assets at amortised cost | ||
| Government bonds | 284,175,167 | 926,631,341 |
| Supranational bonds | 80,614,379 | 786,633,343 |
| Bonds issued by other entities | — | 8,930,600 |
| Impairment | (29,726) | (60,415) |
| 364,759,821 | 1,722,134,868 | |
| 729,465,998 | 2,083,560,322 |
The financial assets at amortised cost are managed based on a business model whose objective is to receive its contractual cash flows.
The increase in debt securities captions is essentially justified by the change in the positive exposure (nominal amount) of 713 million euros of supranational debt, 225 million euros of Spanish public debt, 215 million euros of French public debt, 160 million euros of Belgian public debt, 35 million euros of Austrian public debt and 27 million euros of Portuguese public debt.
The analysis of the Financial assets at amortised cost, by remaining maturity, as at 31 December 2023 and 30 September 2024 is detailed as follows:
| 31.12.2023 | |||||||
|---|---|---|---|---|---|---|---|
| Current | Non-current | ||||||
| Due within 3 months |
Over 3 months and less than 1 year |
Total | Over 1 year and less than 3 years |
Over 3 years | Total | Total | |
| Financial assets at amortised cost |
|||||||
| Government bonds | |||||||
| National | 6,729,393 | — | 6,729,393 | 18,576,142 | 143,668,654 | 162,244,796 | 168,974,189 |
| Foreign | 1,437,251 | 276,008,524 | 277,445,775 | 9,967,700 | 192,561,338 | 202,529,039 | 479,974,813 |
| Supranational bonds | 408,333 | 80,206,046 | 80,614,379 | — | — | — | 80,614,379 |
| 8,574,977 | 356,214,570 | 364,789,547 | 28,543,843 | 336,229,992 | 364,773,835 | 729,563,381 |
| 30.09.2024 | |||||||
|---|---|---|---|---|---|---|---|
| Current | Non-current | ||||||
| Due within 3 months |
Over 3 months and less than 1 year |
Total | Over 1 year and less than 3 years |
Over 3 years | Total | Total | |
| Financial assets at amortised cost |
|||||||
| Government bonds | |||||||
| National | 16,532,654 | 16,216,791 | 32,749,444 | 37,616,096 | 124,307,139 | 161,923,235 | 194,672,679 |
| Foreign | 326,133,723 | 567,748,174 | 893,881,896 | 20,996,304 | 178,566,455 | 199,562,758 | 1,093,444,655 |
| Supranational Bonds | 277,628,452 | 509,004,891 | 786,633,343 | — | — | — | 786,633,343 |
| Bonds issued by other entities | |||||||
| National | — | — | — | — | — | — | — |
| Foreign | 161,896 | 8,768,705 | 8,930,600 | — | — | — | 8,930,600 |
| 620,456,724 1,101,738,560 1,722,195,284 | 58,612,400 | 302,873,593 | 361,485,993 | 2,083,681,277 |
Fair Value
The fair value of debt securities at amortised cost portfolio, on 31 December 2023, amounted to 700,065 thousand euros (a negative difference of 29 401 thousand euros in relation to its book value).
The fair value of debt securities at amortised cost, on 30 September 2024, amounted to 2,062,240 thousand euros (a negative difference of 21,321 thousand euros in relation to its book value).
Impairment losses
The impairment losses, for the year ended 31 December 2023 and the nine-months period ended 30 September 2024, are detailed as follows:
| 31.12.2023 | |||||||
|---|---|---|---|---|---|---|---|
| Opening balance | Increases | Reversals | Transfers Closing balance | ||||
| Non-current assets | |||||||
| Debt securities at amortised cost | 121,927 | 20,146 | (43,919) | (30,497) | 67,657 | ||
| 121,927 | 20,146 | (43,919) | (30,497) | 67,657 | |||
| Current assets | |||||||
| Debt securities at amortised cost | 9,674 | 8,851 | (19,296) | 30,497 | 29,726 | ||
| 9,674 | 8,851 | (19,296) | 30,497 | 29,726 | |||
| Financial assets at amortised cost | 131,601 | 28,997 | (63,215) | — | 97,383 | ||
| 131,601 | 28,997 | (63,215) | — | 97,383 |
| 30.09.2024 | ||||||
|---|---|---|---|---|---|---|
| Opening balance | Increases | Reversals | Transfers Closing balance | |||
| Non-current assets | ||||||
| Debt securities at amortised cost | 67,657 | 28,323 | (16,525) | (18,915) | 60,540 | |
| 67,657 | 28,323 | (16,525) | (18,915) | 60,540 | ||
| Current assets | ||||||
| Debt securities at amortised cost | 29,726 | 28,265 | (16,491) | 18,915 | 60,415 | |
| 29,726 | 28,265 | (16,491) | 18,915 | 60,415 | ||
| Financial assets at amortised cost | 97,384 | 56,588 | (33,016) | — | 120,955 | |
| 97,384 | 56,588 | (33,016) | — | 120,955 |
For the impairment losses of Financial assets at amortised cost, the movements by stages, in the year ended 31 December 2023 and the nine-months period ended 30 September 2024, they are detailed as follows:
| 31.12.2023 | 30.09.2024 | ||
|---|---|---|---|
| Stage 1 | Stage 1 | ||
| Opening balance | 131,602 | 97,384 | |
| Change in period: | |||
| Increases due to origination and acquisition | 28,628 | 56,453 | |
| Changes due to change in credit risk | (41,239) | (24,570) | |
| Derecognised financial assets excluding write-offs | (21,607) | (8,311) | |
| Impairment - Financial assets at amortised cost | 97,384 | 120,955 |
The reconciliation of accounting movements related to impairment losses is presented below:
| 31.12.2023 | 30.09.2024 | |
|---|---|---|
| Stage 1 | Stage 1 | |
| Opening balance | 131,602 | 97,384 |
| Change in period: | ||
| ECL income statement change for the period | (34,218) | 23,571 |
| Impairment - Financial assets at amortised cost | 97,384 | 120,955 |
According to the accounting policy in force, the Group regularly assesses whether there is objective evidence of impairment in its financial asset portfolios at amortised cost.
9. Other banking financial assets and liabilities
As at 31 December 2023 and 30 September 2024, the caption "Other banking financial assets" and "Other banking financial liabilities" showed the following composition:
| 31.12.2023 | 30.09.2024 | |
|---|---|---|
| Current assets | ||
| Investments in central banks | 1,260,076,886 | 633,376,572 |
| Investments in credit institutions | 11,049,500 | 12,410,678 |
| Loans to credit institutions | 961,721 | — |
| Impairment | (8,143) | (1,004) |
| Other | 4,316,633 | 4,891,280 |
| Impairment | (1,821,475) | (1,828,294) |
| 1,274,575,121 | 648,849,232 | |
| 1,274,575,121 | 648,849,232 | |
| Current liabilities | ||
| Other | 47,759,822 | 29,277,188 |
| 47,759,822 | 29,277,188 |
Investments in central banks, credit institutions and Loans to credit institutions
Regarding the above-mentioned captions, the scheduling by maturity is as follows:
| 31.12.2023 | 30.09.2024 | |
|---|---|---|
| Up to 3 months | 1,260,688,003 | 645,787,250 |
| From 3 to 12 months | 11,400,103 | — |
| 1,272,088,106 | 645,787,250 |
The caption "Investments in credit institutions" showed an annual average return of 3.554% (31 December 2023: 2.435%).
The amount of 633,376,572 Euros recorded in investments in central banks corresponds to overnight deposits with the Bank of Portugal. The decrease in the balance compared to the previous period is due to Banco CTT's liquidity management, which in 2024 involved increasing investment in the securities portfolio.
Impairment
The impairment losses, in the year ended 31 December 2023 and the nine-months period ended 30 September 2024, are detailed as follows:
| 31.12.2023 | ||||||
|---|---|---|---|---|---|---|
| Opening balance |
Increases | Reversals | Utilisations | Transfers | Closing balance |
|
| Non-current assets | ||||||
| Investments and loans in credit institutions | 274 | — | — | — | (274) | — |
| 274 | — | — | — | (274) | — | |
| Current assets | ||||||
| Investments and loans in credit institutions | 1,394 | 8,099 | (1,625) | — | 274 | 8,143 |
| Other | 1,805,945 | 30,962 | (8,982) | (6,450) | — | 1,821,475 |
| 1,807,340 | 39,061 | (10,607) | (6,450) | 274 | 1,829,619 | |
| 1,807,615 | 39,061 | (10,607) | (6,450) | — | 1,829,619 |
| 30.09.2024 | |||||||
|---|---|---|---|---|---|---|---|
| Opening balance |
Increases | Reversals | Utilisations | Transfers | Closing balance |
||
| Non-current assets | |||||||
| Investments and loans in credit institutions | — | — | — | — | — | — | |
| — | — | — | — | — | — | ||
| Current assets | |||||||
| Investments and loans in credit institutions | 8,143 | 205 | (7,344) | — | — | 1,004 | |
| Other | 1,821,475 | 11,558 | (4,739) | — | — | 1,828,294 | |
| 1,829,618 | 11,763 | (12,083) | — | — | 1,829,298 | ||
| 1,829,618 | 11,763 | (12,083) | — | — | 1,829,298 |
Regarding the movements in impairment losses on investments and loans to credit institutions by stages, in the periods ended on 31 December 2023 and the nine-months period ended 30 September 2024, they are detailed as follows:
| 31.12.2023 | 30.09.2024 | ||
|---|---|---|---|
| Stage 1 | Stage 1 | ||
| Opening balance | 1,669 | 8,143 | |
| Change in period: | |||
| Increases due to origination and acquisition | 8,099 | 205 | |
| Changes due to change in credit risk | (230) | (7,041) | |
| Decrease due to derecognition repayments and disposals | (1,394) | (303) | |
| Impairment | 8,143 | 1,004 |
The reconciliation of accounting movements related to impairment losses is presented below:
| 31.12.2023 | 30.09.2024 | |
|---|---|---|
| Stage 1 | Stage 1 | |
| Opening balance | 1,669 | 8,143 |
| Change in period: | ||
| ECL income statement change for the period | 6,474 | (7,139) |
| Impairment | 8,143 | 1,004 |
The caption "Other current liabilities" essentially books the balance of banking operations pending of financial settlement.
10. Credit to banking clients
As at 31 December 2023 and 30 September 2024, the caption Credit to banking clients was detailed as follows:
| 31.12.2023 | 30.09.2024 | |
|---|---|---|
| Performing loans | 1,616,912,775 | 1,703,626,836 |
| Mortgage Loans | 728,846,938 | 767,371,125 |
| Auto Loans | 882,757,623 | 932,334,535 |
| Leasings | 1,819,790 | 1,001,628 |
| Overdrafts | 3,488,425 | 2,919,549 |
| Overdue loans | 24,117,118 | 19,018,397 |
| Overdue loans - less than 90 days | 1,384,695 | 1,570,337 |
| Overdue loans - more than 90 days | 22,732,423 | 17,448,060 |
| 1,641,029,894 | 1,722,645,233 | |
| Credit risk impairment | (47,815,999) | (44,108,195) |
| 1,593,213,895 | 1,678,537,038 |
The maturity analysis of the Credit to banking clients as at 31 December 2023 and 30 September 2024 is detailed as follows:
| 31.12.2023 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Current | Non-current | ||||||||
| At sight | Due within 3 months |
>3 months - < 1 year |
Overdue Loans |
Total | > 1 year - > 3 years |
Over 3 years | Total | Total | |
| Mortgage loans |
— | 4,850,143 | 8,998,954 | 41,489 | 13,890,586 | 25,126,922 | 689,870,918 | 714,997,840 | 728,888,426 |
| Auto Loans | — | 35,075,222 | 92,025,117 | 23,091,609 150,191,948 | 246,411,072 | 509,246,212 | 755,657,284 | 905,849,232 | |
| Leasings | — | 194,548 | 647,891 | 98,810 | 941,249 | 520,532 | 456,819 | 977,351 | 1,918,600 |
| Overdrafts | 3,488,425 | — | — | 885,211 | 4,373,636 | — | — | — | 4,373,636 |
| 3,488,425 | 40,119,913 101,671,962 | 24,117,118 169,397,418 | 272,058,526 1,199,573,950 1,471,632,475 | 1,641,029,894 |
| 30.09.2024 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Current | Non-current | ||||||||
| At sight | Due within 3 months |
>3 months - < 1 year |
Overdue Loans |
Total | > 1 year - > 3 years |
Over 3 years |
Total | Total | |
| Mortgage loans |
— | 5,021,197 | 10,806,569 | 34,707 | 15,862,473 | 28,929,841 722,613,519 | 751,543,359 | 767,405,832 | |
| Auto Loans | — | 37,047,875 101,186,967 | 17,098,272 155,333,113 | 261,315,294 532,784,399 | 794,099,694 | 949,432,806 | |||
| Leasings | — | 246,903 | 164,288 | 52,862 | 464,052 | 219,140 | 371,297 | 590,438 | 1,054,489 |
| Overdrafts | 2,919,549 | — | — | 1,832,557 | 4,752,105 | — | — | — | 4,752,105 |
| 2,919,549 | 42,315,974 112,157,823 | 19,018,397 176,411,743 | 290,464,275 1,255,769,215 1,546,233,491 | 1,722,645,233 |
On 28 June 2024, the sale of a portfolio of Auto loans (Non-Performing Loans) with a book value (gross) of 22,432 thousand euros was agreed, the settlement of which took place during the month of September, at which time the derecognition criteria set out in IFRS 9 were met. This transaction resulted in a positive impact on the Group's operating account arising from the sale with capital gains and a decrease in the NPL ratio of approximately 1.1% (on a pro-forma basis as at 30 September 2024).
The credit type analysis of the caption, as at 31 December 2023 and 30 September 2024 is detailed as follows:
| 31.12.2023 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Performing Loans |
Overdue Loans | Gross amount | Impairment | Net amount | ||||
| Mortgage Loans | 728,846,938 | 41,489 | 728,888,426 | (1,419,456) | 727,468,970 | |||
| Auto Loans | 882,757,623 | 23,091,609 | 905,849,232 | (45,581,390) | 860,267,842 | |||
| Leasings | 1,819,790 | 98,810 | 1,918,600 | (23,634) | 1,894,966 | |||
| Overdrafts | 3,488,425 | 885,211 | 4,373,636 | (791,519) | 3,582,117 | |||
| 1,616,912,775 | 24,117,118 | 1,641,029,894 | (47,815,999) | 1,593,213,895 |
| 30.09.2024 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Performing Loans |
Overdue Loans | Gross amount | Impairment | Net amount | |||||
| Mortgage Loans | 767,371,125 | 34,707 | 767,405,832 | (1,375,515) | 766,030,317 | ||||
| Auto Loans | 932,334,535 | 17,098,272 | 949,432,806 | (41,406,873) | 908,025,933 | ||||
| Leasings | 1,001,628 | 52,862 | 1,054,489 | (15,704) | 1,038,785 | ||||
| Overdrafts | 2,919,549 | 1,832,557 | 4,752,105 | (1,310,103) | 3,442,003 | ||||
| 1,703,626,836 | 19,018,397 | 1,722,645,233 | (44,108,195) | 1,678,537,038 |
The total credit portfolio, split by stage according to IFRS 9, is analysed as follows:
| 31.12.2023 | 30.09.2024 | |
|---|---|---|
| Stage 1 | 1,462,656,854 | 1,555,970,572 |
| Gross amount | 1,466,355,203 | 1,560,724,369 |
| Impairment | (3,698,349) | (4,753,797) |
| Stage 2 | 91,015,446 | 75,785,539 |
| Gross amount | 97,460,137 | 83,386,612 |
| Impairment | (6,444,691) | (7,601,073) |
| Stage 3 | 39,541,594 | 46,780,927 |
| Gross amount | 77,214,554 | 78,534,252 |
| Impairment | (37,672,959) | (31,753,325) |
| 1,593,213,895 | 1,678,537,038 |
The caption credit to banking clients includes the effect of traditional securitisation transactions, carried out through securitisation vehicles, consolidated pursuant to IFRS 10.
Fair Value
The "Credit to banking clients" fair value, on 31 December 2023, amounted to 1,559,416 thousand euros (a negative difference of 6,202 thousand euros in relation to its book value).
The "Credit to banking clients" fair value, on 30 September 2024, amounted to 1,667,270 thousand euros (a negative difference of 11,267 thousand euros in relation to its book value).
Impairment losses
During year ended on 31 December 2023 and the nine-months period ended 30 September 2024, the movement under the Accumulated impairment losses caption (Note 13) was as follows:
| 31.12.2023 | |||||||
|---|---|---|---|---|---|---|---|
| Opening balance | Increases | Reversals | Utilisations | Transfers | Other movements Closing balance | ||
| Non-current assets | |||||||
| Credit to banking clients | 22,074,965 | 29,865,366 | (15,637,839) | (18,335,628) | 9,084,969 | 168,623 | 27,220,455 |
| 22,074,965 | 29,865,366 | (15,637,839) | (18,335,628) | 9,084,969 | 168,623 | 27,220,455 | |
| Current assets | |||||||
| Credit to banking clients | 32,661,202 | 22,596,738 | (11,831,904) | (13,873,106) | (9,084,969) | 127,583 | 20,595,544 |
| 32,661,202 | 22,596,738 | (11,831,904) | (13,873,106) | (9,084,969) | 127,583 | 20,595,544 | |
| 54,736,167 | 52,462,104 | (27,469,743) | (32,208,734) | — | 296,206 | 47,815,999 |
| 30.09.2024 | |||||||
|---|---|---|---|---|---|---|---|
| Opening balance | Increases | Reversals | Utilisations | Transfers | Other movements Closing balance | ||
| Non-current assets | |||||||
| Credit to banking clients | 27,220,455 | 27,683,142 | (20,779,018) | (9,507,494) | 4,535,626 | 140,902 | 29,293,614 |
| 27,220,455 | 27,683,142 | (20,779,018) | (9,507,494) | 4,535,626 | 140,902 | 29,293,614 | |
| Current assets | |||||||
| Credit to banking clients | 20,595,544 | 14,000,122 | (10,508,517) | (4,808,200) | (4,535,627) | 71,258 | 14,814,581 |
| 20,595,544 | 14,000,122 | (10,508,517) | (4,808,200) | (4,535,627) | 71,258 | 14,814,581 | |
| 47,815,999 | 41,683,264 | (31,287,535) | (14,315,694) | (1) | 212,160 | 44,108,195 |
The impairment losses of Credit to banking clients (net of reversals) for the period ended 30 September 2024 amounted to 10,395,729 Euros (18,119,571 Euros as at 30 September 2023) was booked in the caption "Impairment of other financial banking assets."
The decrease in impairment losses for the period is essentially explained by: i) Credit cards: net allocation of 10,094 thousand euros in the first 9 months of 2023, the portfolio of which was sold at the end of 2023; ii) Auto Credit: net allocation of 9,954 thousand euros in the first 9 months of 2024 (30 September 2023: 7,835 thousand euros), which represents an increase of 2,119 thousand euros.
The movements in impairment losses by stages, in the year ended on 31 December 2023 and the ninemonths period ended 30 September 2024, they are detailed as follows:
| 31.12.2023 | |||||||
|---|---|---|---|---|---|---|---|
| Stage 1 | Stage 2 | Stage 3 | Total | ||||
| Opening balance | 7,512,642 | 6,955,009 | 40,268,516 | 54,736,167 | |||
| Change in period: | |||||||
| Increases due to origination and acquisition |
1,331,542 | 1,416,045 | 961,291 | 3,708,878 | |||
| Changes due to change in credit risk | (5,673,996) | 2,324,258 | 26,532,908 | 23,183,170 | |||
| Decrease due to derecognition repayments and disposals |
(1,106,458) | (2,500,481) | (29,152,813) | (32,759,752) | |||
| Write-offs | — | — | (1,348,669) | (1,348,669) | |||
| Transfers to: | |||||||
| Stage 1 | 2,606,546 | (1,456,726) | (1,149,820) | — | |||
| Stage 2 | (702,546) | 2,620,554 | (1,918,007) | — | |||
| Stage 3 | (279,413) | (2,931,365) | 3,210,779 | — | |||
| Foreign exchange and other | 10,032 | 17,398 | 268,777 | 296,206 | |||
| Impairment | 3,698,349 | 6,444,691 | 37,672,959 | 47,815,999 | |||
| Of which: POCI | — | — | 578,523 | 578,523 |
| 30.09.2024 | ||||
|---|---|---|---|---|
| Stage 1 | Stage 2 | Stage 3 | Total | |
| Opening balance | 3,698,349 | 6,444,691 | 37,672,959 | 47,815,999 |
| Change in period: | ||||
| Increases due to origination and acquisition |
1,240,006 | 689,628 | 400,133 | 2,329,767 |
| Changes due to change in credit risk | (1,803,748) | 3,004,149 | 10,697,695 | 11,898,095 |
| Decrease due to derecognition repayments and disposals |
(277,176) | (280,560) | (3,274,396) | (3,832,133) |
| Write-offs | — | — | (14,315,694) | (14,315,694) |
| Transfers to: | ||||
| Stage 1 | 2,177,651 | (1,329,972) | (847,679) | — |
| Stage 2 | (164,767) | 1,321,811 | (1,157,045) | — |
| Stage 3 | (67,552) | (2,334,987) | 2,402,540 | — |
| Foreign exchange and other | (48,965) | 86,314 | 174,811 | 212,160 |
| Impairment | 4,753,797 | 7,601,073 | 31,753,325 | 44,108,195 |
| Of which: POCI | — | — | 33,080 | 33,080 |
The reconciliation of accounting movements related to impairment losses is presented below:
| 31.12.2023 | ||||
|---|---|---|---|---|
| Stage 1 | Stage 2 | Stage 3 | Total | |
| Opening balance | 7,512,642 | 6,955,009 | 40,268,516 | 54,736,167 |
| Change in period: | ||||
| ECL income statement change for the | ||||
| period | (5,127,980) | 3,438,509 | 26,681,832 | 24,992,361 |
| Stage transfers (net) | 1,624,587 | (1,767,538) | 142,951 | — |
| Disposals | (320,931) | (2,198,687) | (27,517,324) | (30,036,942) |
| Utilisations during the period | — | — | (823,123) | (823,123) |
| Write-offs | — | — | (1,348,669) | (1,348,669) |
| Foreign exchange and other | 10,032 | 17,398 | 268,777 | 296,206 |
| Impairment | 3,698,349 | 6,444,691 | 37,672,959 | 47,815,999 |
| 30.09.2024 | ||||
|---|---|---|---|---|
| Stage 1 | Stage 2 | Stage 3 | Total | |
| Opening balance | 3,698,349 | 6,444,691 | 37,672,959 | 47,815,999 |
| Change in period: | ||||
| ECL income statement change for the period |
(840,918) | 3,413,216 | 7,823,432 | 10,395,730 |
| Stage transfers (net) | 1,945,332 | (2,343,148) | 397,817 | — |
| Write-offs | — | — | (14,315,694) | (14,315,694) |
| Foreign exchange and other | (48,965) | 86,314 | 174,811 | 212,160 |
| Impairment | 4,753,797 | 7,601,073 | 31,753,325 | 44,108,195 |
Sensitivity Analysis
Given the high uncertainty of macroeconomic projections and considering that deviations from the presented scenarios may have an impact on the value of estimated expected losses, sensitivity analyses were carried out on the distribution of the portfolio by stage and the respective impact on impairment.
The Group considers that the parameters assumed to be more sensitive or susceptible to changes in the economic cycle are the Probability of Default (PD – Probability of Default) for most portfolios and the Loss Given Default (LGD – Loss Given Default) for the case of the Auto Loan portfolio.
In this context, a sensitivity analysis was carried out to determine what would be the impairment of the global portfolio if those parameters suffered a relative deterioration of 10%, conclude that the increase in impairment would be 5,156 thousand euros, corresponding to about 12%.
11. Prepayments
As at 31 December 2023 and 30 September 2024, the Prepayments included in current assets and current and non-current liabilities showed the following composition:
| 31.12.2023 | 30.09.2024 | |
|---|---|---|
| Deferred Assets | ||
| Non-current | ||
| Employee Mortgage Loan protocol |
— | 2,280,929 |
| — | 2,280,929 | |
| Current | ||
| Rents payable | 389,421 | 112,583 |
| Meal allowances | 1,315,703 | 1,315,703 |
| Other | 8,241,648 | 12,817,802 |
| 9,946,772 | 14,246,088 | |
| 9,946,772 | 16,527,017 | |
| Deferred Liabilities | ||
| Non-current | ||
| Investment subsidy | 671,689 | 665,428 |
| 671,689 | 665,428 | |
| Current | ||
| Investment subsidy | 11,201 | 11,201 |
| Contractual liabilities | 2,212,896 | 3,662,818 |
| Other | 2,886,001 | 1,593,782 |
| 5,110,098 | 5,267,801 | |
| 5,781,787 | 5,933,229 |
The change in the caption "Other deferred assets" essentially results from the renewal of software license contracts and insurance contracts.
The caption "Contractual liabilities" results from the application of IFRS 15 - Revenue from Contracts with Customers and stands for the amount already invoiced, but not yet recognised as revenue because the performance obligations have not yet been met as recommended by the standard.
The "Contractual liabilities" essentially refer to amounts related to stamps and prepaid postage of priority mail in the amount of 677 396 Euros (792,237 Euros on 31 December 2023), whose revenue is expected to be recognised in October 2024 (estimate of 80% of the item's value) and the remaining during 2024, and to objects invoiced and not delivered on 30 September 2024 in the express segment, in the amount of 2,985,422 Euros (1,420,660 Euros as at 31 December 2023), whose revenue is recognised upon delivery in the following month.
The revenue recognised in the period, included in the balance of Contractual liabilities at the beginning of the period amounted to 2,212,896 Euros.
No "Assets resulting from contracts" associated with the application of IFRS 15 - Revenue from contracts with customers were recognised.
12. Cash and cash equivalents
As at 31 December 2023 and 30 September 2024, cash and cash equivalents correspond to the amount of cash, sight deposits, term deposits and cash investments on the monetary market, net of bank overdrafts and equivalent short-term bank financing, and is detailed as follows:
| 31.12.2023 | 30.09.2024 | |
|---|---|---|
| Cash | 86,139,678 | 53,312,695 |
| Demand deposits | 93,256,266 | 66,066,299 |
| Deposits at Central Banks | 29,095,592 | 39,577,340 |
| Deposits at other credit institutions | 36,068,548 | 26,235,186 |
| Term deposits | 107,049,550 | 24,566,935 |
| Cash and cash equivalents (Statement of Financial Position) | 351,609,634 | 209,758,455 |
| Demand deposits at Banco de Portugal | (28,625,500) | (39,150,200) |
| Checks for collection / Checks clearing | (7,758,807) | (4,438,464) |
| Impairment of Demand and term deposits | 3,988 | 544 |
| Cash and cash equivalents (Cash Flow Statement) | 315,229,314 | 166,170,334 |
The caption "Sight deposits at Bank of Portugal" includes mandatory deposits in order to meet the legal requirements to maintain a minimum cash reserve in accordance with the provisions of Regulation (EU) No. 1358/2011 of European Central Bank of 14 December 2011, which states that the minimum cash requirements kept as demand deposits at Bank of Portugal amounts to 1% of the average amount of deposits and other liabilities, over each reserve maintenance period. As at 30 September 2024, the daily average of the minimum mandatory availability for the period in force was 39,150,200 Euros.
Therefore, the caption Demand deposits at Bank of Portugal includes, as at 30 September 2024, a total amount of demand deposits of 39,577,340 Euros (31 December 2023: 29,095,592 Euros).
The Eurozone banks are required to hold a certain amount of funds in their current accounts with the national central bank. These funds are called "mandatory minimum reserves". The amount of funds to be held as minimum reserves is calculated based on banks' balance sheets before the start of each maintenance period. Currently, banks are obliged to hold, at their respective national central bank, a minimum of 1% of specific liabilities, mainly customer deposits of up to 2 years.
From the reserve counting period starting on 30 October 2019, the ECB introduced the tiering regime, which exempted part of the excess reserves deposited by credit institutions with the central bank from the negative remuneration then associated with the deposit facility rate. This tiering regime ceased to apply on 27 July 2022, following the Governing Council's decision to increase the deposit facility rate to a non-negative amount. Until October 2022, the interest rate paid was linked to the interest rate on main refinancing operations. It was then reduced to reflect the deposit facility rate, and in July 2023 it was set at 0%.
The caption "Outstanding checks/ Checks clearing" represents checks drawn by third parties on other credit institutions, which are in collection.
Impairment
In the year ended on 31 December 2023 and the nine-months period ended 30 September 2024, the movement recorded under the caption "Impairment of sight and term deposits" (Note 13) related to the Group is detail as follows:
| Group | 31.12.2023 | ||||
|---|---|---|---|---|---|
| Opening balance |
Increases | Reversals | Utilisations | Closing balance |
|
| Sight and term deposits | 7,917 | 38 | (3,967) | — | 3,988 |
| 7,917 | 38 | (3,967) | — | 3,988 |
| 30.09.2024 | ||||||
|---|---|---|---|---|---|---|
| Group | Opening balance |
Increases | Reversals | Utilisations | Closing balance |
|
| Sight and term deposits | 3,988 | 237 | (3,680) | — | 544 | |
| 3,988 | 237 | (3,680) | — | 544 |
The Impairment losses (increases net of reversals) for the period ended 30 September 2024 in the amount of (3,443) Euros (3,573 Euros as at 30 September 2023) were recorded under the caption "Impairment of accounts receivable (losses/reversals)".
13. Accumulated impairment losses
During the year ended on 31 December 2023 and the nine-months period ended 30 September 2024, the following movements occurred in the impairment losses:
| 31.12.2023 | |||||||
|---|---|---|---|---|---|---|---|
| Group | Opening balance | Increases | Reversals | Utilisations | Transfers | Other movements |
Closing balance |
| Non-current assets | |||||||
| Tangible fixed assets | 3,652,127 | 5,176,860 | (8,815,181) | — | — | — | 13,806 |
| Investment properties | 253,181 | 60,000 | (60,788) | — | — | — | 252,393 |
| 3,905,309 | 5,236,860 | (8,875,970) | — | — | — | 266,199 | |
| Debt securities at amortised cost | 121,927 | 20,146 | (43,919) | — | (30,497) | — | 67,657 |
| Other non-current assets | 2,906,847 | 6,458 | (1,841,299) | — | (691,512) | — | 380,493 |
| Credit to banking clients | 22,074,965 | 29,865,366 (15,637,839) | (18,335,628) | 9,084,969 | 168,623 | 27,220,455 | |
| Other banking financial assets | 274 | — | — | — | (274) | — | — |
| 25,104,013 | 29,891,969 (17,523,057) | (18,335,628) | 8,362,686 | 168,623 | 27,668,606 | ||
| 29,009,322 | 35,128,829 (26,399,026) | (18,335,628) | 8,362,686 | 168,623 | 27,934,805 | ||
| Current assets | |||||||
| Accounts receivable | 41,409,047 | 6,063,033 | (1,580,637) | (614,647) | — | (1,140) | 45,275,655 |
| Credit to banking clients | 32,661,202 | 22,596,738 (11,831,904) | (13,873,106) | (9,084,969) | 127,583 | 20,595,544 | |
| Debt securities at amortised cost | 9,674 | 8,851 | (19,296) | — | 30,497 | — | 29,726 |
| Other current assets | 11,547,796 | 337,814 | (809,586) | (118,126) | 691,512 | — | 11,649,410 |
| Other banking financial assets | 1,807,339 | 39,061 | (10,607) | (6,450) | 274 | — | 1,829,618 |
| Slight and term deposits | 7,917 | 38 | (3,967) | — | — | — | 3,988 |
| 87,442,978 | 29,045,535 (14,255,998) | (14,612,329) | (8,362,686) | 126,443 | 79,383,940 | ||
| Non-current assets held for sale | 638 | — | — | — | — | — | 638 |
| 638 | — | — | — | — | — | 638 | |
| Merchandise | 2,747,401 | — | (283,414) | (229,068) | — | — | 2,234,919 |
| Raw, subsidiary and consumable | 922,313 | 92,783 | — | (113,152) | — | — | 901,944 |
| 3,669,714 | 92,783 | (283,414) | (342,220) | — | — | 3,136,863 | |
| 91,113,329 | 29,138,317 (14,539,412) | (14,954,549) | (8,362,686) | 126,443 | 82,521,443 | ||
| 120,122,649 | 64,267,146 (40,938,438) | (33,290,178) | — | 295,066 | 110,456,246 |
| 30.09.2024 | |||||||
|---|---|---|---|---|---|---|---|
| Group | Opening balance |
Increases | Reversals | Utilisations | Transfers | Other movements |
Closing balance |
| Non-current assets | |||||||
| Tangible fixed assets | 13,806 | — | (697) | — | — | — | 13,109 |
| Investment properties | 252,393 | — | — | — | — | — | 252,393 |
| 266,199 | — | (697) | — | — | — | 265,502 | |
| Debt securities at amortised cost | 67,657 | 28,323 | (16,525) | — | (18,915) | — | 60,540 |
| Other non-current assets | 380,493 | — | — | — | (14,082) | — | 366,412 |
| Credit to banking clients | 27,220,455 | 27,683,142 (20,779,018) | (9,507,494) | 4,535,626 | 140,902 | 29,293,614 | |
| 27,668,606 | 27,711,465 (20,795,543) | (9,507,494) | 4,502,629 | 140,902 | 29,720,566 | ||
| 27,934,805 | 27,711,465 (20,796,239) | (9,507,494) | 4,502,629 | 140,902 | 29,986,068 | ||
| Current assets | |||||||
| Accounts receivable | 45,275,655 | 1,514,133 | (151,232) | (2,576,732) | — | (113) 44,061,713 | |
| Credit to banking clients | 20,595,544 | 14,000,122 (10,508,517) | (4,808,200) | (4,535,627) | 71,258 | 14,814,581 | |
| Debt securities at amortised cost | 29,726 | 28,265 | (16,491) | — | 18,915 | — | 60,415 |
| Other current assets | 11,649,410 | 169,766 | (149,757) | (35,662) | 14,082 | — | 11,647,840 |
| Other banking financial assets | 1,829,618 | 11,763 | (12,083) | — | — | — | 1,829,298 |
| Sight and term deposits | 3,988 | 237 | (3,680) | — | — | — | 544 |
| 79,383,943 | 15,724,285 (10,841,761) | (7,420,593) | (4,502,629) | 71,145 | 72,414,391 | ||
| Non-current assets held for sale | 638 | — | — | — | — | — | 638 |
| 638 | — | — | — | — | — | 638 | |
| Merchandise | 2,234,919 | — | (187,554) | (12,558) | — | — | 2,034,807 |
| Raw, subsidiary and consumable | 901,944 | 85,501 | — | (1,842) | — | — | 985,603 |
| 3,136,863 | 85,501 | (187,554) | (14,400) | — | — | 3,020,411 | |
| 82,521,443 | 15,809,787 (11,029,315) | (7,434,993) | (4,502,629) | 71,145 | 75,435,439 | ||
| 110,456,246 | 43,521,252 (31,825,554) | (16,942,487) | — | 212,047 105,421,505 |
14. Equity
At the Annual General Meeting held on 20 April 2023, a share capital reduction of 717,500 Euros was approved, within the scope of the own share buyback programme implemented in 2022. On 21 April 2023, the capital reduction of the aforementioned amount was registered in the Commercial Register, through the extinction of 1,435,000 shares representing 0.997% of the share capital of CTT.
On 17 July 2024, a reduction of CTT's share capital in the amount of 2,737,500 Euros was registered before the Commercial Registry Office through the cancellation of 5,475,000 shares held by the Company, representing 3.80% of its share capital and acquired under the share buyback programme carried out from 26 June 2023 to 9 May 2024. This share capital reduction was carried out following a resolution of the Annual General Meeting of CTT Shareholders held on 23 April 2024 which approved the share capital reduction in the amount of up to 3,825,000 Euros corresponding to the cancellation of up to 7,650,000 own shares already acquired or to be acquired by 25 June 2024 for the special purpose of implementing the share buyback programme and corresponding release of excess capital.
Thus, on 31 December 2023, CTT's share capital was 71,957,500 Euros, represented by 143,915,000 shares with a nominal value of fifty cents per share, and the Company's Articles of Association were consequently amended. The capital was fully subscribed and paid up.
Thus, on 30 September 2024, CTT's share capital was 69,220,000 Euros, represented by 138,440,000 shares with a nominal value of fifty cents per share, and the Company's Articles of Association were consequently amended. The capital was fully subscribed and paid up.
As at 31 December 2023 and 30 September 2024 the Company's shareholders with qualifying holdings shareholdings, according to the information reported, are as follows:
| Shareholders | No. of shares | % Share capital | Nominal Value | |
|---|---|---|---|---|
| Global Portfolio Investments, S.L. (1) | 21,580,000 | 14.995 % | 10,790,000 | |
| Indumenta Pueri, S.L. (1) | Total | 21,580,000 | 14.995 % | 10,790,000 |
| Manuel Champalimaud, SGPS, S.A. | 19,246,815 | 13.374 % | 9,623,408 | |
| Manuel Carlos de Melo Champalimaud | 500,185 | 0.348 % | 250,093 | |
| Manuel Carlos de Melo Champalimaud | Total | 19,747,000 | 13.721 % | 9,873,500 |
| GreenWood Builders Fund I, LP (2) | 9,762,000 | 6.783 % | 4,881,000 | |
| GreenWood Investors LLC(2) | Total | 9,777,400 | 6.794 % | 4,888,700 |
| Green Frog Investments Inc | Total | 7,730,000 | 5.371 % | 3,865,000 |
| CTT, S.A. (own shares) | Total | 4,409,300 | 3.064 % | 2,204,650 |
| Other shareholders | Total | 80,671,300 | 56.055 % | 40,335,650 |
| TOTAL | 143,915,000 | 100.000 % | 71,957,500 |
31.12.2023
(1) Global Portfolio Investments, S.L. is controlled by Indumenta Pueri, S.L..
(2) GreenWood Investors LLC, of which Steven Wood, Non-Executive member of the Board of Directors of CTT, is a Managing Member, exercises the voting rights not in its own name but on behalf of the fund GreenWood Builders Fund I, LP as its management company. The full chain of controlled undertakings through which the voting rights are held includes GreenWood Investors, LLC and GreenWood Performance Investors, LLC. GreenWood Investors LLC's shareholding includes 15,400 shares directly held by Steven Wood.
Note: Pursuant to Article 16(1) of the Portuguese Securities Code as amended, which establishes a shareholding of 5% as the minimum threshold for the duty to communicate qualified holdings, CTT will now only disclose the qualified holdings above that threshold.
| 30.09.2024 | ||||||
|---|---|---|---|---|---|---|
| Shareholders | No. of shares | % Share capital | Nominal Value | |||
| Global Portfolio Investments, S.L. (1) | 21,609,052 | 15.609 % | 10,804,526 | |||
| Indumenta Pueri, S.L. (1) | Total | 21,609,052 | 15.609 % | 10,804,526 | ||
| Manuel Champalimaud, SGPS, S.A. | 19,246,815 | 13.903 % | 9,623,408 | |||
| Manuel Carlos de Melo Champalimaud | 500,185 | 0.361 % | 250,093 | |||
| Manuel Carlos de Melo Champalimaud | Total | 19,747,000 | 14.264 % | 9,873,500 | ||
| Green Frog Investments Inc | Total | 13,500,000 | 9.752 % | 6,750,000 | ||
| GreenWood Builders Fund I, LP (2) | 9,762,000 | 7.051 % | 4,881,000 | |||
| GreenWood Investors LLC(2) | Total | 9,777,400 | 7.063 % | 4,888,700 | ||
| CTT, S.A. (own shares) | Total | 2,277,200 | 1.645 % | 1,138,600 | ||
| Other shareholders | Total | 71,529,348 | 51.668 % | 35,764,674 | ||
| TOTAL | 138,440,000 | 100.000 % | 69,220,000 |
(1) Global Portfolio Investments, S.L. is controlled by Indumenta Pueri, S.L..
(2) GreenWood Investors LLC, of which Steven Wood, Non-Executive member of the Board of Directors of CTT, is a Managing Member, exercises the voting rights not in its own name but on behalf of the fund GreenWood Builders Fund I, LP as its management company. The full chain of controlled undertakings through which the voting rights are held includes GreenWood Investors, LLC and GreenWood Performance Investors, LLC. GreenWood Investors LLC's shareholding includes 15,400 shares directly held by Steven Wood.
Note: Pursuant to Article 16(1) of the Portuguese Securities Code as amended, which establishes a shareholding of 5% as the minimum threshold for the duty to communicate qualified holdings, CTT will now only disclose the qualified holdings above that threshold.
15. Own shares, Reserves, Other changes in equity and Retained earnings
Own shares
As at 31 December 2023, the following movements were made in the caption "Own Shares":
| Quantity | Amount | Average Price | |
|---|---|---|---|
| Balance 31 December 2022 |
2,935,000 | 10,826,390 | 3.69 |
| Acquisitions | 3,031,168 | 10,541,092 | 3.48 |
| Cancellation (due to share capital reduction) |
(1,435,000) | (5,293,313) | 3.69 |
| Shares Delivery - Long term variable remuneration ("LTVR") |
(121,868) | (449,537) | 3.69 |
| Balance at 31 December 2023 |
4,409,300 | 15,624,632 | 3.54 |
During the nine-months period ended 30 September 2024, the following movements were made in the caption "Own Shares":
| Quantity | Amount | Average Price | |
|---|---|---|---|
| Balance 31 December 2023 |
4,409,300 | 15,624,632 | 3.54 |
| Acquisitions | 3,432,549 | 13,762,774 | 4.01 |
| Cancellation (due to share capital reduction) |
(5,475,000) | (20,111,920) | 3.67 |
| Shares Delivery - Long term variable remuneration ("LTVR") |
(89,649) | (327,844) | 3.66 |
| Balance at 30 September 2024 |
2,277,200 | 8,947,643 | 3.93 |
At the General Meeting held on 20 April 2023, the capital reduction was approved for the cancellation of 1,435,000 shares acquired under the buyback program approved and implemented in 2022. On 21 April 2023, it was registered in the register commercial the reduction of capital in the aforementioned amount, through the extinction of 1,435,000 shares representing 0.997% of CTT's share capital.
Also on 21 April 2023, 121,868 of own shares were delivered to the Board of Directors and Top Management of CTT, corresponding to the first tranche of the Long-Term variable remuneration relating to the 2020-2023 term, as explained in detail in note 24 - Staff Costs.
On 23 April 2024, 89,649 own shares were delivered to the Board of directors and Top Management of CTT, corresponding to the second tranche of Long-Term Variable Remuneration relating to the 2020-2023 term, as explained in detail in note 24 - Staff Costs.
At the Company's Board of Directors meeting held on 21 June 2023, and as communicated to the market on the same date, it was decided to approve the implementation of a new buy-back programme of the Company's own shares, in the global amount of up to 20,000,000 euros.
This programme, which began on 26 June 2023 and had the implementation period of the following 12 months, ending on 25 June 2024 at the latest, but may end on an earlier date if the maximum number of shares to be acquired or the amount pecuniary benefits were achieved, with the following objectives:
-
- Repurchasing a maximum of up to 7,650,000 shares, representing a maximum nominal amount of 3,825,000 Euros, which corresponds to 5.3% of the share capital, and
-
- Reducing the same amount of the share capital through cancellation of the acquired shares.
On 9 May 2024, with the company having acquired the announced 20 million euros, in accordance with the terms and conditions of the buy-back programme, it was concluded on this date, ending before the end of its maximum period duration (from 26 June 2023 to 25 June 2024).
At the Anual General Meeting held on 23 April 2024, it was decided to reduce CTT's share capital by up to 3,825,000 Euros corresponding to the extinction of up to 7,650,000 own shares already acquired or that would be acquired, within the scope of the aforementioned program, until 25 June 2024, and are extinguished, with the other terms and conditions for executing the share buy-back and corresponding reduction in share capital being established by the Board of Directors.
On 17 July 2024, a reduction of CTT's share capital in the amount of 2,737,500 Euros was registered before the Commercial Registry Office through the cancellation of 5,475,000 shares held by the Company, representing 3.80% of its share capital and acquired under the share buyback programme carried out from 26 June 2023 to 9 May 2024.
On 19 July 2024, the Executive Committee, based on the delegation of powers granted by the Board of Directors at the meeting of 20 June 2024 and within the maximum monetary amount defined in that delegation, in the amount of 25 million Euros, and in the deliberation adopted at the Annual General Meeting of Shareholders, held on 23 April 2024, approved a buyback program for the Company's own shares to be carried out from 22 July 2024, with the sole objective of reducing CTT's share capital through the extinction of own shares acquired within its scope, as communicated to the market on 19 July 2024.
As at 31 December 2023, the Company held, as a result of the acquisition and cancellation operations indicated herein, an accumulated amount of 4,409,300 own shares, representing 3.064% of the share capital, with par value of 0.50 Euros, with all inherent rights related to suspended shares, with the exception of those relating to the receipt of new shares in the case of capital increase by incorporation of reserves, as provided for in article 324(1)(a)) of the Commercial Companies Code.
As at 30 September 2024, the Company held an accumulated amount of 2,277,200 own shares, representing 1.645% of the share capital, with par value of 0.50 Euros, with all inherent rights related to suspended shares, with the exception of those relating to the receipt of new shares in the case of capital increase by incorporation of reserves, as provided for in article 324(1)(a)) of the Commercial 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.
Reserves
As at 31 December 2023 and 30 September 2024, the caption "Reserves" showed the following composition
| 31.12.2023 | ||||
|---|---|---|---|---|
| Legal reserves | Own shares reserves Other reserves | Total | ||
| Opening balance | 15,000,000 | 10,826,391 | 28,017,666 | 53,844,057 |
| Share capital decrease | — | (5,293,313) | 717,500 | (4,575,813) |
| Own shares acquisitions | — | 10,541,092 | (10,541,092) | — |
| Own shares attribution | — | (449,537) | 449,537 | — |
| Share Plan (share delivery) | — | — | (1,155,000) | (1,155,000) |
| Closing balance | 15,000,000 | 15,624,633 | 17,488,611 | 48,113,244 |
| 30.09.2024 | ||||
|---|---|---|---|---|
| Legal reserves | Own shares reserves Other reserves | Total | ||
| Opening balance | 15,000,000 | 15,624,633 | 17,488,611 | 48,113,244 |
| Share capital decrease | — | (20,111,920) | 2,737,500 | (17,374,420) |
| Own shares acquisitions | — | 13,762,774 | (13,762,774) | — |
| Own shares attribution | — | (327,844) | 327,844 | — |
| Share Plan (share delivery) | — | — | (840,000) | (840,000) |
| Share Plan | — | — | 611,670 | 611,670 |
| Closing balance | 15,000,000 | 8,947,643 | 6,562,851 | 30,510,494 |
Legal reserves
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.
Own shares reserve
The commercial legislation Code obliges, within the scope of the own shares regime provided in article 324, the existence of a reserve equal to the amount for which the shares are accounted for, which becomes unavailable as long as these shares remain in the company's possession. Additionally, applicable accounting standards determine that gains or losses on the sale of own shares are booked in reserves.
As at 30 September 2024, this caption includes the amount of 8,947,643 Euros related to the creation of an unavailable reserve for the same amount of the acquisition price of the own shares held.
Other reserves
This caption records the profits transferred to reserves that are not imposed by the law or articles of association, nor constituted pursuant to contracts signed by the Company.
On 31 December 2023, an amount of reserves of (1,155,000) Euros was derecognised, corresponding to the proportional amount of the options awarded in 2023 within the scope of the long-term variable remuneration, as described in note 24 - Staff Costs.
On 30 September 2024, an amount of reserves of (840,000) Euros was derecognised, corresponding to the proportional amount of the options awarded during 2024 of the long-term variable remuneration, as described in note 24 - Staff Costs.
In the nine-months period ended 30 September 2024, a reserve was booked in the amount of 611,670 Euros related to the new share plan, as described in note 24 - Staff Costs.
Retained earnings
During the year ended on 31 December 2023 and the nine-months period ended 30 September 2024, the following movements were made in caption "Retained earnings":
| 31.12.2023 | 30.09.2024 | |
|---|---|---|
| Opening balance | 64,647,067 | 83,269,152 |
| Application of the net profit of the prior year | 36,406,519 | 60,511,368 |
| Distribution of dividends (Note 16) | (17,817,109) | (23,315,758) |
| Adjustments from the application of the equity method | 32,674 | (9,312) |
| Shareholdings acquisition | — | (504,747) |
| Closing balance | 83,269,152 | 119,950,704 |
Other changes in equity
The actuarial gains/losses associated to post-employment benefits, as well as the corresponding deferred taxes, are recognised in this caption.
During the year ended on 31 December 2023 and the nine-months period ended 30 September 2024, the movements occurred in this caption were as follows:
| 31.12.2023 | 30.09.2024 | |
|---|---|---|
| Opening balance | 6,857,207 | 3,402,039 |
| Actuarial gains/losses | (5,716,054) | — |
| Tax effect (Note 26) | 1,555,423 | — |
| Share Plan (share delivery) | 705,463 | 512,156 |
| Other movements | — | (505,194) |
| Closing balance | 3,402,039 | 3,409,002 |
As at 31 December 2023, the amount of 705,463 Euros related to the Share Plan, refers to the difference between the amount of 1,155,000 Euros derecognized under the caption "Reserves", corresponding to the proportional value of the options attributed (note 15) and the amount of own shares delivered within the scope of this operation amounting to 449,537 Euros. As of 30 September 2024, the amount relating to the Share Plan amounting to 512,156 Euros, corresponds, again, to the difference between the amount of 840,000 Euros, derecognized from the "Reserves" caption, relating to the proportional value of the options attributed in 2024 (note 15) and the value of own shares delivered within the scope of this operation in the amount of 327,844 Euros. The difference between the two amounts is recognized under the caption "other changes in equity", in accordance with the provisions of IFRS.
16. Dividends
According to the dividend distribution proposal included in the 2022 Annual Report, at the General Meeting of Shareholders, which was held on 20 April 2023, a dividend distribution of 17,817,109 Euros, corresponding to a dividend per share of 0.125 Euros (amount that excludes the dividend attributable to own shares in the portfolio at that date), regarding the financial year ended 31 December 2022 was proposed and approved. The dividend amount assigned to own shares was transferred to Retained earnings, amounting to 172,267 Euros.
According to the dividend distribution proposal included in the 2023 Annual Report, at the General Meeting of Shareholders, which was held on 23 April 2024, a dividend distribution of 24,465,550 Euros, corresponding to a dividend per share of 0.17 Euros, regarding the financial year ended 31 December 2023 was proposed and approved. The dividend amount attributable to own shares was transferred to retained earnings, amounting to 1,149,792, so the dividends distributed amounted to 23,315,758 Euros.
17. Earnings per share
During the nine-months periods ended 30 September 2023 and 30 September 2024, the earnings per share were calculated as follows:
| Group | 30.09.2023 | 30.09.2024 |
|---|---|---|
| Net income for the period | 35,527,387 | 27,751,600 |
| Average number of ordinary shares | 142,252,556 | 137,471,532 |
| Earnings per share | ||
| Basic | 0.25 | 0.20 |
| Diluted | 0.25 | 0.20 |
The average number of shares is detailed as follows:
| 30.09.2023 | 30.09.2024 | |
|---|---|---|
| Shares issued at beginning of the period | 145,350,000 | 143,915,000 |
| Effect of extinction of shares during the period | (856,795) | (1,518,613) |
| Average number of actions taken | 144,493,205 | 142,396,387 |
| Own shares effect | 2,240,649 | 4,924,855 |
| Average number of shares during the period | 142,252,556 | 137,471,532 |
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 September 2024, the number of own shares held is 2,277,200 and its average number for the period ended 30 September 2024 is 4,924,855, reflecting the fact that there were not only acquisitions, but also the extinction of own shares in that period, as mentioned in note 15.
There are no dilutive factors of earnings per share.
18. Debt
As at 31 December 2023 and 30 September 2024, the Debt caption showed the following composition:
| 31.12.2023 | 30.09.2024 | |
|---|---|---|
| Non-current liabilities | ||
| Bank loans | 33,390,061 | 16,688,799 |
| Commercial Paper | 34,947,466 | 34,971,674 |
| Lease liabilities | 92,742,578 | 126,548,994 |
| 161,080,105 | 178,209,467 | |
| Current liabilities | ||
| Bank loans | 82,395,558 | 27,261,122 |
| Commercial Paper | 22,067 | 870,449 |
| Lease liabilities | 25,517,227 | 30,943,835 |
| 107,934,852 | 59,075,406 | |
| 269,014,957 | 237,284,873 |
As at 30 September 2024, the interest rates applied to bank loans were between 4.105% and 4.980% (31 December 2023: 4.861% and 5.736%).
Bank loans and Commercial Paper
| 31.12.2023 | 30.09.2024 | |||||
|---|---|---|---|---|---|---|
| Amount used | Amount used | |||||
| Limit | Current | Non-current | Limit | Current | Non-current | |
| Bank loans | ||||||
| Millennium BCP | 12,028,704 | 8,176,561 | 456,482 | 537,037 | 322,222 | 214,815 |
| BBVA / Bankinter | 26,125,000 | 7,069,572 | 18,943,702 | 19,000,000 | 9,455,884 | 9,477,330 |
| Novo Banco | 21,000,000 | 7,196,811 | 13,989,877 | 14,000,000 | 7,328,929 | 6,996,655 |
| Commercial Paper | ||||||
| BBVA / Bankinter | 15,000,000 | 8,886 | 14,976,038 | 15,000,000 | 369,777 | 14,987,388 |
| Novo Banco | 20,000,000 | 13,181 | 19,971,429 | 20,000,000 | 500,672 | 19,984,286 |
| Bank overdrafts | ||||||
| Novo Banco | — | 59,952,614 | — | — | 10,154,087 | — |
| 94,153,704 | 82,417,625 | 68,337,527 | 68,537,037 | 28,131,571 | 51,660,473 |
As at 31 December 2023 and 30 September 2024, the details of the bank loans were as follows:
On 27 September 2017, a loan contract between CTT and BBVA and Bankinter was signed, for an initial period of 5 years and for a total amount of 90 million Euros, with the possibility of using the funds until September 2018. As no amount was used until the mentioned date, the contract was renegotiated on 27 September 2018, having the total amount been altered to 75 million Euros, while maintaining the one-year term for the use of the funds. Subsequently, due to the non-use of all the funds, the limit was reduced throughout the contract period. As at 30 September 2024, the referred used amount, net of commissions and added by the amount of interests to be paid in the following period corresponded to 18,933,214 Euros. By the Group decision, the remaining available amount will not be used.
On 22 April 2019, a simple credit agreement was signed between CTT and Novo Banco for a period of 60 months, with a grace period of two years, and may be extended for a period of 24 months, for a total amount of 35 million Euros. In subsequent periods, the limit was reduced due to non-use of all funds. As at 30 September 2024, the amount presented in the statement of financial position net of commissions and added by the amount of interests to be paid in the following period, in the total amount of 14,325,584 Euros.
As disclosed to the market on 7 March 2023, CTT contracted 35 million euros in bank loans in the form of commercial paper, indexed to sustainability goals, maturing in 2026, with two financial institutions - Novo Banco, S.A. and Banco Bilbao Vizcaya Argentaria S.A. - Portuguese Branch.
These bank loans are set within CTT's Sustainability Related Financing Reference Framework that was the subject of a Second Party Opinion disclosed by S&P Global Ratings. Therefore, the referred financing lines are indexed to the goal of reducing carbon emissions of CTT's activity (scopes 1, 2 and 3 emissions) by at least 30% by 2025 in relation to 2013, which is validated by the Science Based Targets initiative and aligned with the best practices of the sector.
As at 30 September 2024, the amount used presented in the statement of financial position, net of commissions and plus the amount of interest to be paid in the following period, amounts to 15,357,165 Euros in the case of BBVA/Bankinter and 20,484,958 Euros in Novo Banco. These commercial paper programmes are shown in non-current liabilities, since the Group's practice/expectation will be to use the contracts during their period of validity and having the right to roll-over these loans.
On 31 December 2023, the Group presented a bank overdraft with Novo Banco Bank, in the amount of 59,952,614 Euros, corresponding to short-term financing to meet specific treasury needs, regularised at the beginning of January 2024.
Bank loans obtained are subject to compliance with financial covenants, namely clauses of Cross default, Negative Pledge and Assets Disposal's limits. Additionally, the loans obtained also require compliance with rations of Net Debt over EBITDA and financial autonomy. Compliance with financial covenants is regularly monitored by the Group and is measured by counterparties on an annual basis based on the Financial Statements as at 31 December. As at 31 December 2023, the Group is in compliance with financial covenants.
Lease Liabilities
The Group presents lease liabilities which future payments, undiscounted and discounted amounts presented in the financial position, are detailed as follows:
| 31.12.2023 | 30.09.2024 | |
|---|---|---|
| Due within 1 year | 29,181,190 | 35,870,107 |
| Due between 1 to 5 years | 66,930,170 | 94,485,535 |
| Over 5 years | 37,807,781 | 46,550,013 |
| Total undiscounted lease liabilities | 133,919,141 | 176,905,656 |
| Current | 25,517,227 | 30,943,835 |
| Non-current | 92,742,578 | 126,548,994 |
The discount rates used in lease contracts range between 0.68% and 11.50%, depending on the characteristics of the contract, namely their duration.
The amounts recognised in the income statement are detailed as follows:
| 30.09.2023 | 30.09.2024 | |
|---|---|---|
| Lease liabilities interests (note 25) | 2,638,493 | 3,835,821 |
| Variable payments not included in the measurement of the lease liability | 1,372,762 | 1,597,699 |
The amounts recognised in the Cash flow statement are as follows:
| 30.09.2023 | 30.09.2024 | |
|---|---|---|
| Total of lease payments | (27,684,142) | (29,937,006) |
The movement in the rights of use underlying these lease liabilities can be analysed in note 4.
Reconciliation of Changes in the responsibilities of Financing activities
The reconciliation of changes in the responsibilities of financing activities as at 31 December 2023 and 30 September 2024, is detailed as follows:
| 31.12.2023 | 30.09.2024 | |
|---|---|---|
| Opening Balance | 195,954,666 | 269,014,957 |
| Movements without cash | 32,312,979 | 72,017,990 |
| Contract changes | 25,679,408 | 65,479,836 |
| IFRS 16 Interests | 3,396,453 | 3,727,834 |
| Others | 3,237,118 | 2,810,320 |
| Loans: | ||
| Inflow | 94,757,177 | 49,486,223 |
| Outflow | (16,964,205) | (123,297,291) |
| Lease liabilities: | ||
| Outflow | (37,045,659) | (29,937,006) |
| Closing balance | 269,014,957 | 237,284,873 |
The amounts of payments and receivables from loans obtained in the period related to the commercial paper and cash-pooling programs are reported on a net basis, in accordance with paragraph 22 of IAS 7 - Statement of Cash Flows.
19. Provisions, Guarantees provided, Contingent liabilities and commitments
Provisions
For the year ended on 31 December 2023 and the nine-months period ended 30 September 2024 the caption "Provisions", showed the following movement:
| 31.12.2023 | ||||||
|---|---|---|---|---|---|---|
| Opening balance |
Increases | Reversals | Utilisations | Transfers | Closing balance |
|
| Litigations | 3,145,696 | 988,027 | (744,147) | (118,951) | (9,082) | 3,261,544 |
| Onerous contracts | 160,148 | — | (75,162) | (84,986) | — | — |
| Other provisions | 6,019,982 | 1,000,439 | (89,788) | (495,249) | 9,082 | 6,444,466 |
| Commitments provisions | 124,457 | 103,423 | (74,189) | — | — | 153,691 |
| Sub-total - caption "Provisions (increases)/reversals" |
9,450,283 | 2,091,889 | (983,286) | (699,185) | — | 9,859,701 |
| Investments in subsidiary and associated companies |
168,972 | 6,480 | — | (175,452) | — | — |
| Restructuring | 199,386 | 13,441,228 | — | — | — | 13,640,614 |
| Other provisions | 2,813,626 | 25,924 | — | (1,000) | — | 2,838,550 |
| 12,632,267 | 15,565,521 | (983,286) | (875,637) | — | 26,338,865 |
| 30.9.2024 | ||||||
|---|---|---|---|---|---|---|
| Opening balance |
Increases | Reversals | Utilisations | Transfers | Closing balance |
|
| Litigations | 3,261,544 | 997,363 | (610,723) | (102,177) | (21,791) | 3,524,215 |
| Other provisions | 6,444,466 | 917,954 | (42,240) | (3,503,716) | 332,374 | 4,148,838 |
| Commitments provisions | 153,691 | 30,959 | (91,977) | — | — | 92,672 |
| Sub-total - caption "Provisions (increases)/reversals" |
9,859,701 | 1,946,276 | (744,940) | (3,605,893) | 310,583 | 7,765,726 |
| Restructuring | 13,640,614 | — | (1,989,181) | (1,189,922) | (10,263,283) | 198,228 |
| Other provisions | 2,838,550 | 785,706 | — | (360,050) | — | 3,264,206 |
| 26,338,865 | 2,731,981 | (2,734,121) | (5,155,865) | (9,952,700) | 11,228,160 |
The net amount between increases and reversals of provisions was recorded in the consolidated income statement under the caption Provisions, net and amounted to 1,019,736 Euros as at 30 September 2023 and 1,201,336 Euros as at 30 September 2024.
A provision should only be used for expenditures for which the provision was originally recognised, so the Group reverse the provision when it is no longer probable that an outflow of resources that incorporate future economic benefits will be necessary to settle the obligation.
Litigations
The provisions for litigations were set up to face the liabilities resulting from lawsuits brought against the Group and are estimated based on information from their lawyers as well as on the termination of the mentioned lawsuits. The final amount and the timing of the outflows regarding the provision for litigations depend on the outcome of the respective proceedings.
The reversal of the provision for litigations, in the amount of (744,147) Euros as at 31 December 2023 and (610,723) Euros as at 30 September 2024, essentially results from lawsuits whose decision, which
was made known in the course of 2023 or 2024, respectively, proved to be favourable to the Group, or, not being favourable, resulted in the condemnation to pay amounts that proved to be lower than the estimated amounts (and reflected in this provision caption).
Other provisions
In previous years, a provision was recognised in CTT Expresso branch in Spain to face the notification issued by the Spanish National Commission on Markets and Competition ("CNMC"). This process was originated during the year 2016, based on the alleged contrary action to article 1 of the Law 15/2017 ("Law on Competition Defense") and article 101º of the Treaty on the Functioning of the European Union ("TFUE"). This notification amounted to 3,148,845 Euros and, in previous years, has already been subject of an appeal to the Spanish Audiencia Nacional (National High Court). Regarding this matter, CTT Expresso branch in Spain submitted a formal request to the coercive measure suspension, and the request was accepted under the condition of a guarantee presentation – a procedure that was duly and timely adopted. During 2022, the Spanish Audiencia Nacional dismissed the appeal and ratified the fine of 3,148,845 Euros plus final and unappealable costs. Regarding this subject, the provision booked in previous years, which amounted to 3,200,000 Euros, resulted from the evaluation carried out by the Group's legal advisors. On 7 July 2023, CTT Expresso, a branch in Spain, filed an appeal with the Federal Supreme Court in Spain against the decision of the National High Court and on 17 November 2023, a public hearing of the appeal was scheduled for 20 February 2024. On 8 May 2024, the Supreme Court issued an order in which the appeal filed was not granted. On 20 May 2024, the CNMC requested payment of the sanction in the amount of 3,148,845 Euros, which was settled, which justifies the use of the recorded provision.
The amount provisioned in 321 Crédito amounting to 876,752 Euros as at 30 September 2024 (879,205 Euros at 31 December 2023) mainly results from the management assessment regarding the possibility of materialising tax contingencies and other processes.
As at 30 September 2024, in addition to the previously mentioned situations, this caption also includes:
- the amount of 200,749 Euros to cover costs of dismantlement of tangible fixed assets and/or removal of facilities and restoration of the site;
- the amount of 664,872 Euros, which results from the assessment carried out by management regarding the possibility of materialising contingent amounts to be paid to third parties under the scope of contracts entered into;
- the amount of 309,007 Euros regarding the liability, recognised in the company CTT Expresso, with a labour legal proceeding;
- the amount of 2,447,246 Euros to cover costs of operational vehicles restoration;
- the amount of commitments for guarantees provided to third parties to cover promotional contests in the amount of 900,643 Euros.
Restructuring
It is essential for the Group to implement policies that promote rationalisation, adaptation and increased productivity of all available resources, with reflection in the organisational management model of its human resources. In this context, in the previous year, actions were taken leading to the reorganisation of services, which led to the approval of a Human Resources optimisation programme. This programme is based on the conclusion of Suspension Agreements, Pre-Retirements and Termination Agreements by Mutual Agreement, and on 31 December 2023, a provision in the amount of 13,441,229 Euros was created for the respective operationalisation. This provision was recognised
under the caption Staff Costs. As of 30 September 2024, regarding the agreements performed during 2024, an amount of 10,263,283 Euros was transferred to the caption employee benefits in the statement of financial position.
Guarantees provided
As at 31 December 2023 and 30 September 2024, the Group has provided bank guarantees to third parties as follows:
| 31.12.2023 | 30.09.2024 | |
|---|---|---|
| Contencioso Administrativo da Audiência Nacional (National Audience Administrative Litigation) and CNMC - Comission Nacional de los Mercados y la Competencia - Espanha (National Commission on Markets and Competition - Spain) |
3,148,845 | 3,148,845 |
| Autoridade Tributária e Aduaneira (Portuguese Tax and Customs Authority) | 2,974,242 | 2,868,632 |
| LandSearch, Compra e Venda de Imóveis (Real estate company) | 1,792,886 | 1,792,886 |
| Fidelidade, Multicare, Cares - (Glintt BPO) | 1,500,000 | 1,500,000 |
| BVK Europa-Immobilien (Real estate company) | — | 1,203,881 |
| Absolute Miracle, Lda (Real estate company) | — | 938,025 |
| AMBIMOBILIÁRIA- INVESTIMENTOS E NEGÓCIOS, S.A. (Real estate company) | 480,000 | 480,000 |
| MARATHON (Closed investment fund) | 432,000 | 432,000 |
| O Feliz - Real State Company | 378,435 | 378,435 |
| Courts | 339,230 | 339,230 |
| EUROGOLD (Real estate company) | 318,299 | 318,299 |
| CIVILRIA (Real estate company) | 224,305 | 224,305 |
| TRANSPORTES BERNARDO MARQUES , S.A. | 220,320 | 220,320 |
| Repsol (Oil and Gas Company) | 215,000 | 215,000 |
| TIP - Transportes Intermodais do Porto, ACE (Oporto intermodal transport) | 150,000 | 150,000 |
| Via Direta | 150,000 | 150,000 |
| Municipalities | 79,362 | 78,991 |
| EPAL - Empresa Portuguesa de Águas Livres (Multi-municipal System of Water Supply and Sanitation of the Lisbon Area) |
68,895 | 68,895 |
| INCM - Imprensa Nacional da Casa da Moeda (Portuguese Mint and Official Printing Office) | 68,386 | 68,386 |
| ANA - Aeroportos de Portugal (Airports of Portugal) | 34,000 | 34,000 |
| Águas do Norte (Water Supply of the Northern Region) | 23,804 | 23,804 |
| Instituto de Gestão Financeira Segurança Social (Social Security Financial Management Institute) |
21,557 | 21,557 |
| EMEL, S.A. (Municipal company managing parking in Lisbon) | 19,384 | 19,384 |
| Serviços Intermunicipalizados Loures e Odivelas (Inter-municipal Services of Water Supply and Sanitation of the Loures and Odivelas Areas) |
17,000 | 17,000 |
| Direção Geral do Tesouro e Finanças (Directorate General of Treasury and Finance) | 16,867 | 16,867 |
| Alegro Alfragide | 16,837 | 16,837 |
| Portugal Telecom, S.A. (Telecommunication Company) | 16,658 | 16,658 |
| Refer (Public service for the management of the national railway network infrastructure) | 16,460 | 16,460 |
| Other entities | 16,144 | 16,144 |
| SMAS de Sintra (Services of Water Supply and Sanitation of the city of Sintra) | 15,889 | 15,889 |
| DOLCE VITA TEJO (Real State Company) | 13,832 | 13,832 |
| Águas do Porto, E.M (Services of Water Supply and Sanitation of the city of Porto) | 10,720 | 10,720 |
| ADRA - Águas da Região de Aveiro (Services of Water Supply and Sanitation of the city of Aveiro) |
10,475 | 10,475 |
| SMAS Torres Vedras (Services of Water Supply and Sanitation of the city of Torres Vedras) | 9,910 | 9,910 |
| ACT Autoridade Condições Trabalho (Authority for Working Conditions) | 9,160 | 9,160 |
| Consejeria Salud ( Local Health Service/Spain) | 4,116 | 4,116 |
| Wiiv Portugal - SIC Imobiliária Fechada, S.A. | 5,089,792 | — |
| PLANINOVA - Soc. Imobiliária, S.A. (Real estate company) | 2,033,582 | — |
| Garantia KTP Packaging Solutions (Packaging Solutions Supplier) | 211,740 | — |
| 20,148,131 | 14,848,941 |
Bank guarantees
As at 30 September 2024, the bank guarantees provided in favour of "Autoridade Tributária e Aduaneira" (Portuguese Tax and Customs Authority), in a global amount of 2,868,632 Euros, were essentially provided for the suspension of tax enforcement proceedings.
On 31 December 2023, a bank guarantee was provided to the entity Wiiv Portugal in the amount of 5,089,792 as part of the costs to be settled with the early termination of the lease contract with the former Head Office. Regarding the settlement of the amount during the year 2024, the bank guarantee was cancelled.
Guarantees for lease Contracts
According to the terms of some lease contracts of the buildings occupied by the Company's services, the Portuguese State ceased to hold the majority of the share capital of CTT, bank guarantees on first demand had to be provided. These guarantees amount to 1,792,886 Euros as at 30 September 2024 (31 December 2023: 3,826,468 Euros) .
CTT provided a bank guaranty, in previous years, on behalf of CTT Expresso branch in Spain, to the Sixth Section of the National Audience Administrative Litigation and to the Spanish National Commission on Markets and Competition ("Comisión Nacional de los Mercados y la Competencia") in the amount of 3,148,845 Euros, regarding the legal proceedings of CTT Expresso branch in Spain with the National Audience in Spain. As previously mentioned, the CNMC requested payment of the sanction in the amount of 3,148,845 Euros, which was settled. Therefore, the cancellation of the bank guarantee is underway.
Commitments
The Group engaged guarantee insurances in the total amount of 7,779,282 Euros(31 December 2023: 5,985,951 Euros), with the purpose of guaranteeing the fulfilment of contractual obligations assumed by third parties.
In addition, the Group also assumed commitments relating to real estate rents under lease contracts and rents for other leases.
The Group contractual commitments related to Tangible fixed assets and Intangible assets are detailed respectively in Notes 4 and 5.
20. Accounts payable
As at 31 December 2023 and 30 September 2024, the caption "Accounts payable" showed the following composition:
| 31.12.2023 | 30.09.2024 | |
|---|---|---|
| Current | ||
| Advances from customers | 1,877,771 | 40,633,705 |
| CNP money orders | 106,269,099 | 79,075,083 |
| Suppliers | 114,269,770 | 151,685,796 |
| Invoices pending confirmation | 12,368,179 | 11,844,519 |
| Fixed assets suppliers | 5,334,120 | 5,364,834 |
| Invoices pending confirmation (fixed assets) | 8,165,808 | 4,002,120 |
| Values collected on behalf of third parties | 17,707,682 | 26,372,415 |
| Postal financial services | 80,227,690 | 57,929,853 |
| Deposits | 678,080 | 576,651 |
| Charges | 14,664,320 | 15,517,552 |
| Compensations | 669,708 | 543,644 |
| Postal operators - amounts to be settled | 538,979 | 30,000 |
| Amounts to be settled to third parties | 1,229,091 | 581,879 |
| Amounts to be settled in stores | 765,242 | 151,673 |
| Other accounts payable | 9,195,564 | 6,290,320 |
| 373,961,102 | 400,600,045 |
Advances from customers
The captions advances from customers (and suppliers) had a significant increase in the period, which essentially resulted from the segregation of amounts advanced by (and to) postal operators due to annual terminal dues accounts.
These amounts began to be recorded in specific customer (and supplier) advance accounts, making the flows more transparent within the captions, and allowing the accounting process to be aligned with other types of advances received.
A similar impact is observed in the caption suppliers.
CNP money orders
The amount of CNP money orders refers to the money orders received from the National Pensions Center (CNP), whose payment date to the corresponding pensioners will occur in the month after the closing of the period.
The variation in the balance compared to 31 December 2023, is mainly related to the time of receipt of the amounts from the National Pensions Center, which are related with the working days of the calendar compared to the end of the month.
Postal financial services
This caption records mainly the amounts collected related to taxes, insurance, savings certificates and other money orders, whose settlement date should occur in the month following the end of the period. The variation in the item is related, above all, to the limitation of the type of payment methods available in stores, for the payment of taxes for corporate customers, as well as a decrease in subscriptions to savings certificates, related to the change in marketing conditions in June 2023, namely lower interest
rates, and the reduction in maximum limits per application per subscriber, which reduced the attractiveness of these savings products.
21. Debt Securities issued at amortised cost
This caption showed the following composition:
| 31.12.2023 | 30.09.2024 | |
|---|---|---|
| Non current liabilities | ||
| Debt securities issued | 347,131,609 | 274,278,427 |
| 347,131,609 | 274,278,427 | |
| Current liabilities | ||
| Debt securities issued | 243,468 | 278,699 |
| 243,468 | 278,699 | |
| 347,375,077 | 274,557,126 |
As at 31 December 2023 and 30 September 2024, the Debt securities issued are analysed as follows:
| 31.12.2023 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Issue | Issue date | Maturity date | Remuneration | Nominal value | Book value | |||
| Ulisses Finance No.2 – Class A | September 2021 | September 2038 | Euribor 1M + 70 bps | 140,142,471 | 141,123,335 | |||
| Ulisses Finance No.2 – Class B | September 2021 | September 2038 | Euribor 1M + 80 bps | 6,879,846 | 6,878,045 | |||
| Ulisses Finance No.2 – Class C | September 2021 | September 2038 | Euribor 1M + 135 bps | 13,759,693 | 13,757,142 | |||
| Ulisses Finance No.2 – Class D | September 2021 | September 2038 | Euribor 1M + 285 bps | 7,774,226 | 7,774,405 | |||
| Ulisses Finance No.2 – Class E | September 2021 | September 2038 | Euribor 1M + 368 bps | 2,545,543 | 2,545,895 | |||
| Ulisses Finance No.2 – Class F | September 2021 | September 2038 | Euribor 1M + 549 bps | 894,380 | 894,729 | |||
| Ulisses Finance No.3 - Class A | June 2022 | June 2039 | Euribor 1M + 90 bps | 147,128,975 | 147,012,162 | |||
| Ulisses Finance No.3 - Class B | June 2022 | June 2039 | Euribor 1M + 200 bps | 7,006,142 | 6,902,717 | |||
| Ulisses Finance No.3 - Class C | June 2022 | June 2039 | Euribor 1M + 370 bps | 10,509,212 | 10,352,450 | |||
| Ulisses Finance No.3 - Class D | June 2022 | June 2039 | Euribor 1M + 525 bps | 5,254,606 | 5,052,713 | |||
| Ulisses Finance No.3 - Class E | June 2022 | June 2039 | Euribor 1M + 650 bps | 4,378,839 | 4,232,861 | |||
| Ulisses Finance No.3 - Class F | June 2022 | June 2039 | Euribor 1M + 850 bps | 875,768 | 848,624 | |||
| 347,149,701 | 347,375,077 |
| 30.09.2024 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Issue | Issue date | Maturity date | Remuneration | Nominal value | Book value | |||
| Ulisses Finance No.2 – Class A | September 2021 September 2038 | Euribor 1M + 70 bps | 108,785,787 | 109,494,967 | ||||
| Ulisses Finance No.2 – Class B | September 2021 September 2038 | Euribor 1M + 80 bps | 5,340,490 | 5,341,204 | ||||
| Ulisses Finance No.2 – Class C | September 2021 September 2038 | Euribor 1M + 135 bps | 10,680,981 | 10,683,714 | ||||
| Ulisses Finance No.2 – Class D | September 2021 September 2038 | Euribor 1M + 285 bps | 6,034,754 | 6,038,310 | ||||
| Ulisses Finance No.2 – Class E | September 2021 September 2038 | Euribor 1M + 368 bps | 1,975,981 | 1,977,510 | ||||
| Ulisses Finance No.2 – Class F | September 2021 September 2038 | Euribor 1M + 549 bps | 694,264 | 695,080 | ||||
| Ulisses Finance No.3 - Class A | June 2022 | June 2039 | Euribor 1M + 90 bps | 118,223,919 | 118,181,088 | |||
| Ulisses Finance No.3 - Class B | June 2022 | June 2039 | Euribor 1M + 200 bps | 5,629,710 | 5,568,684 | |||
| Ulisses Finance No.3 - Class C | June 2022 | June 2039 | Euribor 1M + 370 bps | 8,444,566 | 8,353,712 | |||
| Ulisses Finance No.3 - Class D | June 2022 | June 2039 | Euribor 1M + 525 bps | 4,222,283 | 4,102,261 | |||
| Ulisses Finance No.3 - Class E | June 2022 | June 2039 | Euribor 1M + 650 bps | 3,518,569 | 3,432,650 | |||
| Ulisses Finance No.3 - Class F | June 2022 | June 2039 | Euribor 1M + 850 bps | 703,714 | 687,946 | |||
| 274,255,017 | 274,557,126 |
During the year ended on 31 December 2023 and the nine-months period ended 30 September 2024, the movement of this item is as follows:
| 31.12.2023 | |||||
|---|---|---|---|---|---|
| Opening balance |
Issues | Repayments | Other movements |
Closing balance |
|
| Ulisses Finance No.1 | 11,350,744 | — | (11,333,007) | (17,736) | — |
| Ulisses Finance No.2 | 234,868,353 | — | (61,351,441) | (543,362) 172,973,550 | |
| Ulisses Finance No.3 | 199,358,764 | — | (25,446,459) | 489,222 174,401,527 | |
| 445,577,861 | — | (98,130,907) | (71,876) 347,375,077 | ||
| 30.09.2024 | |||||
|---|---|---|---|---|---|
| Opening balance |
Issues | Repayments | Other movements |
Closing balance |
|
| Ulisses Finance No.2 | 172,973,550 | — | (38,483,904) | (258,862) 134,230,785 | |
| Ulisses Finance No.3 | 174,401,527 | — | (34,410,780) | 335,594 140,326,341 | |
| 347,375,077 | — | (72,894,683) | 76,732 274,557,126 |
As at 31 December 2023, the credit securitisation operation Ulisses No1, originated by 321 Crédito in 2017, included a consumer credit portfolio amounting to 141.2 million euros. The operation included a clean-up call option clause that could be exercised by the originator when the securitised portfolio dropped by 10% of the initial amount, i.e., 14.1 million euros. This occurred after the IPD ("interest payment date") of June 2023, with the clean-up call being exercised at the IPD of July 2023, with the Company reacquiring the entire securitised portfolio, closing the operation.
The scheduling by maturity regarding this caption is as follows:
| 31.12.2023 | |||||||
|---|---|---|---|---|---|---|---|
| Current | |||||||
| Due within 3 months |
Over 3 months and less than 1 year |
Total | Over 1 year and less than 3 years |
Over 3 years |
Total | Total | |
| Securitisations 243,468 | — | 243,468 | — 347,131,609 | 347,131,609 | 347,375,077 | ||
| 243,468 | — | 243,468 | — 347,131,609 | 347,131,609 | 347,375,077 |
| 30.09.2024 | |||||||
|---|---|---|---|---|---|---|---|
| Current | |||||||
| Due within 3 months |
Over 3 months and less than 1 year |
Total | Over 1 year and less than 3 years |
Over 3 years |
Total | Total | |
| Securitisations 278,699 | — | 278,699 | — 274,278,427 | 274,278,427 | 274,557,126 | ||
| 278,699 | — | 278,699 | — 274,278,427 | 274,278,427 | 274,557,126 |
Asset securitisation
Chaves Funding No.8
This private securitisation operation was issued in November 2019 by Tagus, Sociedade de Titularização de Créditos, S.A., it included a Consumer Credit portfolio originated by 321 Crédito. The operation was set up with the collaboration of Sociedade de Advogados PLMJ. The operation's
structure includes a Tranche A and a Tranche B in the notes issued, both of which are fully owned by the Group.
This operation includes an optional early amortisation clause that allows the Issuer to redeem the Notes of all Classes issued, when the residual value of the credits represents 10% or less of the value of the Credit Portfolio on the date of setting up the securitisation operation.
The underlying assets of Chaves Funding No.8 operation were not derecognised from the Statement of Financial Position, as the Group substantially maintained the risks and benefits associated with their holding.
Ulisses Finance No.2
This securitisation operation was created in September 2021 and issued by Tagus - Sociedade de Titularização de Créditos, S.A. and corresponds to a public credit securitisation programme (Ulysses) with the Ulisses Finance No.2 operation being placed on the market. The operation was set up with the collaboration of Sociedade de Advogados PLMJ and Banco Deutsche Bank, and included a consumer credit portfolio originated by 321 Crédito, whose initial total amount was 250,000 thousand euros, to be maintained over the 12 months of revolving period.
The structure of the transaction includes six collateralised Tranches from A to F and additionally tranches G and Z. All tranches are dispersed in the capital market, with the exception of class Z, whose initial value was 1.5 million euros and which presents the 30 September 2022 a value of 1,000 euros.
This operation obtained ratings from DBRS and Moody's for the tranches placed on the market, that is, Tranches A to G.
The Ulisses Finance No.2 operation has the characteristics of STS (simple, transparent and standardised) and SRT (significant risk transfer).
For the purposes of calculating the capital ratio, as the Ulisses Finance No.2 operation complies with article 244.1 (b) of European Regulation 575/2013 (full capital deduct approached), the company reduced its "Risk Weight Assets" with regard to the contracts securitised within the scope of this operation.
The operation has incorporated an interest rate cap, an interest rate risk mitigation mechanism for the operation and its investors, including the Group, but which was not contracted directly by the Group, but by the issuer. of the securitisation operation (Tagus – STC, S.A.).
The underlying assets of the Ulisses Finance No.2 operation were not derecognised from the Consolidated Statement of Financial Position, as the Group substantially maintained the risks and benefits associated with their holding.
Ulisses Finance No. 3
This securitisation operation was created in June 2022 and issued by Tagus - Sociedade de Titularização de Créditos, S.A. and corresponds to a public credit securitisation programme (Ulisses) with the Ulisses Finance No.3 operation being placed on the market. The operation was set up with the collaboration of "Sociedade de Advogados PLMJ" and "Banco Deutsche Bank", and included a consumer credit portfolio originated by 321 Crédito, whose initial total amount was 200,000 thousand euros, to be maintained over the 12 months of revolving period.
The structure of the Transaction includes six collateralised Tranches from A to F and additionally tranches G and Z. All tranches are dispersed in the capital market, with the exception of class Z, whose initial value was 1.8 million euros.
This operation obtained ratings from DBRS and Moody's for the tranches placed on the market, that is, Tranches A to G.
The Ulisses Finance No.3 operation has the characteristics of STS (simple, transparent and standardised) and SRT (significant risk transfer).
For the purposes of calculating the capital ratio, as the Ulisses Finance No.3 operation complies with article 244.1 (b) of European Regulation 575/2013 (full capital deduct approached), the company reduced its "Risk Weight Assets" regarding to the contracts securitised within the scope of this operation.
The operation incorporates an interest rate swap, an interest rate risk mitigation mechanism for the operation and its investors, including the Group, but which was not contracted directly by the Group, but by the issuer. of the securitisation operation (Tagus – STC, S.A.).
The underlying assets of the Ulisses Finance No.3 operation were not derecognised from the Consolidated Statement of Financial Position, as the Group substantially maintained the risks and rewards associated with their holding.
Additionally, the Group, through 321 Crédito, maintained, as at 30 September 2024, the Fénix operation as the only live unrecognised securitisation operation. The Group's involvement in this operation is limited to providing servicing services.
22. Banking clients' deposits and other loans
As at 31 December 2023 and 30 September 2024, the composition of the caption Banking clients' deposits and other loans in the Group is as follows:
| 31.12.2023 | 30.09.2024 | |
|---|---|---|
| Sight deposits | 1,343,297,943 | 1,371,116,609 |
| Term deposits | 1,409,082,838 | 2,254,234,028 |
| Savings deposits | 338,581,770 | 342,558,760 |
| 3,090,962,551 | 3,967,909,397 | |
| Corrections to the liabilities value subject to hedging operations | — | 8,927 |
| 3,090,962,551 | 3,967,918,324 | |
The above-mentioned amounts relate to Banco CTT clients' deposits. Savings deposits are deposits associated with current accounts and which allow the client to obtain a remuneration above the slight deposits, which can be mobilised at any time, with no subscription limit, and it is possible to schedule transfers from and for this account. These deposits are different from term deposits as they have a definite date of constitution and maturity, and the savings accounts are fully mobilisable without penalty on remuneration.
For the nine-months period ended 30 September 2024 the average rate of return on customer funds was 1.72% (31 December 2023: 0.63%).
As at 31 December 2023 and 30 September 2024, the residual maturity of banking client deposits and other loans, is detailed as follows:
| 31.12.2023 | ||||||
|---|---|---|---|---|---|---|
| No defined maturity |
Due within 3 months |
Over 3 months and less than 1 year |
Over 1 year and less than 3 years |
Over 3 years |
Total | |
| Sight deposits and saving accounts |
1,681,879,712 | — | — | — | — 1,681,879,712 | |
| Term deposits | — 359,591,003 1,049,491,835 | — | — 1,409,082,838 | |||
| Banking clients' deposits 1,681,879,712 359,591,003 1,049,491,835 | — | — 3,090,962,551 |
| 30.09.2024 | ||||||
|---|---|---|---|---|---|---|
| No defined maturity |
Due within 3 months |
Over 3 months and less than 1 year |
Over 1 year and less than 3 years |
Over 3 years |
Total | |
| Sight deposits and saving accounts |
1,713,675,369 | — | — | — | — 1,713,675,369 | |
| Term deposits | — 796,744,262 1,457,489,766 | — | — 2,254,234,028 | |||
| 1,713,675,369 796,744,262 1,457,489,766 | — | — 3,967,909,397 |
23. Income taxes receivable /payable
As of 30 September 2024, this caption reflects the income tax estimate for the nine-months period ended 30 September 2024 and the amounts already paid regarding payments on account and additional payments on account
24. Staff costs
During nine-months period ended 30 September 2023 and 30 September 2024, the composition of the caption Staff Costs was as follows:
| 30.09.2023 | 30.09.2024 | |
|---|---|---|
| Remuneration | 223,877,378 | 239,099,919 |
| Employee benefits | 5,913,170 | 4,527,053 |
| Indemnities | 801,015 | (863,470) |
| Social Security charges | 47,945,123 | 51,233,658 |
| Occupational accident and health insurance | 2,852,955 | 2,733,113 |
| Social welfare costs | 5,848,580 | 4,733,963 |
| Other staff costs | 121,858 | 130,671 |
| 287,360,078 | 301,594,906 |
The increase in staff costs in the period is mainly explained by salary increases, including the increase in the national minimum wage.
Remuneration of the statutory bodies of CTT, S.A.
During the nine-months period ended 30 September 2023 and 30 September 2024, the fixed and variable remunerations attributed to the members of the statutory bodies of CTT, S.A., were:
| 30.09.2023 | |||||
|---|---|---|---|---|---|
| Board of Directors |
Audit Comittee | Remuneration Board |
General Meeting of Shareholders |
Total | |
| Short-term remuneration | |||||
| Fixed remuneration | 1,766,179 | 122,762 | 30,850 | 14,000 | 1,933,791 |
| 1,766,179 | 122,762 | 30,850 | 14,000 | 1,933,791 | |
| Long-term remuneration | |||||
| Defined contribution plan RSP |
138,192 | — | — | — | 138,192 |
| 138,192 | — | — | — | 138,192 | |
| 1,904,371 | 122,762 | 30,850 | 14,000 | 2,071,983 |
| 30.09.2024 | ||||||
|---|---|---|---|---|---|---|
| Board of Directors |
Audit Comittee | Remuneration Board |
General Meeting of Shareholders |
Total | ||
| Short-term remuneration | ||||||
| Fixed remuneration | 1,413,735 | 187,500 | 48,825 | 14,000 | 1,664,060 | |
| 1,413,735 | 187,500 | 48,825 | 14,000 | 1,664,060 | ||
| Long-term remuneration | ||||||
| Defined contribution plan RSP |
115,875 | — | — | — | 115,875 | |
| Long-term variable remuneration |
815,560 | — | — | — | 815,560 | |
| 931,435 | — | — | — | 931,435 | ||
| 2,345,170 | 187,500 | 48,825 | 14,000 | 2,595,495 |
Long-term variable remuneration ("LTVR")
2020/2022 Term
The long-term variable remuneration model for the 2020/2022 term was based on the participation of CTT's Board members and Top Management in the Options Plan.
The aforementioned Option Plan provided for the attribution of options to its participants that conferred the right to attribution of shares representing CTT's share capital. The Options Plan established five tranches of options that are distinguished only by their different exercise price or strike price. In the case of management, the Board Members approved the granting of a global number of 1,200,000 options, subject to the conditions defined for the corporate bodies.
The exercise date of all the options was 1 January 2023, given the end of the 3-year term of office 2020/2022.
The Executive Committee Options Plan provides for the financial settlement of 25% of the options (cash settlement) and the physical settlement of 75% of the options (equity settlement). The plan for CTT's Top Management provides for the physical settlement of 100% of the options.
The plan's settlement conditions were defined as follows: 50% of the LTVR was settled on the fifth trading day immediately following the date of the annual general meeting of the Company approving the accounts for the 2022 financial year that took place in 20 April 2023, half by way of financial settlement in cash, in the case of the Executive Committee, (i.e. 25% of the options) and the other half (i.e. 25% of the options) by way of physical settlement through the delivery of CTT shares. In the case of Top Management, the 50% of the LTVR settled on this date will be settled through the physical delivery of CTT shares; The remaining 50% of the LTVR (i.e. 50% of the options) are settled through the delivery of CTT shares (physical settlement), in 2 tranches of 1/2 of the shares retained, respectively: (i) on the fifth trading day immediately following the end of the month after the date of approval of the accounts relating to financial year 2023 at an annual general meeting of the Company that took place in 30 April 2024 and subject to the positive performance of the Company in each of the financial years 2021 to 2023; and (ii) on the fifth trading day immediately following the end of the month after the date of approval of the accounts for the financial year 2024 at an annual general meeting of the Company to be held in 2025, or on 31 May 2025 (whichever date occurs later) and subject to the positive performance of the Company in each of the financial years 2021 to 2024, respectively for each tranche.
Taking into account the end of the three-year term of office 2020/2022, the Remuneration Committee, in accordance with the Options Plan, has determined, on 1 January 2023, the number of shares to be attributed to each participant as LTVR (which attribution and settlement being subject to the rules set out in the Options Plan, described above). This determination was made through a study carried out by an independent entity.
Considering the above, the allocation of the following number of shares to each participant by way of LTVR was determined:
| Participant | CEO | CFO | Other executive directors (three members) |
Total |
|---|---|---|---|---|
| Shares | 81,629 | 46,645 | 104,949 | 233,226 |
In the case of Top Management, a total of 127,103 shares to be awarded were calculated.
As of 31 December 2023 the amount was paid and the liabilities were settled on 20 April 2023. In the case of the physical settlement component, considering that this was fully recognised in 2021 and 2022, with reference to 31 December 2023, an amount of 1,155,000 Euros was derecognised in the caption "Reserves" in equity, corresponding to the proportional amount of the physical liquidation that occurred (note 15). This amount was derecognised against to the amount of the own shares delivered within the scope of this operation. The difference in the amount of 705,463 Euros, was recognised under the caption "Other changes in equity" (Note 15), pursuant to the provisions of the IFRS. As of 30 September 2024, considering the delivery of the second tranche, an amount of 840,000 Euros was derecognized under the caption "Reserves" in equity, corresponding to the proportional value of the physical settlement that occurred (note 15). This amount was derecognized in exchange for the value of own shares delivered within the scope of this operation. The difference between the two amounts, amounted to 512,156 Euros.
2023/2025 Term
The long-term variable remuneration model for the 2023/2025 term is based on the participation of executive Directors in the Option Plan, which is reflected in the remuneration policy approved by the General Shareholders' Meeting on 23 April 2024, based on in the Remuneration Committee's proposal.
The aforementioned Option Plan provides for the following main rules applicable to the attribution and exercise of options and the financial settlement and delivery and retention of shares under the LTVR:
- a. The Options Plan regulates the attribution to its participants of options that confer the right to attribution of shares representing CTT's share capital, subject to certain conditions applicable to the exercise and settlement of the options;
- b. The Option Plan establishes the number of options attributed to be exercised by the Plan's participants (differentiated between CEO, CFO and CCO), as per the table below, with the date of attribution corresponding to the date of approval of said plan at the General Meeting;
- c. Each Participant will be entitled to receive three distinct tranches of Options, each with a different Exercise Price:
| Number of options per participant | ||||
|---|---|---|---|---|
| Tranche | CEO | CFO | CCO | Strike Price |
| 1 | 1,166,667 | 833,334 | 833,334 € | 4.00 |
| 2 | 1,166,667 | 833,333 | 833,333 € | 6.00 |
| 3 | 1,166,666 | 833,333 | 833,333 € | 8.00 |
- d. The exercise date of all options corresponds to 1 January 2026, taking into account the end of the 3-year term 2023/2025;
- e. The number of Shares to be settled for each tranche of Options will be calculated based on the application of the following formula:
No. of Shares = No. of Options exercised x [(Share Price – Strike Price) / Share Price]
Where:
Strike Price: corresponds to the Strike Price determined in the table above; It is,
Share Price: corresponds to the arithmetic average of the prices, weighted by the respective volumes, of the Company's share transactions occurring on the Euronext Lisbon regulatory market, in Stock Exchange sessions that take place in the 120 days prior to the Exercise Date.
- f. The Options Plan provides for the financial settlement of 25% of the options (cash settlement) and the physical settlement of 75% of the options (equity settlement), without prejudice to, exceptionally and in a scenario where the number of own shares held by CTT it is not enough, to determine that the Remuneration Committee establishes a compensation mechanism through the allocation of a cash amount and financial settlement of options whose physical settlement is not possible;
- g. If shares are allocated based on stock market performance and verification of the Company's positive performance under the terms defined in the plan, the options will be subject to settlement over a deferral/retention period;
- h. 50% of the RVLP is settled on the fifth trading day immediately following the date of the Company's annual general meeting approving the accounts for the 2025 financial year to be held in 2026, subject to verification of positive performance in relation to each of the financial years. 2023, 2024 and 2025, half via financial settlement in cash (i.e., 25% of the options on a proportional basis with respect to each of its 3 tranches) and the other half (i.e., 25% of the options equally on a proportional in relation to each of its 3 tranches) via physical settlement through the delivery of CTT shares;
- i. The remaining 50% of the RVLP (i.e., 50% of the options equally on a proportional basis in relation to each tranches) are settled through the delivery of CTT shares (physical settlement), in 2 tranches of 1/2 of the shares retained, respectively: (i) on the fifth trading day immediately following the end of the month after the date of approval of the accounts for the 2026 financial year at the Company's annual general meeting to be held in 2027, or on 31 May 2027 (depending on the later date) and subject to the positive performance of the Company in each of the financial years from 2023 to 2026; and (ii) on the fifth trading day immediately following the end of the month after the date of approval of the accounts for the 2027 financial year at the Company's annual general meeting to be held in 2028, or on 31 May 2028 (depending on the date occurring later) and subject to the positive performance of the Company in each of the financial years from 2023 to 2027, respectively for each tranche;
j. The exercise of options and their settlement are also subject to eligibility conditions, which are, as a rule, remaining in office during the term, the absence of situations of material noncompliance with the Options Plan and the failure to verify situations that give rise to application of adjustment mechanisms;
On the date of attribution, the determination of the fair value of the options attributed was carried out through a study carried out by an independent entity on the date of attribution of the benefit. The model used to value the action plan was the Monte Carlo simulation model.
The amount relating to the share plan relating to corporate bodies, recognized on 30 September 2024, amounted to 815,560 Euros, with the financial settlement component, recognized under the caption "Employee Benefits", in the amount of 203,890 Euros and the settlement in instruments recognized under the caption "other reserves", in the amount of 611,670 Euros (note 15).
For the financial settlement component, the liability amount is updated at the end of each reporting period, depending on the number of shares or options on shares attributed and their fair value at the reporting date, based on a study carried out by an independent entity .
Annual variable remuneration ("AVR"):
In the period ended 31 December 2023, the amount of 980,387 Euros was recognised as an estimated annual variable remuneration for members of the Governing Bodies. In 2024, the final amount to be settled was calculated, with 50% of the amount having already been settled, as stipulated in the Remuneration Regulations.
For the nine-months period ended 30 September 2024, the caption Staff costs includes the amount of 676,900 Euros related to expenses with workers' representative bodies (30 September 2023: 699,019)
For nine-months period ended 30 September 2024, the average number of staff of the Group was 13,725 (13,155 employees for the period ended 30 September 2023).
25. Interest expenses and Interest income
For the nine-months period ended 30 September 2023 and 30 September 2024, the caption Interest Expenses had the following detail:
| 30.09.2023 | 30.09.2024 | |
|---|---|---|
| Interest expenses | ||
| Bank loans | 3,813,508 | 4,723,177 |
| Lease liabilities | 2,638,493 | 3,835,821 |
| Other interest | 71,851 | 20,985 |
| Interest costs from employee benefits | 5,372,575 | 4,429,602 |
| Other interest costs | 390,709 | 355,023 |
| 12,287,136 | 13,364,608 |
During the nine-months period ended 30 September 2023 and 30 September 2024, the caption Interest income was detailed as follows:
| 30.09.2023 | 30.09.2024 | |
|---|---|---|
| Interest income | ||
| Deposits in credit institutions | 650,079 | 214,200 |
| Other supplementary income | 80 | 16,816 |
| 650,159 | 231,016 |
26. Income tax for the period
Companies with head office in Portugal are subject to tax on their profit through Corporate Income Tax ("IRC") at the normal tax rate of 21%, whilst the municipal tax is established at a maximum rate of 1.5% of taxable profit, and State surcharge is 3% of taxable profit between 1,500,000 Euros and 7,500,00 Euros, 5% of taxable profit between 7,500,000 and to 35,000,000 Euros and 9% of the taxable profit above 35,000,000 Euros. CTT – Expresso, S.A., Spain branch is subject to income taxes in Spain, through income tax (Impuesto sobre Sociedades - "IS") at a rate of 25%, and the subsidiary CORRE is subject to corporate income tax in Mozambique ("IRPC") at a rate of 32%.
Corporate income tax is levied on CTT and its subsidiaries CTT – Expresso, S.A., Payshop Portugal, S.A, CTT Contacto, S.A. and Banco CTT, S.A., 321 Crédito – Instituição Financeira de Crédito, S.A., CTT Soluções Empresariais, S.A., CTT IMO – Sociedade Imobiliária, S.A., NewSpring Services, S.A., MedSpring, S.A., CTT IMO Yield, S.A. and CTT Services, S.A. as a result of the option for the Special Regime for the Taxation of Groups of Companies ("RETGS") application. The remaining companies are taxed individually. The entities NewSpring Services, S.A., MedSpring, S.A., CTT IMO Yield, S.A. and CTT Services, S.A. integrated the RETGS in 2023. In the 2024 financial year, taking into account that it no longer complies with all the requirements set out in that regime, CTT IMO Yield, left the RETGS.
Reconciliation of the income tax rate
For the nine-months period ended 30 September 2023 and 30 September 2024, the reconciliation between the nominal rate and the effective income tax rate was as follows:
| 31.03.2023 | 31.03.2024 | |
|---|---|---|
| Earnings before taxes (a) | 45,448,734 | 34,836,435 |
| Nominal tax rate | 21.0% | 21.0% |
| 9,544,234 | 7,315,651 | |
| Tax Benefits | (141,124) | (471,601) |
| Accounting capital gains/(losses) | (3,821) | (11,828) |
| Tax capital gains/(losses) | 1,910 | 5,914 |
| Provisions not considered in the calculation of deferred taxes | 41,148 | 98,267 |
| Impairment losses and reversals | (389,200) | 8,853 |
| Compensation for insurable events | 103,968 | 69,523 |
| Depreciation and car rental charges | 19,173 | 61,571 |
| Credits uncollectible | 201,489 | 71,982 |
| Difference between current and deferred tax rates | 51,040 | 227,448 |
| Fines, interest, compensatory interest and other charges | 60,668 | 9,877 |
| Contract termination costs | — | 2,241,459 |
| Amounts not subject to taxation | — | (1,078,699) |
| Other situations, net | 353,995 | (549,464) |
| Adjustments related with - autonomous taxation | 401,116 | 416,103 |
| SIFIDE tax credit | (2,029,450) | (861,647) |
| Insuficiency / (Excess) estimated income tax | (272,571) | (3,908,581) |
| Subtotal (b) | 7,942,574 | 3,644,829 |
| (b)/(a) | 17.48% | 10.46% |
| Adjustments related with - Municipal Surcharge | 688,248 | 781,080 |
| Adjustments related with - State Surcharge | 1,319,279 | 2,005,772 |
| Income taxes for the period | 9,950,101 | 6,431,681 |
| Effective tax rate | 21.89% | 18.46% |
| Income taxes for the period | ||
| Current tax | 12,005,318 | 7,154,329 |
| Deferred tax | 246,804 | 4,047,579 |
| SIFIDE tax credit | (2,029,450) | (861,647) |
| Insuficiency / (Excess) estimated income tax | (272,571) | (3,908,581) |
| 9,950,101 | 6,431,681 |
For the six-month period ending on 30 June 2023, the caption "SIFIDE Tax Credit" essentially refers to the remaining amount of the SIFIDE tax credit for the years 2020 and 2021 (1,618,016 Euros).
Deferred taxes
As at 31 December 2023 and 30 September 2024, the balance related to deferred tax assets and liabilities was composed as follows:
| 31.12.2023 | 30.09.2024 | |
|---|---|---|
| Deferred tax assets | ||
| Employee benefits - healthcare | 43,185,623 42,594,405 | |
| Employee benefits - pension plan | 66,831 | 60,731 |
| Employee benefits - other long-term benefits | 5,338,079 | 7,184,982 |
| Impairment losses and provisions | 6,417,768 | 2,299,385 |
| Tax losses carried forward | 3,179,270 | 3,036,991 |
| Impairment losses in tangible fixed assets | 671,318 | 735,757 |
| Long-term variable remuneration (Board of diretors) | 816,443 | 829,539 |
| Land and buildings | 51,529 | 51,529 |
| Tangible assets' tax revaluation regime | 527,549 | 329,719 |
| Sale & Leaseback transactions | 8,784,280 | 8,391,575 |
| Early termination of contracts | 2,241,459 | — |
| Other | 115,718 | 94,103 |
| 71,395,868 65,608,716 | ||
| Deferred tax liabilities | ||
| Revaluation of tangible fixed assets before IFRS | 484,578 | 360,682 |
| Suspended capital gains | 284,397 | 275,572 |
| PPA Movements - New Spring Services | 286,265 | 210,489 |
| Fair value adjustments | 3,420,343 | 1,876,018 |
| Other | 195,125 | 208,224 |
| 4,670,707 | 2,930,985 |
The deferred tax liability relating to "fair value adjustments" essentially refers to the deferred tax associated with the caption "Financial assets and liabilities at fair value through profit or loss".
As at 30 September 2024, the expected amount of deferred tax assets and liabilities to be settled within 12 months is 6.3 million Euros and 6.2 million Euros, respectively.
During the years ended 31 December 2023 and 30 September 2024, the movements which occurred under the deferred tax captions were as follows:
| 31.12.2023 | 30.09.2024 | |
|---|---|---|
| Deferred tax assets | ||
| Opening balances | 67,823,608 | 71,395,868 |
| Effect on net profit | ||
| Employee benefits - healthcare | (11,716,520) | (591,218) |
| Employee benefits - pension plan | 14,012 | (6,100) |
| Employee benefits - other long-term benefits | 247,619 | 1,846,903 |
| Impairment losses and provisions | 4,017,349 | (4,118,384) |
| Tax losses carried forward | 136,866 | (142,279) |
| Impairment losses in tangible fixed assets | (923,508) | 64,439 |
| Long-term variable remuneration (Board of diretors) | — | 13,096 |
| Share plan | (233,286) | — |
| Land and buildings | (281,081) | — |
| Tangible assets' tax revaluation regime | (434,598) | (197,830) |
| Sale & Leaseback Transaction | 8,784,280 | (392,705) |
| Early termination of contracts | 2,241,459 | (2,241,459) |
| Other | 118,611 | (21,616) |
| Effect on equity | ||
| Employee benefits - healthcare | 1,599,841 | — |
| Employee benefits - pension plan | 1,216 | — |
| Closing balance | 71,395,868 | 65,608,716 |
| 31.12.2023 | 30.09.2024 | |
| Deferred tax liabilities | ||
| Opening balances | 9,847,476 | 4,670,707 |
| Effect on net profit | ||
| Revaluation of tangible fixed assets before IFRS adoption |
(1,034,441) | (123,896) |
| Suspended capital gains | (347,496) | (8,825) |
| PPA Movements - New Spring Services | (101,035) | (75,776) |
| Fair value adjustments | (3,296,270) | (1,544,325) |
| Other | (378,345) | 13,250 |
| Effect on equity | ||
| Other | (19,182) | (150) |
| Closing balance | 4,670,707 | 2,930,985 |
During the year ended 31 December 2023 and in the nine-months period ended 30 September 2024, the tax losses carried forward are detailed as follows:
| 31.12.2023 | 30.09.2024 | ||||
|---|---|---|---|---|---|
| Group | Tax losses | Deferred tax assets |
Tax losses | Deferred tax assets |
|
| CTT – Expresso, S.A., branch in Spain | 76,206,218 | — | 63,522,302 | — | |
| CTT Expresso/Transporta | 12,535,630 | 2,632,482 | 11,455,912 | 2,397,325 | |
| CTT Soluções Empresariais/HCCM | 1,285,613 | 269,979 | 1,013,999 | 212,939 | |
| Open Lockers | 1,318,136 | 276,809 | 2,032,027 | 426,727 | |
| Total | 91,345,597 | 3,179,270 | 78,024,240 | 3,036,991 |
Regarding CTT – Expresso, S.A., branch in Spain, the tax losses of the years 2012, 2013 and 2014 may be carried forward in the next 18 years and the tax losses of the years 2015, 2016, 2017, 2018, 2019, 2020, 2021 and 2022 have no time limit for deduction. No deferred tax assets associated with CTT Expresso branch in Spain's tax losses were recognised.
Regarding to CTT Expresso/ Transporta, the tax losses presented refer to the losses of Transporta for the years 2014 and 2015 and 2017 and 2018, since in 2019 this company was incorporated into CTT Expresso, which may be reported in one or more subsequent tax periods, in accordance with the rules established in the income tax code. The recognition of deferred tax assets related to Transporta's tax losses is supported by the estimate of future taxable profits of CTT Expresso, based on the company's business plan.
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 2.26 million Euros.
SIFIDE
The Group recognises an estimate of the tax credit that was submitted for certification by the competent authority (ANI – Agência Nacional de Inovação) in the period to which the investments relate.
Regarding R&D expenses incurred by the Group in the financial year of 2022, with the submission of the application, these amounted to 4,169,551 Euros, with the Group having the possibility of benefiting from a income tax deduction estimated at 1,648,062 euros. As 30 of September 2024, the tax credit for the year 2022 had already been partially granted by the Certification Commission, for a total amount of 1,536,548 Euros.
As for the 2023 financial year, upon submission of the application, these amounts amounted to 5,990,704 Euros, with the Group being able to benefit from a deduction from IRC collection estimated at 3,155,385 Euros.
Pillar II
The transition of the world to a global village, the increasing speed of transactions, the streamlining of commercial relations, among other phenomena, challenge current tax rules, forcing an inevitable renewal and combination of efforts between jurisdictions, governments and national tax policies - in essence, there will be room for tax harmonization with regard to corporate income tax.
In this context, the OECD initiated the BEPS (Base Erosion and Profit Shifting) project, which resulted in the adoption of 15 actions/plans to be followed and which indicate tax standards to be adopted and implemented by national governments in order to abolish avoidance and evasion. tax, aiming at the effective taxation of economic activities in the jurisdiction(s) where the respective profits are generated and in which the added value is actually generated.
In 2021, an agreement was reached between the members of the G20 to implement what is commonly known as Pillar II, referring to the method and criteria for taxing profits obtained by multinational entities, as well as the way in which tax collection power is allocated between states of tax revenue.
According to Pillar II, companies included in multinational groups with an annual global turnover exceeding 750 million euros will be subject, regardless of the jurisdiction to which they belong, to a minimum corporate income tax rate of 15%.
The imposition of this minimum rate aims to prevent, based on abusive tax practices and policies, imbalances between tax rates and regimes in different jurisdictions or illicit exploitation due to lack of liability to or payment of tax.
Setting up an innovative regime, a transitional regime is foreseen, particularly in terms of deadline, for the application of the standards and allowing progressive adaptation to this new regime.
Furthermore, certain jurisdictions will be excluded from the scope of application of such standards.
On the other hand, safe-harbour clauses are provided for, which are characterised by waiving, as long as certain requirements and/or limits are met, the effective application of compliance with certain obligations and removing the subjection to the aforementioned minimum rate.
EU Directive 2022/2523 provided for its transposition by the acceding Member States by 31 December 2023, which did not occur in some jurisdictions, including Portugal.
The Draft Law transposing Council Directive (EU) 2022/2523 of 14 December 2022 was approved by the Council of Ministers in September 2024 after being submitted to public consultation, with the official publication of the law occurring on 18 October 2024.
The CTT Group, as it falls within the subjective scope of the Directive, is carrying out an analysis of the possible impact in each of the jurisdictions in which it operates (Portugal, Spain and Mozambique) in light of the Directive's rules, as well as published national legislation, defining the internal and reporting tasks to be carried out in this context.
Compliance with tax and reporting obligations relating to Pillar II must be carried out in conjunction with the information reported in the CbCR (Country by Country Report) that has been submitted and prepared by the CTT Group.
The amendment to IAS 12 introduced a mandatory temporary exception to the recognition of deferred taxes within the scope of Pillar II.
Other information
Pursuant to the legislation in force in Portugal, income tax returns are subject to review and correction by the tax authorities for a period of four years (five years for Social Security), except when there have been tax losses, tax benefits have been received, or when inspections, claims or challenges are in progress, in which cases, depending on the circumstances, these years are extended or suspended. Therefore, CTT's income tax returns from 2020 and onwards may still be reviewed and corrected.
The Board of Directors believes that any corrections arising from reviews/inspections by the tax authorities of these income tax returns will not have a significant effect on the consolidated financial statements as at 30 September 2024.
27. Related parties
The Regulation on Assessment and Control of transactions with CTT related parties defines related party as: qualified shareholder, manager, subsidiaries companies' managers or third party with any of these related through relevant commercial or personal interest (under the terms of IAS 24) and also subsidiaries, associates and joint ventures of CTT. It is considered that there is a "relevant commercial or personal interest" in relation to (i) close family members of the managers, subsidiaries companies' managers and qualified shareholders who, at each moment, have significant influence on CTT, as well as (ii) controlled entities (individually or jointly), either by management, subsidiaries companies' managers qualified shareholders or by the persons referred to in (i). For this purpose, "control" is considered to exist when an investor is exposed or holds rights in relation to variable results through its relationship with it and has the capacity to affect those results through the power it exercises over the investee. Additionally, "close family members" are: (i) the spouse or domestic partner and (ii) the children and dependents of the person and persons referred to in (i).
According to the Regulation, the significant transactions with related parties, as well as transactions that members of the Board of Directors of CTT and/or its subsidiaries conduct with CTT and/or its subsidiaries, must be previously approved by resolution of Board of Directors, preceded by a prior favourable opinion of Audit Committee, except when included in the normal company´s business and no
special advantage is granted to the director directly or by an intermediary. Significant transaction is any transaction with a related party whose amount exceeds one million Euros, and / or carried out outside current activity scope of CTT and / or subsidiaries and / or outside market conditions.
The other related parties' transactions are approved by Executive Committee, to the extent of the related delegation of powers, and subject to subsequent examination by the Audit Committee.
For the nine-months period ended 30 September 2024 and 30 September 2023, the following transactions took place and the following balances existed with related parties:
| 30.09.2023 | |||||
|---|---|---|---|---|---|
| Accounts receivable | Accounts payable | Revenues | Costs | Dividends | |
| Shareholders | — | — | — | — | 17,817,109 |
| Group companies | |||||
| Associated companies | — | — | — | — | — |
| Jointly controlled | 459,777 | 25,719 | 462,229 | 156,212 | — |
| Members of the (Note 24) |
|||||
| Board of Directors | — | — | — | 1,766,179 | — |
| Audit Committee | — | — | — | 122,762 | — |
| Remuneration Committee | — | — | — | 30,850 | — |
| General Meeting | — | — | — | 14,000 | — |
| 459,777 | 25,719 | 462,229 | 2,090,003 | 17,817,109 |
| 30.09.2024 | |||||
|---|---|---|---|---|---|
| Accounts receivable Accounts payable | Revenues | Costs | Dividends | ||
| Shareholders | — | — | — | — | 23,315,758 |
| Group companies | |||||
| Associated companies | — | — | — | — | — |
| Jointly controlled | 372,447 | 88,192 | 579,725 | 282,949 | — |
| Members of the (Note 24) |
|||||
| Board of Directors | — | — | — | 1,413,735 | — |
| Audit Committee | — | — | — | 187,500 | — |
| Remuneration Committee | — | — | — | 48,825 | — |
| General Meeting | — | — | — | 14,000 | — |
| 372,447 | 88,192 | 579,725 | 1,947,009 | 23,315,758 |
In the context of transactions with related parties, no commitments were made, nor were any guarantees given or received.
No provision was recognised for doubtful debts or expenses recognised during the period in respect of bad or doubtful debts owed by related parties.
The remunerations attributed to the members of the statutory bodies of CTT, S.A. are disclosed in note 24 – Staff Costs.
28. Other information
Within the regulatory framework in force since February 2022 and the Convention on the criteria to be met for the pricing of postal services that make up the basket of services within the universal service obligation (Universal Postal Service Price Convention) for the 2023-2025 period, of 27 July 2022, the prices of these services were updated on 1 February 2024. The update corresponds to an average
annual price variation of 9.49%. The overall average annual price variation, also reflecting the effect of the update of special prices for bulk mail, is 8.91%.
In accordance with the decision of 25 June 2024, ANACOM approved the cost of capital rate of 9.3943%, of CTT – Correios de Portugal (CTT), applicable to the analytical accounting system in the 2024 financial year.
Regarding to the legal proceedings relating to ANACOM's Decision regarding the quality of service parameters and performance targets applicable to the universal postal service provision, of July 2018, the Government's appeal against the decision of the Arbitration Court continues, which acknowledges that ANACOM's decision constituted an abnormal and impressionable change in circumstances, causing damages amounting to 1,869,482 euros. The administrative actions against ANACOM, the first concerning the same decision and the second concerning the deliberation of December 2018 regarding the new measurement procedures to be applied to the indicators, had no relevant developments. On 24 January 2024, CTT was notified of the court decision ordering the Government to pay CTT the sum of 2,410,413 Euros. The Government challenged the decision and the respective proceedings are ongoing.
The administrative offence process in which CTT was accused by ANACOM for allegedly violating the procedure for measuring quality of service indicators in 2016 and 2017 is ongoing.
Following the proposal to apply contractual fines in the amount of 753 thousand euros, on 4 August 2022, CTT requested the constitution of an arbitration court, under the terms of the concession. On 1 July 2024, the arbitration court decided, with one dissenting vote, to reduce the overall amount of the fines by just 51 thousand Euros. CTT filed an appeal against the arbitration ruling with the Supreme Administrative Court. For the same facts relating to 2015 and 2016 (various situations concerning the distribution and publication of information in the post offices), on 19 April (2024), CTT was notified of ANACOM's accusation that it had committed administrative offences, and a fine of 398,750 Euros was imposed. As it disagrees with the grounds of the charge, CTT appealed against it and and the case is pending a decision.
On 23 February 2023, CTT was notified to comment on a new proposal for the application of contractual fines submitted by ANACOM to the Government, in relation to the alleged contractual breach of the quality of service obligation in the years 2016, 2017, 2018 and 2019. CTT submitted its statement on 6 April 2023, in which it defends there is no basis in fact or in law for establishing any contractual liability and requests additional evidence. The application of contractual fines and the respective amount depends on the further steps of the administrative procedure, which has not yet had further developments.
In May 2024, CTT was notified of the decision of the Supreme Administrative Court (STA) to revoke the judgment of the Arbitration Court had unanimously ordered the State to pay CTT the amounts of (i) €6,785,781 as compensation for losses resulting from the effects of the COVID-19 pandemic and (ii) €16,769,864 for the unilateral extension of the Concession Agreement in 2021. This decision, approved by a panel of three judges, had one dissenting vote in relation to part (i), and was appealed to the Constitutional Court in the part relating to the decision on compensation for losses resulting from the effects of the COVID-19 pandemic. Admitted on 12 July 2024 by the STA, it awaits a decision by the Constitutional Court.
The lawsuit filed on 18 January 2022 by the companies Vasp Premium – Entrega Personalizada de Publicações, LDA. (Vasp) and Iberomail – Correio Internacional, S.A., (Iberomail) against CTT before the Competition, Regulation & Supervision Court, seeking the conviction of CTT for abuse of dominant position is ongoing, still awaiting the start of the evidence phase. CTT follows the best market practices and considers the request to be totally unfounded, as this lawsuit concern facts assessed by the
Competition Authority (AdC) in the scope of a proceeding that was closed with the imposition of commitments, which CTT has implemented and reports annually to AdC.
Strategic Partnership - Generali Seguros
On 6 November 2022, CTT - Correios de Portugal, S.A. and its subsidiary Banco CTT, S.A. entered into a strategic partnership agreement with Generali Seguros, S.A. (Tranquilidade/Generali Seguros).
The transaction concluded between the parties includes:
- Long-term distribution agreements, with 5-years exclusivity renewable periods, for the distribution by CTT and Banco CTT of life and non-life insurance products of Tranquilidade/ Generali Seguros;
- Subscription by Tranquilidade/Generali Seguros of a 25 million euros reserved share capital increase in Banco CTT, in exchange for a shareholding of approximately 8.71%. A Shareholders' Agreement will provide Tranquilidade/Generali Seguros with minority interests with the size of the shareholding.
The agreement aims to combine the experience of Tranquilidade/Generali Seguros in the development and management of insurance products with the distribution capacity of CTT and Banco CTT through their nationwide networks coverage and digital channels. The insurance distribution agreements contemplate a fixed price by Tranquilidade/Generali Seguros of 1 million euros and 9 million euros to CTT and Banco CTT, respectively, to be settled in the initial six years, and additional contingent payments depending on the performance achieved over the term of the agreements.
The CTT Group expects that the transaction, which is subject to suspensive conditions, including approval by the banking and insurance regulatory authorities, will be completed during 2024.
29. Subsequent events
After 30 September 2024 and up to the date that the financial statements were approved for issue, no relevant or material facts have occurred in the Group's activity that have not been disclosed in the notes to the financial statements.
