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CTT-Correios de Portugal
Quarterly Report • May 5, 2022
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Quarterly Report
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Consolidated Results 1 st Quarter 2022
CTT – Correios de Portugal, S.A.
1
| 1 ST QUARTER 2022 CONSOLIDATED RESULTS 3 |
||
|---|---|---|
| 1. | OPERATIONAL AND FINANCIAL PERFORMANCE 4 | |
| 2. | OTHER HIGHLIGHTS 13 | |
| 3. | SUBSEQUENT EVENTS 15 | |
| INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 19 |
CTT – CORREIOS DE PORTUGAL, S.A. 1 ST QUARTER 2022 CONSOLIDATED RESULTS
- − Revenues1 grew by 14.3% to €234.7m in 1Q22, an increase of €29.4m compared to 1Q21 that accelerates the growth trend since 3Q21 and reflects Banco CTT's growth (+€6.9m; +32.5% y.o.y) and the performance of the Mail & Other business unit (+€24.9m; +22.9% y.o.y), the latter positively impacted by the consolidation of NewSpring Services (+€6.0m) and the record of the revenues associated to a laptop sale project started in 4Q21 (+€21.5m). The remaining business units posted revenue declines, Express & Parcels by €2.1m (-3.3% y.o.y) and Financial Services & Retail by €0.2m (-1.7% y.o.y).23
- − Banco CTT solidified its growth path in 1Q22, with its recurring EBIT having more than doubled in the period to €3.4m (+142.5% y.o.y). The growth of the auto loan portfolio was a key contributor to this performance, as its production reached the highest level ever in 1Q22, with €60.3m (+48.4% y.o.y). The same happened with the consumer credit portfolio, driven by the partnership with Sonae.
- − The performance in 1Q22 reflects a difficult comparable to 1Q21 as the activity associated with e-commerce in that quarter was positively impacted by the COVID-19 pandemic restrictions and a part of the gains obtained was temporarily reverted the return to physical retail. 1Q22 was also penalized by a more challenging economic environment in terms of consumer confidence, particularly in a context of rising inflation essentially due to geopolitical tensions in Europe arising from the Ukraine War which have impacted the global trade volume during this quarter.
- − To this extent, the impact of the transitory downturn in 1Q22 was especially visible in revenues from Express & Parcels, with Portugal recording a decrease (-€4.1m; -11.8% y.o.y) to €31.0m and Spain a slowdown in its growth profile (+€2.0m; +7.1% y.o.y) to €29.5m, and in Mail & Other via international inbound mail, which also continues to be impacted by the end of the VAT exemption on lower-value extra-EU products (de minimis).
- − Recurring EBIT reached €6.7m in 1Q22, a decrease of €8.4m (-55.7% y.o.y) versus 1Q21 as a result of the decline in higher-value and higher-margin flows and the costs associated with the preparation of the distribution network for the structural growth in e-commerce that is anticipated in the Iberian market. However, there is operational flexibility to adjust, if required.
- − Operating cash flow stood at €10.4m in 1Q22, down €2.5m (-19.3% y.o.y).
- − Net profit4 reached €5.4m, representing a decrease of €3.3m (-38.1% y.o.y).
| Consolidated results | |
|---|---|
| 1Q21 | 1Q22 | ∆ | ∆% | |
|---|---|---|---|---|
| Revenues 1 | 205.3 | 234.7 | 29.4 | 14.3% |
| Mail & Other | 108.6 | 133.5 | 24.9 | 22.9% |
| 107.8 | 132.9 | 25.0 | 23.2% | |
| Central structure | 0.8 | 0.6 | -0.2 | -23.9% |
| Express & Parcels | 63.4 | 61.3 | -2.1 | -3.3% |
| Banco CTT | 21.2 | 28.0 | 6.9 | 32.5% |
| Financial Services & Retail | 12.1 | 11.9 | -0.2 | -1.7% |
| Operating costs (EBITDA) 2 | 176.3 | 212.7 | 36.4 | 20.7% |
| EBITDA 3 | 29.1 | 22.0 | -7.0 | -24.1% |
| Depreciation & amortization | 14.0 | 15.4 | 1.4 | 9.8% |
| Recurring EBIT | 15.0 | 6.7 | -8.4 | -55.7% |
| Specific items | -0.8 | -2.7 | -1.9 | « |
| EBIT | 15.9 | 9.4 | -6.5 | -41.1% |
| Financial results (+/-) | -2.6 | -2.1 | 0.5 | 19.2% |
| Income tax for the period | 4.5 | 1.8 | -2.7 | -59.7% |
| Non-controlling interests | 0.0 | 0.0 | -0.0 | -28.0% |
| Net profit for the period 4 | 8.7 | 5.4 | -3.3 | -38.1% |
1 Excluding specific items.
3 Excluding depreciation & amortization and specific items.
4 Attributable to equity holders.
€ million
2 In 2021 operating costs (EBITDA) include impairments and provisions; also, the impact of the leases covered by IFRS 16 is presented pursuant to this standard.
1. Operational and Financial Performance
Consolidated Revenues
In the comparison between 1Q22 and 1Q21 it must be considered that Portugal and Spain went through the second lockdown caused by the COVID-19 pandemic during most of the period between January and March 2021. Naturally, this had an impact on consumption habits and consumer appetite for e-commerce. This period has led to changes both of a structural nature – in that the number of online buyers and sellers has increased significantly – and of a transitory nature, as the frequency of shopping had been influenced by the lack of alternatives in the high street and in shopping centers, and by the limitations on physical travel. As a result, the evolution of the e-commerce related business in 1Q22, when compared to 1Q21, reflects some slowdown, although it is still above pre-pandemic levels, even in the Portuguese market where the effect was more marked.
Despite this context, CTT revenues grew by 14.3% in 1Q22 to €234.7m, up by €29.4m compared to 1Q21, reflecting the performances of (1) Mail & Other (+€24.9m; +22.9% y.o.y), positively influenced by the consolidation of NewSpring Services (+€6.0m) and the revenue associated with a laptop sale project started in 4Q21 (+€21.5m), and (2) Banco CTT (+€6.9m; +32.5% y.o.y). On the other hand, the remaining business units posted revenue decreases, Express & Parcels by €2.1m (-3.3% y.o.y) and Financial Services & Retail by €0.2m (-1.7% y.o.y).
Mail & Other revenues amounted to €133.5m in 1Q22, which corresponded to a growth of €24.9m versus 1Q21 (+22.9% y.o.y).
The growth registered in this business unit was catalyzed by the business solutions segment (+€28.6m) reflecting the integration of NewSpring Services in CTT's Business Solutions base offer in September 2021 (+€6.0m) and the €22.6m growth of the business solutions base largely explained by the revenue related to a laptop sale project started in the last quarter of 2021 (+€21.5m).
In 1Q22, mail service revenues show an adjustment trend, with a decline of -3.4% (-€3.6m y.o.y), penalized by the strong decrease in the revenues of international inbound mail (-€5.5m; -52.5% y.o.y).
To be noted is the growth of international outbound mail revenues (+€2.9m; +29.1% y.o.y), boosted by the additional revenue in the month of February due to the rerun of the legislative elections in the European constituency (+€3.5m), and by registered mail (+€1.3m; +4.4% y.o.y).
The remaining business lines posted decreases: ordinary mail (-€0.7m; -2.0% y.o.y), green mail (-€0.7m; -25.9% y.o.y), editorial mail (-€0.2m; -5.0% y.o.y), advertising mail (-€0.1m; -1.3% y.o.y), parcels (-€0.2m; -10% y.o.y) and other mail products and services (-€0.2m; -26.0% y.o.y).
The slowdown in e-commerce in 1Q22, due to the transitory impact mentioned above, negatively influenced transactional mail, especially in the retail channel, due to lower demand for registered mail and green mail, the products of choice for e-commerce shipments through this channel.
Business solutions recorded revenues of €32.2m (+€28.6m) as a result of the integration of NewSpring Services (+€6.0m) and the recording of the revenue related to the laptop sales project (+€21.5m), as mentioned above. Excluding these effects, the revenues would still have grown by 31.0% y.o.y. This growth arises from the continued focus on diversifying the offer and strengthening existing skills. In order to position itself as the reference entity in supporting municipalities, CTT teamed up with Wavecom and Cognitive Technologies, CTT's technological partners in the area of wireless network infrastructures and digital signage, with the proposal of an integrated offer for the digital shopping districts project within the scope of the Recovery and Resilience Program. Worthy of note is the growth of the Administrative Offences Management business and the start of several printing & finishing operations, namely with utilities clients. The development of the computer equipment catalogue continued, with the addition of more references, covering categories such as computers, tablets, televisions, printers or projectors.
Philately revenues in 1Q22 amounted to €1.1m, a year-on-year decrease of 5.6%.
On 7 March, the new 2022 prices for postal services provided in the scope of the universal service came into force, set out in accordance with Law 17/2012, of 26 April, as amended by Decree-Law 22-A/2022, of 7 February (Postal Law).
In 1Q22, the average variation in prices of the universal postal service5 was 3.13% y.o.y.
Mail volumes
The addressed mail volumes decline, started in 4Q21, continued to slowdown (-5.2%) with a lower decrease recorded in 1Q22 (-3.7%). Excluding the effect of legislative elections in mail volumes, the decline would have been 4.4% y.o.y.
Mail volumes
| Million items | ||||
|---|---|---|---|---|
| 1Q21 | 1Q22 | ∆ | ∆% | |
| Transactional mail | 107.1 | 104.5 | -2.5 | -2.4% |
| Advertising mail | 10.1 | 8.4 | -1.7 | -16.8% |
| Editorial mail | 7.2 | 6.9 | -0.3 | -4.7% |
| Addressed mail | 124.4 | 119.8 | -4.6 | -3.7% |
| Unaddressed mail | 92.0 | 109.9 | 17.9 | 19.4% |
In 1Q22, transactional mail volumes declined by 2.4% y.o.y, due to more marked declines in international inbound mail (-35.3% y.o.y) and green mail (-26.3%). The downward trend in international inbound mail observed since 2H21 continued in 1Q22 due to the entry into force as of 1 July 2021 of the abolition of the VAT exemption on postal items below €22 ("de minimis"), leading to the need for customs clearance of all items of extra-EU origin containing goods, which resulted in an increase in customs transit times.
In the opposite direction, registered mail grew (+1.8% y.o.y), driven by the dynamics of contractual customers, especially the government and services sector, as did international inbound mail (+17.9% y.o.y), impacted by the effect of the rerun of the elections in the European constituency. Excluding this effect, there would have been a decrease of 4.6% y.o.y.
In 1Q22, unaddressed advertising mail volumes increased by 19.4% and addressed advertising mail decreased by 16.8%. The Use Cases campaign was launched aimed at boosting the advertising offer to online customers, to promote trial of the advertising solutions and help customers increase sales.
Express & Parcels
Express & Parcels revenues amounted to €61.3m in 1Q22, a year-on-year decrease of €2.1m (-3.3%).
In the Iberian market, revenues stood at €60.5m, corresponding to a year-on-year decline of 3.5%, and volumes totaled 17.7 million items (-2.9% y.o.y).
In 1Q22 revenues in Portugal recorded €31.0m, a decrease of 11.8% y.o.y, and volumes totaled 7.6 million items (-10.8% y.o.y).
CEP revenues amounted to €27.6m in 1Q22 (-9.6% y.o.y). This business was impacted by a difficult comparable to 1Q21. In fact, 1Q21 was a quarter affected by the non-structural effect of the restrictions associated with the COVID-19 pandemic, particularly the second lockdown, which strongly boosted the e-commerce activity. It is important to note that despite this lesser momentum in the e-commerce market, 1Q22 volumes are about 50% higher than in the same period of the pre-pandemic year (2020). This shows that much of the growth experienced during the last 2 years has been structural, with the slowdown felt at this stage being the natural adjustment from the transitory component experienced during the COVID-19 pandemic. Additionally, e-commerce activity, as well as the level of consumer confidence in general, are still being penalized by the uncertainty associated with the rising inflation and sharp increases in fuel prices, as well as the military conflict between Russia and Ukraine that, in addition to
5Including letter mail, editorial mail and parcels of the universal postal service, excluding international inbound mail.
generating macroeconomic uncertainty, has hampered the functioning of logistics chains, particularly those originating from Asia.
Revenues of the cargo product line amounted to €1.4m (-44.4% y.o.y), a reduction related to the change in the operating strategy, which aimed to find a solution to position this product line at positive margin levels. A partnership was established specializing in this type of product, which led to commercial renegotiations with some customers and the abandonment of the tire distribution business. This had a penalizing effect on revenues, but a positive effect in terms of margin.
The banking documents delivery product line closed the quarter with revenues of €1.1m (-9.3% y.o.y) and remained under pressure in a context of continued reduction of the capillarity of banking networks, as well as of lower collection/delivery frequency. This is a product line where pressure on revenues will persist.
The logistics product line presented revenues of €0.7m (+19.0% y.o.y), a growth was based on attracting new customers, and on an agreement to carry out the full logistical operation of computers and peripherals supply to Portuguese schools. The outlook for this product line is positive, as some major contracts have been renewed.
CTT continued to roll out its 24-hour Locker strategy to both the general public and private premises (both residential and corporate), as well as Click&Collect. These allow clients to pick up their parcels with maximum convenience, 24 hours a day, every day of the week (24/7). As at the end of March 2022, CTT's parcel locker network comprised 210 lockers in various locations around the country, namely in hospitals, intermodal transport platforms, shopping centres, university campuses, physical retail networks, parking lots, gas stations or, in the case of private lockers, in condominiums and in office/business areas. In late 2021, CTT entered into a partnership with Zongteng Group for the establishment of a joint venture to manage and develop the 24-hour Lockers business in the Iberian Peninsula, aiming to install about 1,000 lockers in Portugal by the end of 2022.
Revenues in Spain stood at €29.5m in 1Q22, an increase of 7.1% y.o.y. Volumes totaled 10.1 million items (+3.9% y.o.y).
CTT Express maintained its growth trajectory despite the situation experienced in Spain in the months of February and March related to the carriers' strike and the retraction of consumer confidence levels observed in Spain due to inflationary pressure and geopolitical tensions. This reflects customer confidence, and the Company's capacity and flexibility to meet any need with high service quality standards, reinforcing the market share gain strategy that has been carried out since 2019.
The strategy of investing in technology and innovation continues, as well as the start-up of new own delivery offices during this year that will allow the Company to move forward in its commitment to Iberian growth. Noticeably, in the quarter, CTT Express continued to outperform the market.
The Company continues to work towards its goal of becoming the leader in the Iberian express parcel market and, during this first quarter, new products and services were launched, such as easy return, which make it easier for recipients to return their purchases online paperless and without the need to leave home.
Revenues in Mozambique in 1Q22 stood at €0.8m, growing by 13.4% y.o.y. The growth achieved was supported by the partnership with a freight forwarder in Africa. 1Q22 was marked by several factors, such as the international economic environment associated with the Russia/Ukraine military conflict, causing constraints in the global supply chain of goods, and the long-term effects of the COVID-19 pandemic.
Banco CTT
Banco CTT revenues reached €28.0m in 1Q22, an increase of €6.9m (+32.5% y.o.y).
Revenue growth was due to the positive performance of net interest income, which totaled €16.4m in 1Q22, €4.8m above 1Q21 (+42.0% y.o.y).
This growth was mainly driven by the partnership with Sonae Financial Services (which started in April 2021) whereby Banco CTT became the sole lender for the Cartão Universo consumer credit portfolio.
This business generated revenues of €4.6m in 1Q22, with a net balance sheet volume of €301.9m in March 2022, a growth of €9.8m (+3.4%) compared to December 2021.
Interest from consumer credit grew by €1.8m (+20.3% y.o.y) and auto loans reached a loan portfolio net of impairments of €671.9m (+3.6% vs. December 2021). Auto loans production stood at €60.3m in 1Q22 (+48.4% y.o.y).
Interest from mortgage loans recorded a year-on-year increase of 3.0%, with a €615.5m mortgage loan portfolio net of impairments (+3.5% vs. December 2021). Mortgage loan production amounted to €38.9m, a year-on-year growth of €2.6m (+7.1% y.o.y).
Commissions received in this business unit reached €10.6m, a year-on-year growth of €1.8m (+20.3% y.o.y). Worthy of note are the positive contributions of (i) commissions received regarding accounts and cards, which amounted to €2.7m (+€0.5m; +20.6% y.o.y), (ii) savings products (off-balance sheet), which totaled €1.1m (+€0.4m; +49.4% y.o.y) as a result of a net volume off-balance sheet of €787.3m, 11.1% above December 2021, (iii) consumer credit (off-balance sheet) amounting to €0.7m (+€0,3m; +58.2% y.o.y), and (iv) payments, which totaled €4.2m (+€0.3m; +8.4% y.o.y).
Banco CTT's good commercial performance continued to allow for growth in customer deposits to €2,173.6m (+2.4% vs. December 2021) and in the number of accounts to 576k (3k more than in December 2021).
The loan-to-deposit ratio reached 73.4% as at the end of March 2022.
Financial Services & Retail
Financial Services & Retail revenues amounted to €11.9m in 1Q22, representing a year-on-year decrease of €0.2m (-1.7% y.o.y).
Financial services (excluding other revenues) obtained revenues of €7.7m, a decrease of €0.7m (-8.2% y.o.y) driven by the results of the month of March, which fell by 27.6% y.o.y, broken down as follows:
• Public debt certificates (Savings Certificates and Treasury Certificates Savings Growth) posted revenues of €5.7m, which decreased by €0.9m (-13.6% y.o.y) compared to 1Q21.
Subscriptions of these certificates amounted to €1,164.3m, an average of €18.5m/day versus €19.2m/day in 1Q21. This was the result of the lower amounts of the securities maturing in March compared to the same month of the previous year, and therefore of the amounts that could be recaptured. This fact, combined with the instability of the international context, led to a 2.4% (-€28.2m) drop in subscriptions in 1Q22 when compared to 1Q21. This reduction impacted revenues by -€0.3m.
- Revenues originated by the remaining savings and insurance products amounted to €0.3m. The negative impact of the maturity of a part of the product portfolio continues to be offset by a broader offer, which was reinforced as from 1H21, aiming to diversify savings in the customer base. In 2H21, placements amounted to €43.7m, and in 1Q22 to €31.6m.
- Money orders revenues reached €1.4m, close to the levels achieved in the same period of the previous year (-2.7% y.o.y). The additional issues of other social benefits, created under the current macroeconomic framework, have contributed to mitigate the structural decline associated with the substitution of this means of payment.
- CTT payment services posted revenues of €0.2m in 1Q22, growing by 5.0% y.o.y.
Retail products and services (excluding other revenues) reached revenues of €4.1m in 1Q22, an increase of €0.5m (+13.4% y.o.y), boosted by the distribution of social gambling (+30.5%) and by the allowance for air transport of the islands (+146.3%). On the contrary, merchandising products' revenues decreased by 54.3% when compared to 1Q21, but new alternative offers are expected to be introduced in 2Q22 in order to boost sales in this business line.
In strategic terms, CTT has been reinforcing its positioning in the retail segment through a more robust, more regular and more comprehensive offer in the Retail network and CTT points, promoting recurrent and impulse buying.
Operating costs
Operating costs totaled €225.4m, a year-on-year growth of €35.9m (+19.0% y.o.y).
Operating costs 6
| € million | ||||
|---|---|---|---|---|
| 1Q21 | 1Q22 | ∆ | ∆% | |
| Staff costs | 89.2 | 91.8 | 2.6 | 2.9% |
| ES&S | 75.7 | 85.3 | 9.7 | 12.8% |
| Impairments & provisions | 2.4 | 5.7 | 3.4 | 142.1% |
| Other costs | 9.0 | 29.9 | 20.8 | » |
| Operating costs (EBITDA)6 | 176.3 | 212.7 | 36.4 | 20.7% |
| Depreciation & amortization | 14.0 | 15.4 | 1.4 | 9.8% |
| Specific items | -0.8 | -2.7 | -1.9 | « |
| Corporate restructuring costs and strategic projects | 0.6 | 0.7 | 0.1 | 18.6% |
| Other non-recurring revenues and costs | -1.4 | -3.4 | -2.0 | -140.3% |
| Operating costs | 189.4 | 225.4 | 35.9 | 19.0% |
Staff costs increased by €2.6m (+2.9% y.o.y) in 1Q22, essentially in the Mail & Other business unit (+€2.6m y.o.y), due to the acquisition of NewSpring Services (+€3.1m), and in Banco CTT (+€0.6m y.o.y) due to increased commercial activity and team reinforcement in the wake of the partnership with Sonae Financial Services. This growth was partly offset by the remaining business units (-€0.6m y.o.y). Excluding the change in the consolidation perimeter, these costs would have declined by €0.5m, as a result of the measures taken to increase productivity and the focus on operating efficiency.
External supplies & services costs increased by €9.7m (+12.8% y.o.y), both due to the inorganic effect of the acquisition of NewSpring Services (+€1.9m y.o.y), and to business growth, with emphasis on: direct costs, impacted by the effect of legislative elections (+€3.3m), business solutions growth (+€0.9m y.o.y), temporary work (+€1.1m y.o.y), as well as physical and technological resources (+€2.3m y.o.y).
Impairments and provisions increased by €3.4m in 1Q22 (+142% y.o.y), as a result of the growth in the auto loan portfolio and the Universo credit card.
Other costs grew by €20.8m (+231% y.o.y), mainly in the Mail & Other business unit due to the growth of business solutions (+€20.7m y.o.y in connection with the laptop sale project referred to above).
Depreciation & amortization increased by €1.4m (+9.8% y.o.y), as a result of investment carried out in IT systems (+€0.8m y.o.y) and postal equipment (+€0.1m y.o.y) partially offset by new building and vehicle lease contracts which impacted amortization (+€0.5m y.o.y), due to the IFRS 16 accounting standard.
Specific items amounted to -€2.7m, due to: (i) gross gain from the appreciation of a contracted derivative (-€3.6m y.o.y); (ii) costs related to the COVID-19 pandemic (+€0.2m y.o.y); (iii) restructuring costs, particularly related with suspension agreements of employment contracts (+€0.2m y.o.y); and (iv) strategic projects (+€0.4m y.o.y).
The valuation of the derivative in the amount of €3.6m, as mentioned above, is the result of the MTM (Mark to Market) of the interest rate derivative in the form of a Cap Agreement, associated with the Ulisses 2 securitization operation. The derivative envisages the hedge of the interest rate for the tranches issued, with a predetermined repayment plan and a strike price of 1.5%. Its MTM appreciation resulted only from the prospects of future evolution of market rates.
6 From 2021 onwards, operating costs (EBITDA) include impairments and provisions as well as the impact of the leases covered by IFRS 16 and presented pursuant to this standard.
Staff
As at 31 March 2022, the CTT headcount (permanent and fixed-term staff) consisted of 12,569, an increase of 473 (+3.9%) compared to 31 March 2022. These figures incorporate the inorganic effect of NewSpring Services which had an impact of +819 employees. Excluding this effect, the number of staff would be 11,750, corresponding to a year-on-year decrease of 344 (-2.8% y.o.y).
Headcount
| 31.03.2021 | 31.03.2022 | ∆ | ∆% | |
|---|---|---|---|---|
| Mail & Other | 10,259 | 10,774 | 515 | 5.0% |
| Express & Parcels | 1,360 | 1,305 | -55 | -4.0% |
| Banco CTT | 443 | 460 | 17 | 3.8% |
| Financial Services & Retail | 34 | 30 | -4 | -11.8% |
| Total, of which: | 12,096 | 12,569 | 473 | 3.9% |
| Permanent | 10,819 | 11,360 | 541 | 5.0% |
| Fixed-term contracts | 1,277 | 1,209 | -68 | -5.3% |
| Portugal | 11,452 | 11,898 | 446 | 3.9% |
| Other geographies | 644 | 671 | 27 | 4.2% |
Excluding the inorganic effect, there was a decrease in the number of staff in almost all business units, especially in Mail & Other (-304) where projects to increase the productivity of operations are ongoing, which have adapted the network to the new profile of the mail flows and reduced the need for additional hiring, as well as the HR optimization program underway mainly in the central structure.
Together, the areas of operations and distribution within the mail network (5,607 employees, of whom 4,230 are delivery postmen and women) and the retail network (2,345 employees) represented circa 70.0% of CTT's permanent staff. Excluding the integration of NewSpring Services, this staff would represent 72.9%.
Recurring EBIT
Recurring EBIT stood at €6.7m in 1Q22, decreasing by €8.4m (-55.7% y.o.y), with a margin of 2.8% (7.3% in 1Q21).
This performance was due to the decline in EBIT in the various business units, except Banco CTT (+€2.0m; +142.5% y.o.y), with greater expression in Mail & Other (-€8.2m y.o.y) due to the decline in higher-value and higher-margin mail volumes and the costs associated with the capacity building of the distribution network for the structural growth of e-commerce that is anticipated in the Iberian market.
Recurring EBIT by business unit
| € million | ||||
|---|---|---|---|---|
| 1Q21 | 1Q22 | ∆ | ∆% | |
| Recurring EBIT by business unit | 15.0 | 6.7 | -8.4 | -55.7% |
| Mail & Other | 4.9 | - 3.3 | -8.2 | « |
| 18.5 | 10.8 | -7.8 | -41.9% | |
| Central structure | - 13.6 | - 14.1 | -0.5 | -3.4% |
| Express & Parcels | 2.5 | 1.3 | -1.2 | -47.4% |
| Banco CTT | 1.4 | 3.4 | 2.0 | 142.5% |
| Financial Services & Retail | 6.2 | 5.2 | -0.9 | -15.3% |
Financial Results and Net Profit
Consolidated financial results amounted to -€2.1m, corresponding to an improvement of €0.5m (+19.2% y.o.y).
Financial Results
| € million | ||||
|---|---|---|---|---|
| 1Q21 | 1Q22 | ∆ | ∆% | |
| Financial results | -2.6 | -2.1 | 0.5 | 19.2% |
| Financial income, net | -2.1 | -2.1 | 0.1 | 2.5% |
| Financial costs and losses | -2.1 | -2.2 | -0.1 | -2.5% |
| Financial income | 0.0 | 0.1 | 0.1 | » |
| Gains/losses in subsidiaries, associated companies and joint ventures | -0.5 | -0.0 | 0.5 | 91.7% |
Financial costs and losses incurred amounted to €2.2m, mainly incorporating financial costs related to post-employment and long-term employee benefits of €1.0m, interest expense associated to finance leases liabilities linked to the implementation of IFRS 16 for an amount of €0.7m and interest expense on bank loans for an amount of €0.4m.
In 1Q22, CTT obtained a consolidated net profit attributable to equity holders of €5.4m, which is €3.3m below 1Q21, negatively impacted by the evolution of EBIT (-€6.5m y.o.y) and positively by financial results (+€0.5m y.o.y) and by the corporate income tax for the period (-€2.7m y.o.y).
Investment
Capex stood at €5.9m in 1Q22, 0.8% more (+€0.04m y.o.y) than in1Q21.
Although the same level of investment was achieved in this quarter, the Company increased its investment in IT systems to support the Bank's business (+€0.2m y.o.y) and in the implementation of the platform to support the locker business (+€0.2m y.o.y). On the other hand, there was a decrease in other business units (-€0.3m y.o.y).
Cash flow
In 1Q22, the Company generated an operating cash flow of €10.4m, a year-on-year decrease of €2.5m (-19.3%).
Cash flow78
| € million | ||||
|---|---|---|---|---|
| 1Q21 | 1Q22 | ∆ | ∆% | |
| EBITDA | 29.1 | 22.0 | -7.0 | -24.1% |
| Non-cash items* | -5.0 | -2.3 | 2.8 | 55.3% |
| Specific items ** | 0.8 | 2.7 | 1.9 | 219.6% |
| Capex | -5.9 | -5.9 | -0.0 | -0.8% |
| Δ Working capital | -6.1 | -6.2 | -0.1 | -1.1% |
| Operating cash flow | 12.8 | 10.4 | -2.5 | -19.3% |
| Employee benefits | -3.1 | -4.2 | -1.1 | -33.8% |
| Tax | 0.2 | 0.0 | -0.2 | -86.4% |
| Free cash flow | 9.9 | 6.2 | -3.7 | -37.4% |
| Debt (principal + interest) | -0.3 | -4.0 | -3.7 | « |
| Acquisition of own shares | 0.0 | -1.6 | -1.6 | - |
| Disposal of buildings | 0.0 | 0.0 | 0.0 | - |
| Change in adjusted cash | 9.7 | 0.6 | -9.1 | -93.6% |
| Δ Liabilities related to Financial Serv. & others and Banco CTT, net 7 | 31.4 | -118.2 | -149.6 | « |
| Δ Other 8 | -0.7 | 5.8 | 6.6 | » |
| Net change in cash | 40.4 | -111.7 | -152.1 | « |
*Impairments, Provisions and IFRS 16 affecting EBITDA.
**Specific items affecting EBITDA.
The negative evolution of the operating cash flow in 1Q22 resulted mainly from the performance of EBITDA, which was strongly impacted by the negative performance of the Mail business area when compared to the same period of the previous year. The €10.4m operating cash flow in 1Q22 is largely explained by an efficient management of working capital related to EBITDA, which was offset by the payments in this quarter related to the investment made in 4Q21.
Consolidated Balance sheet
Consolidated Balance sheet
| € million | ||||
|---|---|---|---|---|
| 31.12.2021 | 31.03.2022 | ∆ | ∆% | |
| Non-current assets | 1,970.3 | 2,048.8 | 78.5 | 4.0% |
| Current assets | 1,614.9 | 1,552.0 | -62.8 | -3.9% |
| Assets | 3,585.2 | 3,600.9 | 15.7 | 0.4% |
| Equity | 174.5 | 178.4 | 3.8 | 2.2% |
| Liabilities | 3,410.7 | 3,422.5 | 11.9 | 0.3% |
| Non-current liabilities | 705.3 | 705.7 | 0.4 | 0.1% |
| Current liabilities | 2,705.4 | 2,716.8 | 11.4 | 0.4% |
| Equity and consolidated liabilities | 3,585.2 | 3,600.9 | 15.7 | 0.4% |
7 The change in net liabilities of Financial Services & Retail and Banco CTT reflects the evolution of credit balances with third parties, depositors or other banking financial liabilities, net of the amounts invested in credit or investments in securities / banking financial assets, of entities of the CTT Group providing financial services, namely the financial services of CTT, Payshop, Banco CTT and 321 Crédito. 8 The change in other cash items reflects the evolution of Banco CTT's sight deposits at Bank of Portugal, outstanding cheques / clearing of Banco CTT cheques, and impairment of sight and term deposits and bank applications.
The key aspects of the comparison between the consolidated balance sheet as at 31.03.2022 and that as at 31.12.2021 are as follows:
- Assets grew by €15.7m, mostly due to the growth in credit to banking clients (+€53.2m), especially auto loans and credit cards, as well as to the increase in investments in securities at amortized cost (+€45.3m), investments in assets at fair value through profit or loss (+€3.8m) and accounts receivable (+€20.9m) as a result of the increased invoicing in the scope of business solutions. These increases were partly attenuated by the decrease in cash and cash equivalents (-€111.7m) as a result of the reduction in cash associated with tax receipts and investments in securities by Banco CTT.
- Equity increased by €3.8m following the net profit attributable to shareholders of the CTT Group in 1Q22 in the amount of €5.4m and the increase in reserves as a result of the constitution of the reserve associated with the share plan (€0.4m). In the opposite direction, there was the acquisition of own shares in the amount of €2.0m.
- Liabilities increased by €11.9m, underpinned by the increase in banking clients' deposits and other loans (+€44.9m), the increase of debt by €6.7m due to increased lease liabilities, other banking financial liabilities (+€3.8m) and other current liabilities (+€5.3m) in the wake of the increment in holiday accrual, holiday and Christmas bonuses. On the contrary, there was a decrease in accounts payable (-€50.3m) mainly as a result of the reduction in the amounts associated with tax receipts.
The CTT Group consolidated balance sheet excluding Banco CTT from the full consolidation perimeter and accounting it as a financial investment measured by the equity method would be as follows:
Consolidated Balance sheet with Banco CTT under equity method
| € million | ||||
|---|---|---|---|---|
| 31.12.2021 | 31.03.2022 | ∆ | ∆% | |
| Non-current assets | 680.2 | 686.4 | 6.3 | 0.9% |
| Current assets | 454.9 | 413.1 | -41.8 | -9.2% |
| Assets | 1,135.0 | 1,099.5 | -35.5 | -3.1% |
| Equity | 173.9 | 174.8 | 0.9 | 0.5% |
| Liabilities | 961.1 | 924.7 | -36.4 | -3.8% |
| Non-current liabilities | 422.5 | 425.9 | 3.3 | 0.8% |
| Current liabilities | 538.6 | 498.9 | -39.7 | -7.4% |
| Equity and consolidated liabilities | 1,135.0 | 1,099.5 | -35.5 | -3.1% |
Liabilities related to employee benefits (post-employment and long-term benefits) stood at €282.8m in March 2022, down €0.3m compared to December 2021, broken down as specified in the table below:
Liabilities related to employee benefits
| € million | ||||
|---|---|---|---|---|
| 31.12.2021 | 31.03.2022 | ∆ | ∆% | |
| Total liabilities | 283.1 | 282.8 | -0.3 | -0.1% |
| Healthcare | 263.5 | 262.2 | -1.3 | -0.5% |
| Healthcare (321 Crédito) | 1.5 | 1.5 | 0.0 | 2.2% |
| Suspension agreements | 9.5 | 10.0 | 0.5 | 5.2% |
| Other long-term employee benefits | 6.5 | 6.5 | -0.1 | -1.1% |
| Other long-term benefits (321 Crédito) | 0.2 | 0.2 | 0.0 | 2.2% |
| Pension plan | 0.3 | 0.3 | -0.0 | -2.0% |
| Other benefits | 1.6 | 2.2 | 0.5 | 33.3% |
| Deferred tax assets | -78.6 | -78.7 | -0.2 | -0.2% |
| Current amount of after-tax liabilities | 204.5 | 204.0 | -0.5 | -0.2% |
These liabilities related to employee benefits are associated with deferred tax assets amounting to €78.7m, which brings the current amount of liabilities related to employee benefits net of deferred tax assets associated with them to €204.0m.
Consolidated net debt
Consolidated net debt
| € million | ||||
|---|---|---|---|---|
| 31.12.2021 | 31.03.2022 | ∆ | ∆% | |
| Net debt | 58.9 | 64.9 | 6.1 | 10.3% |
| ST & LT debt | 201.1 | 207.8 | 6.7 | 3.3% |
| of which Finance leases (IFRS16) | 115.3 | 121.6 | 6.4 | 5.5% |
| Adjusted cash (I+II) | 142.3 | 142.9 | 0.6 | 0.4% |
| Cash & cash equivalents | 877.9 | 766.2 | -111.7 | -12.7% |
| Cash & cash equivalents at the end of the period (I) | 857.0 | 739.4 | -117.5 | -13.7% |
| Other cash items | 20.9 | 26.8 | 5.8 | 27.9% |
| Other Financial Services liabilities, net (II) | -714.7 | -596.5 | 118.2 | 16.5% |
The key aspects of the comparison between the consolidated net debt as at 31.03.2022 and that as at 31.12.2021, are as follows:
- Adjusted cash increased by €0.6m, as the positive performance of the operating cash flow (+€10.4m) offset the payment of employee benefits (-€4.2m), debt service (-€4.0m) and the acquisition of own shares (-€1.6m).
- Short-term & long-term debt increased by €6.7m essentially due to the increase in lease liabilities.
CTT Group net debt excluding Banco CTT from the full consolidation perimeter and accounting it as a financial investment measured by the equity method would be as follows:
| Consolidated net debt with Banco CTT under equity method | |||
|---|---|---|---|
| ---------------------------------------------------------- | -- | -- | -- |
| € million | ||||
|---|---|---|---|---|
| 31.12.2021 | 31.03.2022 | ∆ | ∆% | |
| Net debt with Banco CTT under equity method | 182.4 | 189.9 | 7.5 | 4.1% |
| ST & LT debt | 198.5 | 205.3 | 6.8 | 3.4% |
| of which Finance leases (IFRS16) | 112.6 | 119.2 | 6.5 | 5.8% |
| Adjusted cash (I+II) | 16.1 | 15.4 | -0.7 | -4.2% |
| Cash & cash equivalents | 215.2 | 154.8 | -60.4 | -28.1% |
| Cash & cash equivalents at the end of the period (I) | 215.2 | 154.8 | -60.4 | -28.1% |
| Other cash items | -0.0 | -0.0 | -0.0 | 73.6% |
| Other Financial Services liabilities, net (II) | -199.1 | -139.3 | 59.7 | 30.0% |
2. Other Highlights
REGULATORY ISSUES
On 23 December 2021, the Council of Ministers communicated the approval on that date of the decree amending the legal framework applicable to the provision of postal services in Portugal. The corresponding decree was promulgated on 5 February 2022 and Decree-Law no. 22-A/2022 was published on 7 February 2022. The new concession agreement thus came into force and will have a duration of approximately seven years – until 31 December 2028.
This framework improves the decision-making mechanisms and provides clear criteria to guarantee the provision of the universal postal service under sustainable economic conditions, promoting a better balance between the continuity of the postal service provision and the reinforcement of the Company's capacity to face the challenges of digital transition, pursuing the consistent implementation of its transformation process. For reasons of general interest, only the following activities and services have remained reserved to the concessionaire: sitting of letter boxes on the public highway intended for the deposit of postal items, issue and sale of postage stamps bearing the word Portugal and the registered mail service used in court or administrative proceedings.
While some impacts of the pandemic still persisted, CTT continued to periodically submit updates on the status of the postal network to the Government, as a counterparty in the agreement, and to ANACOM,
the regulatory authority responsible for overseeing the provision of the universal postal service, until 21 February 2022.
The concession agreement sets out that, for the year 2022, which will be the transition period, the prices of the services included in the universal postal service offer to be implemented by CTT shall respect a maximum annual average variation of 6.80%, which considers the decline in mail volumes observed in the first nine months of 2021 and the variation of the Consumer Price Index for the Transport expense category, as communicated by the National Statistics Institute for the month of October 2021. The pricing proposal was submitted to ANACOM on 28 February and the new prices entered into force on 7 March 2022, without prejudice to the evaluation to be carried out by ANACOM, in accordance with the provisions of said agreement.
The special prices of the postal services included in the universal postal service offer applicable to bulk mail senders were also updated on 7 March 2022, following the information sent to ANACOM on 28 February 2022.
The aforementioned updates correspond to an average annual price variation of 5.84% for the year 2022.
ESG
Natural Capital
- Paper shreds This is a circular economy pilot project, implemented in five CTT post offices. The goal is to provide customers with paper shreds 100% made from waste paper from our buildings so that they can package their parcels free of charge.
- Deposit your mask here Given the good reaction of CTT employees, in 2022, this action was extended to more buildings. This innovative circular economy project aims to reduce the environmental impact associated with the use of COVID-19 pandemic protection masks by transforming them into a plastic compound (polypropylene) that allows their reuse for various purposes. In 2021, around 6,000 masks used in CTT's operational areas were collected, which contributed towards the production of around 3,200 small Christmas decorations given to the employees in these areas.
- "Merece Program, Corporate Movement for the Recycling of Cards with Electronic Components" – Banco CTT collected the first 15 kg of obsolete banking cards. Through this initiative, the Bank prevents their electronic components from contaminating the environment. In addition to giving a new life to cards, transforming them into street furniture, for each kilogram of cards collected a tree is planted and its maintenance ensured for 5 years, thus offsetting the emissions generated. Banco CTT thus began planting the first 15 trees in the Sintra-Cascais Natural Park.
- Planting "A Tree for the Forest" On 25 and 28 February, 6,000 native trees were planted at Mata da Machada, in Barreiro, within an action promoted by CTT and Quercus. The planting corresponds to the number of kits acquired in the scope of the 8th edition of the "A Tree for the Forest" campaign and was attended by more than 500 people who volunteered to participate.
- Electric vehicles In 1T22, 71 new electric vehicles started operating in delivery offices throughout the country. This significant allocation of electric vehicles made it possible to ensure a 100% electric fleet in a second delivery office: Arroios (Lisbon). Together with the vehicles, 50 chargers were received and expressly placed to serve these vehicles.
- Energy efficiency Under a partnership with the Portuguese company LMIT, CTT has wisemeters installed in 46 buildings, which represent more than 55% of the total consumption of its real estate. In the first months of the year, wisemeters were installed in Évora and in the CTT Expresso logistics center in Viseu. These systems for controlling and acting on energy consumption aim to optimize energy consumption through remote monitoring and intervention, in order to, for example, regulate the times of use of lighting and other appliances.
Social Capital
- Help for the People of Ukraine CTT joined the wave of solidarity motivated by the war in Ukraine and launched, in early March, a campaign to collect goods in its post offices. The campaign was a huge success, with about 40 tons of goods received. The driving force behind the initiative was provided by two Ukrainian employees and the difficult mission of sorting and preparing the goods for shipment was the responsibility of a team of CTT volunteers both from the Famões facilities, which handle international shipments, and from CTT's existing volunteer pool.
- Sales "A Tree for the Forest" The edition of the project in which the 100,000-kit mark was reached since it began 8 years ago reported a great sales success, with the stock of 6,500 physical kits being sold out before the end of March.
- EPIS The reference project to support students in situations of school failure was launched for another three-year edition, with a new group of 16 students to be individually tutored by CTT mentors. In addition, a group of trainees, accompanied by some other employees, volunteered to monitor the studies of these students, with tutoring in Portuguese, Mathematics and English.
Human Capital
- Michelin competition A pastime was launched, in conjunction with Michelin, aimed at CTT's operational areas. It was the first time that a competition exclusively for operational areas was conceived and carried out. These areas are often limited in their participation in this type of internal initiatives due to their location or working hours.
- Certification EFR (Family-Responsible Enterprise) An internal survey was launched aimed at CTT workers to collect their opinions on the issues of conciliation between family, personal and professional life. This was the first public step taken to present this initiative to all CTT employees.
- "Green Planet" Training By the end of the first quarter, 574 employees from the Central Services (47% of the total population covered), completed the "Green Planet" training, disseminated in the distance learning modality. It is a course to raise awareness of environmental issues and was produced internally, in a partnership between the CTT Academy, of the People and Culture Department, and the Sustainability Department.
OUTLOOK FOR 2022
We continue to build capacity to cope with anticipated future demand, while preserving operational flexibility to adjust, if required.
We believe that the commercial and marketing initiatives should improve customer intake, especially in Express and Parcels, in Spain and Portugal, and in Business Services. Additionally, the profitability measures, namely in operations and in central structure, have been intensified and will deliver results as from 2H22.
It should be underlined that EBIT generation improved throughout 1Q22, as 81% of recurring EBIT in the quarter was generated in March. On another note, previously identified risks, as at the date of the announcement of the FY earnings, in the guidance disclosure, remain active and 2Q22 will still be penalized by macroeconomic factors when compared with March 22 run-rate.
Against this backdrop and notwithstanding a difficult environment, which increases execution risk, we remain committed to achieving FY22 EBIT within €65-75m.
3. Subsequent Events
The Annual General Meeting held on 21 April 2022, passed a resolution that approved a reduction in share capital of up to €2,325,000 for the purpose of releasing excess capital, by means of cancellation of up to 4,650,000 shares representing up to 3.1% of the share capital already acquired or to be acquired in connection with a share buyback program, as well as on related reserves, with the corresponding amendment to paragraphs 1 and 2 of article 4 of the Articles of Association.
Final Note
This press release is based on CTT – Correios de Portugal, S.A. interim condensed consolidated financial statements for the three months of 2022, which are attached hereto.
Lisbon, 5 May 2022
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
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] Fax: + 351 210 471 996 Telefone: + 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 first quarter of 2022 (1Q22) 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 (di)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 summarized 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.
3 months report 2022
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 2021 AND 31 MARCH 2022 Euros
| Unaudited | |||
|---|---|---|---|
| NOTES | 31.12.2021 | 31.03.2022 | |
| ASSETS | |||
| Non-current assets | |||
| Tangible fixed assets | 4 | 296,287,578 | 301,332,730 |
| Investment properties | 6 | 6,327,424 | 6,274,277 |
| Intangible assets | 5 | 63,507,247 | 62,640,681 |
| Goodwill | 81,471,314 | 81,471,314 | |
| Investments in associated companies | 481 | 481 | |
| Investments in joint ventures | 17,992 | — | |
| Other investments | 311,684 | 311,684 | |
| Financial assets at fair value through profit or loss | 2,261,947 | 5,890,053 | |
| Debt securities at fair value through other comprehensive income | 8 | 4,906,841 | — |
| Debt securities at amortized cost | 8 | 294,986,658 | 332,531,349 |
| Other non-current assets | 1,772,136 | 1,506,525 | |
| Credit to banking clients | 10 | 1,125,984,322 | 1,165,418,373 |
| Other banking financial assets | 9 | 5,237,710 | 4,116,119 |
| Deferred tax assets | 25 | 87,255,087 | 87,334,376 |
| Total non-current assets | 1,970,328,421 | 2,048,827,962 | |
| Current assets | |||
| Inventories | 6,872,274 | 7,361,146 | |
| Accounts receivable | 160,930,050 | 181,858,723 | |
| Credit to banking clients | 10 | 415,924,171 | 429,696,820 |
| Income taxes receivable | 8,268 | 8,268 | |
| Prepayments | 11 | 8,725,934 | 11,103,156 |
| Financial assets at fair value through profit or loss | 24,999,138 | 25,176,625 | |
| Debt securities at fair value through other comprehensive income | 8 | 1,188,069 | 5,766,426 |
| Debt securities at amortized cost | 8 | 39,173,861 | 46,952,762 |
| Other current assets | 68,848,382 | 64,622,119 | |
| Other banking financial assets | 9 | 9,721,536 | 12,804,726 |
| Cash and cash equivalents | 12 | 877,872,696 | 766,185,991 |
| 1,614,264,378 | 1,551,536,762 | ||
| Non-current assets held for sale | 605,798 | 503,110 | |
| Total current assets | 1,614,870,176 | 1,552,039,872 | |
| Total assets | 3,585,198,598 | 3,600,867,834 | |
| EQUITY AND LIABILITIES | |||
| Equity | |||
| Share capital | 14 | 75,000,000 | 75,000,000 |
| Own shares | 15 | (6,404,963) | (8,441,966) |
| Reserves | 15 | 67,078,351 | 67,481,953 |
| Retained earnings | 15 | 43,904,074 | 82,327,579 |
| Other changes in equity | 15 | (43,998,612) | (43,998,612) |
| Net profit | 38,404,113 | 5,388,750 | |
| Equity attributable to equity holders | 173,982,963 | 177,757,704 | |
| Non-controlling interests | 563,106 | 606,349 | |
| Total equity | 174,546,069 | 178,364,053 | |
| Liabilities Non-current liabilities |
|||
| Medium and long term debt | 18 | 149,336,438 | 154,204,946 |
| Employee benefits | 260,805,742 | 260,387,697 | |
| Provisions | 19 | 14,679,520 | 13,972,186 |
| Prepayments | 11 | 272,088 | 269,288 |
| Other banking financial liabilities | 9 | 277,760,616 | 273,526,576 |
| Deferred tax liabilities | 25 | 2,427,513 | 3,346,620 |
| Total non-current liabilities | 705,281,916 | 705,707,313 | |
| Current liabilities Accounts payable |
20 | 350,304,332 | 299,976,105 |
| Banking clients' deposits and other loans | 21 | 2,121,511,345 | 2,166,423,234 |
| Employee benefits | 21,090,144 | 20,777,128 | |
| Income taxes payable | 22 | 11,611,897 | 12,621,072 |
| Short term debt | 18 | 51,783,012 | 53,593,915 |
| Prepayments Other current liabilities |
11 | 3,452,240 118,594,781 |
4,473,149 123,904,967 |
| Other banking financial liabilities | 9 | 27,022,862 | 35,026,898 |
| Total current liabilities | 2,705,370,613 | 2,716,796,468 | |
| Total liabilities | 3,410,652,529 | 3,422,503,781 | |
| Total equity and liabilities | 3,585,198,598 | 3,600,867,834 |
CTT – Correios de Portugal, S.A.
CTT-CORREIOS DE PORTUGAL, S.A.
CONSOLIDATED INCOME STATEMENT FOR THE THREE MONTH PERIODS ENDED 31 MARCH 2021 AND 31 MARCH 2022 Euros
| NOTES | Unaudited | Unaudited | ||
|---|---|---|---|---|
| 31.03.2021 | 31.03.2022 | |||
| Sales and services rendered | 3 | 186,282,196 | 209,578,237 | |
| Financial margin | 11,558,405 | 16,407,396 | ||
| Other operating income | 7,486,351 | 8,759,838 | ||
| 205,326,952 | 234,745,471 | |||
| Cost of sales | (4,964,495) | (25,473,870) | ||
| External supplies and services | (76,776,653) | (85,939,317) | ||
| Staff costs | 23 | (89,337,208) | (92,018,805) | |
| Impairment of accounts receivable, net | (851,897) | (1,281,248) | ||
| Impairment of other financial banking assets | (1,417,027) | (3,780,615) | ||
| Provisions, net | 19 | (93,597) | (658,302) | |
| Depreciation/amortization and impairment of investments, net | (14,003,235) | (15,379,662) | ||
| Net gains/(losses) of assets and liabilities at fair value through profit or loss | — | 3,805,592 | ||
| Gains / (losses) on derecognition of financial assets and liabilities at amortized cost | 2,210,811 | — | ||
| Other operating costs | (4,215,242) | (4,695,853) | ||
| Gains/losses on disposal of assets | 16,437 | 44,392 | ||
| (189,432,106) | (225,377,688) | |||
| 15,894,846 | 9,367,783 | |||
| Interest expenses | 24 | (2,146,675) | (2,199,332) | |
| Interest income | 24 | 5,986 | 111,114 | |
| Gains/losses in subsidiary, associated companies and joint ventures | (492,581) | (40,649) | ||
| (2,633,270) | (2,128,867) | |||
| Earnings before taxes | ||||
| Income tax for the period | 25 | 13,261,576 | 7,238,916 | |
| Net profit for the period | (4,528,025) | (1,826,317) | ||
| 8,733,551 | 5,412,599 | |||
| Net profit for the period attributable to: | ||||
| Equity holders | 8,700,423 | 5,388,750 | ||
| Non-controlling interests | 33,127 | 23,851 | ||
| Earnings per share: | 17 | 0.06 | 0.04 |
The attached notes are an integral part of these financial statements.
CTT-CORREIOS DE PORTUGAL, S.A.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE THREE MONTH PERIODS ENDED 31 MARCH 2021 AND 31 MARCH 2022 Euros
| NOTES | Unaudited | Unaudited | |
|---|---|---|---|
| 31.03.2021 | 31.03.2022 | ||
| Net profit for the period | 8,733,550 | 5,412,601 | |
| Adjustments from application of the equity method (non re-classifiable adjustment to profit and loss) |
15 | 5,189 | 19,392 |
| Changes to fair value reserves | 15 | 245 | (1,398) |
| Other changes in equity | 5,189 | 19,392 | |
| Other comprehensive income for the period after taxes | 10,623 | 37,386 | |
| Comprehensive income for the period | 8,744,173 | 5,449,987 | |
| Attributable to non-controlling interests | 38,315 | 43,243 | |
| Attributable to shareholders of CTT | 8,705,858 | 5,406,744 |
CTT-CORREIOS DE PORTUGAL, S.A.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AS AT 31 DECEMBER 2021 AND 31 MARCH 2022
Euros
| NO TE S |
Sh ital are ca p |
Ow n S har es |
Re ser ves |
Oth er cha s in nge uity eq |
Re tai ned nin ear gs |
Ne rof it fo t p r the ye ar |
No n llin tro con g inte ts res |
To tal |
|
|---|---|---|---|---|---|---|---|---|---|
| Ba lan 31 De ber 20 20 ce on cem |
75, 000 ,000 |
(8) | 65,9 19,9 35 |
(47 ) ,600 ,236 |
39,9 62,4 19 |
16,6 69,3 09 |
323 ,675 |
150 ,275 ,094 |
|
| Ap iati of n rofi t fo r th of 202 0 et p pro pr on e y ear |
— | — | — | — | 16,6 69,3 09 |
(16 ) ,669 ,309 |
— | — | |
| Div ide nds |
— | — | — | — | (12 ,750 ,000 |
) — |
— | (12 ) ,750 ,000 |
|
| Acq uis itio f ow har n o n s es |
15 | (6,4 54) 04,9 |
— | — | — | — | — | (6,4 54) 04,9 |
|
| Sh lan are p |
15 | — | — | 1,21 5,0 00 |
— | — | — | — | 1,21 5,0 00 |
| — | (6,4 54) 04,9 |
1,21 5,0 00 |
— | 3,9 19,3 09 |
(16 ) ,669 ,309 |
— | (17 ) ,939 ,954 |
||
| Oth nts er m ove me |
15 | — | — | — | — | — | — | 52,2 42 |
52,2 42 |
| Act ial ins /los - H eal th C t fro m d efe rred tax uar ga ses are , ne es |
15 | — | — | — | 3,6 01,6 23 |
— | — | — | 3,6 01,6 23 |
| Ch to f air val ang es ue res erv es |
15 | — | — | (56 ) ,584 |
— | — | — | — | (56 ) ,584 |
| Adj fro he lica tion of the uity tho d ust nts m t me app eq me |
15 | — | — | — | — | 22, 345 |
— | — | 22, 345 |
| Ne ofit for the riod t pr pe |
— | — | — | — | — | 38,4 04, 113 |
187 ,190 |
38,5 91,3 03 |
|
| Co reh ive inc e fo r th eri od mp ens om e p |
— | — | (56 ,584 ) |
3,6 01,6 23 |
45 22,3 |
38,4 04, 113 |
239 ,43 1 |
42,2 10,9 30 |
|
| Ba lan 31 De ber 20 21 ce on cem |
75, 000 ,000 |
(6,4 63) 04,9 |
67,0 78,3 51 |
(43 ) ,998 ,612 |
43,9 04,0 74 |
38,4 04, 113 |
563 ,106 |
174 ,546 ,069 |
|
| Ap iati of n rofi t fo r th of 202 1 et p pro pr on e y ear |
— | — | — | — | 38,4 04, 113 |
(38 ) ,404 ,113 |
— | — | |
| Div ide nds |
— | — | — | — | — | — | — | ||
| Acq uis itio f ow har n o n s es |
15 | — | (2,0 37,0 03) |
— | — | — | — | — | (2,0 37,0 03) |
| Sh lan are p |
15 | — | — | 405 ,000 |
— | — | — | — | 405 ,000 |
| — | (2,0 03) 37,0 |
405 ,000 |
— | 38,4 04, 113 |
(38 ) ,404 ,113 |
— | (1,6 03) 32,0 |
||
| Oth nts er m ove me |
15 | — | — | — | — | — | — | 19,3 92 |
19,3 92 |
| Ch to f air val ang es ue res erv es |
15 | — | — | (1,3 98) |
— | — | — | — | (1,3 98) |
| Adj fro he lica tion of the uity tho d ust nts m t me app eq me |
15 | — | — | — | — | 19,3 92 |
— | — | 19,3 92 |
| Ne ofit for the riod t pr pe |
— | — | — | — | — | 5,3 88,7 50 |
23, 851 |
5,4 12,6 01 |
|
| Co reh ive inc e fo r th eri od mp ens om e p |
— | — | (1,3 98) |
— | 19,3 92 |
5,3 88,7 50 |
43,2 43 |
5,44 9,98 7 |
|
| Ba lan 31 Ma rch 20 22 ce on |
75, 000 ,000 |
(8,4 66) 41,9 |
67,4 81,9 53 |
(43 ) ,998 ,612 |
82,3 27,5 79 |
5,3 88,7 50 |
606 ,349 |
178 ,364 ,053 |
CTT – Correios de Portugal, S.A.
CTT-CORREIOS DE PORTUGAL, S.A.
CONSOLIDATED AND INDIVIDUAL CASH FLOW STATEMENT FOR THE THREE MONTH PERIODS ENDED 31 MARCH 2021 AND 31 MARCH 2022 Euros
| NOTES | Unaudited | Unaudited | |
|---|---|---|---|
| 31.03.2021 | 31.03.2022 | ||
| Cash flow from operating activities | |||
| Collections from customers | 174,785,584 | 208,445,349 | |
| Payments to suppliers | (90,526,442) (123,965,452) | ||
| Payments to employees | (71,374,011) | (72,504,968) | |
| Banking customer deposits | 108,980,349 | 44,920,394 | |
| Credit to bank clients | (34,111,022) | (52,144,212) | |
| Cash flow generated by operations | 87,754,459 | 4,751,111 | |
| Payments/receivables of income taxes | 230,297 | 31,238 | |
| Other receivables/payments | (38,169,898) | (45,418,458) | |
| Cash flow from operating activities (1) | 49,814,857 | (40,636,110) | |
| Cash flow from Investing activities | |||
| Receivables resulting from: | |||
| Tangible fixed assets | 78,750 | 3,360 | |
| Financial investments | — | 2 | |
| Investment in securities at fair value through other comprehensive income | 8 | 2,028,059 | 1,470,500 |
| Investment in securities at amortized cost | 8 | 34,458,564 | 187,881,491 |
| Other banking financial assets | 9 | 26,770,000 | 2,335,000 |
| Interest income | 10,178 | 16,917 | |
| Payments resulting from: | |||
| Tangible fixed assets | (5,116,682) | (4,466,844) | |
| Intangible assets | (4,127,028) | (7,075,478) | |
| Investment in securities at fair value through other comprehensive income | 8 | — | (1,146,911) |
| Investment in securities at amortized cost | 8 | (23,650,000) (233,643,726) | |
| Demand deposits at Bank of Portugal | (1,123,500) | (1,325,700) | |
| Other banking financial assets | 9 | (24,800,000) | (3,250,000) |
| Loans granted | |||
| Cash flow from investing activities (2) | 4,528,341 | (59,201,389) | |
| Cash flow from financing activities | |||
| Receivables resulting from: | |||
| Loans obtained | 18 | 3,713,901 | 33,934,486 |
| Payments resulting from: | |||
| Loans repaid | 18 | (3,729,908) | (34,189,027) |
| Other credit institutions' deposits | |||
| Interest expenses | (244,625) | (101,654) | |
| Confirming | 18 | — | (3,636,486) |
| Lease liabilities | 18 | (7,443,849) | (7,990,527) |
| Acquisition of own shares | — | (1,628,781) | |
| Other banking financial liabilities | 9 | (5,500,582) | (4,081,971) |
| Cash flow from financing activities (3) | (13,205,063) | (17,693,960) | |
| Net change in cash and cash equivalents (1+2+3) | 41,138,135 | (117,531,459) | |
| Cash and equivalents at the beginning of the period | 498,826,782 | 856,957,546 | |
| Cash and cash equivalents at the end of the period | 12 | 539,964,917 | 739,426,088 |
| Cash and cash equivalents at the end of the period | 539,964,917 | 739,426,088 | |
| Sight deposits at Bank of Portugal | 16,919,100 | 21,263,500 | |
| Outstanding checks of Banco CTT / Checks clearing of Banco CTT | 1,725,533 | 5,503,166 | |
| Impairment of slight and term deposits | (8,594) | (6,762) | |
| Cash and cash equivalents (Balance sheet) | 558,600,956.00 | 766,185,991 |
| 1. | INTRODUCTION 24 | ||
|---|---|---|---|
| 2. | SIGNIFICANT ACCOUNTING POLICIES 25 | ||
| 2.1 | New standards or amendments adopted by the Group 25 | ||
| 2.2 | Basis of preparation 26 | ||
| 3. | SEGMENT REPORTING 26 | ||
| 4. | TANGIBLE FIXED ASSETS 34 | ||
| 5. | INTANGIBLE ASSETS 39 | ||
| 6. | INVESTMENT PROPERTIES 41 | ||
| 7. | COMPANIES INCLUDED IN THE CONSOLIDATION 43 | ||
| 8. | DEBT SECURITIES 48 | ||
| 9. | OTHER BANKING FINANCIAL ASSETS AND LIABILITIES 52 | ||
| 10. | CREDIT TO BANKING CLIENTS 57 | ||
| 11. | PREPAYMENTS 64 | ||
| 12. | CASH AND CASH EQUIVALENTS 65 | ||
| 13. | ACCUMULATED IMPAIRMENT LOSSES 66 | ||
| 14. | EQUITY 68 | ||
| 15. | OWN SHARES, RESERVES, OTHER CHANGES IN EQUITY AND RETAINED EARNINGS 70 | ||
| 16. | DIVIDENDS 72 | ||
| 17. | EARNINGS PER SHARE 73 | ||
| 18. | DEBT 73 | ||
| 19. | PROVISIONS, GUARANTEES PROVIDED, CONTINGENT LIABILITIES AND COMMITMENTS 76 | ||
| 20. | ACCOUNTS PAYABLE 80 | ||
| 21. | BANKING CLIENTS' DEPOSITS AND OTHER LOANS 81 | ||
| 22. | INCOME TAXES RECEIVABLE /PAYABLE 82 | ||
| 23. | STAFF COSTS 82 | ||
| 24. | INTEREST EXPENSES AND INTEREST INCOME 85 | ||
| 25. | INCOME TAX FOR THE PERIOD 85 | ||
| 26. | RELATED PARTIES 90 | ||
| 27. | OTHER INFORMATION 91 | ||
| 28. | SUBSEQUENT EVENTS 93 |
1. Introduction
CTT – Correios de Portugal, S.A. ("CTT" or "Company"), with head office at Avenida D. João II, no. 13, 1999-001 in Lisbon, had its origin in the "Administração Geral dos Correios Telégrafos e Telefones" government department and its legal form is the result of successive re-organizations carried out by the Portuguese state business sector in the communications area.
Decree-Law no. 49.368, of 10 November 1969 founded the state-owned company CTT - Correios e Telecomunicações de Portugal, E. P., which started operating on 1 January 1970. By Decree-Law no. 87/92, of 14 May, CTT – Correios e Telecomunicações de Portugal, E. P., was transformed into a legal entity governed by private law, with the status of a state-owned public limited company. Finally, with the foundation of the former Telecom Portugal, S.A. by spin-off from Correios e Telecomunicações de Portugal, S.A. under Decree-Law no. 277/92, of 15 December, the Company's name was changed to the current CTT – Correios de Portugal, S.A..
On 31 January 2013, the Portuguese State through the Order 2468/12 – SETF, of 28 December, determined the transfer of the investment owned by the Portuguese State in CTT to Parpública – Participações Públicas, SGPS, S.A.
At the General Meeting held on 30 October 2013, the registered capital of CTT was reduced to 75,000,000 Euros, being from that date onward represented by 150,000,000 shares, as a result of a stock split which was accomplished through the reduction of the nominal value from 4.99 Euros to 0.50 Euros.
During the financial year ended 31 December 2013, CTT's capital was opened to the private sector. Supported by Decree-Law no. 129/2013, of 6 September and the Resolution of the Council of Ministers ("RCM") no. 62-A/2013, of 10 October, the RCM no. 62-B/2013, of 10 October and RCM no. 72-B/2013, of 14 November, the first phase of privatization of the capital of CTT took place on 5 December 2013. From this date, 63.64% of the shares of CTT (95.5 million shares) were owned by the private sector, of which 14% (21 million shares) were sold in a Public Offering and 49.64% (74.5 million shares) by Institutional Direct Selling. On 31 December 2013 the Portuguese State, through Parpública - Participações Públicas, SGPS, S.A. held 36.36% of the shares of CTT, 30.00% by holding and 6.36% by allocation.
On 5 September 2014, the second phase of the privatization of CTT took place. The shares held by Parpública - Participações Públicas, SGPS, S.A., which on that date represented 31.503% of CTT's capital, were subject to a private offering of Shares ("Equity Offering") via an accelerated book building process. The Equity Offering was addressed exclusively to institutional investors.
The shares of CTT are listed on Euronext Lisbon.
The financial statements attached herewith are expressed in Euros, as this is the main currency of the Group's operations.
These financial statements were approved by the Board of Directors and authorized for issue on 5 May 2022.
2. Significant 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 2021, except for the new standards and amendments effective from 1 January 2022.
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 IFRS 3 References to the Conceptual Framework for Financial Reporting - This amendment updates the references to the Conceptual Framework in the text of IFRS 3, and no changes have been made to the accounting requirements for business combinations. The accounting treatment to be adopted in relation to liabilities and contingent liabilities under IAS 37 and IFRIC 21, incurred separately versus those included in a business combination, is also clarified.
- Amendments to IAS 16 Income obtained before entry into operation Clarifies the accounting treatment given to the consideration obtained with the sale of products that result from the production in the test phase of tangible fixed assets, prohibiting their deduction from the acquisition cost of the assets. The entity recognizes the income obtained from the sale of such products and the costs of their production in profit or loss.
- Amendments to IAS 37 Onerous contracts costs of complying with a contract This amendment specifies that in the assessment of whether or not a contract is onerous, only expenses directly related to the performance of the contract can be considered, such as incremental costs related to direct labour and materials and the allocation of other directly related expenses such as the allocation of depreciation expenses of the tangible assets used to perform the contract. General and administrative costs do not relate directly to a contract and are excluded unless they are explicitly charged to the counterparty in accordance with the contract. This amendment shall apply to contracts which, at the beginning of the first annual reporting period to which the amendment is applied, still include unfulfilled contractual obligations, without the need to restate the comparative.
- Amendments to IFRS 1 Subsidiary as a first-time adopter of IFRS (included in the annual improvements for the 2018-2020 cycle) - This improvement clarifies that, when the subsidiary chooses to measure its assets and liabilities at the amounts included in the consolidated financial statements of the parent company (assuming that no adjustment has occurred in the consolidation process), the measurement of accumulated translation differences of all foreign operations can be carried out at the amounts that would be recorded in the consolidated financial statements, based on the parent company's transition date for IFRS.
- Amendments to IFRS 9 Derecognition of financial liabilities Fees to be included in the '10 percent' variation test (included in the annual improvements for the 2018-2020 cycle) - This improvement clarifies which fees an entity must include when evaluating whether the terms
of a financial liability are materially different from the terms of the original financial liability. This improvement clarifies that in the scope of derecognition tests carried out on renegotiated liabilities, only commissions paid or received between the debtor and creditor should be included, including commissions paid or received by the debtor or creditor on behalf of the other.
• Amendments to IAS 41 – Taxation and fair value measurement (included in the annual improvements for the 2018-2020 cycle) - This improvement eliminates the requirement to exclude tax cash flows when measuring the fair value of biological assets, ensuring consistency with the principles of IFRS 13 – Fair value.
The Group did not apply any of these standards in advance to the financial statements in the twelvemonth period ended 31 December 2021. No significant impacts on the financial statements resulting from their adoption are estimated.
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 2022, and in accordance with IAS 34 - Interim Financial Reporting.
The consolidated financial statements were prepared under the assumption of going concern and are prepared under the historical cost convention, except for the financial assets and liabilities accounted at fair value.
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.
Since 2021, in the segment reporting, the calculation of EBITDA was simplified with the inclusion of impairments and provisions and with the leases impact covered by IFRS 16. Accordingly, the only difference between EBITDA and EBIT is depreciation and amortization and specific items.
The business of CTT is organized in the following segments:
- Mail CTT Contacto, S.A., CTT Soluções Empresariais, S.A., New Spring Services S.A., HCCM - Outsourcing Investment, CTT IMO - Sociedade Imobiliaria, S.A. MedSpring, S.A. and CTT, S.A. excluding:
- Business related to postal financial services and retail products Financial Services & Retail;
- The business of payments related with collection of invoices and fines, Western Union transfers, integrated solutions and tolls – Bank.
- Express & Parcels includes CTT Expresso S.A., CORRE S.A., Fundo Inovação Techtree and Open Lockers, S.A.;
- Financial Services & Retail Postal Financial Services and the sale of products and services in the retail network of CTT, S.A.;
- Bank Banco CTT S.A., S.A., Payshop S.A., 321 Crédito S.A. and CTT's payment business (mentioned above).
The business segregation by segment is based on management information produced internally and presented to the "chief operating decision maker".
The segments cover the three CTT business areas, as follows:
- 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 various operating segments. The Internal Services Rendered refer to services provided across the different CTT, S.A. business areas, and the income is calculated according to standard activities valued through internally set transfer prices. The Mail segment provides internal services essentially related to the retail network (included in the Mail segment). Additionally, the Financial Services Segment uses the Retail network to sell its products. The use of the Retail network by other segments, as Express & Parcels and CTT Bank is, equally, presented in the line "Internal Services Rendered".
Initially, CTT, S.A. operating costs are allocated to the different segments by charging the internal transactions for the services mentioned above. After this initial allocation, costs relating to corporate and support areas (CTT Central Structure) are allocated by nature to the Mail segment and others.
The consolidated income statement by nature and segment of the 1st quarter of 2021 and 2022 are as follows:
| 31.03.2021 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Thousand Euros | Express & Parcels |
Financial | Total | |||||
| Services & | Bank | |||||||
| Revenues | 108,615 | 63,446 | Retail 12,100 |
21,166 | 205,327 | |||
| Sales and services rendered | 107,278 | 63,243 | 11,986 | 3,775 | 186,282 | |||
| Sales | 2,482 | 80 | 2,915 | — | 5,477 | |||
| Services rendered | 104,796 | 63,163 | 9,071 | 3,775 | 180,805 | |||
| Financial Margin | — | — | — | 11,558 | 11,558 | |||
| Other operating income | 1,337 | 203 | 114 | 5,833 | 7,487 | |||
| Operating costs - EBITDA | 94,417 | 58,161 | 5,895 | 17,801 | 176,274 | |||
| Staff costs | 74,752 | 7,804 | 351 | 6,314 | 89,221 | |||
| External supplies and services | 17,366 | 50,069 | 599 | 7,629 | 75,663 | |||
| Other costs | 4,093 | 380 | 2,628 | 1,926 | 9,027 | |||
| Impairment and provisions | 412 | 478 | — | 1,473 | 2,363 | |||
| Internal services rendered | (2,206) | (570) | 2,317 | 459 | — | |||
| EBITDA | 14,198 | 5,285 | 6,205 | 3,365 | 29,053 | |||
| Depreciation/amortization and impairment of | 9,263 | 2,746 | 30 | 1,964 | 14,003 | |||
| investments, net | ||||||||
| EBIT recurring | 4,935 | 2,539 | 6,175 | 1,401 | 15,050 | |||
| Specific itens | 684 | 293 | — | (1,822) | (845) | |||
| Business restructurings | 16 | 92 | — | — | 108 | |||
| Strategic estudies and projects costs | 400 | — | — | 44 | 444 | |||
| Other non-recurring income and expenses | 268 | 201 | — | (1,866) | (1,397) | |||
| EBIT | 4,251 | 2,246 | 6,175 | 3,223 | 15,895 | |||
| Financial results | ||||||||
| Interest expenses | (2,147) | |||||||
| Interest income | 6 | |||||||
| Gains/losses in subsidiary, associated companies | (493) | |||||||
| and joint ventures | ||||||||
| Earnings before taxes (EBT) | 13,262 | |||||||
| Income tax for the period | 4,528 | |||||||
| Net profit for the period | 8,734 | |||||||
| Non-controlling interests | 33 | |||||||
| Equity holders of parent company | 8,700 |
| 31.03.2022 | |||||||
|---|---|---|---|---|---|---|---|
| Thousand Euros | Express & Parcels |
Financial Services & Retail |
Bank | Total | |||
| Revenues | 133,466 | 61,348 | 11,889 | 28,042 | 234,746 | ||
| Sales and services rendered | 132,460 | 61,240 | 11,760 | 4,118 | 209,578 | ||
| Sales | 23,304 | 32 | 3,269 | — | 26,605 | ||
| Services rendered | 109,156 | 61,208 | 8,491 | 4,118 | 182,973 | ||
| Financial Margin | — | — | — | 16,407 | 16,407 | ||
| Other operating income | 1,006 | 108 | 129 | 7,517 | 8,760 | ||
| Operating costs - EBITDA | 126,645 | 56,788 | 6,633 | 22,633 | 212,699 | ||
| Staff costs | 77,343 | 7,318 | 250 | 6,895 | 91,806 | ||
| External supplies and services | 26,933 | 48,752 | 571 | 9,066 | 85,322 | ||
| Other costs | 23,978 | 656 | 3,231 | 1,987 | 29,851 | ||
| Impairment and provisions | 581 | 530 | 390 | 4,219 | 5,720 | ||
| Internal services rendered | (2,190) | (467) | 2,190 | 466 | — | ||
| EBITDA | 6,821 | 4,560 | 5,256 | 5,409 | 22,047 | ||
| Depreciation/amortization and impairment of investments, net |
10,121 | 3,224 | 25 | 2,010 | 15,380 | ||
| EBIT recurring | (3,300) | 1,337 | 5,231 | 3,399 | 6,667 | ||
| Specific items | 760 | 170 | — | (3,631) | (2,701) | ||
| Business restructurings | 133 | 81 | — | — | 215 | ||
| Strategic studies and projects costs | 377 | 62 | — | — | 439 | ||
| Other non-recurring income and expenses | 249 | 27 | — | (3,631) | (3,355) | ||
| EBIT | (4,060) | 1,166 | 5,231 | 7,030 | 9,368 | ||
| Financial results | (2,129) | ||||||
| Interest expenses | (2,199) | ||||||
| Interest income | 111 | ||||||
| Gains/losses in subsidiary, associated | (41) | ||||||
| companies and joint ventures | |||||||
| Earnings before taxes (EBT) | 7,239 | ||||||
| Income tax for the period | 1,826 | ||||||
| Net profit for the period | 5,413 | ||||||
| Non-controlling interests | 24 | ||||||
| Equity holders of parent company | 5,389 |
As at 31 March 2022, the specific items amounted to -2.7 million euros, due to: (i) gross gain from the appreciation of a contracted derivative (-3.6 million euros), (ii) expenses related to the COVID-19 pandemic (+0.2 million euros), (iii) restructuring, namely agreements to suspend employment contracts (+0.2 million euros), and (iv) strategic projects (+0.4 million euros).
The valuation of the derivative in the amount of €3.6m, as mentioned above, is the result of the MTM (Mark to Market) of the interest rate derivative in the form of a Cap Agreement, associated with the Ulisses 2 securitization operation. The derivative envisages the hedge of the interest rate for the tranches issued, with a predetermined repayment plan and a strike price of 1.5%. Its MTM appreciation resulted only from the prospects of future evolution of market rates.
The revenues are detailed as follows:
| Thousand Euros | 31.03.2021 | 31.03.2022 |
|---|---|---|
| 108,615 | 133,466 | |
| Transactional mail | 92,545 | 89,756 |
| Editorial mail | 3,284 | 3,119 |
| Parcels (USO) | 1,943 | 1,748 |
| Advertising mail | 4,273 | 4,216 |
| Philately | 1,133 | 1,069 |
| Business Solutions | 3,550 | 32,179 |
| Other | 1,886 | 1,380 |
| Express & Parcels | 63,446 | 61,349 |
| Portugal | 35,142 | 30,992 |
| Parcels | 30,591 | 27,647 |
| Cargo | 2,541 | 1,414 |
| Banking network | 1,192 | 1,080 |
| Logistics | 567 | 675 |
| Other | 251 | 176 |
| Spain | 27,592 | 29,548 |
| Mozambique | 713 | 809 |
| Financial Services & Retail | 12,100 | 11,889 |
| Savings & Insurance | 6,751 | 6,051 |
| Money orders | 1,456 | 1,417 |
| Payments | 187 | 196 |
| Retail | 3,640 | 4,128 |
| Other | 66 | 97 |
| Bank | 21,167 | 28,042 |
| Net interest income | 11,558 | 16,407 |
| Interest income (+) | 11,810 | 17,479 |
| Interest expense (-) | (252) | (1,072) |
| Fees & commissions income (+) | 8,935 | 10,743 |
| Credits | 985 | 1,378 |
| Savings & Insurance | 1,389 | 1,906 |
| Accounts and Cards | 2,490 | 3,014 |
| Payments | 4,067 | 4,418 |
| Other comissions received | 4 | 27 |
| Other | 674 | 892 |
| 205,327 | 234,746 |
The revenue detail, related to sales and services rendered and financial margin, for the year ended 31 March 2021 and 31 March 2022, by the revenue's sources, are detailed as follows:
| 31.03.2021 | |||||||
|---|---|---|---|---|---|---|---|
| Nature | Express & Parcels |
Financial Services & Retail |
Bank | Total | |||
| Postal Services | 97,518,039 | — | — | — | 97,518,039 | ||
| Express services | — | 63,243,092 | — | — | 63,243,092 | ||
| Merchandising products sales | — | — | 623,861 | — | 623,861 | ||
| PO Boxes | — | — | 417,056 | — | 417,056 | ||
| International mail services (*) | 9,760,291 | — | — | — | 9,760,291 | ||
| Financial Services fees | — | — | 10,944,692 | 15,333,568 | 26,278,260 | ||
| "Sales and Services rendered" and | |||||||
| "Financial Margin" total | 107,278,330 | 63,243,092 | 11,985,609 | 15,333,568 | 197,840,599 |
(*) Inbound mail
| 31.03.2022 | |||||||
|---|---|---|---|---|---|---|---|
| Nature | Express & Parcels |
Financial Services & Retail |
Bank | Total | |||
| Postal Services | 128,035,512 | — | — | — | 128,035,512 | ||
| Express services | — | 61,240,267 | — | — | 61,240,267 | ||
| Merchandising products sales | — | — | 411,429 | — | 411,429 | ||
| PO Boxes | — | — | 385,136 | — | 385,136 | ||
| International mail services (*) | 4,424,838 | — | — | — | 4,424,838 | ||
| Financial Services fees | — | — | 10,963,008 | 20,525,444 | 31,488,452 | ||
| "Sales and Services rendered" and "Financial Margin" total |
132,460,350 | 61,240,267 | 11,759,573 | 20,525,444 | 225,985,634 |
(*) Inbound mail
The assets by segment are detailed as follows:
| 31.12.2021 | ||||||
|---|---|---|---|---|---|---|
| Assets (Euros) | Express & | Financial | Non | |||
| Parcels | Services & | Bank | allocated | Total | ||
| Retail | assets | |||||
| Intangible assets | 21,289,971 | 6,849,250 | 174,038 | 26,927,847 | 8,266,141 | 63,507,247 |
| Tangible fixed assets | 227,402,730 | 62,708,795 | 64,571 | 4,227,555 | 1,883,926 | 296,287,578 |
| Investment properties | — | — | — | — | 6,327,424 | 6,327,424 |
| Goodwill | 17,430,813 | 2,955,753 | — | 61,084,749 | — | 81,471,314 |
| Deferred tax assets | — | — | — | — | 87,255,087 | 87,255,087 |
| Accounts receivable | — | — | — | — 160,930,050 | 160,930,050 | |
| Credit to bank clients | — | — | — 1,541,908,493 | — | 1,541,908,493 | |
| Financial assets at fair | — — |
— | 27,261,085 | — | 27,261,085 | |
| value through profit or loss | ||||||
| Debt securities at fair | ||||||
| value through other | — | — | — | 6,094,910 | — | 6,094,910 |
| comprehensive income | ||||||
| Debt securities at | 334,160,519 | 334,160,519 | ||||
| amortized cost | ||||||
| Other banking financial | — | — | — | 14,959,246 | — | 14,959,246 |
| assets | ||||||
| Other assets | 14,891,188 | 17,690,710 34,608,628 | 6,739,026 | 12,627,597 | 86,557,151 | |
| Cash and cash | — | 15,590,602 | — | 662,721,068 199,561,026 | 877,872,696 | |
| equivalents Non-current assets held |
— | — | — | 605,798 | — | 605,798 |
| for sale | ||||||
| 281,014,703 105,795,111 34,847,237 2,686,690,296 476,851,252 | 3,585,198,598 |
| 31.03.2022 | ||||||
|---|---|---|---|---|---|---|
| Assets (Euros) | Express & Parcels |
Financial Services & Retail |
Bank | Non allocated assets |
Total | |
| Intangible assets | 24,178,274 | 6,908,262 | 225,232 | 26,373,514 | 4,955,399 | 62,640,681 |
| Tangible fixed assets | 226,206,907 | 70,121,897 | 57,647 | 4,004,005 | 942,273 | 301,332,730 |
| Investment properties | — | — | — | — | 6,274,277 | 6,274,277 |
| Goodwill | 17,430,813 | 2,955,753 | — | 61,084,749 | — | 81,471,314 |
| Deferred tax assets | — | — | — | — | 87,334,376 | 87,334,376 |
| Accounts receivable | — | — | — | — 181,858,723 | 181,858,723 | |
| Credit to bank clients | — | — | — 1,595,115,193 | — | 1,595,115,193 | |
| Financial assets at fair value through profit or loss |
— | — | — | 31,066,678 | — | 31,066,678 |
| Debt securities at fair value through other comprehensive income |
— | — | — | 5,766,426 | — | 5,766,426 |
| Debt securities at amortized cost |
— | — | — | 379,484,111 | — | 379,484,111 |
| Other banking financial assets |
— | — | — | 16,920,845 | — | 16,920,845 |
| Other assets | 9,987,802 | 13,390,248 40,556,944 | 7,301,783 | 13,676,603 | 84,913,380 | |
| Cash and cash | — | 17,337,689 | — | 616,991,593 131,856,709 | 766,185,991 | |
| equivalents Non-current assets held for sale |
— | — | — | 503,110 | 503,110 | |
| 277,803,796 110,713,850 40,839,823 2,744,612,006 426,898,359 | 3,600,867,834 |
The non-current assets acquisitions by segment, are detailed as follows:
| 31.12.2021 | ||||||
|---|---|---|---|---|---|---|
| Express & Parcels |
Financial Services & Retail |
Bank | Non allocated assets |
Total | ||
| Intangible assets | 10,687,971 | 3,967,727 | 125,669 | 3,897,385 | — | 18,678,753 |
| Tangible fixed assets | 20,153,598 | 23,903,875 | — | 1,561,666 | 458,948 | 46,078,087 |
| 30,841,569 | 27,871,602 | 125,669 | 5,459,051 | 458,948 | 64,756,839 |
| 31.03.2022 | ||||||
|---|---|---|---|---|---|---|
| Express & Parcels |
Financial Services & Retail |
Bank | Non allocated assets |
Total | ||
| Intangible assets | 987,681 | 851,676 | 50,799 | 965,482 | — | 2,855,638 |
| Tangible fixed assets | 6,722,514 | 9,958,072 | — | 88,297 | — | 16,768,884 |
| 7,710,195 | 10,809,747 | 50,799 | 1,053,780 | — | 19,624,522 |
The detail of the underlying reasons to the non-allocation of the following assets to any segment, is as follows:
• "Intangible assets" (4,955,399 Euros): the unallocated amount is related to the intangible assets in progress, which have been allocated to the underlying segment in the moment they become firm assets;
- "Tangible fixed assets" (942,273 Euros): This amount corresponds to tangible fixed assets in progress and advances payments to suppliers, which will be allocated to the respective segment at the time of the transfer to firm assets;
- "Investment properties" (6,274,277 Euros): These assets are not allocated to the operating activity, which is why they are not allocated to any segment;
- "Deferred tax assets" (87,344,376 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 25 - 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" (181,858,723 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" (13,676,603 Euros): This amount is mainly related to investments in associated companies and investments in joint ventures, that are not allocated to the operating activity, which is why they are not allocated to any segment, as well as some captions of 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 (131,856,709 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:
| 31.12.2021 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Other information (Euros) | Express & Parcels |
Financial Services & Retail |
Bank | Total | ||||||
| Non-current debt | 114,127,927 | 33,250,570 | 34,807 | 1,923,133 | 149,336,438 | |||||
| Bank loans | 62,161,852 | — | — | — | 62,161,852 | |||||
| Lease liabilities | 51,966,076 | 33,250,570 | 34,807 | 1,923,133 | 87,174,586 | |||||
| Current debt | 35,785,578 | 15,240,151 | 27,024 | 730,259 | 51,783,012 | |||||
| Bank loans | 14,436,742 | 7,732,258 | — | — | 22,169,000 | |||||
| Confirming | — | 1,500,152 | — | — | 1,500,152 | |||||
| Lease liabilities | 21,348,836 | 6,007,741 | 27,024 | 730,259 | 28,113,860 | |||||
| 149,913,506 | 48,490,722 | 61,831 | 2,653,392 | 201,119,450 |
| 31.03.2022 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Other information (Euros) | Express & Parcels |
Financial Services & Retail |
Bank | Total | ||||||
| Non-current debt | 114,303,406 | 38,094,639 | 27,999 | 1,778,902 | 154,204,946 | |||||
| Bank loans | 62,138,996 | — | — | — | 62,138,996 | |||||
| Lease liabilities | 52,164,410 | 38,094,639 | 27,999 | 1,778,902 | 92,065,950 | |||||
| Current debt | 36,737,841 | 16,105,924 | 27,104 | 723,047 | 53,593,915 | |||||
| Bank loans | 14,558,999 | 7,741,744 | — | — | 22,300,743 | |||||
| Confirming | — | 1,714,799 | — | — | 1,714,799 | |||||
| Lease liabilities | 22,178,842 | 6,649,381 | 27,104 | 723,047 | 29,578,374 | |||||
| 151,041,247 | 54,200,563 | 55,103 | 2,501,948 | 207,798,861 |
The Group is domiciled in Portugal. The result of its Sales and services rendered by geographical segment is disclosed below:
| Thousand Euros | 31.03.2021 | 31.03.2022 |
|---|---|---|
| Revenue - Portugal | 141,665 | 167,880 |
| Revenue - other countries | 44,617 | 41,698 |
| 186,282 | 209,578 |
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 28,352 thousand Euros.
4. Tangible fixed assets
During the year ended 31 December 2021 and the three-months period ended 31 March 2022, the movements occurred in Tangible fixed assets, as well as the respective accumulated depreciation, were as follows:
| 31.12.2021 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Land and natural resources |
Buildings and other constructions |
Basic equipment | Transport | equipment Office equipment | Other tangible fixed assets |
Tangible fixed assets in progress |
Advance payments to suppliers |
Rights of use | Total | |
| Tangible fixed assets | ||||||||||
| Opening balance | 35,479,827 | 339,115,881 | 168,452,024 | 3,602,903 | 70,641,110 | 26,092,908 | 6,019,646 | 1,237,818 | 231,178,507 | 881,820,624 |
| Acquisitions | 90,151 | 1,147,764 | 4,148,073 | 13,168 | 1,139,994 | 1,524,618 | 5,878,872 | 3,525,258 | — | 17,467,898 |
| New contracts | — | — | — | — | — | — | — | — | 28,610,189 | 28,610,189 |
| Disposals | (222,547) | (7,914,602) | (7,094,964) | (21,041) | (1,742) | — | — | — | — | (15,254,896) |
| Transfers and write-offs |
275,780 | 7,653,725 | 2,551,680 | — | (126,872) | (311,937) | (8,287,534) | — | (6,528,059) | (4,773,218) |
| Remeasurements | — | — | — | — | — | — | — | — | 1,179,139 | 1,179,139 |
| Adjustments | — | 4,652 | 158,587 | 8,868 | 9,590 | 5,727 | 1,918 | — | (558,663) | (369,322) |
| Remeasurements lease terms |
— | — | — | — | — | — | — | — | 600,570 | 600,570 |
| Change in the consolidation perimeter |
— | 469,081 | 868,215 | 3,500 | 393,551 | 58,375 | — | — | 2,189,935 | 3,982,657 |
| Closing balance | 35,623,210 | 340,476,500 | 169,083,615 | 3,607,398 | 72,055,630 | 27,369,691 | 3,612,902 | 4,763,076 | 256,671,618 | 913,263,640 |
| Accumulated depreciation | ||||||||||
| Opening balance | 3,723,758 | 227,546,379 | 138,324,288 | 3,395,091 | 64,977,312 | 20,231,064 | — | — | 128,613,895 | 586,811,787 |
| Depreciation for the period |
— | 8,880,869 | 6,507,580 | 60,416 | 1,685,243 | 1,310,469 | — | — | 26,397,955 | 44,842,534 |
| Disposals | (203,240) | (8,423,387) | (6,925,351) | (20,498) | (1,465) | — | — | — | — | (15,573,941) |
| Transfers and write-offs |
42,108 | 1,588,052 | 7,155 | — | (126,338) | (285,824) | — | — | (2,996,447) | (1,771,295) |
| Adjustments | — | 1,640 | 79,391 | 4,395 | 7,848 | 5,347 | — | — | — | 98,621 |
| Change in the consolidation perimeter |
— | 264,751 | 859,406 | 2,139 | 247,118 | 5,949 | — | — | 1,169,535 | 2,548,897 |
| Closing balance | 3,562,627 | 229,858,304 | 138,852,469 | 3,441,543 | 66,789,717 | 21,267,005 | — | — | 153,184,938 | 616,956,602 |
| Accumulated impairment | ||||||||||
| Opening balance | — | — | — | — | — | 19,460 | — | — | — | 19,460 |
| Closing balance | — | — | — | — | — | 19,460 | — | — | — | 19,460 |
| Net Tangible fixed assets |
32,060,584 | 110,618,196 | 30,231,146 | 165,855 | 5,265,913 | 6,083,227 | 3,612,902 | 4,763,076 | 103,486,680 | 296,287,578 |
| 31.03.2022 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Land and natural resources |
Buildings and other constructions |
Basic equipment | Transport | equipment Office equipment | Other tangible fixed assets |
Tangible fixed assets in progress |
Advance payments to suppliers |
Rights of use | Total | |
| Tangible fixed assets | ||||||||||
| Opening balance | 35,623,210 | 340,476,500 | 169,083,615 | 3,607,398 | 72,055,630 | 27,369,691 | 3,612,902 | 4,763,076 | 256,671,618 | 913,263,640 |
| Acquisitions | — | 236,711 | 169,820 | 641 | 161,750 | 80,344 | 1,753,293 | 668,366 | — | 3,070,925 |
| New contracts | — | — | — | — | — | — | — | — | 13,697,959 | 13,697,959 |
| Disposals | — | — | (408,070) | — | — | — | — | — | — | (408,070) |
| Transfers and write-offs |
— | 304,647 | 3,436,466 | — | — | 7,610 | (517,817) (3,230,905) | (1,134,727) | (1,134,727) | |
| Remeasurements | — | — | — | — | — | — | — | — | 46,868 | 46,868 |
| Adjustments | — | 440 | 19,737 | 227 | 1,607 | 543 | — | — | 1,506 | 24,061 |
| Closing balance | 35,623,210 | 341,018,298 | 172,301,569 | 3,608,266 | 72,218,987 | 27,458,188 | 4,848,377 | 2,200,538 | 269,283,224 | 928,560,656 |
| Accumulated depreciation | ||||||||||
| Opening balance | 3,562,627 | 229,858,304 | 138,852,469 | 3,441,543 | 66,789,717 | 21,267,005 | — | — | 153,184,938 | 616,956,602 |
| Depreciation for the period |
— | 2,293,354 | 1,633,569 | 15,232 | 409,832 | 332,567 | — | — | 6,972,133 | 11,656,688 |
| Disposals | — | — | (406,950) | — | — | — | — | — | — | (406,950) |
| Transfers and write-offs |
— | — | — | — | — | — | — | — | (1,009,578) | (1,009,578) |
| Adjustments | — | 188 | 9,706 | 522 | 773 | 515 | — | — | — | 11,704 |
| Closing balance | 3,562,627 | 232,151,846 | 140,088,794 | 3,457,297 | 67,200,322 | 21,600,086 | — | — | 159,147,493 | 627,208,466 |
| Accumulated impairment | ||||||||||
| Opening balance | — | — | — | — | — | 19,460 | — | — | — | 19,460 |
| Closing balance | — | — | — | — | — | 19,460 | — | — | — | 19,460 |
| Net Tangible fixed assets |
32,060,584 | 108,866,452 | 32,212,774 | 150,969 | 5,018,664 | 5,838,642 | 4,848,377 | 2,200,538 | 110,135,730 | 301,332,730 |
The depreciation recorded in the Group amounting to 11,656,888 Euros (10,994,881 Euros on 31 March 2021), is booked under the heading Depreciation/amortization and impairment of investments, net.
In the period ended 31 December 2021, the caption "Changes in the consolidation perimeter" refers to the balances of the companies HCCM - Outsourcing Investment, S.A. and NewSpring Services, S.A. on the date of its acquisition.
As at 31 March 2022, Land and natural resources and Buildings and other constructions include 482,513 Euros (490,537 Euros as at 31 December 2021), related to land and property in co-ownership with the company MEO – Serviços de Comunicações e Multimédia, S.A..
According to the concession contract in force, at the end of the concession, the assets included in the public and private domain of the State revert automatically, at no cost, to the conceding entity. As the postal network belongs exclusively to CTT, not being a public domain asset, only the assets that belong to the State revert to it, and as such, at the end of the concession CTT will continue to own its assets. The Board of Directors, supported by CTT's accounting records and the statement of Directorate General of Treasury and Finance ("Direção Geral do Tesouro e Finanças"), the entity responsible for the Information System of Public Buildings ("Sistema de Informação de Imóveis do Estado" – SIIE) concludes that CTT's assets do not include any public or private domain assets of the Portuguese State.
As under the concession contract, the grantor does not control any significant residual interest in CTT's postal network and CTT being free to dispose of, replace or encumber the assets that integrate the postal network, IFRIC 12 - Service Concession Agreements is not applicable to the universal postal service concession contract.
During the three-months period ended 31 March 2022, the most significant movements in Tangible Fixed Assets were the following:
Buildings and other constructions:
The movements associated to acquisitions and transfers relate mostly to the capitalization of repairs in own and third parties' buildings of CTT and CTT Expresso.
Basic equipment:
The amount related to acquisitions mainly refers to the upgrade of mail handling machines in the amount of approximately 78 thousand Euros and the acquisition of various postal equipment for an approximate amount of 27 thousand Euros at CTT Expresso.
Office equipment:
The amount relating to acquisitions mainly concerns to the acquisition of several micro-computer equipment for an approximate amount of 18 thousand Euros and the acquisition of furniture in the approximate amount of 24 thousand Euros, at CTT, as well as the acquisition of several micro-computer equipment in the approximate amount of 46 thousand Euros and the acquisition of securities in the amount of approximately 11 thousand Euros at CTT Expresso.
Other tangible fixed assets:
The acquisitions item essentially includes prevention and safety equipment in the amount of approximately 28 thousand Euros and the acquisition of air conditioning equipment for an approximate amount of 39 thousand Euros at CTT.
Rights of Use
The rights of use recognized are detailed as follows, by type of underlying asset:
| 31.12.2021 | ||||||
|---|---|---|---|---|---|---|
| Buildings Vehicles |
Other assets |
Total | ||||
| Tangible fixed assets | ||||||
| Opening balance | 198,020,167 | 31,683,313 | 1,475,027 231,178,507 | |||
| New contracts | 25,753,442 | 2,720,633 | 136,114 | 28,610,189 | ||
| Transfers and write-offs | (5,941,969) | (586,090) | — | (6,528,059) | ||
| Remeasurements | 1,779,709 | — | — | 1,779,709 | ||
| Regularizations | (557,788) | (876) | — | (558,663) | ||
| Changes in the consolidation perimeter | 2,096,605 | 93,330 | — | 2,189,935 | ||
| Closing balance | 221,150,166 | 33,910,310 | 1,611,141 256,671,618 | |||
| Accumulated depreciation | ||||||
| Opening balance | 117,290,196 | 10,510,125 | 813,574 128,613,895 | |||
| Depreciation for the period | 19,348,499 | 6,835,484 | 213,973 | 26,397,955 | ||
| Transfers and write-offs | (2,614,116) | (382,331) | — | (2,996,447) | ||
| Changes in the consolidation perimeter | 1,117,563 | 51,971 | — | 1,169,535 | ||
| Closing balance | 135,142,142 | 17,015,249 | 1,027,547 153,184,938 | |||
| Net Tangible fixed assets | 86,008,024 | 16,895,061 | 583,595 103,486,680 |
| 31.03.2022 | ||||
|---|---|---|---|---|
| Buildings | Vehicles | Other assets |
Total | |
| Tangible fixed assets | ||||
| Opening balance | 221,150,166 | 33,910,310 | 1,611,141 256,671,618 | |
| New contracts | 9,848,141 | 3,849,818 | — | 13,697,959 |
| Transfers and write-offs | (1,071,686) | (63,041) | — | (1,134,727) |
| Remeasurements | 46,868 | — | — | 46,868 |
| Regularizations | 1,506 | — | — | 1,506 |
| Closing balance | 229,974,996 | 37,697,087 | 1,611,141 269,283,224 | |
| Accumulated depreciation | ||||
| Opening balance | 135,142,142 | 17,015,249 | 1,027,547 153,184,938 | |
| Depreciation for the period | 5,067,553 | 1,823,864 | 80,716 | 6,972,133 |
| Transfers and write-offs | (984,889) | (24,688) | — | (1,009,578) |
| Closing balance | 139,224,806 | 18,814,425 | 1,108,263 159,147,494 | |
| Net Tangible fixed assets | 90,750,190 | 18,882,662 | 502,879 110,135,730 |
The depreciation recorded, in the amount of 6,972,133 Euros (6,423,712 Euros on 31 March 2021), is booked under the caption "Depreciation/amortization and impairment of investments, net."
As at 31 December 2021, the amounts related to changes in the consolidation perimeter refer to the incorporation of New Spring Services and HCCM - Outsourcing Investment.
The information on the liabilities associated with these leases as well as the interest expenses can be found disclosed on Debt (Note 18) and Interest expenses and income (Note 24), respectively.
For the three-months period ended 31 March 2022, no interest on loans was capitalized, as no loans were directly identified attributable to the acquisition or construction of an asset that requires a substantial period of time (greater than one year) to reach its status of use.
According to the analysis of impairment signs as at 31 March 2022, no events or circumstances were identified that indicate that the amount for which the Group's tangible fixed assets are recorded may not be recovered.
CTT has in progress an analysis for the possible constitution of a real estate investment fund for its real estate fixed assets profitability. The final and updated market evaluations, according to current market conditions corresponding to these assets, will only be carried out after the decision to implement this initiative, and will determine the selection of the assets to be part of the fund.
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 31 March 2022, amount to 1,374,726 Euros.
5. Intangible assets
During the year ended 31 December 2021 and the three-months period ended 31 March 2022, the movements which occurred in the main categories of the Intangible assets, as well as the respective accumulated amortization, were as follows:
| 31.12.2021 | ||||||
|---|---|---|---|---|---|---|
| Development projects |
Computer Software |
Industrial property |
Other intangible assets |
Intangible assets in progress |
Total | |
| Intangible assets | ||||||
| Opening balance | 4,380,552 133,716,151 | 17,275,736 | 444,739 | 9,208,639 165,025,816 | ||
| Acquisitions | — | 2,269,684 | 1,129,377 | — | 15,279,692 | 18,678,753 |
| Disposals | — | (255,750) | — | — | — | (255,750) |
| Transfers and write-offs | — | 12,620,694 | (102,919) | — (12,621,044) | (103,269) | |
| Adjustments | — | — | 85,168 | — | — | 85,168 |
| Changes in the consolidation perimeter | — | — | 432,868 | 1,053,154 | — | 1,486,022 |
| Closing balance | 4,380,552 148,350,779 | 18,820,229 | 1,497,893 | 11,867,286 184,916,739 | ||
| Accumulated amortization | ||||||
| Opening balance | 4,378,267 | 90,676,717 | 11,509,131 | 444,739 | — 107,008,855 | |
| Amortization for the period | 1,272 | 11,694,901 | 1,366,535 | — | — | 13,062,708 |
| Transfers and write-offs | — | (59) | (102,919) | — | — | (102,978) |
| Adjustments | — | — | 45,958 | — | — | 45,958 |
| Changes in the consolidation perimeter | — | — | 281,178 | 1,053,154 | — | 1,334,332 |
| Closing balance | 4,379,539 102,371,559 | 13,099,884 | 1,497,893 | — 121,348,875 | ||
| Accumulated impairment | ||||||
| Opening balance | — | — | — | — | — | — |
| Impairment losses for the period | — | — | — | — | 60,617 | 60,617 |
| Closing balance | — | — | — | — | 60,617 | 60,617 |
| Net intangible assets | 1,013 | 45,979,220 | 5,720,345 | — | 11,806,669 | 63,507,247 |
| 31.03.2022 | ||||||
|---|---|---|---|---|---|---|
| Development projects |
Computer Software |
Industrial property |
Other intangible assets |
Intangible assets in progress |
Total | |
| Intangible assets | ||||||
| Opening balance | 4,380,552 148,350,779 | 18,820,229 | 1,497,893 | 11,867,286 184,916,739 | ||
| Acquisitions | — | 915,058 | 243,611 | — | 1,696,970 | 2,855,638 |
| Transfers and write-offs | — | 5,487,926 | — | — | (5,487,926) | — |
| Adjustments | — | — | 8,062 | — | (55,000) | (46,938) |
| Closing balance | 4,380,552 154,753,762 | 19,071,902 | 1,497,893 | 8,021,330 187,725,439 | ||
| Accumulated amortization | ||||||
| Opening balance | 4,379,539 102,371,559 | 13,099,884 | 1,497,893 | — 121,348,875 | ||
| Amortization for the period | 319 | 3,285,217 | 385,072 | — | — | 3,670,607 |
| Adjustments | — | 4,658 | — | — | 4,658 | |
| Closing balance | 4,379,858 105,656,776 | 13,489,614 | 1,497,893 | — 125,024,141 | ||
| Accumulated impairment | ||||||
| Opening balance | — | — | — | — | 60,617 | 60,617 |
| Closing balance | — | — | — | — | 60,617 | 60,617 |
| Net intangible assets | 694 | 49,096,987 | 5,582,288 | — | 7,960,713 | 62,640,681 |
The amortization for the period ended 31 March 2022, amounting to 3,670,607 Euros (2,891,132 Euros as at 31 March 2021) was recorded under Depreciation / amortization and impairment of investments, net.
In the period ended 31 December 2021, the caption "Changes in the consolidation perimeter" refers to the balances of the companies HCCM - Outsourcing Investment, S.A. and NewSpring Services, S.A. . on the date of its acquisition.
The caption Industrial property in the includes the license of the trademark "Payshop International" of CTT Contacto, S.A., in the amount of 1,200,000 Euros. This license has an indefinite useful life, therefore it is not amortized, being subject to impairment tests on a minimum annual basis or when there are indications of impairment.
The transfers occurred in the period ended 31 March 2022 from Intangible assets in progress to Computer software refer to IT projects, which were completed during the year.
The amounts of 1,186,512 Euros and 346,624 Euros were capitalized in computer software and in Intangible assets in progress as at 31 December 2021 and 31 March 2022, respectively, related to staff costs incurred in the development of these projects.
During the period ended 31 March 2022, the most significant movements in Intangible assets were the following:
Computer software:
The acquisitions caption mainly books the acquisitions by CTT Expresso of the software "Minerva" in the amount of approximately 197 thousand Euros and of the software "Suppliers Portal" in the amount of approximately 84 thousand Euros, as well as the software "Accipiens" in an approximate amount of 306 thousand Euros in 321 Credit.
Industrial property:
The acquisitions caption essentially includes the acquisitions, by CTT, of "Storage and Backup" licenses in the amount of 80 thousand Euros and "Desk Management" licenses in the amount of approximately 162 thousand Euros.
The intangible assets in progress as at 31 March 2022 refer to IT projects that are being developed, the most significant being the following:
| 31.03.2022 | |
|---|---|
| Digital Factory - software | 1,766,066 |
| OneBiller Solution | 854,287 |
| Digitization Services - Software | 361,830 |
| SAP Hana & Hybris Billing | 266,256 |
| New Ecosystem Operations - Software | 250,907 |
| Centralized Settlement Collections - software | 238,568 |
| Gateway | 233,204 |
| New Mobile App for Field Force | 228,111 |
| Lockers Tuga - Software | 205,544 |
| 4,404,775 |
The Group has not identified any relevant uncertainties regarding the conclusion of ongoing projects, nor about their recoverability.
Most of the projects are expected to be completed in 2022.
Regarding the economic period of 2021, the Group is still identifying and quantifying the expenses incurred, as disclosed in Note 25.
There are no Intangible assets with restricted ownership or any carrying value relative to any Intangible assets which have been given as a guarantee of liabilities.
In the three-months period ended 31 March 2022, no interest on loans was capitalized, as no loans were directly identified attributable to the acquisition or construction of an asset that requires a substantial period of time (greater than one year) to reach its status of use.
Contractual commitments related intangible assets at 31 March 2022, amount to 4,384,569 Euros.
6. Investment properties
During the year ended 31 December 2021 and the three-months period ended 31 March 2022, the Group has the following assets classified as properties:
| 31.12.2021 | ||||
|---|---|---|---|---|
| Land and natural resources |
Buildings and other constructions |
Total | ||
| Investment properties | ||||
| Opening balance | 3,192,033 | 13,282,551 | 16,474,584 | |
| Disposals | (26,832) | (126,599) | (153,431) | |
| Transfers and write-offs | (275,780) | (1,925,784) (2,201,564) | ||
| Closing balance | 2,889,422 | 11,230,168 | 14,119,589 | |
| Accumulated depreciation | ||||
| Opening balance | 202,509 | 8,745,858 | 8,948,368 | |
| Depreciation for the period | — | 216,293 | 216,293 | |
| Disposals | (1,752) | (96,754) | (98,505) | |
| Transfers and write-offs | (42,108) | (1,624,817) | (1,666,925) | |
| Closing balance | 158,649 | 7,240,580 | 7,399,229 | |
| Accumulated impairment | ||||
| Opening balance | — | 450,308 | 450,308 | |
| Impairment for the period | — | (57,372) | (57,372) | |
| Closing balance | — | 392,936 | 392,936 | |
| Net Investment properties | 2,730,773 | 3,596,652 | 6,327,424 |
| 31.03.2022 | ||||
|---|---|---|---|---|
| Land and natural |
Buildings and other constructions |
Total | ||
| resources | ||||
| Investment properties | ||||
| Opening balance | 2,889,422 | 11,230,168 | 14,119,589 | |
| Closing balance | 2,889,422 | 11,230,168 | 14,119,589 | |
| Accumulated depreciation | ||||
| Opening balance | 158,649 | 7,240,580 | 7,399,229 | |
| Depreciation for the period | — | 53,148 | 53,148 | |
| Closing balance | 158,649 | 7,293,728 | 7,452,377 | |
| Accumulated impairment | ||||
| Opening balance | — | 392,936 | 392,936 | |
| Closing balance | — | 392,936 | 392,936 | |
| Net Investment properties | 2,730,773 | 3,543,504 | 6,274,277 |
These assets are not allocated to the Group operating activities, being in the market available for lease.
The market value of these assets, which are classified as investment property, in accordance with the valuations obtained at the end of the fiscal year 2021 which were conducted by independent entities, amounts to 10,345,517 Euros.
On 31 December 2021, the caption Transfers and Write-offs includes the amount of 2,201,564 Euros related to the transfer from Investment Properties, as well as the corresponding accumulated depreciations of 1,666,925 Euros of a group of properties that were again assigned to the operational activity of the Group.
The depreciation for the three-months period ended 31 March 2022, of 53,148 Euros (56,974 Euros on 31 March 2021) was recorded in the caption Depreciation/amortization and impairment of investments, net.
For the three-months period ended 31 March 2022, the rents amount charged by the Group for properties and equipment leases classified as investment properties was 9,769 Euros (31 March 2021: 5,373 Euros).
For the period ended 31 December 2021, impairment losses, amounting to (57,372) Euros, were recorded in the caption "Depreciation/amortization and impairment of investments, net" and are explained by the properties transferred to tangible fixed assets.
7. Companies included in the consolidation
Subsidiary companies
As at 31 December 2021 and 31 March 2022, the parent company, CTT - Correios de Portugal, S.A. and the following subsidiaries were included in the consolidation:
| 31.12.2021 | 31.03.2022 | |||||||
|---|---|---|---|---|---|---|---|---|
| Company name | Place of business |
Head office | Percentage of ownership | Percentage of ownership | ||||
| Direct | Indirect | Total | Direct | Indirect | Total | |||
| Parent company: | ||||||||
| CTT - Correios de Portugal, S.A. | Portugal | Av. D. João II N.º 13 1999-001 Lisboa |
— | — | — | — | — | — |
| Subsidiaries: | ||||||||
| CTT Expresso - Serviços Postais e Logística, S.A. ("CTT Expresso") |
Portugal | Av. D. João II N.º 13 1999-001 Lisboa |
100 | — | 100 | 100 | — | 100 |
| Payshop Portugal, S.A. ("Payshop") | Portugal | Av. D. João II N.º 13 1999-001 Lisboa |
— | 100 | 100 | — | 100 | 100 |
| CTT Contacto, S.A. ("CTT Con") |
Portugal | Av. D. João II N.º 13 1999-001 Lisboa |
100 | — | 100 | 100 | — | 100 |
| CTT Soluções Empresariais, S.A. ("CTT Sol") |
Portugal | Av. D. João II N.º 13 1999-001 Lisboa |
100 | — | 100 | 100 | — | 100 |
| Correio Expresso de Moçambique, S.A. ("CORRE") |
Mozambique | Av. 24 de Julho, Edificio 24, n.º 1097, 3.º Piso, Bairro da Polana Maputo - Moçambique |
50 | — | 50 | 50 | — | 50 |
| Banco CTT, S.A. ("BancoCTT") | Portugal | Av. D. João II N.º 13 1999-001 Lisboa |
100 | — | 100 | 100 | — | 100 |
| Fundo Inovação TechTree ("TechTree") | Portugal | Av Conselheiro Fernando de Sousa, 19 13º Esq 1070-072 Lisboa |
60 | 40 | 100 | 60 | 40 | 100 |
| 321 Crédito - Instituição Financeira de Crédito, S.A. ("321 Crédito") |
Portugal | Av. Duque d'Ávila, 46, 7º B 1050-083 Lisboa |
— | 100 | 100 | — | 100 | 100 |
| HCCM - Outsourcing Investiment, S.A. ("HCCM") |
Portugal | Av. D. João II N.º 13 1999-001 Lisboa |
— | 100 | 100 | — | 100 | 100 |
| NewSpring Services, S.A. ("NSS") |
Portugal | Av. D. João II N.º 13 1999-001 Lisboa |
— | 100 | 100 | — | 100 | 100 |
| CTT IMO - Sociedade Imobiliária, S.A. ("CTTi") |
Portugal | Av. D. João II N.º 13 1999-001 Lisboa |
100 | — | 100 | 100 | — | 100 |
| Open Lockers, S.A. ("Lock") |
Portugal | Av. D. João II N.º 13 1999-001 Lisboa |
26 | 41 | 66 | — | 66 | 66 |
| MedSpring, S.A. ("Med") |
Portugal | Av. D. João II N.º 13 1999-001 Lisboa |
— | — | — | — | 100 | 100 |
In relation to the company CORRE, as the Group has the right to variable returns arising from its involvement and the ability to affect those returns, it is included in the consolidation.
On 25 January 2021, CTT - Correios de Portugal, S.A. subscribed a share capital increase in the subsidiary Banco CTT, S.A., with a cash contribution in the amount of 10,000,000 Euros and with the issue of 10,000,000 new shares with no par value, ordinary, nominative and with an issue value of 1 Euro each. Banco CTT, S.A.'s share capital amounting to 286,400,000 Euros increased to 296,400,000 Euros.
On 30 August 2021, the total share capital of NewSpring Services, S.A. ("NewSpring Services") and its holding HCCM - Outsourcing Investment, S.A. ("HCCM – Outsourcing Investment"), companies operating
in the Business Process Outsourcing (BPO) and Contact Center market were acquired for an amount of 10,573,344 Euros, which amount was fully satisfied by financial settlement on that date.
On 22 December 2021, the entity CTT IMO - Sociedade Imobiliária, S.A., was established with the purpose of the purchase, exchange, sale and lease of real estate, and resale of the acquired assets for this purpose.
On 30 December 2021, the company Open Lockers, S.A was established. This company was the result of a partnership agreement between CTT and YunExpress, the logistics business unit of the Chinese company Zongteng Group, which resulted in the creation of this partnership that aims to manage the business of a locker network for parcel pick-up in Portugal and Spain. CTT holds a 66% majority stake in the new company and YunExpress holds a 34% stake.
As of 31 March 2022, CTT - Correios de Portugal, S.A. and CTT - Soluções Empresariais - S.A. proceeded with the sale of their investments in Open Lockers, S.A., of 25.5% and 15%, respectively, to CTT Expresso - Serviços Postais e Logística, S.A., which now concentrates the CTT Group's investments in the entity. Therefore, this operation did not result in a change in the equity interests held by the Group.
On 9 March 2022, the entity MedSpring, S.A., owned by NewSpring Services, was established, whose corporate purpose is insurance mediation in the category of insurance agent.
Joint ventures
As at 31 December 2021 and 31 March 2022, the Group held the following interests in joint ventures, registered through the equity method:
| Head office | 31.12.2021 | 31.03.2022 | ||||||
|---|---|---|---|---|---|---|---|---|
| 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 Lisboa |
49 | — | 49 | 49 | — | 49 |
| PTP & F, ACE | Portugal | Estrada Casal do Canas Amadora |
51 | — | 51 | 51 | — | 51 |
| Wolfspring, ACE | Portugal | Urbanização do Passil, nº100- A 2890-852 Alcochete |
— | 50 | 50 | — | 50 | 50 |
| MKTPlace - Comércio Eletrónico, S.A ("MKTP") |
Portugal | Rua Eng.º Ferreira Dias 924 Esc. 5 Porto |
50 | — | 50 | — | — | — |
The entity Mktplace - Comércio Eletrónico, S.A., a partnership with Sonae - SGPS, S.A., corresponds to an e-commerce platform that provides integrated services for the intermediation of commercial relations between sellers and consumers. Each shareholder, CTT and Sonae, as at 31 December 2021, owned 50% of the share capital of the referred entity.
On 13 January 2022, the investment in Mktplace - Comércio Eletrónico, SA, (Dott) was sold to Worten - Equipamentos para o Lar, SA. The sale of the investment in Dott, created as an e-commerce benefit with the purpose of promoting the digitization of companies and entry into e-commerce, arise in the context of strengthening the partnership between CTT and Worten in the area of e-commerce. As two logistics companies working to deepen their partnership at the Iberian level, in areas such as instant delivery, several distribution flows for e-commerce and business orders, including fulfilment for sellers on the Worten marketplace, in order to maximize the of the respective businesses.
As of 31 December 2021, the entity Wolfspring ACE became part of the joint ventures whose interests are held by the Group. The interest in this entity is held by New Spring Services (entity that integrated
the consolidation perimeter in this period) and results from a partnership with Reisswolf – Tratamento confidencial e reciclagem de dados e serviços, S.A. for the provision of services in the custody and management archive area.
Associated companies
As at 31 December 2021 and 31 March 2022, the Group held the following interests in associated companies accounted for by the equity method:
| Company name | Place of | 31.12.2021 | 31.03.2022 | |||||
|---|---|---|---|---|---|---|---|---|
| business | Head office | Percentage of ownership | Percentage of ownership | |||||
| Direct | Indirect | Total | Direct | Indirect | Total | |||
| Mafelosa, SL (a) | Espanha | Castellon - Espanha | — | 25 | 25 | — | 25 | 25 |
| Urpacksur, SL (a) | Espanha | Málaga - Espanha | — | 30 | 30 | — | 30 |
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 | % Economic Interest |
Consolidation Method |
|---|---|---|---|---|
| Ulisses Finance No.1 (*) | 2017 | Portugal | 33.9 % | Full |
| Ulisses Finance No.2 (*) | 2021 | Portugal | 0.00040 % | Full |
| Chaves Funding No.8 (*) | 2019 | Portugal | 100 % | Full |
| Next Funding No.1 (*) | 2021 | Portugal | 100 % | Full |
(*) Entities incorporated in the scope of securitisation operations, recorded in the consolidated financial statements in accordance with the Group's continued involvement, determined based on the percentage held in the residual interests (equity piece) of the respective vehicles and to the extent that the Group substantially owns the risks and rewards associated with the underlying assets and has the ability to affect these same risks and rewards
In the consolidated financial statements at 31 December 2021, was included the structured entity Next Funding No.1. This entity was the result of a partnership between Banco CTT and Sonae Financial Services for the financing of the Universo card and the related management of credit risk exposure. The underlying assets of the Next Funding No.1 operation were consolidated and recognized in Banco CTT's consolidated accounts, considering that Banco CTT is i) responsible for all relevant activities inherent to the management of the underlying assets, ii) has exposure to variable income and iii) has the ability to affect its variable returns through the power to manage the relevant activities.
Also in 2021, the CTT Bank Group issued a new securitization operation (Ulisses Finance No. 2) related to the auto loan portfolio originated by 321 Crédito in the amount of 250 million Euros. Considering IFRS10, this operation became part of the Group's consolidation perimeter.
The main impacts of the consolidation of these structured entities on the Group's accounts are the following:
| 31.12.2021 | 31.03.2022 | |
|---|---|---|
| Cash and cash equivalents | 20,092,235 | 20,124,480 |
| Financial assets at fair value through profit and loss (Derivatives) |
2,261,947 | 5,890,053 |
| Financial assets at amortized cost - Credit to Banking clients (Note 10) |
298,716,076 | 301,893,938 |
| Other banking financial liabilities (Debt securities issued) - note 8 |
277,795,753 | 273,560,344 |
Changes in the consolidation perimeter
As of 31 December 2021, the structured entities Next Funding No.1 and Ulisses Finance No.2 was included in the consolidation perimeter.
During the period ended 31 December 2021, the consolidation perimeter was also changed following the acquisition of NewSpring Services and its holding HCCM - Outsourcing Investment. On 16 June 2021, CTT through its subsidiary CTT Soluções Empresariais, S.A. entered into a purchase agreement for the acquisition of the total share capital of these companies, operating in the Business Process Outsourcing (BPO) and Contact Center market.
The acquisition was carried out on 30 August 2021 (transaction closing date), for an initial fixed price of 7,000,000 Euros, subject to adjustments, based on the accounts prepared at the transaction close, related to the net financial debt and working capital of the acquired companies, with the acquisition price of 10,573,344 Euros. Additionally, earnouts were agreed depending on the company's activity over the 2 years following the closing date, based on the achievement of pre-defined objectives for NewSpring Services, including EBITDA targets.
The Group incurred, in 2021, in expenses related to the acquisition of NewSpring Services of 190,716 Euros related to the transaction, namely financial advice and legal costs. These expenses were recorded in the External Supplies and Services item.
The Purchase Price Allocation ("PPA") is ongoing and the Group is still evaluating the assumptions and criteria for the fair value assessment of the assets acquired and the liabilities assumed and will be concluded within the 12 months after the acquisition date as required by IFRS 3 – Business Combinations.
| Initial recognition | |
|---|---|
| Assets acquired (HCCM) | 5,887,230 |
| Liabilities acquired (HCCM) | 50,992 |
| Net assets acquired (HCCM) | 5,836,238 |
| Assets acquired (NSS) | 9,875,561 |
| Assets acquired (NSS) | 6,995,252 |
| Net assets acquired (NSS) | 2,880,309 |
| Net assets acquired (NSS) - CTT-SE Participation (*) | 139,292 |
| Goodwill | 9,097,814 |
| Fair Value of contingent components | 4,500,000 |
| Acquisition Price | 10,573,344 |
Therefore, the initial Goodwill assessed on the date of the acquisition of HCCM - Outsourcing Investment and NewSpring Services was as follows:
(*) Acquistion by CTT-SE of 4.84% of the share capital of NSS, with the remaining 95.16% belonging to HCCM.
The contingent components are related to the earnouts described above, and their fair value was determined based on the best estimate at the operation closing date, subject to revaluation at each reporting date.
It should be noted that the calculated Goodwill, in 2021, was fully allocated to the NewSpring Services Cash Generating Unit, since HCCM – Outsourcing investment has as its sole activity the shareholding management in this entity.
The assets acquired from HCCM – Outsourcing investment and NewSpring Services, as at 30 August 2021, was detailed as follows:
| HCCM – Outsourcing investment | Initial recognition | |||
|---|---|---|---|---|
| Non current assets | ||||
| Tangible fixed assets | 54,118 | |||
| Goodwill | 2,171,673 | |||
| Intangible assets | 70 | |||
| Investments in subsidiaries | 2,736,914 | |||
| Other investments | 4,121 | |||
| Non current assets | 4,966,896 | |||
| Current assets | ||||
| Income tax receivables | 7,498 | |||
| Other current assets | 1,091 | |||
| Prepayments | 3,798 | |||
| Cash and cash equivalents | 907,947 | |||
| Current assets | 920,334 | |||
| Assets acquired (HCCM) | 5,887,230 |
| NewSpring Services | Initial recognition |
|---|---|
| Non current assets | |
| Tangible fixed assets | 1,337,688 |
| Intangible assets | 151,620 |
| Investments in joint ventures | 54,045 |
| Other investments | 221,726 |
| Non current assets | 1,765,079 |
| Current assets | |
| Account receivables | 2,487,856 |
| Other current assets | 1,488,112 |
| Prepayments | 126,647 |
| Cash and cash equivalents | 4,007,867 |
| Current assets | 8,110,482 |
| Assets acquired (NSS) | 9,875,561 |
The detail of accounts receivable from NewSpring Services, as at 30 August 2021, was detailed as follows:
| Initial Recognition | |
|---|---|
| Accounts receivables - National | 2,487,856 |
| Doubtful debts | 51,648 |
| Accumulated Impairment Losses | (51,648) |
| Total | 2,487,856 |
As previously mentioned, the Purchase Price Allocation (PPA) is in progress. The net book value of accounts receivable on the acquisition date amounts to 2,487,856 Euros, with no differences in relation to their fair value within the scope of IFRS 3.
On 22 December 2021, the entity CTT IMO - Sociedade Imobiliária, SA was established and on 30 December 2021 the company Open Lockers, S.A was established, which results from a partnership
agreement between the Group and YunExpress, in which the Group holds a 66% majority stake in the new company and YunExpress, a 34% participation.
During three-months period ended 31 March 2022, the entity MedSpring, S.A. was established, which integrated the consolidation perimeter.
8. Debt securities
As at 31 December 2021 and 31 March 2022, the caption Debt securities, showed the following composition:
| 31.12.2021 | 31.03.2022 | |
|---|---|---|
| Non-current | ||
| Financial assets at fair value through other comprehensive | ||
| income (1) | ||
| Government bonds | — | — |
| Bonds issued by other entities | 4,906,841 | — |
| 4,906,841 | — | |
| Financial assets at amortized cost | ||
| Government bonds | 295,098,611 332,656,264 | |
| Bonds issued by other entities | — | — |
| Impairment | (111,953) | (124,915) |
| 294,986,658 332,531,349 | ||
| 299,893,499 332,531,349 | ||
| Current | ||
| Financial assets at fair value through other comprehensive income (1) |
||
| Government bonds | 849,374 | 844,322 |
| Bonds issued by other entities | 338,695 | 4,922,104 |
| 1,188,069 | 5,766,426 | |
| Financial assets at amortized cost | ||
| Government bonds | 38,795,904 | 39,462,919 |
| Bonds issued by other entities | 386,509 | 7,500,000 |
| Impairment | (8,552) | (10,157) |
| 39,173,861 | 46,952,762 | |
| 40,361,930 | 52,719,188 | |
| 340,255,429 385,250,537 |
(1) As at 31 December 2021 and 31 March 2022 includes the amount of 9,429 Euros and 2,170 Euros, respectively, regarding Accumulated impairment losses.
During 2021, there were carried out sales of debt securities at amortized cost in the amount of 204 million Euros (nominal value) which resulted in a gain of 17,777 thousand Euros. As at 31 March 2022, the increase in debt securities essentially refers to investment in Portuguese, Spanish and Italian debt securities.
For "Financial assets at fair value through other comprehensive income", the changes in fair value are reflected in other comprehensive income.
The analysis of the Financial assets at fair Value through other comprehensive income and the Financial assets at amortized cost, by remaining maturity, as at 31 December 2021 and 31 March 2022 is detailed as follows:
| 31.12.2021 | |||||||
|---|---|---|---|---|---|---|---|
| Current | Non-current | ||||||
| Due within 3 months |
Over 3 months and less than 1 year |
Total | Over 1 year and less than 3 years |
Over 3 years | Total | Total | |
| Financial assets at fair value through other comprehensive income (1) |
|||||||
| Government bonds | |||||||
| National | 4,384 | 844,990 | 849,374 | — | — | — | 849,374 |
| Bonds issued by other entities | |||||||
| National | 338,695 | — | 338,695 | 4,906,841 | — | 4,906,841 | 5,245,536 |
| 343,079 | 844,990 | 1,188,069 | 4,906,841 | — | 4,906,841 | 6,094,910 |
(1) As at 31 December 2021 includes the amount of 3,194 Euros regarding Accumulated impairment losses.
| 31.03.2022 | |||||||
|---|---|---|---|---|---|---|---|
| Current | Non-current | ||||||
| Due within 3 months |
Over 3 months and less than 1 year |
Total | Over 1 year and less than 3 years |
Over 3 years | Total | Total | |
| Financial assets at fair value through other comprehensive income (1) Government bonds |
|||||||
| National | 311,248 | 533,075 | 844,322 | — | — | — | 844,322 |
| Bonds issued by other entities | |||||||
| National | 2,837 | 4,919,267 | 4,922,104 | — | — | — | 4,922,104 |
| 314,085 | 5,452,341 | 5,766,426 | — | — | — | 5,766,426 |
(1) As at 31 March 2022 includes the amount of 2,170 Euros regarding Accumulated impairment losses.
| 31.12.2021 | |||||||
|---|---|---|---|---|---|---|---|
| Current | Non-current | ||||||
| Due within 3 months |
Over 3 months and less than 1 year |
Total | Over 1 year and less than 3 years |
Over 3 years | Total | Total | |
| Financial assets at amortized cost Government bonds |
|||||||
| National | 2,521,147 | 22,264,251 | 24,785,398 | 38,565,156 | 122,194,456 | 160,759,612 | 185,545,010 |
| Foreign | 1,013,181 | 12,997,325 | 14,010,506 | 11,098,271 | 123,240,728 | 134,338,999 | 148,349,505 |
| Bonds issued by other entities | |||||||
| National | 386,509 | — | 386,509 | — | — | — | 386,509 |
| 3,920,837 | 35,261,576 | 39,182,413 | 49,663,427 | 245,435,184 | 295,098,611 | 334,281,023 |
| 31.03.2022 | |||||||
|---|---|---|---|---|---|---|---|
| Current | Non-current | ||||||
| Due within 3 months |
Over 3 months and less than 1 year |
Total | Over 1 year and less than 3 years |
Over 3 years | Total | Total | |
| Financial assets at amortized cost |
|||||||
| Government bonds | |||||||
| National | 2,868,339 | 22,181,891 | 25,050,229 | 38,249,405 | 134,720,303 | 172,969,708 | 198,019,937 |
| Foreign | 12,413,504 | 1,999,186 | 14,412,689 | 11,085,350 | 148,601,206 | 159,686,555 | 174,099,245 |
| Bonds issued by other entities | |||||||
| National | 7,500,000 | — | 7,500,000 | — | — | — | 7,500,000 |
| Foreign | — | — | — | — | — | — | — |
| 22,781,842 | 24,181,077 | 46,962,919 | 49,334,755 | 283,321,509 | 332,656,264 | 379,619,182 |
The impairment losses, for the year ended 31 December 2021 and three-months period ended 31 March 2022, are detailed as follows:
| 31.12.2021 | ||||||
|---|---|---|---|---|---|---|
| Opening balance |
Increases | Reversals | Utilizations | Transfers Closing balance | ||
| Non-current assets | ||||||
| Financial assets at fair value through other comprehensive income |
5,918 | — | (5,019) | — | 1,673 | 2,572 |
| Financial assets at amortized cost | 175,486 | 32,617 | (89,741) | — | (6,410) | 111,952 |
| 181,404 | 32,617 | (94,760) | — | (4,737) | 114,524 | |
| Current assets | ||||||
| Financial assets at fair value through other comprehensive income |
3,511 | — | (1,215) | — | (1,673) | 623 |
| Financial assets at amortized cost | 6,505 | 2,492 | (6,855) | — | 6,410 | 8,552 |
| 10,016 | 2,492 | (8,070) | — | 4,737 | 9,175 | |
| Financial assets at fair value through other comprehensive income |
9,429 | — | (6,235) | — | — | 3,194 |
| Financial assets at amortized cost | 181,991 | 35,109 | (96,595) | — | — | 120,505 |
| 191,420 | 35,109 | (102,830) | — | — | 123,699 |
| 31.03.2022 | ||||||
|---|---|---|---|---|---|---|
| Opening balance |
Increases | Reversals | Utilizations | Transfers Closing balance | ||
| Non-current assets | ||||||
| Financial assets at fair value through other comprehensive income |
2,572 | — | — | — | (2,572) | — |
| Financial assets at amortized cost | 111,952 | 16,630 | (3,158) | — | (510) | 124,915 |
| 114,524 | 16,630 | (3,158) | — | (3,082) | 124,915 | |
| Current assets | ||||||
| Financial assets at fair value through other comprehensive income |
623 | 562 | (1,046) | — | 2,572 | 2,710 |
| Financial assets at amortized cost | 8,552 | 1,352 | (257) | — | 510 | 10,157 |
| 9,175 | 1,914 | (1,303) | — | 3,082 | 12,867 | |
| Financial assets at fair value through other comprehensive income |
3,194 | 562 | (1,046) | — | — | 2,710 |
| Financial assets at amortized cost | 120,505 | 17,982 | (3,415) | — | — | 135,072 |
| 123,699 | 18,544 | (4,461) | — | — | 137,782 |
The impairment of "Financial assets at fair value against other comprehensive income" is reflected in other comprehensive income.
Regarding the movements in impairment losses of Financial assets at fair value through other comprehensive income by stages, for the year ended 31 December 2021 and three-months period ended 31 March 2022, they are detailed as follows:
| 31.12.2021 | 31.03.2022 | ||
|---|---|---|---|
| Stage 1 | Stage 1 | ||
| Opening balance | 9,429 | 3,194 | |
| Change in period: | |||
| Increases due to origination and acquisition | — | 562 | |
| Changes due to change in credit risk | (4,090) | (1,022) | |
| Decrease due to derecognition repayments and disposals | (2,145) | (24) | |
| Impairment - Financial assets at fair value through other comprehensive income |
3,194 | 2,710 |
The reconciliation of accounting movements related to impairment losses is presented below:
| 31.12.2021 | 31.03.2022 | |
|---|---|---|
| Stage 1 | Stage 1 | |
| Opening balance | 9,429 | 3,194 |
| Change in period: | ||
| ECL income statement change for the period | (6,235) | (484) |
| Impairment - Financial assets at fair value through other comprehensive income |
3,194 | 2,710 |
For the impairment losses of Financial assets at amortized cost, the movements by stages, in the year ended 31 December 2021 and three-months period ended 31 March 2022, they are detailed as follows:
| 31.12.2021 | 31.03.2022 | ||
|---|---|---|---|
| Stage 1 | Stage 1 | ||
| Opening balance | 181,991 | 120,505 | |
| Change in period: | |||
| Increases due to origination and acquisition | 35,109 | 10,572 | |
| Changes due to change in credit risk | (78,141) | 4,023 | |
| Decrease due to derecognition repayments and disposals | (18,455) | (28) | |
| Impairment - Financial assets at amortized cost | 120,505 | 135,072 |
The reconciliation of accounting movements related to impairment losses is presented below:
| 31.12.2021 | 31.03.2022 | |
|---|---|---|
| Stage 1 | Stage 1 | |
| Opening balance | 181,991 | 120,505 |
| Change in period: | ||
| ECL income statement change for the period | (61,487) | 14,567 |
| Impairment - Financial assets at amortized cost | 120,505 | 135,072 |
According to the accounting policy in force, the Group regularly assesses whether there is objective evidence of impairment in its financial asset portfolios at fair value through other comprehensive income and other financial assets at amortized cost.
As at 31 December 2021 and 31 March 2022, the caption "Other banking financial assets" and "Other banking financial liabilities" showed the following composition:
| 31.12.2021 | 31.03.2022 | |
|---|---|---|
| Non-current assets | ||
| Loans to credit institutions | 5,239,419 | 4,117,463 |
| Impairment | (1,709) | (1,343) |
| 5,237,710 | 4,116,120 | |
| Current assets | ||
| Investments in credit institutions | 2,350,000 | 4,700,000 |
| Loans to credit institutions | 6,185,069 | 5,869,854 |
| Impairment | (2,197) | (4,778) |
| Other | 2,988,970 | 4,041,597 |
| Impairment | (1,800,306) | (1,801,947) |
| 9,721,536 | 12,804,726 | |
| 14,959,246 | 16,920,846 | |
| Non-current liabilities | ||
| Debt securities issued | 277,760,616 | 273,526,576 |
| 277,760,616 | 273,526,576 | |
| Current liabilities | ||
| Debt securities issued | 35,137 | 33,768 |
| Other | 26,987,725 | 34,993,130 |
| 27,022,862 | 35,026,898 | |
| 304,783,478 | 308,553,474 |
Investments in credit institutions and Loans to credit institutions
Regarding the above-mentioned captions, the scheduling by maturity is as follows:
| 31.12.2021 | 31.03.2022 | |
|---|---|---|
| Up to 3 months | 2,337,172 | 1,722,740 |
| From 3 to 12 months | 6,197,897 | 8,847,114 |
| From 1 to 3 years | 5,239,419 | 4,117,463 |
| Over 3 years | — | — |
| 13,774,489 | 14,687,316 |
The caption "Investments at credit institutions" showed an annual average return of 1.508% (31 December 2021: 1.191%).
Impairment
The impairment losses, in the year ended 31 December 2021 and three-months period ended 31 March 2022, are detailed as follows:
| 31.12.2021 | ||||||
|---|---|---|---|---|---|---|
| Opening balance |
Increases | Reversals | Utilizations | Transfers | Closing balance |
|
| Non-current assets | ||||||
| Investments and loans in credit institutions | 3,712 | 555 | (10,964) | — | 8,406 | 1,709 |
| 3,712 | 555 | (10,964) | — | 8,406 | 1,709 | |
| Current assets | ||||||
| Investments and loans in credit institutions | 23,980 | 713 | (14,090) | — | (8,406) | 2,197 |
| Other | 3,238,971 | 30,268 | (22,533) | (1,446,399) | — | 1,800,307 |
| 3,262,951 | 30,981 | (36,623) | (1,446,399) | (8,406) | 1,802,504 | |
| 3,266,663 | 31,536 | (47,587) | (1,446,399) | — | 1,804,213 |
| 31.03.2022 | ||||||
|---|---|---|---|---|---|---|
| Opening balance |
Increases | Reversals | Utilizations | Transfers | Closing balance |
|
| Non-current assets | ||||||
| Investments and loans in credit institutions | 1,709 | 691 | (205) | — | (852) | 1,343 |
| 1,709 | 691 | (205) | — | (852) | 1,343 | |
| Current assets | ||||||
| Investments and loans in credit institutions | 2,197 | 2,458 | (729) | — | 852 | 4,778 |
| Other | 1,800,306 | 15,567 | — | (13,927) | — | 1,801,947 |
| 1,802,503 | 18,025 | (729) | (13,927) | 852 | 1,806,725 | |
| 1,804,213 | 18,716 | (933) | (13,927) | — | 1,808,068 |
Regarding the movements in impairment losses on investments and loans to credit institutions by stages, in the periods ended on 31 December 2021 and three-months period ended 31 March 2022, they are detailed as follows:
| 31.12.2021 | 31.03.2022 | ||
|---|---|---|---|
| Stage 1 | Stage 1 | ||
| Opening balance | 27,692 | 3,906 | |
| Change in period: | |||
| Increases due to origination and acquisition | 1,261 | 3,149 | |
| Changes due to change in credit risk | (1,067) | (836) | |
| Decrease due to derecognition repayments and disposals | (23,980) | (97) | |
| Impairment | 3,906 | 6,122 |
The reconciliation of accounting movements related to impairment losses is presented below:
| 31.12.2021 | 31.03.2022 | |
|---|---|---|
| Stage 1 | Stage 1 | |
| Opening balance | 27,692 | 3,906 |
| Change in period: | ||
| ECL income statement change for the period | (23,786) | 2,216 |
| Impairment | 3,906 | 6,122 |
Debt securities issued
This caption showed the following composition:
| 31.12.2021 | 31.03.2022 | |
|---|---|---|
| Securitizations | 277,795,753 | 273,560,344 |
| 277,795,753 | 273,560,344 |
As at 31 December 2021 and 31 March 2022, the Debt securities issued are analyzed as follows:
| 31.12.2021 | |||||
|---|---|---|---|---|---|
| Issue | Issue date | Maturity date |
Remuneration | Nominal value |
Book value |
| Ulisses Finance No.1 – Class A | July 2017 | March 2033 | Euribor 1M + 85 b.p. | 10,421,009 | 10,424,113 |
| Ulisses Finance No.1 – Class B | July 2017 | March 2033 Euribor 1M + 160 b.p. | 7,000,000 | 7,001,507 | |
| Ulisses Finance No.1 – Class C | July 2017 | March 2033 Euribor 1M + 375 b.p. | 7,100,000 | 7,106,617 | |
| Ulisses Finance No.2 – Class A | September 2021 |
September 2038 |
Euribor 1M + 70 b.p. 203,700,000 | 205,737,929 | |
| Ulisses Finance No.2 – Class B | September 2021 |
September 2038 |
Euribor 1M + 80 b.p. | 10,000,000 | 9,986,657 |
| Ulisses Finance No.2 – Class C | September 2021 |
September 2038 |
Euribor 1M + 135 b.p. | 20,000,000 | 19,976,063 |
| Ulisses Finance No.2 – Class D | September 2021 |
September 2038 |
Euribor 1M + 285 b.p. | 11,300,000 | 11,290,713 |
| Ulisses Finance No.2 – Class E | September 2021 |
September 2038 |
Euribor 1M + 368 b.p. | 3,700,000 | 3,697,727 |
| Ulisses Finance No.2 – Class F | September 2021 |
September 2038 |
Euribor 1M + 549 b.p. | 1,300,000 | 1,299,790 |
| Ulisses Finance No.2 – Class G | September 2021 |
September 2038 |
Euribor 1M + 500 b.p. | 1,275,000 | 1,274,637 |
| 275,796,009 | 277,795,753 |
| 31.03.2022 | |||||
|---|---|---|---|---|---|
| Issue | Issue date | Maturity date |
Remuneration | Nominal value |
Book value |
| Ulisses Finance No.1 – Class A | July 2017 | March 2033 | Euribor 1M + 85 p.p. | 6,564,038 | 6,565,471 |
| Ulisses Finance No.1 – Class B | July 2017 | March 2033 | Euribor 1M + 160 p.p. |
7,000,000 | 7,001,842 |
| Ulisses Finance No.1 – Class C | July 2017 | March 2033 | Euribor 1M + 375 p.p. |
7,100,000 | 7,106,533 |
| Ulisses Finance No.2 – Class A | September 2021 |
September 2038 |
Euribor 1M + 70 bps | 203,700,000 | 205,580,913 |
| Ulisses Finance No.2 – Class B | September 2021 |
September 2038 |
Euribor 1M + 80 bps | 10,000,000 | 9,987,699 |
| Ulisses Finance No.2 – Class C | September 2021 |
September 2038 |
Euribor 1M + 135 bps |
20,000,000 | 19,978,147 |
| Ulisses Finance No.2 – Class D | September 2021 |
September 2038 |
Euribor 1M + 285 bps |
11,300,000 | 11,291,891 |
| Ulisses Finance No.2 – Class E | September 2021 |
September 2038 |
Euribor 1M + 368 bps |
3,700,000 | 3,698,112 |
| Ulisses Finance No.2 – Class F | September 2021 |
September 2038 |
Euribor 1M + 549 bps |
1,300,000 | 1,299,925 |
| Ulisses Finance No.2 – Class G | September 2021 |
September 2038 |
Euribor 1M + 500 bps |
1,050,000 | 1,049,811 |
| 271,714,038 | 273,560,344 |
During the year ended on 31 December 2021 and three-months period ended 31 March 2022, the movement of this item is as follows:
| 31.12.2021 | |||||
|---|---|---|---|---|---|
| Opening balance |
Issues | Repayments | Other movements |
Closing balance |
|
| Ulisses Finance No.1 | 44,517,924 | — | (19,980,815) | (4,872) 24,532,237 | |
| Ulisses Finance No.2 | — 251,500,000 | (225,000) | 1,988,517 253,263,517 | ||
| 44,517,924 251,500,000 | (20,205,815) | 1,983,644 277,795,753 |
During the period ended 31 December 2021, the movements recorded in "Issues" caption are related with a new securitization operation (Ulisses Finance No. 2) on the auto loan portfolio originated by 321 Crédito. The caption "other movements" includes an amount of 2,314,824 Euros related to the issue premium of Note Class A of Ulisses Finance No.2 and an amount of 350,486 Euros of assembly cost at the amortized cost of Ulisses Finance No.2.
| 31.03.2022 | |||||
|---|---|---|---|---|---|
| Opening balance |
Issues | Repayments | Other movements |
Closing balance |
|
| Ulisses Finance No.1 | 24,532,237 | — | (3,856,971) | (1,420) 20,673,846 | |
| Ulisses Finance No.2 | 253,263,517 | — | (225,000) | (152,019) 252,886,498 | |
| 277,795,753 | — | (4,081,971) | (153,439) 273,560,344 |
The scheduling by maturity regarding this caption is as follows:
| 31.12.2021 | |||||||
|---|---|---|---|---|---|---|---|
| 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 | |
| Securitizations | 35,137 | — | 35,137 | — 277,760,616 | 277,760,616 | 277,795,753 | |
| 35,137 | — | 35,137 | — 277,760,616 | 277,760,616 | 277,795,753 |
| 31.03.2022 | |||||||
|---|---|---|---|---|---|---|---|
| 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 | |
| Securitizations | 33,768 | — | 33,768 | — 273,526,576 | 273,526,576 | 273,560,344 | |
| 33,768 | — | 33,768 | — 273,526,576 | 273,526,576 | 273,560,344 |
Asset securitization
Ulisses Finance No.1
The underlying assets of Ulisses Finance No.1 operations were not derecognised from the balance sheet as the Group substantially maintained the risks and rewards associated with their holding.
The Group guarantees the debt service (servicer) of traditional securitization operations, taking over the collection of assigned credits and channelling the amounts received, for the respective deposit to the credit securitization company.
The Ulisses Finance No.1 operation has an interest rate cap, an interest rate risk mitigation mechanism for the operation and its investors, including the Group, but which was not contracted directly by the Group , but by the issuer of the securitization operation (Sagres – STC, S.A.).
Ulisses Finance No.2
The underlying assets of the Ulisses Finance No.2 operation were not derecognised from the balance sheet as the Group substantially maintained the risks and rewards associated with their holding.
The Group guarantees the debt service (servicer) of traditional securitization operations, taking over the collection of assigned credits and channelling the amounts received, for the respective deposit to the credit securitization company.
The Ulisses Finance No.2 operation incorporates an interest rate cap, an interest rate risk mitigation mechanism for the operation and its investors, including the Group, but which was not contracted directly by the Group, but by the issuer of the securitization transaction (Tagus – STC, S.A.).
Chaves Funding No.8
The underlying assets of the Chaves Funding No.8 operation were not derecognised from the balance sheet as the Group substantially maintained the risks and rewards associated with their holding, insofar as this operation was fully subscribed by the Group.
The Group guarantees the debt service (servicer) of traditional securitization operations, taking over the collection of assigned credits and channelling the amounts received, for the respective deposit to the credit securitization company.
Next Funding No.1
The Next Funding No.1 operation, issued by Tagus – STC, SA in April 2021 and in which Banco CTT is a single investor, has as its underlying asset the credit card balances originated by the Universo credit card issued by Sonae Financial Services . Additionally, Banco CTT grants the operation an overdraft facility (Liquidity Facility) with the sole purpose of acquiring receivables (credit card balances) between the interest payment dates. On each interest payment date (IPD) the balance of the Liquidity Facility will be settled by converting it into the note value.
In the consolidated accounts, taking into account the conditions set out in IFRS 10 (Consolidated Financial Statements), the securitization operation is consolidated, insofar as the Group substantially holds the risks and benefits associated with the underlying assets and is able to affect these same risks and benefits.
The caption other current liabilities primarily record the banking operations' balances pending of financial settlement.
10. Credit to banking clients
As at 31 December 2021 and 31 March 2022, the caption Credit to banking clients was detailed as follows:
| 31.12.2021 | 31.03.2022 | |
|---|---|---|
| Performing loans | 1,560,653,792 | 1,615,775,490 |
| Mortgage Loans | 595,419,629 | 616,120,098 |
| Auto Loans | 660,982,844 | 685,643,088 |
| Credit Cards | 297,943,534 | 308,304,674 |
| Leasings | 4,975,252 | 4,496,868 |
| Overdrafts | 1,332,534 | 1,210,761 |
| Other credits | — | — |
| Overdue loans | 12,345,092 | 13,643,926 |
| Overdue loans - less than 90 days | 1,165,016 | 1,942,136 |
| Overdue loans - more than 90 days | 11,180,076 | 11,701,790 |
| 1,572,998,883 | 1,629,419,415 | |
| Credit risk impairment | (31,090,390) | (34,304,223) |
| 1,541,908,493 | 1,595,115,193 |
The maturity analysis of the Credit to bank clients as at 31 December 2021 and 31 March 2022 is detailed as follows:
| 31.12.2021 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Current | Non-current | ||||||||
| At sight | Due within 3 months |
>3 months - < 1 year |
Overdue Loans |
Total | > 1 year - > 3 years |
Over 3 years | Total | Total | |
| Mortgage loans |
— | 4,529,387 | 13,058,049 | — | 17,587,436 | 35,360,412 542,471,779 577,832,191 | 595,419,626 | ||
| Auto Loans | — | 27,206,248 | 73,256,613 | 9,611,208 110,074,069 | 188,259,391 372,260,592 560,519,983 | 670,594,052 | |||
| Credit Cards | — 297,943,534 | — | 772,542 298,716,076 | — | — | — | 298,716,076 | ||
| Leasings | — | 460,233 | 1,281,167 | 76,935 | 1,818,335 | 2,717,445 | 516,407 | 3,233,852 | 5,052,187 |
| Overdraft | 1,332,534 | — | — | 1,278,857 | 2,611,391 | — | — | — | 2,611,391 |
| Other credits | — | — | — | 605,550 | 605,550 | — | — | — | 605,550 |
| 1,332,534 330,139,402 | 87,595,829 | 12,345,092 431,412,857 | 226,337,248 915,248,778 1,141,586,026 | 1,572,998,883 |
As of 31 December 2021, the Credit Cards caption represents a portfolio of credit cards acquired within the scope of the Universo Partnership with Sonae Financial Services. This portfolio was recognized in the Group's financial statements to the extent that the Group is a sole investor in the Next Funding No.1 securitization operation and, therefore, in compliance with the conditions set out in IFRS 10 - Consolidated Financial Statements, the securitization operation is consolidated.
| 31.03.2022 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Current | Non-current | |||||||||
| At sight | Due within 3 months |
>3 months - < 1 year |
Overdue Loans |
Total | > 1 year - > 3 years |
Over 3 years | Total | Total | ||
| Mortgage loans |
— | 4,683,667 | 13,515,605 | 2,173 | 18,201,445 | 36,781,938 561,138,887 597,920,825 | 616,122,270 | |||
| Auto Loans | — | 28,221,271 | 75,989,704 | 10,523,963 114,734,937 | 195,283,056 386,149,056 581,432,113 | 696,167,050 | ||||
| Credit Cards | — 308,304,674 | — | 1,725,058 310,029,733 | — | — | — | 310,029,733 | |||
| Leasings | — | 415,980 | 1,157,979 | 122,210 | 1,696,169 | 2,456,156 | 466,753 | 2,922,909 | 4,619,079 | |
| Overdraft | 1,210,762 | — | — | 1,270,523 | 2,481,284 | — | — | — | 2,481,284 | |
| Other credits | — | — | — | — | — | — | — | — | — | |
| 1,210,762 341,625,593 | 90,663,288 | 13,643,926 447,143,568 | 234,521,151 947,754,696 1,182,275,847 | 1,629,419,415 |
The breakdown of this heading by type of rate is as follows:
| 31.12.2021 | 31.03.2022 | |
|---|---|---|
| Fixed rate | 926,351,787 | 963,272,315 |
| Floating rate | 646,647,096 | 666,147,101 |
| 1,572,998,883 | 1,629,419,415 | |
| Credit risk impairment | (31,090,390) | (34,304,223) |
| 1,541,908,493 | 1,595,115,193 |
As at 31 December 2021 and 31 March 2022, the analysis of this caption by type of collateral, is presented as follows:
| 31.12.2021 | ||||||
|---|---|---|---|---|---|---|
| Performing Loans |
Overdue Loans | Gross amount | Impairment | Net amount | ||
| Asset-backed Loans | 600,433,555 | 1,510,327 | 601,943,882 | (2,409,164) | 599,534,718 | |
| Other guaranteed Loans |
645,072,323 | 4,775,730 | 649,848,053 | (17,150,161) | 632,697,892 | |
| Unsecured Loans | 315,147,914 | 6,059,034 | 321,206,948 | (11,531,064) | 309,675,884 | |
| 1,560,653,792 | 12,345,092 | 1,572,998,883 | (31,090,389) 1,541,908,494 |
| 31.03.2022 | |||||||
|---|---|---|---|---|---|---|---|
| Performing Loans |
Overdue Loans | Gross amount | Impairment | Net amount | |||
| Asset-backed Loans | 620,647,475 | 95,269 | 620,742,743 | (823,341) | 619,919,403 | ||
| Other guaranteed Loans |
668,666,965 | 5,594,679 | 674,261,644 | (19,874,658) | 654,386,986 | ||
| Unsecured Loans | 326,461,049 | 7,953,978 | 334,415,028 | (13,606,224) | 320,808,804 | ||
| 1,615,775,490 | 13,643,926 | 1,629,419,415 | (34,304,223) 1,595,115,193 |
The credit type analysis of the caption, as at 31 December 2021 and 31 March 2022 is detailed as follows:
| 31.12.2021 | ||||||
|---|---|---|---|---|---|---|
| Performing Loans |
Overdue Loans | Gross amount | Impairment | Net amount | ||
| Mortgage Loans | 595,419,629 | — | 595,419,629 | (596,281) | 594,823,348 | |
| Auto Loans | 660,982,844 | 9,611,208 | 670,594,052 | (22,024,094) | 648,569,958 | |
| Credit Cards | 297,943,534 | 772,542 | 298,716,076 | (6,617,578) | 292,098,498 | |
| Leasings | 4,975,252 | 76,935 | 5,052,186 | (98,307) | 4,953,880 | |
| Overdrafts | 1,332,534 | 1,278,857 | 2,611,391 | (1,148,581) | 1,462,810 | |
| Other credits | — | 605,550 | 605,550 | (605,550) | — | |
| 1,560,653,792 | 12,345,091 | 1,572,998,883 | (31,090,390) 1,541,908,492 |
| 31.03.2022 | ||||||
|---|---|---|---|---|---|---|
| Performing Loans |
Overdue Loans | Gross amount Impairment |
Net amount | |||
| Mortgage Loans | 616,120,098 | 2,173 | 616,122,270 | (664,097) | 615,458,174 | |
| Auto Loans | 685,643,088 | 10,523,963 | 696,167,051 | (24,273,570) | 671,893,480 | |
| Credit Cards | 308,304,674 | 1,725,058 | 310,029,733 | (8,135,794) | 301,893,938 | |
| Leasings | 4,496,868 | 122,210 | 4,619,078 | (91,168) | 4,527,910 | |
| Overdrafts | 1,210,761 | 1,270,523 | 2,481,284 | (1,139,594) | 1,341,690 | |
| Other credits | — | — | — | — | — | |
| 1,615,775,490 | 13,643,926 | 1,629,419,415 | (34,304,223) 1,595,115,193 |
The analysis of credit to bank clients as at 31 December 2021 and 31 March 2022, by sector of activity, is as follows:
| 31.12.2021 | |||||
|---|---|---|---|---|---|
| Performing Loans |
Overdue Loans |
Gross amount | Impairment | Net amount | |
| Companies | 56,009,899 | 1,584,427 | 57,594,325 | (2,227,312) | 55,367,014 |
| Agriculture, forestry and fishing | 4,233,937 | 38,988 | 4,272,925 | (131,975) | 4,140,950 |
| Mining and quarrying | 694,899 | 211 | 695,109 | (4,777) | 690,333 |
| Manufacturing | 6,007,208 | 137,158 | 6,144,366 | (173,610) | 5,970,756 |
| Water supply | 123,735 | — | 123,735 | (230) | 123,506 |
| Construction | 9,894,287 | 300,665 | 10,194,952 | (386,725) | 9,808,227 |
| Wholesale and retail trade | 10,126,222 | 428,000 | 10,554,222 | (530,948) | 10,023,274 |
| Transport and storage | 4,168,460 | 87,594 | 4,256,054 | (115,008) | 4,141,046 |
| Accommodation and food service activities |
4,182,495 | 90,792 | 4,273,288 | (146,261) | 4,127,027 |
| Information and communication | 644,625 | 421 | 645,046 | (4,991) | 640,054 |
| Financial and insurance activities | 307,998 | 2,231 | 310,229 | (3,766) | 306,463 |
| Real estate activities | 1,706,577 | 2,052 | 1,708,628 | (21,028) | 1,687,600 |
| Professional, scientific and technical activities |
1,657,181 | 8,011 | 1,665,192 | (45,590) | 1,619,602 |
| Administrative and support service activities |
3,471,167 | 329,223 | 3,800,390 | (379,908) | 3,420,482 |
| Education | 721,135 | 575 | 721,711 | (9,691) | 712,019 |
| Human health services and social work activities |
1,305,341 | 14,931 | 1,320,271 | (23,464) | 1,296,808 |
| Arts, entertainment and recreation | 897,261 | 73,013 | 970,274 | (65,933) | 904,342 |
| Other services | 5,867,371 | 70,562 | 5,937,933 | (183,407) | 5,754,525 |
| Individuals | 1,504,643,890 | 10,760,664 | 1,515,404,554 | (28,863,077) 1,486,541,477 | |
| Mortgage Loans | 595,515,589 | — | 595,515,589 | (598,198) | 594,917,391 |
| Consumer Loans | 909,128,301 | 10,760,664 | 919,888,965 | (28,264,879) | 891,624,086 |
| 1,560,653,792 | 12,345,091 | 1,572,998,883 | (31,090,390) 1,541,908,493 |
| 31.03.2022 | |||||
|---|---|---|---|---|---|
| Performing Loans |
Overdue Loans |
Gross amount | Impairment | Net amount | |
| Companies | 58,021,072 | 1,133,440 | 59,154,511 | (1,802,652) | 57,351,862 |
| Agriculture, forestry and fishing | 4,739,454 | 60,113 | 4,799,567 | (131,630) | 4,667,937 |
| Mining and quarrying | 806,664 | 961 | 807,626 | (12,298) | 795,329 |
| Manufacturing | 6,007,745 | 163,041 | 6,170,786 | (189,196) | 5,981,590 |
| Water supply | 109,403 | — | 109,403 | (217) | 109,186 |
| Construction | 10,339,280 | 307,741 | 10,647,020 | (426,969) | 10,220,052 |
| Wholesale and retail trade | 10,320,411 | 141,276 | 10,461,687 | (191,895) | 10,269,792 |
| Transport and storage Accommodation and food service activities |
4,379,942 4,440,129 |
97,044 90,494 |
4,476,986 4,530,623 |
(153,924) (176,143) |
4,323,062 4,354,480 |
| Information and communication | 656,475 | 421 | 656,896 | (4,222) | 652,674 |
| Financial and insurance activities | 278,497 | 3,214 | 281,711 | (10,353) | 271,358 |
| Real estate activities | 1,675,899 | 4,716 | 1,680,615 | (25,784) | 1,654,831 |
| Professional, scientific and technical activities |
1,629,444 | 10,572 | 1,640,016 | (57,230) | 1,582,786 |
| Administrative and support service activities |
3,433,085 | 56,005 | 3,489,090 | (119,487) | 3,369,603 |
| Public administration and defence, compulsory social security |
17,048 | — | 17,048 | (338) | 16,710 |
| Education | 708,514 | 862 | 709,375 | (11,782) | 697,593 |
| Human health services and social work activities |
1,336,538 | 15,283 | 1,351,821 | (23,733) | 1,328,089 |
| Arts, entertainment and recreation | 939,268 | 92,418 | 1,031,686 | (71,690) | 959,996 |
| Other services | 6,203,276 | 89,279 | 6,292,555 | (195,761) | 6,096,794 |
| Individuals | 1,557,754,417 | 12,510,487 | 1,570,264,903 | (32,501,572) 1,537,763,331 | |
| Mortgage Loans | 616,214,505 | 2,173 | 616,216,678 | (665,983) | 615,550,695 |
| Consumer Loans | 941,539,912 | 12,508,314 | 954,048,225 | (31,835,589) | 922,212,636 |
| 1,615,775,489 | 13,643,927 | 1,629,419,414 | (34,304,224) 1,595,115,193 |
The total credit portfolio, split by stage according to IFRS 9, is analysed as follows:
| 31.12.2021 | 31.03.2022 | |
|---|---|---|
| Stage 1 | 1,428,289,210 | 1,470,455,142 |
| Gross amount | 1,434,762,828 | 1,477,468,467 |
| Impairment | (6,473,618) | (7,013,326) |
| Stage 2 | 82,564,071 | 92,528,346 |
| Gross amount | 87,166,648 | 97,819,440 |
| Impairment | (4,602,577) | (5,291,094) |
| Stage 3 | 31,055,213 | 32,131,705 |
| Gross amount | 51,069,407 | 54,131,508 |
| Impairment | (20,014,194) | (21,999,803) |
| 1,541,908,493 | 1,595,115,193 |
The caption "credit to bank clients" includes the effect of traditional securitization transactions, carried out through securitization vehicles, consolidated pursuant to IFRS 10.
The caption credit to bank clients includes the following amounts related to finance leases contracts:
| 31.12.2021 | 31.03.2022 | |
|---|---|---|
| Amount of future minimum payments | 5,352,218 | 4,850,394 |
| Interest not yet due | (376,966) | (353,526) |
| Present value | 4,975,252 | 4,496,868 |
The amount of future minimum payments of lease contracts, by maturity terms, is analyzed as follows:
| 31.12.2021 | 31.03.2022 | |
|---|---|---|
| Due within 1 year | 2,106,914 | 1,969,212 |
| Due between 1 to 5 years | 2,727,068 | 2,408,011 |
| Over 5 years | 518,236 | 473,170 |
| Amount of future minimum payments | 5,352,218 | 4,850,394 |
The analysis of financial leases contracts, by type of client, is presented as follows:
| 31.12.2021 | 31.03.2022 | |
|---|---|---|
| Individuals | 622,998 | 571,241 |
| Home | 91,154 | 89,514 |
| Others | 531,844 | 481,727 |
| Companies | 4,352,254 | 3,925,627 |
| Equipment | 198,954 | 193,140 |
| Real Estate | 4,153,300 | 3,732,487 |
| 4,975,252 | 4,496,868 |
Impairment losses
During year ended on 31 December 2021 and three-months period ended 31 March 2022, the movement under the Accumulated impairment losses caption (Note 13) was as follows:
| 31.12.2021 | |||||||
|---|---|---|---|---|---|---|---|
| Opening balance |
Increases | Reversals | Utilizations | Transfers | Other adjustments |
Closing balance |
|
| Non-current assets | |||||||
| Credit to banking clients |
11,245,242 | 14,707,276 | (7,614,585) | (343,835) (2,967,630) | 575,237 | 15,601,705 | |
| 11,245,242 | 14,707,276 | (7,614,585) | (343,835) (2,967,630) | 575,237 | 15,601,705 | ||
| Current assets | |||||||
| Credit to banking clients |
5,419,841 | 14,600,735 | (7,559,425) | (341,345) | 2,797,807 | 571,071 | 15,488,685 |
| 5,419,841 | 14,600,735 | (7,559,425) | (341,345) | 2,797,807 | 571,071 | 15,488,685 | |
| 16,665,083 | 29,308,011 | (15,174,010) | (685,180) | (169,822) | 1,146,308 | 31,090,390 |
| 31.03.2022 | |||||||
|---|---|---|---|---|---|---|---|
| Opening balance |
Increases | Reversals | Utilizations | Transfers | Other adjustments |
Closing balance |
|
| Non-current assets | |||||||
| Credit to banking clients |
15,601,706 | 4,197,522 | (2,355,345) | (297,635) | (323,543) | 34,770 | 16,857,474 |
| 15,601,706 | 4,197,522 | (2,355,345) | (297,635) | (323,543) | 34,770 | 16,857,474 | |
| Current assets | |||||||
| Credit to banking clients |
15,488,685 | 4,344,251 | (2,437,679) | (308,039) | 323,543 | 35,987 | 17,446,748 |
| 15,488,685 | 4,344,251 | (2,437,679) | (308,039) | 323,543 | 35,987 | 17,446,748 | |
| 31,090,391 | 8,541,773 | (4,793,024) | (605,674) | — | 70,757 | 34,304,223 |
The impairment losses of Credit to banking clients (net of reversals) for the period ended 31 March 2022 amounted to 1,441,733 Euros (1,441,733 Euros as of 31 March 2021) was booked in the caption "Impairment of other financial banking assets."
The movements in impairment losses by stages, in the year ended on 31 December 2021 and threemonths period ended 31 March 2022, they are detailed as follows:
| 31.12.2021 | ||||
|---|---|---|---|---|
| Stage 1 | Stage 2 | Stage 3 | Total | |
| Opening balance | 4,161,745 | 2,224,575 | 10,278,763 | 16,665,083 |
| Change in period: | ||||
| Increases due to origination and acquisition |
3,754,079 | 2,937,210 | 2,506,799 | 9,198,088 |
| Changes due to change in credit risk | (1,623,295) | (369,984) | 8,187,354 | 6,194,075 |
| Decrease due to derecognition repayments and disposals |
(407,088) | (154,824) | (696,251) | (1,258,163) |
| Write-offs | — | — | (685,180) | (685,180) |
| Transfers to: | ||||
| Stage 1 | 1,011,657 | (360,513) | (651,144) | — |
| Stage 2 | (203,586) | 1,686,749 | (1,483,163) | — |
| Stage 3 | (164,668) | (1,481,613) | 1,646,281 | — |
| Foreign exchange and other | (55,226) | 120,976 | 910,736 | 976,486 |
| Impairment | 6,473,618 | 4,602,577 | 20,014,195 | 31,090,390 |
| Of which: POCI | — | — | 1,462,841 | 1,462,841 |
Changes due to changes in exposure or risk parameters verified in the period ended 31 December 2021 are fundamentally due to the entry into force of the new definition of Default by EBA.
| 31.03.2022 | ||||
|---|---|---|---|---|
| Stage 1 | Stage 2 | Stage 3 | Total | |
| Opening balance | 6,473,619 | 4,602,577 | 20,014,195 | 31,090,391 |
| Change in period: | ||||
| Increases due to origination and acquisition |
795,115 | 66,115 | 12,962 | 874,193 |
| Changes due to change in credit risk | (736,418) | 1,193,434 | 2,728,223 | 3,185,239 |
| Changes due to modifications without derecognition |
— | — | — | — |
| Decrease due to derecognition repayments and disposals |
(112,266) | (45,772) | (152,645) | (310,683) |
| Write-offs | — | — | (605,674) | (605,674) |
| Changes due to update in the institution's methodology for estimation |
— | — | — | — |
| Transfers to: | ||||
| Stage 1 | 1,003,114 | (563,868) | (439,247) | — |
| Stage 2 | (400,977) | 967,548 | (566,572) | — |
| Stage 3 | (13,060) | (875,993) | 889,053 | — |
| Foreign exchange and other | 4,198 | (52,948) | 119,507 | 70,757 |
| Impairment | 7,013,326 | 5,291,094 | 21,999,803 | 34,304,223 |
| Of which: POCI | — | — | 1,037,130 | 1,037,130 |
The reconciliation of accounting movements related to impairment losses is presented below:
| 31.12.2021 | ||||
|---|---|---|---|---|
| Stage 1 | Stage 2 | Stage 3 | Total | |
| Opening balance | 4,161,745 | 2,224,575 | 10,278,763 | 16,665,083 |
| Change in period: | ||||
| ECL income statement change for the period |
1,723,696 | 2,412,403 | 9,997,902 | 14,134,001 |
| Stage transfers (net) | 643,403 | (155,377) | (488,026) | — |
| Write-offs | — | — | (685,180) | (685,180) |
| Foreign exchange and other | (55,226) | 120,976 | 910,736 | 976,486 |
| Impairment | 6,473,619 | 4,602,577 | 20,014,194 | 31,090,390 |
| 31.03.2022 | ||||
|---|---|---|---|---|
| Stage 1 | Stage 2 | Stage 3 | Total | |
| Opening balance | 6,473,619 | 4,602,577 | 20,014,195 | 31,090,391 |
| Change in period: | ||||
| ECL income statement change for the period |
(53,569) | 1,213,778 | 2,588,540 | 3,748,749 |
| Stage transfers (net) | 589,078 | (472,313) | (116,765) | — |
| Write-offs | — | — | (605,674) | (605,674) |
| Foreign exchange and other | 4,198 | (52,948) | 119,507 | 70,757 |
| Impairment | 7,013,326 | 5,291,094 | 21,999,803 | 34,304,223 |
11. Prepayments
As at 31 December 2021 and 31 March 2022, the Prepayments included in current assets and current and non-current liabilities showed the following composition:
| 31.12.2021 | 31.03.2022 | |
|---|---|---|
| Prepaid Assets | ||
| Current | ||
| Rents payable | 1,469,876 | 1,543,173 |
| Meal allowances | 1,402,305 | 1,394,237 |
| Other | 5,853,753 | 8,165,747 |
| 8,725,934 | 11,103,156 | |
| Prepaid Liabilities | ||
| Non-current | ||
| Investment subsidy | 272,088 | 269,288 |
| 272,088 | 269,288 | |
| Current | ||
| Investment subsidy | 11,201 | 11,201 |
| Contractual liabilities | 1,360,862 | 2,652,217 |
| Other | 2,080,178 | 1,809,731 |
| 3,452,241 | 4,473,149 | |
| 3,724,329 | 4,742,437 |
The change in the caption Other assets prepayments essentially results from the renewal of software license contracts and insurance contracts.
The "Contractual liabilities" essentially refer to amounts related to stamps and prepaid postage of priority mail in the amount of 2,039,647 Euros (151,948 Euros on 31 December 2021), whose revenue is expected to be recognized in April 2022 (estimate of 80% of the item's value) and the remaining during 2022, and to objects invoiced and not delivered on 31 March 2022 in the express segment, in the amount of 612,570 Euros (1,208,914 Euros as of 31 December 2021), whose revenue is recognized upon delivery in the following month.
The revenue recognized in the period, included in the balance of Contractual liabilities at the beginning of the period amounted to 1,085,447 Euros.
No "Assets resulting from contracts" associated with the application of IFRS 15 - Revenue from contracts with customers were recognized.
12. Cash and cash equivalents
As at 31 December 2021 and 31 March 2022, cash and cash equivalents correspond to the amount of cash, sight deposits, term deposits and cash investments on the monetary market, net of bank overdrafts and equivalent short-term bank financing, and is detailed as follows:
| 31.12.2021 | 31.03.2022 | ||
|---|---|---|---|
| Cash | 95,963,001 | 62,723,499 | |
| Slight deposits | 86,975,064 | 115,388,043 | |
| Demand deposits at Bank of Portugal | 593,160,283 | 538,241,882 | |
| Deposits in other credit institutions | 34,251,584 | 43,109,541 | |
| Term deposits | 67,522,764 | 6,723,026 | |
| Cash and cash equivalents (Balance sheet) |
877,872,696 | 766,185,991 | |
| Sight deposits at Bank of Portugal | (19,937,800) | (21,263,500) | |
| Outstanding checks / Checks clearing | (1,002,263) | (5,503,166) | |
| Impairment of slight and term deposits | 24,913 | 6,762 | |
| Cash and cash equivalents (Cash flow statement) |
856,957,546 | 739,426,088 |
The caption "Sight deposits at Bank of Portugal" includes mandatory deposits in order to meet the legal requirements to maintain a minimum cash reserve in accordance with the provisions of Regulation (EU) No. 1358/2011 of European Central Bank of 14 December 2011, which states that the minimum cash requirements kept as demand deposits at Bank of Portugal amounts to 1% of deposits and other liabilities. As of the reserve counting period started on 30 October 2019, the ECB introduced the tiering regime, in which the balance with the Central Bank in excess of the minimum cash reserves, up to a calculated maximum of 6 times the reserves, is remunerated at the central bank lending rate.
Therefore, the item Demand deposits at Bank of Portugal includes, as at 31 March 2022, a total amount of demand deposits of 538,241,882 Euros (31 December 2021: 593,160,283 Euros), of which 21,263,500 Euros (31 December 2021: 19,937,800 Euros) were allocated to the fulfilment of the above mentioned mandatory minimum cash requirements at Banco de Portugal.
The caption "Outstanding checks/ Checks clearing" represents checks drawn by third parties on other credit institutions, which are in collection.
Impairment
In the year ended on 31 December 2021 and three-months period ended 31 March 2022, the movement recorded under the caption "Impairment of sight and term deposits" (Note 13) related to the Group is detail as follows:
| 31.12.2021 | ||||||
|---|---|---|---|---|---|---|
| Group | Opening balance |
Increases | Reversals | Utilizations Closing balance | ||
| Sight and term deposits | 17,510 | 11,433 | (4,028) | — | 24,913 | |
| 17,510 | 11,433 | (4,028) | — | 24,913 |
| 31.03.2022 | ||||||
|---|---|---|---|---|---|---|
| Group | Opening balance |
Increases | Reversals | Utilizations Closing balance | ||
| Sight and term deposits | 24,913 | 2,395 | (20,546) | — | 6,762 | |
| 24,913 | 2,395 | (20,546) | — | 6,762 |
The Impairment losses (increases net of reversals) for the period ended 31 March 2022 in the amount of 18,151 Euros (8,916 Euros as of 31 March 2021) were recorded under the caption "Impairment of accounts receivable (losses/reversals)" ".
13. Accumulated impairment losses
During the year ended on 31 December 2021 and three-months period ended 31 March 2022, the following movements occurred in the impairment losses:
| 31.12.2021 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Group | Opening balance |
Increases | Reversals | Utilizations | Transfers | Changes in the consolidation |
Other movements |
Closing balance |
| Non-current assets | perimeter | |||||||
| Tangible fixed assets | 19,460 | — | — | — | — | — | — | 19,460 |
| Investment properties | 450,308 | — | (57,372) | — | — | — | — | 392,936 |
| Intangible assets | — | 60,617 | — | — | — | — | — | 60,617 |
| 469,768 | 60,617 | (57,372) | — | — | — | — | 473,013 | |
| Debt securities at fair value through other comprehensive income |
5,918 | — | (5,019) | — | 1,673 | — | — | 2,572 |
| Debt securities at amortised cost |
175,485 | 32,617 | (89,741) | — | (6,410) | — | — | 111,953 |
| Other non-current assets | 2,538,985 | — | — | — | 210,025 | — | — | 2,749,010 |
| Credit to banking clients | 11,245,241 | 14,707,276 | (7,614,585) | (3,118,702) (2,967,630) | — | 3,350,104 | 15,601,705 | |
| Other banking financial assets |
3,712 | 555 | (10,964) | — | 8,406 | — | — | 1,709 |
| 13,969,341 | 14,740,448 | (7,720,309) | (3,118,702) (2,753,935) | — | 3,350,104 | 18,466,949 | ||
| 14,439,109 | 14,801,065 | (7,777,681) | (3,118,702) (2,753,935) | — | 3,350,104 | 18,938,962 | ||
| Current assets | ||||||||
| Accounts receivable | 39,633,843 | 4,209,818 | (2,588,327) | (1,423,383) | — | 51,648 | — | 39,883,599 |
| Credit to banking clients | 5,419,841 | 14,600,735 | (7,559,425) | (3,096,110) 2,797,807 | — | 3,325,837 | 15,488,685 | |
| Debt securities at fair value through other comprehensive income |
3,511 | — | (1,215) | — | (1,673) | — | — | 623 |
| Debt securities at amortised cost |
6,505 | 2,492 | (6,855) | — | 6,410 | — | — | 8,551 |
| Other current assets | 10,052,551 | 995,992 | (267,494) | (245,159) | (210,024) | — | — | 10,325,865 |
| Other banking financial assets |
3,262,950 | 30,981 | (36,623) | (1,446,399) | (8,406) | — | — | 1,802,503 |
| Slight and term deposits | 17,509 | 11,433 | (4,028) | — | — | — | — | 24,913 |
| 58,396,710 | 19,851,451 (10,463,967) | (6,211,051) 2,584,113 | 51,648 | 3,325,837 | 67,534,740 | |||
| Non-current assets held for sale |
282,778 | 14,234 | (132,572) | — | — | — | — | 164,441 |
| 282,778 | 14,234 | (132,572) | — | — | — | — | 164,441 | |
| Merchandise | 2,525,086 | 680,033 | (743) | (72,971) | — | — | — | 3,131,405 |
| Raw, subsidiary and consumable |
847,331 | 128,297 | (8,329) | (99,631) | — | — | — | 867,668 |
| 3,372,417 | 808,331 | (9,072) | (172,602) | — | — | — | 3,999,073 | |
| 62,051,906 | 20,674,015 (10,605,611) | (6,383,653) 2,584,113 | 51,648 | 3,325,837 | 71,698,254 | |||
| 76,491,014 | 35,475,080 (18,383,292) | (9,502,356) | (169,822) | 51,648 | 6,675,941 | 90,638,216 |
In April 2021, Banco CTT and Sonae Financial Services started a new partnership in consumer credit through the financing of Universo card credit and the respective management of exposure to credit risk. As at 31 December 2021, the credit card portfolio had a value of 298,716,076 Euros and an increase in impairment of 6,617,578 Euros, which justifies the increase in impairment increases in 2021.
| 31.03.2022 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Opening | Changes in the consolidation |
Other | Closing | |||||
| Group | balance | Increases | Reversals | Utilizations | Transfers | perimeter | movements | balance |
| Non-current assets | ||||||||
| Tangible fixed assets | 19,460 | — | — | — | — | — | — | 19,460 |
| Investment properties | 392,936 | — | — | — | — | — | — | 392,936 |
| Intangible assets | 60,617 | — | — | — | — | — | — | 60,617 |
| 473,013 | — | — | — | — | — | — | 473,013 | |
| Debt securities at fair value through other comprehensive income |
2,572 | — | — | — | (2,572) | — | — | — |
| Debt securities at amortised cost |
111,953 | 16,630 | (3,158) | — | (510) | — | — | 124,915 |
| Other non-current assets | 2,749,010 | — | — | — | 42,380 | — | — | 2,791,390 |
| Credit to banking clients | 15,601,705 | 4,197,522 | (2,355,345) | (297,635) | (323,543) | — | 34,770 | 16,857,474 |
| Other banking financial assets |
1,709 | 691 | (205) | — | (852) | — | — | 1,343 |
| 18,466,949 | 4,214,842 | (2,358,708) | (297,635) | (285,097) | — | 34,770 | 19,775,122 | |
| 18,939,963 | 4,214,842 | (2,358,708) | (297,635) | (285,097) | — | 34,770 | 20,248,136 | |
| Current assets | ||||||||
| Accounts receivable | 39,883,599 | 983,720 | (136,192) | (167,756) | — | — | 652 | 40,564,023 |
| Credit to banking clients | 15,488,685 | 4,344,251 | (2,437,679) | (308,039) | 323,543 | — | 35,987 | 17,446,748 |
| Debt securities at fair value through other comprehensive income |
623 | 562 | (1,046) | — | 2,572 | — | — | 2,711 |
| Debt securities at amortised cost |
8,551 | 1,352 | (257) | — | 510 | — | — | 10,157 |
| Other current assets | 10,325,865 | 436,742 | (126,406) | (74,503) | (42,380) | — | — | 10,519,318 |
| Other banking financial assets |
1,802,503 | 18,025 | (729) | (13,927) | 852 | — | — | 1,806,725 |
| Slight and term deposits | 24,914 | 2,395 | (20,545) | — | — | — | — | 6,764 |
| 67,534,740 | 5,787,048 | (2,722,853) | (564,226) | 285,097 | — | 36,639 | 70,356,445 | |
| Non-current assets held for sale |
164,441 | 395 | (1,175) | — | — | — | — | 163,661 |
| 164,441 | 395 | (1,175) | — | — | — | — | 163,661 | |
| Merchandise | 3,131,405 | — | (79,325) | (5,543) | — | — | — | 3,046,538 |
| Raw, subsidiary and consumable |
867,668 | — | (22,930) | — | — | — | — | 844,738 |
| 3,999,073 | — | (102,255) | (5,543) | — | — | — | 3,891,276 | |
| 71,698,254 | 5,787,442 | (2,826,283) | (569,768) | 285,097 | — | 36,639 | 74,411,382 | |
| 90,638,216 | 10,002,284 | (5,184,990) | (867,403) | — | — | 71,410 | 94,659,517 |
The amounts classified as "Other movements", with reference to 31 December 2021 and 31 March 2022, refer to the movements resulting from adjustments to POCI credits (Purchase or Originated Credit Impaired) regarding the acquisition of 321 Crédito on 1 May 2019, according to IFRS 3 - Business Combinations.
14. Equity
As at 31 March 2022, the Company share capital was composed of 150,000,000 shares with the nominal value of 0.50 Euros each. The share capital is fully underwritten and paid-up.
As at 31 December 2021 and 31 March 2022 the Company's shareholders with greater than or equal to 2% shareholdings, according to the information reported, are as follows:
| Shareholders | Number of | Nominal Value | |||
|---|---|---|---|---|---|
| Shares % Share Capital | |||||
| Manuel Champalimaud SGPS, S.A. (1) | 19,330,084 | 12.887% | 9,665,042 | ||
| Manuel Carlos de Melo Champalimaud | 353,185 | 0.235% | 176,593 | ||
| Manuel Carlos de Melo Champalimaud (1) | Total | 19,683,269 | 13.122% | 9,841,635 | |
| Global Portfolio Investments, S.L. (2) | 15,057,937 | 10.039% | 7,528,969 | ||
| Indumenta Pueri, S.L. (2) | Total | 15,057,937 | 10.039% | 7,528,969 | |
| GreenWood Builders Fund I, LP (3) | 10,025,000 | 6.683% | 5,012,500 | ||
| GreenWood Investors LLC (3) | Total | 10,025,000 | 6.683% | 5,012,500 | |
| Green Frog Investments Inc | Total | 7,730,000 | 5.153% | 3,865,000 | |
| Norges Bank | Total | 3,105,287 | 2.070% | 1,552,644 | |
| Bestinver Gestión S.A. SGIIC (4) | Total | 3,024,366 | 2.016% | 1,512,183 | |
| CTT, S.A. (own shares) (5) | Total | 1,500,001 | 1.000% | 750,001 | |
| Remaining shareholders | Total | 89,874,140 | 59.916% | 44,937,070 | |
| TOTAL | 150,000,000 | 100.000% | 75,000,000 |
31.12.2021
(1) Includes 19,246,815 shares held by Manuel Champalimaud SGPS, S.A. and 83,269 shares held by the members of its Board of Directors of which Duarte Palma Leal Champalimaud, Non-Executive Director of CTT, is Vice-Chairman. Qualified shareholding directly and indirectly attributable to Manuel Carlos de Melo Champalimaud.
(2) Global Portfolio Investments, S.L. is controlled by Indumenta Pueri, S.L.
(3) GreenWood Investors, LLC, of which Steven Duncan Wood, Non-Executive Director of CTT, is Managing Member, exercises the voting rights not in its own name but on behalf of GreenWood Builders Fund I, LP as its management company. The full chain of controlled undertakings through which the voting rights are held includes GreenWood Investors, LLC and GreenWood Performance Investors, LLC.
(4) Bestinver Gestión S.A. SGIIC is a Spanish fund management company. As such, it exercises the voting rights attached to the shares property of the investment institutions it manages and represents. Additionally, Bestinver Gestión, S.A. SGIIC has been granted a power of attorney to exercise the voting rights attached to the shares under the property of the pension funds managed by Bestinver Pensiones EGFP, S.A..
(5) Shares held by CTT following the conclusion, as at 22 June 2021, of the trading in the context of the share Buy-back Program, the main terms and conditions of which may be found in the announcement regarding the start of trading within the Buy-back Program disclosed to the market on 17 May 2021, (see press releases available on CTT website, at https://www.ctt.pt/grupoctt/investidores/comunicados/index?topic=informacao&year=2021&search=).
| Shareholders | Number of | Shares % Share Capital | Nominal Value | |
|---|---|---|---|---|
| Manuel Champalimaud SGPS, S.A. (1) | 19,330,084 | 12.887% | 9,665,042 | |
| Manuel Carlos de Melo Champalimaud | 353,185 | 0.235% | 176,593 | |
| Manuel Carlos de Melo Champalimaud (1) | Total | 19,683,269 | 13.122% | 9,841,635 |
| Global Portfolio Investments, S.L. (2) | 15,057,937 | 10.039% | 7,528,969 | |
| Indumenta Pueri, S.L. (2) | Total | 15,057,937 | 10.039% | 7,528,969 |
| GreenWood Builders Fund I, LP (3) | 10,025,000 | 6.683% | 5,012,500 | |
| GreenWood Investors LLC (3) | Total | 10,025,000 | 6.683% | 5,012,500 |
| Green Frog Investments Inc | Total | 7,730,000 | 5.153% | 3,865,000 |
| Norges Bank | Total | 3,105,287 | 2.070% | 1,552,644 |
| Bestinver Gestión S.A. SGIIC (4) | Total | 3,024,366 | 2.016% | 1,512,183 |
| CTT, S.A. (own shares) (5) | Total | 1,950,859 | 1.000% | 975,430 |
| Remaining shareholders | Total | 89,423,282 | 59.916% | 44,711,641 |
| TOTAL | 150,000,000 | 100.000% | 75,000,000 |
31.03.2022
(1) Includes 19,246,815 shares directly held by Manuel Champalimaud, SGPS, S.A. and 83,269 shares held by the members of its Board of Directors, which is vice-chaired by Duarte Palma Leal Champalimaud, Non-executive Director of CTT. Qualified shareholding directly and indirectly attributable to Manuel Carlos de Melo Champalimaud.
(2) Global Portfolio Investments, S.L. is controlled by Indumenta Pueri, S.L..
(3) GreenWood Investors, LLC, of which Steven Wood, Non-Executive member of the Board of Directors of CTT, is a Managing Member, exercises the voting rights not in its own name but on behalf of the fund GreenWood Builders Fund I, LP as its management company. The full chain of controlled undertakings through which the voting rights are held includes GreenWood Investors, LLC and GreenWood Performance Investors, LLC.
- (4) Bestinver Gestión S.A. SGIIC is a Spanish fund management company. As such, it exercises the voting rights attached to the shares property of the investment institutions it manages and represents. Additionally, Bestinver Gestión, S.A. SGIIC has been granted a power of attorney to exercise the voting rights attached to the shares under the property of the pension funds managed by Bestinver Pensiones EGFP, S.A..
- (5) Shares held by CTT as at 31 March 2022, as a result of the transactions carried out in the context of the share Buy-back Program, the main terms and conditions of which may be found in the announcement regarding the start of trading within the Buy-back Program disclosed to the market on 16 March 2022, (see press releases available on CTT website, at https://www.ctt.pt/grupoctt/investidores/comunicados/index?topic=informacao&year=2022&search=).
15. Own shares, Reserves, Other changes in equity and Retained earnings
Own shares
The commercial legislation regarding own shares requires that a non-distributable reserve must be created for the same amount of the acquisition price of such shares. This reserve is not available for distribution while the shares stay in the Company's possession. In addition, the applicable accounting standards determine that the gains or losses obtained with the sale of such shares are recognized in reserves.
As of 31 March 2022, the following movements were made in the caption "Own Shares":
| Quantity | Amount | Average Price | |
|---|---|---|---|
| Balance 31 December 2021 |
1,500,001 | 6,404,963 | 4.27 |
| Acquisitions | 450,858 | 2,037,003 | 4.51 |
| Balance 31 March 2022 | 1,950,859 | 8,441,966 | 4.33 |
As at 31 March 2022, CTT held 1,950,859 own share, with a nominal value of 0.50€, being all the inherent rights suspended pursuant to article 324 of the Portuguese Companies Code.
At the Company's Board of Directors meeting held on 16 March 2022, it was unanimously decided to approve the implementation of a buyback program for CTT's own shares ("Buyback Program"), including the related terms and conditions, and in accordance with the deliberation limits within the scope of the General Meeting of shareholders of CTT, held on 21 April 2021, under which the acquisition and disposal of own shares by the Company and its subsidiaries was authorized, under the terms defined by the Board of Directors.
The sole purpose of the Buyback Program is to reduce CTT share capital by extinguishing the own shares acquired under the program, in accordance with the proposed capital reduction to be presented by the Board of Directors to the 2022 Annual General Meeting. The reduction in CTT's share capital to be implemented for these purposes was therefore approved by the CTT General Meeting, held on 21 April 2022.
The maximum number of shares to be acquired within the scope of the Buyback Program will be 4,650,000 CTT ordinary shares, representing up to 3.1% of the respective share capital and corresponding to the maximum number of shares that, under the terms of the capital reduction proposal submitted by the Board of Directors to the 2022 Annual General Meeting of CTT and approved at the same, they will be extinguished in the context of the capital reduction that constitutes the purpose of this program. The maximum cash amount of the Buyback Program will be 18,000,000 Euros.
The Buyback Program will last until 18 December 2022 and started on 17 March 2022, without prejudice to ending on an earlier date if the maximum number of shares to be acquired or the maximum monetary amount of the Buyback Program are reached.
In the context of the share buyback program as of 31 March 2022, the Company had already acquired 450,858 shares. As a result, as of 31 March 2022, considering as acquired shares those whose financial settlement took place until 31 March 2022. As a result, as of 31 March 2022, the Company held, as a result of the acquisition operations indicated herein, an accumulated total of 1,950,859 treasury shares, representing 1.30% of the share capital, including 1,500,001 treasury shares previously acquired.
Own shares held by CTT are within the limits established by the Articles of Association of the Company and by the Portuguese Companies Code. These shares are recorded at acquisition cost.
Reserves
As at 31 December 2021 and 31 March 2022, the caption "Reserves" showed the following composition
| : | |||||
|---|---|---|---|---|---|
| 31.12.2021 | |||||
| Legal reserves Own shares reserves | Fair Value reserves |
Other reserves | Total | ||
| Opening balance | 15,000,000 | 8 | 83,330 | 50,836,597 | 65,919,935 |
| Own shares acquisition | — | 6,404,954 | — | (6,404,954) | — |
| Assets fair value | — | — | (56,584) | — | (56,584) |
| Share Plan | — | — | — | 1,215,000 | 1,215,000 |
| Closing balance | 15,000,000 | 6,404,963 | 26,746 | 45,646,642 | 67,078,351 |
| 31.03.2022 | |||||
|---|---|---|---|---|---|
| Legal reserves Own shares reserves | Fair Value reserves |
Other reserves | Total | ||
| Opening balance | 15,000,000 | 6,404,963 | 26,746 | 45,646,642 | 67,078,351 |
| Own shares acquisition | — | 2,037,003 | — | (2,037,003) | — |
| Assets fair value | — | — | (1,398) | — | (1,398) |
| Share Plan | — | — | — | 405,000 | 405,000 |
| Closing balance | 15,000,000 | 8,441,966 | 25,348 | 44,014,639 | 67,481,953 |
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 (CTT, S.A.)
As at 31 March 2022, this caption includes the amount of 8,441,966 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.
In the three-months period ended 31 March 2022, a reserve in the total amount of 405,000 Euros was recorded related with the stock option plan, as described in the note 23 - Staff Costs.
Retained earnings
During the year ended on 31 December 2021 and three-months period ended 31 March 2022, the following movements were made in caption "Retained earnings":
| 31.12.2021 | 31.03.2022 | |
|---|---|---|
| Opening balance | 39,962,419 | 43,904,074 |
| Application of the net profit of the prior year | 16,669,309 | 38,404,113 |
| Distribution of dividends | (12,750,000) | — |
| Adjustments from the application of the equity | 22,345 | 19,392 |
| Other movements | — | |
| Closing balance | 43,904,074 | 82,327,579 |
Other changes in equity
The actuarial gains/losses associated to post-employment benefits, as well as the corresponding deferred taxes, are recognized in this caption.
During the year ended on 31 December 2021 and three-months period ended 31 March 2022,, the movements occurred in this caption were as follows:
| 31.12.2021 | 31.03.2022 | |
|---|---|---|
| Opening balance | (47,600,236) | (43,998,612) |
| Actuarial gains/losses | 4,999,158 | — |
| Tax effect (Note 25) | (1,397,534) | — |
| Closing balance | (43,998,612) | (43,998,612) |
16. Dividends
According to the dividend distribution proposal included in the 2020 Annual Report, at the General Meeting of Shareholders, which was held on 21 April 2021, a dividend distribution of 12,750,000 Euros, corresponding to a dividend per share of 0.085 Euros, regarding the financial year ended 31 December 2020 was proposed and approved. The dividend amount assigned to own shares was transferred to Retained earnings, amounting to 0.085 Euros.
According to the dividend distribution proposal included in the 2021 Annual Report, at the General Meeting of Shareholders, which was held on 21 April 2022, a dividend distribution of 17,820,000 Euros, corresponding to a dividend per share of 0.12 Euros, regarding the financial year ended 31 December 2021 was proposed and approved. The dividend amount assigned to own shares will be transferred to Retained earnings.
17. Earnings per share
During the three-months periods ended 31 March 2021 and 31 March 2022, the earnings per sharewere calculated as follows:
| Group | 31.03.2021 | 31.03.2022 |
|---|---|---|
| Net income for the period | 8,700,423 | 5,388,750 |
| Average number of ordinary shares | 149,999,999 | 149,001,324 |
| Earnings per share | ||
| Basic | 0.06 | 0.04 |
| Diluted | 0.06 | 0.04 |
The average number of shares is detailed as follows:
| 31.03.2021 | 31.03.2022 | |
|---|---|---|
| Shares issued at begining of the period | 150,000,000 | 150,000,000 |
| Own shares effect | 1 | 998,676 |
| Average number of shares during the period | 149,999,999 | 149,001,324 |
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 31 March 2022, the number of own shares held is 1,950,859 and its average number for the year ended 31 March 2022 is 998,676, reflecting the fact that no acquisitions or sales/attribution have occurred in the given period, as mentioned in note 27.
There are no dilutive factors of earnings per share.
18. Debt
As at 31 December 2021 and 31 March 2022, the Debt caption showed the following composition:
| 31.12.2021 | 31.03.2022 | |
|---|---|---|
| Non-current liabilities | ||
| Bank loans | 62,161,852 | 62,138,996 |
| Lease liabilities | 87,174,586 | 92,065,950 |
| 149,336,438 | 154,204,946 | |
| Current liabilities | ||
| Bank loans | 22,169,000 | 22,300,743 |
| Confirming | 1,500,152 | 1,714,799 |
| Lease liabilities | 28,113,860 | 29,578,374 |
| 51,783,012 | 53,593,915 | |
| 201,119,450 | 207,798,861 |
As at 31 March 2022, the interest rates applied to bank loans were between 1.00% and 1.875% (31 December 2021: 1.00% and 1.875%).
Bank loans
| 31.12.2021 | 31.03.2022 | |||||
|---|---|---|---|---|---|---|
| Amount used | Amount used | |||||
| Limit | Current | Non-current | Limit | Current | Non-current | |
| Bank loans | ||||||
| Millennium BCP | 12,673,148 | 8,054,480 | 1,100,926 | 12,592,593 | 8,063,966 | 1,020,370 |
| BBVA / Bankinter | 40,375,000 | 6,958,272 | 33,121,646 | 47,500,000 | 6,958,272 | 33,157,958 |
| Novo Banco | 35,000,000 | 7,029,645 | 27,939,280 | 35,000,000 | 7,193,708 | 27,960,668 |
| Caixa Geral de depósitos |
126,470 | 126,603 | — | 84,314 | 84,798 | — |
| Banco Montepio | 25,000,000 | — | — | — | — | — |
| Bankinter Confirming |
2,200,000 | 1,500,152 | 2,200,000 | 1,714,799 | — | |
| 115,374,618 | 23,669,152 | 62,161,852 | 97,376,907 | 24,015,543 | 62,138,996 |
As at 31 December 2021 and 31 March 2022, the details of the bank loans were as follows:
On 27 September 2017, a financing contract between CTT and BBVA and Bankinter was signed, for an initial period of 5 years and for a total amount of 90 million Euros, with the possibility of using the funds until September 2018. As no amount was used until the mentioned date, the contract was renegotiated on 27 September 2018, having the total amount been altered to 75 million Euros, while maintaining the one-year term for the use of the funds. As at 31 March 2022, the referred used amount corresponded to 40,116,230 Euros. By the Group decision, the remaining available amount will not be used.
On 22 April 2019, a simple credit agreement was signed between CTT and Novo Banco for a period of 60 months, with a grace period of two years, and may be extended for a period of 24 months, for a total amount of 35 million Euros. As at 31 March 2022, the 35 million Euros were used and are presented in the statement of financial position net of commissions and added by the amount of interests to be paid in the following period, in the total amount of 35,154,376 Euros.
On 21 May 2020, a Commercial Paper Issue Placement Agreement was signed with Banco Montepio in the maximum amount of 25 million Euros, with a term of 3 years, renewable for the same period. As of 31 December 2021 no amount was used. As no available amount was used, the contract was discontinued and no amount was available on 31 March 2022.
Bank loans obtained are subject to compliance with financial covenants, namely clauses of Cross default, Negative Pledge and Assets Disposal's limits. Additionally, the loans obtained also require compliance with rations of Net Debt over EBITDA and financial autonomy. Compliance with financial covenants is regularly monitored by the Group and is measured by counterparties on an annual basis based on the Financial Statements as at 31 December. As at 31 December 2021, the Group is in compliance with financial covenants.
Lease Liabilities
The Group presents lease liabilities which future payments, undiscounted and discounted amounts presented in the financial position, are detailed as follows:
| 31.12.2021 | 31.03.2022 | |
|---|---|---|
| Due within 1 year | 30,860,141 | 32,046,950 |
| Due between 1 to 5 years | 66,579,734 | 66,629,145 |
| Over 5 years | 28,808,052 | 34,204,456 |
| Total undiscounted lease liabilities |
126,247,928 | 132,880,551 |
| Current | 28,113,860 | 29,578,374 |
| Non-current | 87,174,586 | 92,065,950 |
| Lease liabilities included in the statement of financial position |
115,288,445 | 121,644,323 |
The amounts recognized in the income statement are detailed as follows:
| 31.03.2021 | 31.03.2022 | |
|---|---|---|
| Lease Liabilities interests (note 24) | 764,361 | 733,266 |
| Variable payments not included in the measurement of the lease liability | 480,351 | 502,139 |
The amounts recognized in the Cash flow statement are as follows:
| 31.12.2021 | 31.03.2022 | |
|---|---|---|
| Total of lease payments | (7,443,849) | (7,990,527) |
The movement in the rights of use underlying these lease liabilities can be analyzed in note 4.
Reconciliation of Changes in the responsibilities of Financing activities
The reconciliation of changes in the responsibilities of financing activities as of 31 December 2021 and 31 March 2022, is detailed as follows:
| 31.12.2021 | 31.03.2022 | |
|---|---|---|
| Opening Balance | 206,866,753 | 201,119,450 |
| Changes in the consolidation perimeter | 2,667,159 | — |
| Movements without cash | 35,383,531 | 18,560,965 |
| Contract changes | 26,291,146 | 13,618,591 |
| IFRS 16 Interests | 3,066,925 | 733,266 |
| Others | 6,025,460 | 4,209,108 |
| Loans: | ||
| Inflow | 100,261,411 | 33,934,486 |
| Outflow | (110,777,850) | (34,189,027) |
| Confirming: | ||
| Inflow | — | — |
| Outflow | (2,938,473) | (3,636,486) |
| Lease liabilities: | ||
| Inflow | — | — |
| Outflow | (30,343,081) | (7,990,527) |
| Closing balance | 201,119,450 | 207,798,861 |
19. Provisions, Guarantees provided, Contingent liabilities and commitments
Provisions
For the year ended on 31 December 2021 and three-months period ended 31 March 2022 in order to face legal proceedings and other liabilities arising from past events the Group recognized provisions, which showed the following movement:
| 31.12.2021 | |||||||
|---|---|---|---|---|---|---|---|
| Group | Opening balance |
Increases | Reversals | Utilizations | Transfers | Regularizations | Closing balance |
| Non-current provisions |
|||||||
| Litigations | 3,003,416 | 1,254,601 | (1,383,155) | (90,046) | 49,983 | — | 2,834,799 |
| Restructuring | 1,083,347 | — | (964,524) | (123,823) | — | 5,000 | — |
| Other provisions | 10,402,877 | 686,564 | (3,623,942) | (83,435) | (67,983) | — | 7,314,082 |
| Commitment provisions |
— | 211,465 | (67,125) | — | 169,822 | — | 314,163 |
| Sub-total - caption "Provisions (increases)/revers |
14,489,641 | 2,152,630 | (6,038,746) | (297,304) | 151,822 | 5,000 | 10,463,043 |
| als" Restructuring |
163,800 | 9,341,409 | (13,145) | (36,328) | (8,000,000) | — | 1,455,737 |
| Other provisions | 2,762,913 | 41,951 | — | (44,123) | — | — | 2,760,741 |
| 17,416,354 | 11,535,990 | (6,051,891) | (377,755) | (7,848,178) | 5,000 | 14,679,520 |
| 31.03.2022 | |||||||
|---|---|---|---|---|---|---|---|
| Group | Opening balance |
Increases | Reversals | Utilizations | Transfers | Regularizations | Closing balance |
| Non-current provisions |
|||||||
| Litigations | 2,834,799 | 662,336 | (363,529) | (65,756) | 213,598 | — | 3,281,447 |
| Restructuring | — | — | — | — | — | — | — |
| Other provisions | 7,314,082 | 460,512 | (81,557) | 122 | (213,598) | 102,344 | 7,581,905 |
| Commitment provisions |
314,163 | 17,045 | (36,507) | — | — | — | 294,701 |
| Sub-total - caption "Provisions (increases)/revers als" |
10,463,043 | 1,139,893 | (481,593) | (65,634) | — | 102,344 | 11,158,052 |
| Restructuring | 1,455,737 | — | (50,000) | — | (1,250,000) | (102,344) | 53,393 |
| Other provisions | 2,760,741 | — | — | — | — | — | 2,760,741 |
| 14,679,520 | 1,139,893 | (531,593) | (65,634) | (1,250,000) | — | 13,972,186 |
The net amount between increases and reversals of provisions was recorded in the consolidated income statement under the caption Provisions, net and amounted to (3,886,116) Euros as at 31 December 2021 and 658,302 Euros as at 31 March 2022.
A provision should only be used for expenditures for which the provision was originally recognized, so the Group reverse the provision when it is no longer probable that an outflow of resources that incorporate future economic benefits will be necessary to settle the obligation.
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 1,383,155 Euros as at 31 December 2021 and 363,529 Euros as at 31 March 2022, essentially results from lawsuits whose decision, which was made known in the course of 2021 or 2022, respectively, proved to be favourable to the Group, or, not being favourable, resulted in the condemnation to pay amounts that proved to be lower than the estimated amounts (and reflected in this provision item).
Restructuring
In June 2021, CTT approved a new HR optimization program considering the need to optimize teams. This program presumed the launch of a Voluntary Exit Program based on the signing of Suspension or Pre-Retirement Agreements. As at 31 December 2021, a provision in the amount of 9,341,409 Euros was booked, which was recognized under Staff costs caption in the income statement. As at 31 December 2021, regarding the agreements performed at this date, an amount of 8,000,000 Euros was transferred to the caption employee benefits in the statement of financial position. As at 31 March 2022, regarding the agreements performed during 2022, an amount of 1,250,000 Euros was transferred to the caption employee benefits in the statement of financial position.
Other provisions
As at 31 March 2022, the provision to cover any contingencies relating to labour litigation proceedings not included in the current court proceedings related to remuneration differences that can be claimed by workers, amounts to 3,834,594 Euros (3,916,051 as at 31 December 2021). The amount of the provision corresponds to the Group's best estimate for the outflow.
As at 31 March 2022, a provision is recognized in CTT Expresso branch in Spain to face the notification issued by the Spanish National Commission on Markets and Competition. This process was originated during the year 2016, based on the alleged contrary action to article 1 of the Law 15/2017 ("Law on Competition Defense") and article 101º of the Treaty on the Functioning of the European Union ("TFUE"). This notification amounts to 3,148,845 Euros and has already been subject of an appeal to the Spanish Audiencia Nacional (National High Court). Regarding this matter, Tourline (currently designated as CTT Expresso branch in Spain) submitted a formal request to the coercive measure suspension, and the request was accepted under the condition of a guarantee presentation – a procedure that was duly and timely adopted by Tourline. The amount provisioned, of 1,400,000 Euros, is the result of the evaluation carried out by its legal advisors and the Group is awaiting the outcome of the process and it is not possible to anticipate a deadline for resolution.
The amount provisioned in 321 Crédito, S.A. amounting to 741,601 Euros as at 31 March 2022 (741,641 Euros at 31 December 2021) mainly results from the management assessment regarding the possibility of materializing tax contingencies and other processes.
As at 31 March 2022, in addition to the previously mentioned situations, this caption also includes:
- the amount of 537,510 Euros to cover costs of dismantlement of tangible fixed assets and/or removal of facilities and restoration of the site;
- the amount of 550,000 Euros, which arise from the assessment made by the management regarding the possibility of tax contingencies;
- the amount of 309,007 Euros regarding the liability, recognized in the company CTT Expresso, with a labor legal proceeding;
- the amount of 1,972,779 Euros to cover costs of operational vehicles restoration.
Commitments provisions
Commitments provisions refer to provisions for indirect credit. As at 31 December 2021, a credit impairment transfer in the amount of 169,822 Euros was made to provisions (note 10).
Guarantees provided
As at 31 December 2021 and 31 March 2022, the Group has provided bank guarantees to third parties as follows:
| 31.12.2021 | 31.03.2022 | |
|---|---|---|
| Contencioso Administrativo da Audiência Nacional (National | ||
| Audience Administrative Litigation) and CNMC - Comision Nacional de los Mercados y la Competencia - Espanha (National |
3,148,845 | 3,148,845 |
| Commission on Markets and Competition - Spain) | ||
| Autoridade Tributária e Aduaneira (Portuguese Tax and Customs | ||
| Authority) | 2,917,205 | 2,917,205 |
| PLANINOVA - Soc. Imobiliária, S.A. (Real estate company) | 2,033,582 | 2,033,582 |
| LandSearch, Compra e Venda de Imóveis (Real estate company) | 1,792,886 | 1,792,886 |
| Fidelidade, Multicare, Cares - (Glintt BPO) | 1,022,834 | 1,022,834 |
| AMBIMOBILIÁRIA- INVESTIMENTOS E NEGÓCIOS, S.A. (Real | ||
| estate company) | 480,000 | 480,000 |
| MARATHON (Closed investment fund) | 432,000 | 432,000 |
| O Feliz - Imobiliaria (Real estate company) | 369,932 | 369,932 |
| Courts | 339,230 | 339,230 |
| EUROGOLD (Real estate company) | — | 318,299 |
| CIVILRIA (Real estate company) | 224,305 | 224,305 |
| TRANSPORTES BERNARDO MARQUES , S.A. | 220,320 | 220,320 |
| TIP - Transportes Intermodais do Porto, ACE (Oporto intermodal | ||
| transport) | 150,000 | 150,000 |
| Municipalities | 118,658 | 118,658 |
| EPAL - Empresa Portuguesa de Águas Livres (Multi-municipal | ||
| System of Water Supply and Sanitation of the Lisbon Area) | 68,895 | 68,895 |
| INCM - Imprensa Nacional da Casa da Moeda (Portuguese Mint | ||
| and Official Printing Office) | 85,056 | 68,386 |
| ANA - Aeroportos de Portugal (Airports of Portugal) | 34,000 | 34,000 |
| GNB Companhia de seguros vida SA (Insurance company) | 25,000 | 25,000 |
| Águas do Norte (Water Supply of the Northern Region) | 23,804 | 23,804 |
| Instituto de Gestão Financeira Segurança Social (Social Security | ||
| Financial Management Institute) | 21,557 | 21,557 |
| EMEL, S.A. (Municipal company managing parking in Lisbon) | 19,384 | 19,384 |
| Serviços Intermunicipalizados Loures e Odivelas (Inter-municipal | ||
| Services of Water Supply and Sanitation of the Loures and | 17,000 | 17,000 |
| Odivelas Areas) Direção Geral do Tesouro e Finanças (Directorate General of |
||
| Treasury and Finance) | 16,867 | 16,867 |
| Portugal Telecom, S.A. (Telecommunication Company) | 16,658 | 16,658 |
| 31.12.2021 | 31.03.2022 | |
|---|---|---|
| Refer (Public service for the management of the national railway | ||
| network infrastructure) | 16,460 | 16,460 |
| Other entities | 16,144 | 16,144 |
| SMAS de Sintra (Services of Water Supply and Sanitation of the | ||
| city of Sintra) | 15,889 | 15,889 |
| Repsol (Oil and Gas Company) | 15,000 | 15,000 |
| DOLCE VITA TEJO (Real State Company) | 13,832 | 13,832 |
| Lagos em Forma - Gestão desportiva, E.M., S.A. (Municipal | ||
| company managing sports in Lagos) | 11,000 | 11,000 |
| Águas do Porto, E.M (Services of Water Supply and Sanitation of | ||
| the city of Porto) | 10,720 | 10,720 |
| ADRA - Águas da Região de Aveiro (Services of Water Supply | ||
| and Sanitation of the city of Aveiro) | 10,475 | 10,475 |
| SMAS Torres Vedras (Services of Water Supply and Sanitation | ||
| of the city of Torres Vedras) | 9,910 | 9,910 |
| ACT Autoridade Condições Trabalho (Authority for Working | ||
| Conditions) | 9,160 | 9,160 |
| Consejeria Salud ( Local Health Service/Spain) | 4,116 | 4,116 |
| Instituto do Emprego e Formação Profissional (Employment and | ||
| Professional Training Institute) | 3,719 | 3,719 |
| EMARP - Empresa de Águas e Resíduos de Portimão (Services | ||
| of Water Supply and Sanitation of the city of Portimão) | 3,100 | 3,100 |
| Via Direta | 150,000 | — |
| 13,867,543 | 14,019,172 |
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 3,826,468 Euros as at 31 December 2021 and 31 March 2022.
CTT provided a bank guaranty, on behalf of CTT Expresso branch in Spain, to the Sixth Section of the National Audience Administrative Litigation and to the Spanish National Commission on Markets and Competition ("Comisión Nacional de los Mercados y la Competencia") in the amount of 3,148,845 Euros, while the appeal presented by CTT Expresso branch in Spain in the National Audience in Spain proceeds.
Commitments
As at 31 December 2021 and 31 March 2022., the Group subscribed promissory notes amounting to approximately 41.9 thousand Euros and 42.8 thousand Euros, respectively, for various credit institutions intended to secure complete and timely compliance with the corresponding financing contracts.
The Group also assumed financial commitments (comfort letters) in the amount of 1,170,769 Euros regarding the branch of CTT Expresso in Spain which are still active as at 31 March 2022.
The Group engaged guarantee insurances in the total amount of 4,363,411 Euros(31 December 2021: 4,226,910 Euros), with the purpose of guaranteeing the fulfilment of contractual obligations assumed by third parties. In addition, the Group also assumed commitments relating to real estate rents under lease contracts and rents for other leases.
The Group contractual commitments related to Tangible fixed assets and Intangible assets are detailed respectively in Notes 4 and 5.
20. Accounts payable
As at 31 December 2021 and 31 March 2022, the caption "Accounts payable" showed the following composition:
| 31.12.2021 | 31.03.2022 | |
|---|---|---|
| Current | ||
| Advances from customers | 2,368,197 | 2,386,996 |
| CNP money orders | 51,157,113 | 50,200,535 |
| Suppliers | 88,144,917 | 102,595,450 |
| Invoices pending confirmation | 12,256,372 | 11,210,893 |
| Fixed assets suppliers | 7,008,092 | 5,184,678 |
| Invoices pending confirmation (fixed assets) |
6,300,825 | 2,556,845 |
| Values collected on behalf of third parties |
8,911,160 | 8,942,631 |
| Postal financial services | 156,371,620 | 100,061,762 |
| Deposits | 594,183 | 652,781 |
| Charges | 2,200,392 | 3,829,274 |
| Compensations | 881,108 | 985,337 |
| Postal operators - amounts to be settled |
1,586,135 | 226,704 |
| Amounts to be settled to third parties |
1,919,132 | 1,079,686 |
| Amounts to be settled in stores | 495,269 | 401,868 |
| Other accounts payable | 10,109,816 | 9,660,665 |
| 350,304,332 | 299,976,105 | |
| 350,304,332 | 299,976,105 |
CNP money orders
The value of CNP money orders refers to the money orders received from the National Pensions Center (CNP), whose payment date to the corresponding pensioners will occur in the month after the closing of the financial year.
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 decrease in this caption refers essentially to the amounts charged for taxes, since in 2021 there was a flexibilization of the tax calendar by the tax authority, which allowed the delivery of the tax related to the periodic VAT returns of the month December 2021, for the monthly regime, could be carried out until 30 December, which resulted in temporarily higher balances to be delivered.
21. Banking clients' deposits and other loans
As at 31 December 2021 and 31 March 2022, the composition of the caption Banking clients' deposits and other loans in the Group is as follows:
| 31.12.2021 | 31.03.2022 | |
|---|---|---|
| Sight deposits | 1,485,969,930 | 1,536,355,854 |
| Term deposits | 223,067,357 | 217,498,270 |
| Savings deposits | 412,474,058 | 412,569,111 |
| 2,121,511,345 | 2,166,423,234 |
The above-mentioned amounts relate to Banco CTT clients' deposits. Savings deposits are deposits associated with current accounts and which allow the client to obtain a remuneration above the slight deposits, which can be mobilized at any time, with no subscription limit, and it is possible to schedule transfers from and for this account. These deposits are different from term deposits as they have a definite date of constitution and maturity, and the savings accounts are fully mobilizable without penalty on remuneration.
For the year ended on 31 December 2021 and three-months period ended 31 March 2022 the average rate of return on customer funds was 0.02% (31 December 2021: 0.02%).
As at 31 December 2021 and 31 March 2022, the residual maturity of banking client deposits and other loans, is detailed as follows:
| 31.12.2021 | ||||||
|---|---|---|---|---|---|---|
| No defined maturity |
Due within 3 months |
Over 3 months and less than 1 year |
Over 1 year and less than 3 years |
Over 3 years |
Total | |
| Sight deposits and saving accounts |
1,898,443,987 | — | — | — | — 1,898,443,987 | |
| Term deposits | — 106,310,120 116,757,237 | — | — | 223,067,357 | ||
| 1,898,443,987 106,310,120 116,757,237 | — | — 2,121,511,345 |
| 31.03.2022 | ||||||
|---|---|---|---|---|---|---|
| No defined maturity |
Due within 3 months |
Over 3 months and less than 1 year |
Over 1 year and less than 3 years |
Over 3 years |
Total | |
| Sight deposits and saving accounts |
1,948,924,964 | — | — | — | — 1,948,924,964 | |
| Term deposits | — 143,545,021 | 73,953,248 | — | — | 217,498,270 | |
| 1,948,924,964 143,545,021 | 73,953,248 | — | — 2,166,423,234 |
22. Income taxes receivable /payable
As at 31 March 2022 the caption reflects the estimated income tax regarding 2020, which has not yet been paid, as well as the estimated income tax regarding the three-months period ended 31 March 2022.
23. Staff costs
During three-months periods ended 31 March 2021 and 31 March 2022, the composition of the caption Staff Costs was as follows:
| 31.03.2021 | 31.03.2022 | |
|---|---|---|
| Remuneration | 70,204,232 | 71,652,208 |
| Employee benefits | 1,082,290 | 1,652,877 |
| Indemnities | 249,516 | 238,251 |
| Social Security charges | 15,167,424 | 15,212,086 |
| Occupational accident and health insurance |
1,022,513 | 995,564 |
| Social welfare costs | 1,578,450 | 2,238,380 |
| Other staff costs | 32,783 | 29,439 |
| 89,337,208 | 92,018,805 |
Remuneration of the statutory bodies of CTT, S.A.
During the three-months periods ended 31 March 2021 and 31 March 2022, the fixed and variable remunerations attributed to the members of the statutory bodies of CTT, SA, were:
| 31.03.2021 | ||||||
|---|---|---|---|---|---|---|
| Company | Board of Directors | Audit Comittee | Remuneration Board |
General Meeting of Shareholders |
Total | |
| Short-term remuneration | ||||||
| Fixed remuneration | 717,999 | 39,643 | 4,950 | — | 762,592 | |
| Annual variable remuneration |
— | — | — | — | — | |
| 717,999 | 39,643 | 4,950 | — | 762,592 | ||
| Long-term remuneration | ||||||
| Defined contribution plan RSP |
49,425 | — | — | — | 49,425 | |
| Long-term variable remuneration |
— | — | — | — | — | |
| 49,425 | — | — | — | 49,425 | ||
| 767,424 | 39,643 | 4,950 | — | 812,017 |
| 31.03.2022 | |||||
|---|---|---|---|---|---|
| Company | Board of Directors | Audit Comittee | Remuneration Board |
General Meeting of Shareholders |
Total |
| Short-term remuneration | |||||
| Fixed remuneration | 694,908 | 39,643 | 4,950 | — | 739,501 |
| Annual variable remuneration |
— | — | — | — | — |
| 694,908 | 39,643 | 4,950 | — | 739,501 | |
| Long-term remuneration | |||||
| Defined contribution plan RSP |
49,425 | — | — | — | 49,425 |
| Long-term variable remuneration |
362,143 | — | — | — | 362,143 |
| 411,568 | — | — | — | 411,568 | |
| 1,106,476 | 39,643 | 4,950 | — | 1,151,069 |
Long-term variable remuneration
At the General Meeting held on 21 April 2021, a new Remuneration Regulation for Members of the Statutory Bodies was approved for the 2020-2022 term, which replaces the Regulation in force at that date. This regulation changes the assumptions for the annual variable remuneration (AVR) attribution and changes the long-term variable remuneration (LTVR) terms to a "stock option" mechanism.
Similarly, the Board of Directors put in place a stock options program addressed to CTT's top management, using the same terms of the program approved for the governing bodies members.
The LTVR model through participation in CTT's stock option plan, also depends on the Company's performance and aims to align interests with this performance in a long-term, as follows:
a. The plan sets out the number of options allocated that may be exercised by the Plan's participants (the CEO, the CFO, the remaining executive Directors and the Top Manager), as detailed:
| Number of options - per participant | ||||
|---|---|---|---|---|
| Tranche | CEO | CFO | Other executive Directors |
Strike Price |
| 1 | 700.000 | 400.000 | 300.000 € | 3.00 |
| 2 | 700.000 | 400.000 | 300.000 € | 5.00 |
| 3 | 700.000 | 400.000 | 300.000 € | 7.50 |
| 4 | 700.000 | 400.000 | 300.000 € | 10.00 |
| 5 | 700.000 | 400.000 | 300.000 € | 12.50 |
- b. Awarding, also through the Plan, of 5 tranches of options that differ exclusively by their different strike price;
- c. The number of shares to be received depends on the difference between the strike price and the market price, i.e., the average price, weighted by trading volume, of the Company's shares traded on the Euronext Lisbon regulated market in the sessions held in the 45 days prior to the exercise date (i.e. 1 January 2023);
- d. The LTVR attributed under the plan is subject to the positive evolution of the share price and the positive performance of the Company and to eligibility conditions related to the non-verification
of the situations that give rise to the application of the adjustment mechanisms mentioned below and material breaches of the terms of the plan;
- e. The plan also provides for mechanisms for deferring the exercise of options and retaining shares which result from the combination of two aspects: (i) deferral of exercise date of all options (1 January 2023 considering the end of the 2020/2022 term of office); and (ii) the establishment of a retention period by the Company of part of the shares allocated (throughout the period from the exercise date and the fifth trading day immediately following the end of the month after the date of approval of the accounts for 2024 at the annual general meeting to be held in 2025, or as of 31 May 2025 whichever occurs later).
- f. The Plan for Members of the Statutory Bodies, as a rule, provides for 25% of net cash settlement and 75% of net share settlement of the options, without prejudice to the fact that, on an exceptional basis and in a scenario where the number of own shares held by CTT is not sufficient, the Plan provides for the Remuneration Committee to establish a remuneration mechanism through the awarding of a cash amount and the net cash settlement of the options whose net share settlement is not possible. The plan for governing bodies members provides for 100% of net shares settlement of the options.
The fair value of the options granted was determined through a study carried out by an independent entity on the grant date. The model used for the valuation of the stock plan was the Monte Carlo simulation model.
The amount related to the share plan recognized as at 31 December 2021, amounted to 1,626,429 Euros, with the financial settlement component, recognized under the caption "Employee benefits", in the amount of 411,431 Euros and the component of settlement in instruments recognized under the caption "Other reserves", in the amount of 1,215,000 Euros. In the three-months period ended 31 March 2022, the amount recognized in personnel costs amounted to 542,143 Euros, of which 137,143 Euros corresponds to the cash settlement component and 405,000 Euros correspond to the instrument settlement component.
Following the calculation carried out by an independent entity on 31 December 2021, an amount of 1,447,419 Euros was calculated by reference to the Remuneration Regulation as an estimate of annual variable remuneration for the members of the Governing Bodies, recognized in expenses of the period in 2021.
For the three-months periods ended 31 March 2021 and 31 March 2022, the caption Staff costs includes the amounts of 108,754 Euros and 72,083 Euros related to expenses with workers' representative bodies.
For three-months period ended 31 March 2022, the average number of staff of the Group was 12,560 (12,053 employees for the period ended 31 March 2021).
24. Interest expenses and Interest income
For the three-months periods ended 31 March 2021 and 31 March 2022, the caption Interest Expenses had the following detail:
| 31.03.2021 | 31.03.2022 | |
|---|---|---|
| Interest expenses | ||
| Bank loans | 458,383 | 406,063 |
| Lease liabilities | 764,361 | 733,266 |
| Interest costs from employee benefits | 892,743 | 970,726 |
| Other interest costs | 31,188 | 89,277 |
| 2,146,675 | 2,199,332 |
During the three-months periods ended 31 March 2021 and 31 March 2022, the Company caption Interest income was detailed as follows:
| 31.03.2021 | 31.03.2022 | |
|---|---|---|
| Interest income | ||
| Deposits in credit institutions | 4,093 | 4,676 |
| Other supplementary income | 1,893 | 106,438 |
| 5,986 | 111,114 |
25. 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. e CTT Soluções Empresariais, S.A. as a result of the option for the Special Regime for the Taxation of Groups of Companies ("RETGS") application. The remaining companies are taxed individually. The entities 321 Crédito – Instituição Financeira de Crédito S.A. and CTT Soluções Empresariais, S.A. integrated the RETGS in the previous financial year. The entity CTT IMO – Sociedade Imobiliária, S.A. integrated the RETGS in this financial year.
Reconciliation of the income tax rate
For the three-months periods ended 31 March 2021 and 31 March 2022, the reconciliation between the nominal rate and the effective income tax rate was as follows:
| 31.03.2021 | 31.03.2022 | |
|---|---|---|
| Earnings before taxes (a) | 13,261,575 | 7,238,916 |
| Nominal tax rate | 21.0% | 21.0% |
| 2,784,931 | 1,520,173 | |
| Tax Benefits | (68,686) | (73,476) |
| Accounting capital gains/(losses) | (3,698) | (1,964) |
| Tax capital gains/(losses) | 1,849 | 980 |
| Equity method | 103,442 | (112,806) |
| Provisions not considered in the calculation of deferred taxes | (17,021) | 12,287 |
| Impairment losses and reversals | 51,956 | 64,538 |
| Compensation for insurable events | 40,437 | 64,208 |
| Depreciation and car rental charges | 6,486 | 6,832 |
| Credits uncollectible | 8,935 | 29,676 |
| Difference between current and deferred tax rates | — | — |
| Fines, interest, compensatory interest and other charges | 2,851 | 1,802 |
| Other situations, net | 998,019 | 29,245 |
| Adjustments related with - autonomous taxation | 130,283 | 140,903 |
| Adjustments related with - undistributed variable remuneration | — | — |
| Tax losses without deferred tax | — | — |
| SIFIDE tax credit | (216,176) | — |
| Insuficiency / (Excess) estimated income tax | — | (95,617) |
| Subtotal (b) | 3,823,607 | 1,586,782 |
| (b)/(a) | 28.83% | 21.92% |
| Adjustments related with - Municipal Surcharge | 228,486 | 112,747 |
| Adjustments related with - State Surcharge | 475,933 | 126,788 |
| Income taxes for the period | 4,528,025 | 1,826,317 |
| Effective tax rate | 34.14% | 25.23% |
| Income taxes for the period | ||
| Current tax | 3,706,665 | 1,082,200 |
| Deferred tax | 1,037,536 | 839,734 |
| SIFIDE tax credit | (216,176) | — |
| Insuficiency / (Excess) estimated income tax | — | (95,617) |
| 4,528,025 | 1,826,317 |
For the three-month period ended 31 March 2021, the caption "SIFIDE Tax Credit" refers to the reimbursement of SIFIDE for the year 2018.
Deferred taxes
As at 31 December 2021 and 31 March 2022, the balance related to deferred tax assets and liabilities was composed as follows:
| 31.12.2021 | 31.03.2022 | |
|---|---|---|
| Deferred tax assets | ||
| Employee benefits - healthcare | 73,832,987 73,462,321 | |
| Employee benefits - pension plan | 68,583 | 67,212 |
| Employee benefits - other long-term benefits | 4,208,731 | 4,607,437 |
| Impairment losses and provisions | 4,139,032 | 3,798,357 |
| Tax losses carried forward | 2,078,911 | 2,078,965 |
| Impairment losses in tangible fixed assets | 481,187 | 503,586 |
| Long-term variable remuneration (Board of diretors) | 455,400 | 607,200 |
| Land and buildings | 343,652 | 343,652 |
| Tangible assets' tax revaluation regime | 1,282,862 | 1,202,683 |
| Other | 363,742 | 662,963 |
| 87,255,087 87,334,376 | ||
| Deferred tax liabilities | ||
| Revaluation of tangible fixed assets before IFRS | 1,684,213 | 1,616,472 |
| Suspended capital gains | 658,042 | 651,505 |
| Non-current assets held for sale | 42,718 | 6,017 |
| Other | 42,540 | 1,072,625 |
| 2,427,513 | 3,346,620 |
The deferred tax asset related to Tangible assets tax revaluation regime was recognized following the Companies' accession to the regime established in Decree-Law no. 66/2016, of 3 November. In the year ended 31 March 2022 the deferred tax asset amounts to 1,202,683 Euros.
The increase in the item "Others" essentially refers to the deferred tax associated with the caption "results of assets and liabilities at fair value through profit or loss", the amount of which in the current period resulted in the recognition of the respective deferred tax.
As at 31 March 2022, the expected amount of deferred tax assets and liabilities to be settled within 12 months is 3.2 million Euros and 0.4 million Euros, respectively.
During the years ended 31 December 2021 and 31 March 2022, the movements which occurred under the deferred tax captions were as follows:
| 31.12.2021 31.03.2022 | |
|---|---|
| ----------------------- | -- |
| Deferred tax assets | ||
|---|---|---|
| Opening balances | 87,891,869 87,255,087 | |
| Changes in the consolidation perimeter | ||
| Effect on net profit | (745,695) | (370,666) |
| Employee benefits - healthcare | 3,037 | (1,371) |
| Employee benefits - pension plan | 1,022,295 | 398,706 |
| Employee benefits - other long-term benefits | (797,419) | (340,675) |
| Impairment losses and provisions | 1,291,917 | 54 |
| Tax losses carried forward | 72,431 | 22,399 |
| Impairment losses in tangible fixed assets | — | — |
| Long-term variable remuneration (Board of diretors) | 401,422 | 151,800 |
| Land and buildings | (12,118) | — |
| Tangible assets' tax revaluation regime | (320,715) | (80,179) |
| Other | (154,405) | 298,894 |
| Effect on equity | ||
| Employee benefits - healthcare | (1,390,302) | — |
| Employee benefits - pension plan | (7,230) | — |
| Other | — | 327 |
| Closing balance | 87,255,087 87,334,376 |
31.12.2021 31.03.2022
| Effect on equity Fair Value Reserve Other |
16,344 (13,384) (31,746) |
— |
|---|---|---|
| 993,627 (243) |
||
| Other | ||
| Suspended capital gains | (40,292) | — |
| Revaluation of tangible fixed assets before IFRS adoption | (26,149) | (6,537) |
| Effect on net profit | (270,958) | (67,741) |
| Changes in the consolidation perimeter | ||
| Opening balances | 2,793,698 | 2,427,513 |
| Deferred tax liabilities |
The tax losses carried forward are related to the losses of the subsidiaries Tourline and Transporta which were merged by incorporation into CTT Expresso, S.A., in 2019, and are detailed as follows:
| 31.12.2021 | 31.03.2022 | ||||
|---|---|---|---|---|---|
| Group | Tax losses | Deferred tax assets |
Tax losses | Deferred tax assets |
|
| CTT – Expresso, S.A., branch in Spain | 75,434,282 | — | 76,526,374 | — | |
| CTT Expresso/Transporta | 13,747,683 | 2,075,283 | 13,705,883 | 2,068,075 | |
| Total | 89,181,965 | 2,075,283 | 90,232,257 | 2,068,075 |
Regarding CTT – Expresso, S.A., branch in Spain (prior Tourline), the tax losses of the years 2008, 2009 and 2011 may be reported in the next 15 years (available for reporting until 2023, 2024 and 2026, respectively), the tax losses related to 2012, 2013 and 2014 may be carried forward in the next 18 years (available for reporting until 2030, 2031 and 2032, respectively) and the tax losses of the years 2015, 2016, 2017,2018, 2019, 2020 and 2021 have no time limit for deduction. No deferred tax assets associated with CTT Expresso branch in Spain's tax losses were recognized, given its losses history.
Regarding to CTT Expresso/ Transporta, the tax losses presented refer to the losses of Transporta for the years 2014 and 2015 and 2017 and 2018, since in 2019 this company was incorporated into CTT Expresso, which can be reported in the next 14 years (previously 12 years, but extended to 14 years under exceptional measures approved to deal with adverse consequences caused by the COVID Pandemic), for the years 2014 and 2015 and 7 years (previously 5 years, but extended to 7 years within the scope of exceptional measures approved to deal with adverse consequences caused by the COVID Pandemic) for the years 2017 and 2018. The recognition of deferred tax assets related to Transporta's tax losses is supported by the estimate of future taxable profits of CTT Expresso, based on the company's 8-year business plan (ie, until 2029).
It should be noted that, following the acquisition of Transporta, a request was made to maintain the tax losses that had been determined with reference to the periods of 2014 and 2015 (in the amounts of 4,536,810 Euros and 3,068,088 Euros, available for reporting until 2028 and 2029, respectively), for which a favourable response was obtained from the Tax Authority during 2021.
The sensitivity analysis performed allows us to conclude that a 1% reduction in the underlying rate of deferred tax would imply an increase in the income tax for the period of about 2.41 million Euros.
SIFIDE
Considering the historical data associated with this reality, the policy for recognition of fiscal credits regarding SIFIDE tend to be the recognition of the credit at the moment of the effective receipt from the commission certification statement, certifying the eligibility of expenses presented in the applications for tax benefits.
Regarding to R&D expenses incurred in the 2019 financial year, during the 2021 period, a tax credit of 753,235 Euros was attributed by the Certifying Committee.
Regarding to R&D expenses incurred in the 2020 financial year, with the submission of the application, these amounted to approximately 5,304,741 Euros, with the possibility of benefiting from an income tax deduction estimated at 3,850,195 Euros. During the first three months of the current year, a tax credit of 310,239 Euros was attributed by the Certifying Committee, in relation to the 2020 financial year, and the Group is awaiting receipt of the declarations regarding the remaining amount.
As for the 2021 financial year, the Group is still identifying and quantifying the expenses incurred with R&D that will be included in the applications that will be submitted during the course of the current year.
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 2018 and onwards may still be reviewed and corrected.
The Board of Directors of the Company believes that any corrections arising from reviews/inspections by the tax authorities of these income tax returns will not have a significant effect on the consolidated financial statements as at 31 March 2022.
26. 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 favorable opinion of Audit Committee , except when included in the normal company´s business and no special advantage is granted to the director directly or by an intermediary. Significant transaction is any transaction with a related party whose amount exceeds one million Euros, and / or carried out outside current activity scope of CTT and / or subsidiaries and / or outside market conditions.
The other related parties' transactions are approved by Executive Committee, to the extent of the related delegation of powers, and subject to subsequent examination by the Audit Committee.
| 31.03.2021 | ||||||
|---|---|---|---|---|---|---|
| Group | Accounts receivable |
Accounts payable |
Revenues | Costs | Dividends | Financial investments / Increase in share capital |
| Shareholders | — | — | — | — | — | — |
| Group companies | ||||||
| Associated companies | — | — | — | — | — | — |
| Jointly controlled | 691,917 | 2,050 | 314,019 | 252,591 | — | — |
| Members of the (Note 23) | ||||||
| Board of Directors | — | — | — | 717,999 | — | — |
| Audit Committee | — | — | — | 39,643 | — | — |
| Remuneration Committee | — | — | — | 4,950 | — | — |
| General Meeting | — | — | — | — | — | — |
| 691,917 | 2,050 | 314,019 | 1,015,183 | — | — |
For the three-months periods ended 31 March 2021 and 31 March 2022, the following transactions took place and the following balances existed with related parties:
| 31.03.2022 | ||||||
|---|---|---|---|---|---|---|
| Group | Accounts receivable |
Accounts payable |
Revenues | Costs | Dividends | Financial investments / Increase in share capital |
| Shareholders | — | — | — | — | — | — |
| Group companies | ||||||
| Associated companies | — | — | — | — | — | — |
| Jointly controlled | 198,694 | — | 180,830 | 160,498 | — | — |
| Members of the (Note 23) | ||||||
| Board of Directors | — | — | — | 694,908 | — | — |
| Audit Committee | — | — | — | 39,643 | — | — |
| Remuneration Committee | — | — | — | 4,950 | — | — |
| General Meeting | — | — | — | — | — | — |
| 198,694 | — | 180,830 | 899,999 | — | — |
In the context of transactions with related parties, no commitments were made, nor were any guarantees given or received in addition to the comfort letters assumed regarding CTT Expresso, branch in Spain, mentioned in Note 19.
No provision was recognized for doubtful debts or expenses recognized during the period in respect of bad or doubtful debts owed by related parties.
The remunerations attributed to the members of the statutory bodies of CTT, S.A. are disclosed in note 23 – Staff Costs.
27. Other information
On 23 December 2021, the Council of Ministers communicated the approval on that date of the decree amending the legal framework applicable to the provision of postal services in Portugal. The corresponding decree was promulgated on 5 February 2022 and Decree-Law no. 22-A/2022 was published on 7 February 2022. The new concession agreement thus came into force and will have a duration of approximately seven years – until 31 December 2028.
This framework improves the decision-making mechanisms and provides clear criteria to guarantee the provision of the universal postal service under sustainable economic conditions, promoting a better balance between the continuity of the postal service provision and the reinforcement of the Company's capacity to face the challenges of digital transition, pursuing the consistent implementation of its transformation process. For reasons of general interest, only the following activities and services have remained reserved to the concessionaire: sitting of letter boxes on the public highway intended for the deposit of postal items, issue and sale of postage stamps bearing the word Portugal and the registered mail service used in court or administrative proceedings.
While some impacts of the pandemic still persisted, CTT continued to periodically report the status of the postal network to the Government, as a counterparty in the agreement, and to ANACOM, the regulatory authority responsible for overseeing the provision of the universal postal service until 21 February 2022.
The concession agreement sets out that, for the year 2022, which will be the transition period, the prices of the services included in the universal postal service offer to be implemented by CTT shall respect a maximum annual average variation of 6.80%, which considers the decline in mail volumes observed in the first nine months of 2021 and the variation of the Consumer Price Index for the Transport expense
The special prices of the postal services included in the universal postal service offer applicable to bulk mail senders were also updated on 7 March 2022 following the information sent to ANACOM on 28 February 2022.
The aforementioned updates correspond to an average annual price variation of 5.84% for the year 2022.
With regard to the legal proceedings relating to ANACOM's Decision regarding the quality of service parameters and performance targets applicable to the universal postal service provision, of July 2018, CTT was notified of the State's appeal to the South Administrative Central Court, considering that the arbitration court should have declined jurisdiction to judge both CTT requests.
The administrative proceedings brought against ANACOM, the first one regarding the same decision and the second one concerning the December 2018 resolution regarding the new measurement procedures to be applied to the quality of service indicators, had no relevant developments. The process related to the proposal to enforce eleven contractual fines, initiated in 2018 by ANACOM, within the scope of the Universal Postal Service Concession Agreement, based on alleged breaches of contract obligations during 2015, 2016 and 2017 is still pending a decision. There were no developments following the presentation of defence in the administrative proceedings initiated against CTT on 30 July 2021 for four administrative offences related to the measurement of quality of service indicators (QSI), relating to events occurred in 2016 and 2017 (partially contested in the abovementioned administrative action brought against ANACOM in March 2019), and on 30 August 2021 for twenty-six administrative offences concerning facts related to the compliance with the objectives of network density and minimum service offer already covered by the contractual fines proceedings initiated in 2018.
On 18 January 2022, CTT was notified of the action brought against the Company by the companies Vasp Premium – Entrega Personalizada de Publicações, LDA. (Vasp) and Iberomail – Correio Internacional, S.A., (Iberomail) before the Competition, Regulation & Supervision Court. The action against CTT for abuse of dominant position, in particular for refusal of access to its postal network, since 2012 to the day the alleged illegal conduct ceases. Claims were also made for damages estimated at between €69.5m and €158m by Vasp and between €9.5m and €31m by Iberomail, to be ascertained in the course of the proceedings. The lawsuit also requests the conviction of CTT to immediately cease the anti-competitive practices, giving Vasp and Iberomail access to its postal distribution network for their products, at the access points and in the manner intended by those companies, or in the conditions that the Court deems necessary for the access offer to be, in the opinion of those companies, viable. In this context, it should be recalled that, following VASP's complaint to the Competition Authority on 21 November 2014, the proceedings then opened were subject to a decision to close the proceedings, with the imposition of commitments on 5 July 2018. CTT follows the best market practices and considers the request to be totally unfounded, and as such the Company presented its contestation on 29 March 2022.
Impacts of geopolitical events in Ukraine
The geopolitical events in Ukraine, military actions taken by Russia and the response of several countries, namely Europeans and the United States, in the form of economic sanctions, could affect global markets, logistics chains and economic developments in general. Although CTT has no direct exposure to Russian entities, the conflict may also have indirect impacts for the Group which, at the present date, it is not possible to estimate with a reasonable degree of confidence.
28. Subsequent events
At the Annual General Meeting held on 21 April 2022, a reduction in share capital of up to 2,325,000 Euros was approved for the purpose of releasing excess capital, by means of cancellation of up to 4,650,000 shares representing up to 3.1% of the share capital already acquired or to be acquired in connection with a share buyback programme, as well as on related reserves, and on the corresponding amendment to paragraphs 1 and 2 of article 4 of the Articles of Association.
With the exception of the above, after 31 March 2022 and up to the present date, no relevant or material facts have occurred in the Group's activity that have not been disclosed in the notes to the financial statements.