Investor Presentation • Mar 16, 2022
Investor Presentation
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16 March 2022
This document has been prepared by CTT - Correios de Portugal, S.A. (the "Company" or "CTT") exclusively for use during the presentation of the FY21 results. As a consequence thereof, this document may not be disclosed or published, nor used by any other person or entity, for any other reason or purpose without the express and prior written consent of CTT. This document (i) may contain summarised information and be subject to amendments and supplements, and (ii) the information contained herein has not been verified, reviewed nor audited by any of the Company's advisors or auditors.
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. Consequently, the Company does not assume liability for this document if it is used for a purpose other than the above. No express or implied representation, warranty or undertaking is made as to, and no reliance shall be placed on, the accuracy, completeness or correctness of the information or the opinions or statements expressed herein. Neither the Company nor its subsidiaries, affiliates, directors, employees or advisors assume liability of any kind, whether for negligence or any other reason, for any damage or loss arising from any use of this document or its contents. Neither this document nor any part of it constitutes a contract, nor may it be used for incorporation into or construction of any contract or agreement.
This document has an informative nature and 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 a solicitation of any kind 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. Moreover, the recipients of this documentare invited and advised to consult the public information disclosed by CTT on its website (www.ctt.pt) as well as on the Portuguese Securities Market Commission's website (www.cmvm.pt). In particular, the contents of this presentation shall be read and understood in light of the financial information disclosed by CTT, through such means, which prevail in regard to any data presented in this document. By attending the meeting where this presentation is made and reading this document, you agree to be bound by the foregoing restrictions.
This presentation 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 concerning 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 bevond 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 presentation. 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.
Operational review
CH Committed to deliver
| New concession framework improves predictability and allows for partial compensation 1 of prior years; 6.8% average price increase of universal postal services in 2022 |
|
|---|---|
| Business services are driving revenue growth and strengthening commercial activity | |
| Spain continues to drive growth of Express & Parcels, significantly anticipating its turnaround plan with a positive EBITDA in FY21 |
|
| B | Transformation of operations is positively impacting cost structure in a consistent manner |
| (२०) १ |
Banco CTT continues its growth path on the back of consumer credit |
| Dividend of €0.12 per share for the 2021 financial year to be proposed and subject to approval in the AGM, payable in May 2022 Share buyback of $\epsilon$ 18m (equivalent to 2.7% market cap 2 ) reiterating CTT's commitment with shareholder remuneration |
1The arbitration proceedings initiated by CTT seeking compensation for COVID-19 adverse impacts and for unilateral extension of the concession agreement are still pending and no rights have been waived in the new concessio
$\epsilon$ million; weight (%); weight percentual point change vs. prior year
Group CTT – Legacy1 vs. Transformation2
1 Mail & Other excl. business solutions;2 Express & Parcels, Financial Services & Retail, Banco CTT and business solutions
Group CTT - Financials
FY20
A1021
A2021
FY21
△4Q21
△3Q21
Express & Parcels Iberia 1 – Volumes million items; % change vs. prior year
Express & Parcels Iberia $1 -$ Revenues $\epsilon$ million; % change vs. prior year
Express & Parcels Iberia $1 -$ Recurring EBIT $\epsilon$ million; change vs. prior year
1 includes Mozambique, contributing with 0.01 m in volumes, €0.9 m in revenue and €0.2 m in recurring EBIT in 4Q21 and 0.05 m in volumes, €3.2 m in revenue and €0.6 m in recurring EBIT in FY21
% change vs. prior year; million items
Volume growth despite slow-down in multichannel e-tailers
Cargo & other revenues declined due to churn of unprofitable clients, upon the new cargo operating model
Consistent volume growth is translating into revenue growth and turnaround in profitability
Quality: To be approved by the Government upon ANACOM's proposal following European best practices, also for three-year periods
For 2022, the transition period, the prices to be implemented shall reflect a maximum annual average variation of 6.80% - which considers the decline in volumes of 9M21 and the CPI for the Transport expense category
$\epsilon$ million
Operations Transformation
• Undergoing c.175-200 suspension agreements1 by YE22. with total annual savings of €5-6m:
Central Structure Transformation
• Implementation of work-life balance, personal/professional development and equality of opportunities initiatives within the Familiar Responsible Entity (EFR) certification process
Mail – staff costs (excl. Business solutions) $\epsilon$ million; % change vs. prior year
Central Structure - staff costs $\epsilon$ million; % change vs. prior year
$\epsilon$ million except otherwise indicated
1 Average cost of customer deposits;2 Net of impairments
$CO2$ (scopes 1+2+3) vs. 2013 base year (CTT science-based target)
CTT distinguished at CDP rating on Climate Change
First 100% Electric Hub and the largest green transport and distribution fleet in Portugal
80% of letters, parcels and boxes sold to clients contain recycled paper and/or plastic
Strong focus on culture, social exclusion and poverty projects
Financial review
CH Committed to deliver
$\epsilon$ million: % change vs. prior year
| Quarter | Full year | |||||
|---|---|---|---|---|---|---|
| 4Q20 | 4Q21 | y.o.y | FY20 | FY21 | ||
| Revenues 1 | 211.0 | 235.0 | 11.4% | 745.2 | 847.9 | |
| Operating costs - EBITDA 2 | 172.8 | 199.8 | 15.7% | 641.6 | 729.8 | |
| EBITDA 2 | 38.2 | 35.2 | $-8.0\%$ | 103.6 | 118.1 | |
| Depreciation & amortization $3$ | 16.1 | 14.8 | $-8.0%$ | 62.1 | 58.0 | |
| Recurring EBIT 1 | 22.1 | 20.4 | $-7.9%$ | 41.5 | 60.1 | |
| Specific items | 4.9 | 4.0 | $-18.4%$ | 7.0 | $-1.8$ | |
| EBIT | 17.2 | 16.4 | $-4.9%$ | 34.5 | 61.9 | |
| Financial result | $-3.0$ | $-3.0$ | n.m. 4 | $-11.4$ | $-11.1$ | |
| Tax | 1.9 | 1.2 | $-35.4%$ | 6.4 | 12.2 | |
| Net profit attributable to equity holders | 12.3 | 12.1 | $-2.0%$ | 16.7 | 38.4 | |
| Free cash flow | 22.0 | 5.9 | $-73.2%$ | 21.8 | 45.3 | |
1 Excluding Specific items; 2 Excluding Specific items, depreciation & amortization;3 Depreciation & amortization were positively impacted in FY21 by the revision of the useful life of some assets; 4 Not meaningful
Revenues1 $\epsilon$ million; % change vs. prior year
Revenues1 breakdown
$\epsilon$ million; % change vs. prior year; % of total
1 Excluding Specific items; 2 Including Central Structure
$\epsilon$ million; % change vs. prior year
1 Excluding Specific items. In 2021 and in the same period of the previous year (proforma), operating costs (EBITDA) include impairments and provisions and the impact of the leases covered by IFRS 16 being presented purs
$\epsilon$ million
$\epsilon$ million; impact on cash flow vs. prior year
| (+) Cash & cash equivalents | 877.9 | |||
|---|---|---|---|---|
| $(-)$ Net Financial Services & other payables $3$ | 199.1 | |||
| $(-)$ Banco CTT liabilities, net 3 | 515.6 | |||
| $(-)$ Other 4 | 20.9 | |||
| $(=)$ Adjusted cash | 142.3 | |||
| $(-)$ Financial debt | 85.8 | |||
| $(=)$ Net cash position | 56.4 | |||
| (-) Lease liabilities (IFRS 16) | 115.3 | |||
| Net financial debt 2 | 58.9 |
1 Impairments, provisions and IFRS 16 affecting EBITDA;2 Only financial debt presented in the table; it does not include net employee benefits of £204.5m as at 31 December 2021;3 The change in net liabilities of Financ 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, change inother 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
Expand integrated Iberian footprint to enable grabbing the full potential of e-commerce convergence in Portugal and Spain
Continue to implement transformation initiatives to drive revenue sustainability by reducing dependence on traditional mail services
Improve structurally mail profitability given a more balanced and sustainable concession contract
Propel Banco CTT's growth, underpinned by balance sheet optionality and potential equity and industry partnerships
Compensate pressure in mail revenues through implementation of profitability and efficiency initiatives, which are already visible
Exploit inorganic expansion opportunities in logistics and fulfilment segments in Iberia
1Based on individual accounts;2 Excludes the dividend paid on the 1.5m own shares of the share buyback of 2021;3 Yield calculated taking as a reference the year end share price of each year; 4 Using market cap of 15
Contacts: Phone: +351 210 471 087 E-mail: [email protected]
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