Annual Report • Nov 4, 2020
Annual Report
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January-September 2020
| HIGHLIGHTS | |
|---|---|
| 1. OPERATIONAL AND FINANCIAL PERFORMANCE OF THE BUSINESS UNITS | |
| 2. OTHER HIGHLIGHTS | |
| INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
| Consolidated results | |||
|---|---|---|---|
| € million | |||
| 9M19 | 9M20 | ∆ 20/19 | |
| Revenues1 | 539.6 | 534.3 | -1.0% |
| Mail & other | 353.2 | 310.8 | -12.0% |
| Mail2 | 350.1 | 308.8 | -11.8% |
| Central Structure | 3.1 | 2.0 | -36.5% |
| Express & Parcels | 110.1 | 131.5 | 19.5% |
| Banco CTT | 42.9 | 59.7 | 39.3% |
| Financial Services & Retail2 | 33.4 | 32.3 | -3.3% |
| Operating costs3 | 466.3 | 476.6 | 2.2% |
| EBITDA3 | 73.3 | 57.7 | -21.3% |
| Leases (IFRS16) | 20.4 | 21.0 | 2.6% |
| EBITDA including IFRS 16 | 93.7 | 78.6 | -16.1% |
| Impairments & provisions | 4.0 | 13.2 | 232.1% |
| Depreciation & amortization | 39.5 | 46.1 | 16.7% |
| Specific items | 16.0 | 2.1 | -87.0% |
| EBIT | 34.2 | 17.3 | -49.6% |
| Financial results (+/-) | -7.9 | -8.4 | -5.9% |
| Income tax for the period | 3.4 | 4.5 | 29.9% |
| Non-controlling interests | 0.03 | 0.09 | 194.8% |
| Net profit for the period4 | 22.9 | 4.3 | -81.1% |
1 Excluding specific items.
2 In 2020 and in the same period of the previous year (proforma), the retail products and services of the Mail & other business unit are considered within the Financial Services & Retail business unit (former Financial Services business unit).
3 Excluding depreciation/amortization, impairments and provisions, as well as the impact of IFRS 16 and specific items.
4 Attributable to equity holders.
Mail revenues reached €308.8m in the 9M20, -€41.4m (-11.8%) vis-à-vis the same period of 2019, mainly due to the decline in the revenues of transactional (-€39.7m; -13.1%) and advertising mail (-€3.6m; -21.6%), mitigated by the revenue growth in business solutions (+€4.6m; +58.6%).
In 3Q20, the gradual opening up from lockdown, in Portugal as well as in most international markets, has already allowed a recovery in the revenues of the Mail business unit, which stood at €105.9m, -€9.1m (-7.9%) compared with a decline of 13.7% in 1H20. It should be noted that, excluding the effect of volumes related to the elections of September 2019, the revenue decrease in the quarter would be only -3.5%.
| allowed a recovery in the revenues of the Mail business unit, which stood at €105.9m, -€9.1m (-7.9%) compared with a decline of 13.7% in 1H20. It should be noted that, excluding the effect of volumes related to the elections |
||||||
|---|---|---|---|---|---|---|
| of September 2019, the revenue decrease in the quarter would be only -3.5%. | ||||||
| Mail volumes | ||||||
| Million items | ||||||
| 3Q19 | 3Q20 | ∆ | 9M19 | 9M20 | ∆ | |
| Transactional mail | 127.0 | 108.5 | -14.5% | 405.9 | 336.7 | -17.0% |
| Advertising mail | 11.2 | 8.9 | -21.2% | 35.6 | 28.5 | -20.0% |
| Editorial mail | 8.2 | 7.0 | -14.5% | 25.5 | 22.1 | -13.2% |
| Addressed mail | 146.4 | 124.3 | -15.1% | 467.0 | 387.3 | -17.1% |
| Unaddressed mail | 138.9 | 122.2 | -12.0% | 376.5 | 305.3 | -18.9% |
Transactional mail volumes decreased (-17.0%) in the 9M20, due to reductions in all products, except for green mail (+58.6%), which continued to grow mostly as a result of product substitution (after discontinuation of the registered mail and priority mail prepaid products business lines), being a simpler and eco-friendly shipping form. The decline of ordinary domestic mail reached 16.2%, mainly in contractual clients of the banking and insurance, telecommunications, utilities, and Government segments. Priority mail volumes declined by 38.8% and registered mail ones by 18.1%.
International mail volumes recovered in 3Q20, particularly in international inbound mail (+6.5%) and the decrease stood at -14.8% in the 9M20 (-25.1% in 1H20). International outbound mail posted a decrease of 30.7% in the 9M20. Excluding the effect of the volumes associated with the elections in September 2019, that decrease would be 24.1%.
The advertising mail business has been significantly affected, as the pandemic crisis led to reduced utilization of this type of mail, in some cases, with full suspension of shipments and campaigns. The 3Q20 exhibited some pick-up vis-à-vis the drop recorded in 1H20 (-12.7% vs. -22.6%). Some improvement of the activity motivated by the Christmas season and consequent launching of campaigns by major advertisers is expected.
In the 9M20, the business solutions segment recorded revenues of €12.4m (+58.6%). This increase is the result of the intense commercial drive introduced in this business line, which has been achieved mainly through several new partnerships, serving corporate and public administration clients' different needs.
In the 9M20, philately revenues amounted to €3.8m, a decrease of 19.4% compared to 2019 (-€0.9m) due to the effects of the pandemic in the performance of the outlets' sales during the 2nd and the 3rd quarters.
The average price change of the Universal Service5 in the 9M20 was 1.5% vs. the same period of the previous year.
5 Including letter mail, editorial mail and parcels of the Universal Postal Service, excluding international inbound mail.
The Express & Parcels revenues totaled €131.5m in the 9M20, growing €21.4m (+19.5%) compared to the same period of 2019. In 3Q20, they reached €46.4m, +€9.1m (+24.5%) versus the same quarter of 2019, which illustrates the continued strong growth already seen in 2Q20.
Revenues in Portugal stood at €81.2m in the 9M20, 15.1% above those of the same period of 2019. Revenues of €29.4m obtained in 3Q20 (+19.5%) stood at record levels.
The business performance achieved in Portugal in the 9M20 resulted mostly from the growth of the CEP (Courier, Express and Parcels) business, which recorded revenues of €65.2m (+23.2%). The banking documents delivery business remained stable with revenues of €5.0m, while those of the cargo business amounted to €8.6m (-9.4%) and those of the logistics business to €1.7m (-25.7%). There was a recovery in cargo in 3Q20 (+7.6%) compared to the two previous quarters of declining revenues, particularly 2Q20, when the effect of the pandemic and the restrictions on economic activity were more severe.
1H20 was marked by the impacts of the COVID-19 pandemic and the restrictions imposed on most sectors of the economy, which substantially impacted shipments' profile, with a reduction in B2B volumes. In contrast, strong growth in e-commerce activity was observed and therefore also in the B2C segment. In 3Q20, the strong pace of e-commerce activity was maintained, and there was a recovery in the B2B segment.
In the 9M20, CEP volumes in Portugal totaled 17.8 million items, 34.5% more than in the same period of 2019. Contributing to this record-level activity was the strong boost of e-commerce, with very relevant growth in the sectors of food, sports and leisure, education and culture, and consumer electronics. In 3Q20, CEP volumes reached 6.6 million items, 33.6% above those of 3Q19, with the strong contribution of the "back-to-school".
The Dott marketplace6 , launched in May 2019 in partnership with Sonae, had, at the end of September 2020, 1,240 registered vendors on the platform (an increase of 180 in 3Q20) and more than 2.5 million products available for purchase. At the end of September 2020, circa 170k users were registered (+13% vs. June 2020), evidencing the healthy growth and the acceleration of digitalization and e-commerce during the lockdown period.
Revenues in Spain stood at €48.2m in the 9M20, 27.4% above those of the same period of 2019. In 3Q20, they reached €16.3m, corresponding to more €4.4m (+ 36.7%) versus 3Q19.
Volumes totaled 16.7 million items, growing 44.0% vis-à-vis the same period of 2019. This evolution is a consequence of the COVID-19 pandemic during 2Q20, which led to strong volumes growth resulting from changes in consumption patterns that drove e-commerce purchases and captured the confidence of new B2C customers, as well as to commercial initiatives that resulted in agreements with major global e-tailers that started urgent delivery operations throughout the Iberian Peninsula.
The Company proceeds with its restructuring plan to position itself as a reference operator in the urgent delivery of parcels within the Iberian market, having invested in sorting machines for its main centers – in Madrid and Barcelona – and acquired mobile devices and new artificial intelligence software to optimize the day-to-day life of parcel carriers, their cargo loads and routes, and already has numerous vehicles operating with this equipment to improve the quality of service.
Revenues in Mozambique stood at €2.1m in the 9M20, 22.8% above those of the same period of the previous year. The CEP and the banking documents delivery businesses positively contributed to this growth, the latter underpinned by the business in the health area (collection of biological samples), which started in the 2nd half of 2019, but also by the continued growth of the banking sector.
6 The Dott marketplace investment is accounted for by the equity method.
Banco CTT revenues reached €59.7m in the 9M20, a year-on-year growth of €16.9m (+39.3%), of which €12.3m originated in 321 Crédito, acquired in May 2019. Excluding this inorganic effect, the revenues would amount to €35.0m, up €4.6m (+14.9%) vis-à-vis the 9M19.
The revenue growth was driven by the positive performance of a €32.8m net interest income in the 9M20, €13.9m (+73.7%) above the level of the 9M19. Excluding 321 Crédito, the net interest income would be €12.8m in the 9M20, up €3.7m (+40.5%) versus the 9M19.
Banco CTT commissions received grew €3.4m (+56.5%), mainly due to customer transactionality (+16.8%), as well as accounts and debit cards (+517.2%), boosted, as from the beginning of April, by the introduction of debit card commissions.
The consumer credit commissions received in the 9M20 decreased by 17.3% (-€0.3m) vis-à-vis the 9M19, due to the reduction in production volumes in 2Q20 and 3Q20 and the increased risk arising from the current economic context.
PPR placements fell by 86.5% to €30.3m compared to the 9M19, although there was a recovery in PPR production in 3Q20 compared to 2Q20. In terms of commissions received, the product continues to grow, in this case, by €1.1m (+179.0%) versus the 9M19. The PPR product volume reached €386.9m (off-balance sheet), up 54.9% versus the 9M19. It should also be noted that the PPR production compared to the previous year is influenced by the change in the risk profile of the product, which no longer guarantees the preservation of the customer's capital, leading to a contraction in demand, as well as by the effects of the lockdown period.
The payments business line recorded a decrease of €2.6m (-16.8%) in commissions received in the 9M20 compared to the previous year's same period, with total revenues of €12.7m. The peak of the decline occurred in April, especially in the payment of tolls and invoices, but the 3Q20 already showed signs of recovery, with an improvement of 15.8 p.p. vis-à-vis 2Q20 (+€1.3m). Mention should also be made to the launch in September of a new payment solution: the Prepaid School Card for Municipalities.
The volume of auto loan production, with a credit portfolio net of impairments of €536.2m (+14.2% compared to December 2019), was strongly affected by the closure of auto dealerships as a result of the confinement measures. As a consequence, as of mid-March, the capture of new proposals generation entered a downward trend.
The net mortgage loan portfolio stood at €494.3m (22.0% above that of December 2019). The mortgage loan production decreased by 13.0% (-€17.5m) versus the 9M19, following year-on-year growth of 3.5% (+€2.9m) in 1H20.
Banco CTT business performance continued to allow for growth in customer deposits to €1,571m (+35.4% versus the 9M19 and +22.4% compared to the end of 2019) and in the number of accounts to 505k (66k more than in the 9M19 and 43k more than at the end of 2019). The loans-to-deposits ratio currently stands at 66.2%.
In the 9M20, total impairments and provisions of €8.5m were registered, of which €5.8m in 2Q20 reflects the credit portfolio's evolution. As a consequence of the worsening economic situation, 321 Crédito's impairments and provisions reached €7.9m in the 9M20, of which €5.5m in 2Q20 and €0.9m in 3Q20. These impairments mostly reflect forward-looking credit risk.
At the end of the 9M20, moratorium requests reached a total exposure of €41.2m, representing 3.9% of the total gross credit portfolio. The private auto credit moratoria in the amount of €27.6m ended on 30 September and represented 40.1% of the total moratorium requests. Public moratoria were extended until September 2021.
Financial Services & Retail revenues amounted to €32.3m in the 9M20 (€24.2m relative to Financial Services and €8.0m to Retail), with a decrease of €1.1m (-3.3%) compared to the same period of 2019.
The economic environment from 2Q20 onwards reversed the favorable trend of the business evolution registered in the first two months of 2020, when compared to the same period of the previous year, when +68.3% of revenues from Public Debt Securities subscriptions and +4.7% in the Retail business, in general, stood out.
In fact, the 2Q20 of this business unit was strongly influenced by the restrictive measures of the state of emergency, namely the effect it generated on the preference for liquidity and consequently on medium/longterm financial investments, as well as by the limited access to the CTT retail network and the changes in post office opening hours.
Financial products obtained revenues of €24.2m in the 9M20, a decrease of €0.1m (-0.4%), due especially to:
With revenues of €8.0m in the 9M20, retail products and services recorded a decrease of €0.8m (-9.3%), reversing the growth trend of the first two months of 2020. In third-party retail products and services, essentially in the sale of lottery, books, and in the payment of the air transport subsidy (Azores and Madeira), the reduction was most felt. Conversely, merchandising posted a positive year-on-year growth of €1.1m (+390.4%) due to the successful introduction of the sale of products such as protective masks and sanitizer gel.
In retail, there was a gradual recovery of 18.1 p.p. in 3Q20 versus 2Q20, as CTT has been strengthening its position with the sale of new book issues, the establishment of new partnerships in telecommunications and merchandising, as well the increase in monthly sales of lotteries. In September, the sale of instant lottery (scratch-off lottery tickets) was introduced in the retail network, and it is estimated that it will reach 200 post offices by the end of the year.
Operating costs7 amounted to €476.6m in the 9M20, a year-on-year increase of €10.3m (+2.2%), with a partly inorganic impact of €9.2m from 321 Crédito. Excluding 321 Crédito, operating costs totaled €467.4m (+1.3%).
7 Excluding depreciation/amortization, impairments and provisions, the impact of IFRS 16 and specific items.
| CTT – Correios de Portugal, S.A. – |
Public Company | ||||
|---|---|---|---|---|---|
| Operating costs | |||||
| € million | |||||
| 9M19 | 9M20 | ∆ | ∆% | ||
| Operating costs | 466.3 | 476.6 | 10.3 | 2.2% | |
| Staff costs | 252.2 | 250.6 | - 1.5 | -0.6% | |
| ES&S | 193.5 | 201.1 | 7.6 | 3.9% |
Staff costs decreased €1.5m (-0.6%) in the 9M20 versus the same period of the previous year. Excluding the effect of 321 Crédito, those costs decreased €1.3m (-1.3%), mostly because health costs with active members of staff have decreased by €2.2m (-25.3%) as a consequence of the COVID-19 pandemic. This effect was partly offset by the reversal in liabilities with retirees carried out in 1Q19 related to reducing average mobile phone tariffs, which had a positive impact of €0.9m. Staff costs by business unit exhibit growth in the expanding business units of Express & Parcels (+€1.5m) and Banco CTT (+€0.7m). This growth is more than offset by the €5.9m decrease in the Mail & other business unit due to the optimization that has been carried out.
External supplies & services costs increased €7.6m (+3.9%), of which €1.4m resulted from the integration of 321 Crédito. Excluding the inorganic effect, the growth was €6.2m (+3.2%), which includes mainly the increase in direct costs (+€5.0m) and in costs related to temporary work (+€3.5m), particularly in the Express & Parcels business unit, which has been growing. This increase was partly offset by the reduction in physical resources, commercial and after-sales costs (-€2.4m).
Other operating costs grew €4.2m (+20.5%) compared to the same period of the previous year. Excluding the inorganic effect of 321 Crédito (+€1.2m), the increase would have been of €3.0m (+15.2%), mostly due to the launch of new partnerships (+€4.7m), which were partly offset by the reduction in other sales costs (-€0.5m) and the lower amount of indemnities paid to customers (-€1.0m).
As of 30 September 2020, the CTT headcount (permanent and fixed-term staff) consisted of 12,472 employees, 207 less (-1.6%) than 30 September 2019. As of 2020, the methodology for counting permanent staff changed; hence permanent staff under a suspension agreement, corresponding in the period under analysis to 49 employees, is no longer considered. Excluding this effect, the decrease in permanent staff would have been 158.
| As of 30 September 2020, the CTT headcount (permanent and fixed-term staff) consisted of 12,472 employees, | ||||
|---|---|---|---|---|
| 207 less (-1.6%) than 30 September 2019. As of 2020, the methodology for counting permanent staff changed; hence permanent staff under a suspension agreement, corresponding in the period under analysis to 49 |
||||
| employees, is no longer considered. Excluding this effect, the decrease in permanent staff would have been 158. | ||||
| Headcount8 | ||||
| 30.09.2019 | 30.09.2020 | Δ 2020/2019 | ||
| Mail & other | 11,066 | 10,792 | -274 | -2.5% |
| Express & Parcels | 1,170 | 1,219 | 49 | 4.2% |
| Banco CTT | 405 | 428 | 23 | 5.7% |
| Financial Services & Retail | 38 | 33 | -5 | -13.2% |
| Total, of which: | 12,679 | 12,472 | -207 | -1.6% |
| Permanent | 10,833 | 10,779 | -54 | -0.5% |
| Fixed-term contracts | 1,846 | 1,693 | -153 | -8.3% |
| Portugal | 12,207 | 11,922 | -285 | -2.3% |
| Other geographies | 472 | 550 | 78 | 16.5% |
8 In 2020 and in the same period of the previous year (proforma), the retail products and services of the Mail & other business unit are considered within the Financial Services & Retail business unit (former Financial Services business unit). This migration had an impact on the movement of workers between these business units.
There was a decrease in the number of staff (permanent staff and fixed-term employees) in the Mail & other (-274) and the Financial Services & Retail (-5) business units, which more than offset the staff increase in the Express & Parcels (+49) and Banco CTT (+23) business units.
Together, the areas of operations and distribution within the basic network (5,931 employees, of whom 4,342 delivery postmen and women) and the retail network (2,464 employees) represented circa 78% of CTT's permanent staff.
In the 9M20, the Company generated an EBITDA9 of €57.7m, €15.6m (-21.3%) less than in the 9M19, with a margin of 10.8% (versus 13.6% in the 9M19). This performance was strongly influenced by the impacts that occurred from March 2020, namely the COVID-19 pandemic restrictions, given that EBITDA was growing by €5.9m (+49.7%) in the first two months of 2020. Excluding the effect of the elections in 3Q19, EBITDA decreases only €0.7m (-2.7%), a recovery that is underpinned mainly by the Express & Parcels (+199.1%) and Banco CTT (+47.1%) business units.
In the 9M20, the Company recorded specific items in the amount of €2.1m, broken down as shown in the table below, proceeding with the policy of decreasing this type of costs followed in recent periods.
| In the 9M20, the Company recorded specific items in the amount of €2.1m, broken down as shown in the table below, proceeding with the policy of decreasing this type of costs followed in recent periods. |
||||
|---|---|---|---|---|
| Specific items | ||||
| € million | ||||
| ∆% | ||||
| 9M19 | 9M20 | ∆ | ||
| Specific items | 16.0 | 2.1 | -13.9 | -87.0% |
| Corporate restructuring costs and strategic projects | 14.7 | 1.5 | -13.2 | -89.6% |
In the 9M20, specific items for an amount of €2.1m relate to (i) corporate restructuring for €0.8m (-€9.2m than in the same period of the previous year); (ii) strategic projects for €0.8m (-€3.9m), mainly studies to support the renegotiation of the new concession agreement; and (iii) other revenues and costs for €0.5m (-€0.8m), especially capital gains of €0.6m from the sale of real estate and costs associated with the COVID-19 pandemic, mainly personal protection equipment, nebulization, temperature measurement, and extra cleaning services, for an amount of €0.9m.
The decline of €13.2m in corporate restructuring and strategic projects is mostly related to spending on (i) compensations paid for termination of employment contracts by mutual agreement and suspension agreements (-€8.3m) within the Human Resources Optimization Program, and consulting services (-€1.6m), both under the ongoing Operational Transformation Plan; (ii) fees related to the acquisition of 321 Crédito (-€1.3m); and (iii) the implementation of the changes to the Quality of Service Indicators measurement system required by ANACOM (-€1.0m).
EBIT stood at €17.3m in the 9M20, -€17.0m (-49.6%) compared to the 9M19, with a margin of 3.2% (6.3% in the 9M19). It was strongly penalized by the decrease in EBITDA (-€15.6m) and the growth in impairments and provisions to cover potential losses from the projected economic downturn(+€9.2m), mainly within Banco CTT
9 Excluding depreciation/amortization, impairments and provisions, the impact of IFRS 16 and specific items.
business unit, particularly in auto loans, and also depreciation/amortization (+€6.6m) that result from strategic investments not offset by the decrease in specific items (-€13.9m).
Except for Mail & other, all the remaining business units, despite the adverse environment, managed to grow significantly in EBIT.
| Except for Mail & other, all the remaining business units, despite the adverse environment, managed to grow | ||||
|---|---|---|---|---|
| EBIT by business unit | ||||
| € million | ||||
| 9M19 | 9M20 | ∆ | ∆% | |
| EBIT | 34.2 | 17.3 | -17.0 | -49.6% |
| Mail & other | 32.7 | 4.7 | -28.1 | -85.7% |
| 72.7 | 47.0 | -25.7 | -35.3% | |
| Central Structure | - 40.0 | - 42.4 | -2.4 | -6.0% |
| Express & Parcels | - 7.8 | - 4.1 | 3.7 | 47.4% |
| Banco CTT | -5.9 | 0.4 | 6.3 | 107.6% |
| Financial Services & Retail | 15.1 | 16.2 | 1.1 | 7.3% |
| The consolidated financial results totaled -€8.4m, corresponding to a deterioration of €0.5m (-5.9%) compared | Financial results | |||
| € million | ||||
| 9M19 | 9M20 | ∆ | ∆% | |
| Financial results | -7.9 | -8.4 | -0.5 | -5.9% |
| Financial income, net | -7.3 | -7.3 | 0.0 | 0.1% |
| Financial costs and losses | -7.5 | -7.3 | 0.2 | 2.5% |
| Financial income Gains /losses in subsidiaries, associated |
0.2 | 0.01 | -0.2 | -94.5% |
The consolidated financial results totaled -€8.4m, corresponding to a deterioration of €0.5m (-5.9%) compared to the previous year's same period.
| The consolidated financial results totaled -€8.4m, corresponding to a deterioration of €0.5m (-5.9%) compared | ||||
|---|---|---|---|---|
| Financial results | ||||
| € million | ||||
| Financial results | -7.9 | -8.4 | -0.5 | -5.9% |
| Financial income, net | -7.3 | -7.3 | 0.0 | 0.1% |
| Financial costs and losses | -7.5 | -7.3 | 0.2 | 2.5% |
| Financial income | 0.2 | 0.01 | -0.2 | -94.5% |
| Gains /losses in subsidiaries, associated companies and joint ventures |
-0.6 | -1.1 | -0.5 | -77.0% |
Financial costs and losses incurred amounted to €7.3m, mainly incorporating financial costs related to post-employment and long-term employee benefits of €3.3m, interest associated with financing leases liabilities linked to the implementation of IFRS 16 for an amount of €2.5m, and interest on the financial debt for an amount of €1.2m.
In the 9M20, CTT obtained a consolidated net profit attributable to CTT Group equity holders of €4.3m, €18.5m below (-81.1%) obtained in the same period of the previous year, strongly impacted by the negative evolution of EBIT (-€17.0m).
Capex stood at €18.2m, corresponding to €0.2m (-1.2%) less than in the same period of 2019.
The financial effort made in an economic environment strongly impacted by the pandemic continued to focus on the expanding business unit of Express & Parcels (+€5.6m) to improve the systems that support this activity. This amount was offset by initiatives to reduce investment in information systems in the remaining business units (-€2.6m) and sorting equipment in the Mail & other business unit (-€3.6m) following the strong investment in this area in 2019.
In the 9M20, the Company generated an operating cash flow of €16.0m, -€7.6m versus the same period of 2019.
| In the 9M20, the Company generated an operating cash flow of €16.0m, -€7.6m versus the same period of | |||
|---|---|---|---|
| Cash flow 10 11 12 | |||
| € million | |||
| 9M19 | 9M20 | ∆ | |
| EBITDA | 73.3 | 57.7 | -15.6 |
| Specific items* (-) | 14.6 | 2.1 | -12.5 |
| CAPEX (-) | 18.5 | 18.2 | -0.2 |
| Δ Working capital (+) | -16.5 | -21.3 | -4.8 |
| Operating cash flow10 | 23.7 | 16.0 | -7.6 |
| Employee benefits | -10.6 | -8.3 | 2.3 |
| Tax | 3.1 | -7.9 | -11.0 |
| Free cash flow | 16.2 | -0.2 | -16.3 |
| Debt (principal + interest) | 59.1 | -0.9 | -60.0 |
| Dividends | -15.0 | 0.0 | 15.0 |
| Financial investiments | -114.4 | 0.4 | 114.8 |
| Net change in organic own cash | -54.2 | -0.7 | 53.4 |
| Changes to consolidation perimeter - 321Crédito | 6.8 | 0.0 | -6.8 |
| Change in own cash | -47.3 | -0.7 | 46.6 |
| Δ Liabilities related to Financial Services & other | |||
| + Banco CTT, net11 | 22.8 | -48.9 | -71.8 |
| Δ Other12 | 6.3 | -7.8 | -14.1 |
| Net change in cash (Balance Sheet) | -18.2 | -57.4 | -39.2 |
The negative change in working capital compared to the same period of 2019 (-€4.8m) resulted mainly from the high investment at the end of 2019 (€27.0m in 4Q19), which was paid mainly in 1H20 and compares to a lower investment at the end of 2018 (€18.9m in 4Q18) leading to a negative evolution in working capital related to Capex in the amount of €6.8m in the 9M20 vs. the same period of 2019.
This change was partially offset by a positive evolution of working capital related to the current business, with a strong contribution from more effective management of accounts payable (+€1.2m) and various debtors/creditors (+€8.9m).
10 The 1Q19 operating cash flow was restated to be comparable with that of 1Q20. In 2Q19 the methodology for calculating the operating cash flow changed, in particular with respect to the change in working capital, which no longer includes a non-cyclical value related to the mobility allowance.
11 The change in net liabilities of Financial Services and Banco CTT reflects the evolution of credit balances with third parties, depositors or other banking financial liabilities, net of the amounts invested in credit or investments in securities/banking financial assets, of entities of the CTT Group providing financial services, namely the financial services of CTT, Payshop, Banco CTT and 321 Crédito.
12 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.
| CTT – Correios de Portugal, S.A. – |
Public Company | ||||
|---|---|---|---|---|---|
| Consolidated balance sheet | |||||
| € million | |||||
| 31.12.2019 | 30.09.2020 | ∆ | ∆% | ||
| Non-current assets | 1,734.7 | 1,923.9 | 189.2 | 10.9% | |
| Current assets | 778.8 | 795.6 | 16.8 | 2.2% | |
| Assets | 2,513.4 | 2,719.5 | 206.1 | 8.2% | |
| Equity | 131.4 | 136.2 | 4.8 | 3.6% | |
| Liabilities | 2,382.0 | 2,583.3 | 201.3 | 8.4% | |
| Non-current liabilities Current liabilities |
512.8 1,869.2 |
488.6 2,094.7 |
-24.2 225.5 |
-4.7% 12.1% |
The key aspects of the comparison between the balance sheet as of 30.09.2020 and that as of 31.12.2019 are as follows:
The CTT Group consolidated Balance Sheet, excluding Banco CTT from the full consolidation perimeter and accounting for it as a financial investment measured by the equity method, would be as follows:
| (+€249.3m) and the increase in Debt (+€12.0m) following the increment in lease contracts, partially offset by the decrease in Accounts payable (-€38.7m) as a direct consequence of the substantial reduction of Treasury Certificates subscriptions, and the decrease of Other banking financial liabilities (-€21.3m). |
|||||
|---|---|---|---|---|---|
| The CTT Group consolidated Balance Sheet, excluding Banco CTT from the full consolidation perimeter and accounting for it as a financial investment measured by the equity method, would be as follows: |
|||||
| Consolidated balance sheet excluding Banco CTT | |||||
| € million | |||||
| 31.12.2019 | 30.09.2020 | ∆ | ∆% | ||
| Non-current assets | 615.8 | 614.5 | -1.3 | -0.2% | |
| Current assets | 456.9 | 443.2 | -13.7 | -3.0% | |
| Assets | 1,072.8 | 1,057.7 | -15.0 | -1.4% | |
| Equity | 131.4 | 136.3 | 4.9 | 3.7% | |
| Liabilities | 941.3 | 921.4 | -19.9 | -2.1% | |
| Non-current liabilities | 432.0 | 432.3 | 0.3 | 0.1% | |
| Current liabilities | 509.3 | 489.1 | -20.2 | -4.0% | |
| Equity and Liabilities | 1,072.8 | 1,057.7 | -15.0 | -1.4% |
As of 30 September 2020, the liabilities related to employee benefits (post-employment and long-term benefits) decreased to €285.2m, -€1.5m compared to December 2019, as specified in the table below:
| CTT – Correios de Portugal, S.A. – |
Public Company | |||
|---|---|---|---|---|
| Liabilities related to employee benefits | ||||
| € million | ||||
| 31.12.2019 286.7 |
30.09.2020 285.2 |
∆ -1.5 |
∆% -0.5% |
|
| Healthcare | 274.4 | 274.4 | -0.1 | 0.0% |
| Healthcare (321 Crédito) | 1.3 | 1.4 | 0.1 | 6.8% |
| Suspension agreements | 3.1 | 1.9 | -1.2 | -39.8% |
| Other long-term employee benefits | 7.1 | 6.9 | -0.3 | -3.6% |
| Other post-employment benefits | 0.2 | 0.2 | 0.0 | 5.7% |
| As of 30 September 2020, the liabilities related to employee benefits (post-employment and long-term benefits) decreased to €285.2m, -€1.5m compared to December 2019, as specified in the table below: Total liabilities Pension plan |
0.4 | 0.4 | 0.0 | -4.4% |
| Consolidated net debt | |||
|---|---|---|---|
| € million | |||
| 31.12.2019 | 30.09.2020 | ∆ | |
| Net debt | 60.0 | 72.8 | 12.8 |
| Short-term & long-term debt | 175.4 | 187.4 | 12.0 |
| of which financial leases (IFRS 16) | 84.0 | 95.7 | 11.7 |
| Own cash (I+II) | 115.4 | 114.6 | -0.7 |
| Cash & cash equivalents | 443.0 | 385.6 | -57.4 |
| Cash & cash equivalents at the end of the period (I) | 414.9 | 365.2 | -49.7 |
| Other cash items | 28.1 | 20.4 | -7.8 |
| Financial Services payables, net (II) | -299.5 | -250.6 | 48.9 |
The key aspects of the comparison between the consolidated net debt as of 30.09.2020 and that as of 31.12.2019 are as follows:
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:
| financial leases in the scope of IFRS 16 (+€11.7m), resulting from the network's expansion of logistics centers and operational fleet to support the growth in the Express & Parcels activity. |
|||
|---|---|---|---|
| CTT Group net debt excluding Banco CTT from the full consolidation perimeter and accounting it as a financial investment measured by the equity method would be as follows: |
|||
| Consolidated net debt excluding Banco CTT | |||
| € million | |||
| 31.12.2019 | 30.09.2020 | ∆ | |
| Net debt with Banco CTT under equity method | 144.1 | 153.7 | 9.7 |
| Short-term & long-term debt | 173.2 | 185.3 | 12.0 |
| of which financial leases (IFRS 16) | 81.8 | 93.5 | 11.7 |
| Own cash (I+II) | 29.1 | 31.5 | 2.4 |
| Cash & cash equivalents | 268.2 | 238.0 | -30.1 |
| Cash & cash equivalents at the end of the period (I) | 268.2 | 238.0 | -30.2 |
| Other cash items | -0.02 | -0.02 | 0.00 |
| -239.1 | -206.5 | 32.6 |
Under the Universal Postal Service Concession Contract, on 13 March 2020, CTT invoked force majeure before the Grantor, following the World Health Organization's public health emergency of international scope. Since then, the CTT continued to comply with the competent authorities' public health standards and to adopt the necessary and appropriate measures to protect workers and customers while continuing to ensure the functioning and continuity of postal services. CTT also continues to periodically submit an update on the situation to the Government, as a counterparty in the contract, and to ANACOM, the regulatory authority responsible for overseeing the Universal Postal Service provision.
On 14 September 2020, ANACOM announced that it considered the results of the cost accounting system of CTT for the financial years of 2016 and 2017 were produced following ANACOM's decision on the reformulation of those results and imposing new criteria for the separation of costs between the postal activity and the banking activity of the Company. According to the reports of the audit firm appointed by ANACOM, the impact of the reformulation of the CTT cost accounting system results on the provision of the Universal Postal Service in those two years, on a like-for-like basis, was circa €1.3m in 2016 and circa €5m in 2017 of postal-related cost reduction and equivalent banking-allocated cost increase.
On 30 September 2020, CTT was notified of the decision to maintain the postal network density targets and minimum offers of service that would be in effect until that date – established by ANACOM's decision of 15 September 2017, supplemented by the same entity's decision of 21 August 2019 – until the approval of the new targets, under the terms of the concession contract.
This press release is based on CTT – Correios de Portugal, S.A. interim condensed consolidated financial statements for the nine months of 2020, which are attached.
Lisbon, 4 November 2020
This information to the market and the general public is made under the terms and for the purposes of article 248 of the Portuguese Securities Code. It is also available on CTT website at: https://www.ctt.pt/grupo-ctt/investidores/comunicados/index?language_id=1.
Guy Pacheco Market Relations Representative of CTT
Peter Tsvetkov Director of Investor Relations of CTT
Email: [email protected] Fax: + 351 210 471 996 Telephone: + 351 210 471 087
This document has been prepared by CTT – Correios de Portugal, S.A. (the "Company" or "CTT") exclusively for communication of the financial results of the nine months of 2020 and has a merely 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 at www.ctt.pt and 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.
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 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 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.
Interim condensed consolidated financial statements
| CTT-CORREIOS DE PORTUGAL, S.A. | |||
|---|---|---|---|
| CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2019 AND 30 SEPTEMBER 2020 | |||
| Euros | |||
| NOTES | 31.12.2019 | Unaudited 30.09.2020 |
|
| ASSETS | |||
| Non-current assets | |||
| Tangible fixed assets | 4 | 263,443,040 | 272,254,936 |
| Investment properties | 6 | 7,653,000 | 7,049,838 |
| Intangible assets Goodwill |
5 | 62,012,644 70,201,828 |
55,522,635 70,201,828 |
| Investments in associated companies | 293,434 | 481 | |
| Investments in joint ventures | 2,723,803 | 2,950,638 | |
| Other investments | 1,379,137 | 6,394 | |
| Debt securities | 8 | 424,851,179 | 476,828,719 |
| Other non-current assets | 1,543,308 | 1,148,911 | |
| Credit to banking clients | 10 | 792,469,611 | 935,925,713 |
| Other banking financial assets | 9 | 18,764,049 | 13,184,444 |
| Deferred tax assets Total non-current assets |
25 | 89,329,806 1,734,664,839 |
88,838,685 1,923,913,222 |
| Current assets | |||
| Inventories | 5,860,069 | 6,695,118 | |
| Accounts receivable | 146,471,712 | 152,616,479 | |
| Credit to banking clients | 10 | 93,350,959 | 103,686,487 |
| Deferrals Debt securities |
11 8 |
7,305,261 31,560,152 |
8,491,806 58,724,483 |
| Other current assets | 35,766,227 | 41,004,540 | |
| Other banking financial assets | 9 | 14,660,286 | 36,686,005 |
| Cash and cash equivalents | 12 | 442,995,724 | 385,566,428 |
| 777,970,390 | 793,471,346 | ||
| Non-current assets held for sale | 805,675 | 2,117,535 | |
| Total current assets | 778,776,065 | 795,588,881 | |
| Total assets | 2,513,440,904 | 2,719,502,103 | |
| EQUITY AND LIABILITIES | |||
| Equity | |||
| Share capital | 14 | 75,000,000 | 75,000,000 |
| Own shares | 15 | (8) | (8) |
| Reserves | 15 | 65,852,595 | 66,288,652 |
| Retained earnings | 15 | 10,867,301 | 40,011,490 |
| Other changes in equity | 15 | (49,744,144) | (49,744,144) |
| Net profit | 29,196,933 | 4,329,478 | |
| Equity attributable to equity holders | 131,172,677 | 135,885,468 | |
| Non-controlling interests | 242,255 | 321,696 | |
| Total equity | 131,414,932 | 136,207,164 | |
| Liabilities | |||
| Non-current liabilities | |||
| Medium and long term debt | 18 | 148,597,934 | 151,069,290 |
| Employee benefits | 267,286,679 | 266,193,677 | |
| Provisions | 19 | 17,635,379 | 17,652,798 |
| Deferrals | 11 | 294,490 | 286,089 |
| Other banking financial liabilites | 9 | 76,060,295 | 50,572,083 |
| Deferred tax liabilities Total non-current liabilities |
25 | 2,958,115 512,832,892 |
2,821,892 488,595,829 |
| Current liabilities | |||
| Accounts payable | 20 | 373,790,665 | 335,100,314 |
| Banking clients' deposits and other loans | 21 | 1,321,418,042 | 1,570,754,041 |
| 19,416,212 | 19,042,444 | ||
| Employee benefits | 22 | 5,958,753 | 724,508 |
| Income taxes payable | 26,813,567 | 36,372,505 | |
| Short term debt | 18 | ||
| Deferrals | 11 | 3,454,477 | 2,789,624 |
| Other current liabilities | 100,353,646 | 107,732,509 | |
| Other banking financial liabilities | 9 | 17,987,719 | 22,183,165 |
| Total current liabilities Total liabilities |
1,869,193,080 2,382,025,972 |
2,094,699,110 2,583,294,939 |
| I-LUKKEIUS DE PUKTUGAL. S.A. | |
|---|---|
| INSOLIDATED INCOME STATEMENT FOR THE NINE MONTH PERIODS ENDED 30 SEPTEMBER 2019 AND 30 SEPTEMBER 2020 |
| CTT –Correios de Portugal, S.A. – | Public Company | ||||
|---|---|---|---|---|---|
| CTT-CORREIOS DE PORTUGAL, S.A. | |||||
| CONSOLIDATED INCOME STATEMENT FOR THE NINE MONTH PERIODS ENDED 3O SEPTEMBER 2019 AND 30 SEPTEMBER 2020 | |||||
| Euros | |||||
| Nine months ended | Three months ended | ||||
| Unaudited | Unaudited | Unaudited | Unaudited | ||
| 30.09.2019 | 30.09.2020 | 30.09.2019 | 30.09.2020 | ||
| Sales and services rendered | 3 | 506,389,732 | 483,902,444 | 169,211,986 | 167,445,456 |
| Financial margin | 18,894,786 | 32,822,039 | 9,807,036 | 11,439,044 | |
| Other operating income | 14,266,027 | 17,537,452 | 5,536,090 | 6,209,903 | |
| 539,550,545 | 534,261,935 | 184,555,112 | 185,094,403 | ||
| Cost of sales | (9,456,408) | (13,320,299) | (3,110,872) | (4,609,543) | |
| External supplies and services | (177,833,811) | (181,805,882) | (61,552,387) | (64,452,800) | |
| Staff costs Impairment of accounts receivable, net |
23 | (262,136,055) (4,197,162) |
(251,441,508) (4,711,477) |
(85,455,104) (2,207,824) |
(81,170,172) (950,183) |
| Impairment of other financial banking assets | (1,686,179) | (7,583,228) | (1,171,609) | (1,179,663) | |
| Provisions, net | 19 | 511,271 | (922,830) | 314,381 | (33,190) |
| Depreciation/amortisation and impairment of investments, net | (39,462,952) | (46,054,866) | (13,022,185) | (16,020,694) | |
| Other operating costs | (11,502,611) | (11,757,478) | (4,055,860) | (4,294,681) | |
| Gains/losses on disposal of assets | 454,222 | 606,778 | 234,702 | 20,284 | |
| (505,309,685) | (516,990,790) | (170,026,759) | (172,690,642) | ||
| 34,240,860 | 17,271,145 | 14,528,353 | 12,403,761 | ||
| Interest expenses Interest income |
24 24 |
(7,500,181) 196,869 |
(7,309,878) 10,755 |
(2,561,645) 83,460 |
(2,564,772) 4,544 |
| Gains/losses in subsidiary, associated companies and joint ventures | (611,752) | (1,082,665) | (427,127) | 76,338 | |
| (7,915,064) | (8,381,788) | (2,905,312) | (2,483,889) | ||
| Earnings before taxes | 26,325,796 | 8,889,356 | 11,623,041 | 9,919,872 | |
| Income tax for the period | 25 | (3,444,396) | (4,473,740) | 2,271,635 | (3,576,025) |
| Net profit for the period | 22,881,400 | 4,415,616 | 13,894,676 | 6,343,847 | |
| Net profit for the period attributable to: | |||||
| Equity holders Non-controlling interests |
22,852,183 29,218 |
4,329,478 86,138 |
13,863,738 30,938 |
6,313,811 30,036 |
|
| Earnings per share: | 17 | 0.15 | 0.03 | 0.09 | 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 NINE MONTH PERIODS ENDED 30 SEPTEMBER 2019 AND 30 SEPTEMBER 2020 | |||||
| Euros | |||||
| Nine months ended | Three months ended | ||||
| NOTES | Unaudited | Unaudited | Unaudited | Unaudited | |
| 30.09.2019 | 30.09.2020 | 30.09.2019 | 30.09.2020 | ||
| Net profit for the period | 22,881,400 | 4,415,616 | 13,894,676 | 6,343,846 | |
| Adjustments from application of the equity method (non re-classifiable adjustment to profit and | 15 | (1,431) | (6,697) | (1,563) | (2,533) |
| loss) | |||||
| Changes to fair value reserves | 15 | 19,247 | 436,057 | (1,607) | 80,166 |
| Other changes in equity | (151,823) | (52,744) | (1,563) | (2,533) | |
| Other comprehensive income for the period after taxes | (134,007) | 376,615 | (4,733) | 75,099 | |
| Comprehensive income for the period | 22,747,394 | 4,792,232 | 13,889,944 | 6,418,946 | |
| Attributable to non-controlling interests | 27,787 | 79,441 | 29,375 | 27,503 | |
| Attributable to shareholders of CTT | 22,719,607 | 4,712,791 | 13,860,569 | 6,391,443 |
| NOTES | Share capital | Own Shares | Reserves | Other changes in equity |
Retained earnings | Net profit for the year | Non-controlling interests |
Total | |
|---|---|---|---|---|---|---|---|---|---|
| 75,000,000 | (8) | 65,836,875 | (30,993,430) | 4,378,984 | 21,499,271 | 165,494 | 135,887,186 | ||
| Appropriation of net profit restated for the year of 2018 | - | - | - | - | 21,499,271 | (21,499,271) | - | - | |
| Balance on 31 December 2018 restated Dividends |
16 | - | - | - | - | (15,000,000) | - | - | (15,000,000) |
| - | - | - | - | 6,499,271 | (21,499,271) | - | (15,000,000) | ||
| Other movements | 15 | - | - | - | - | - | - | (11,005) | (11,005) |
| Actuarial gains/losses - Health Care, net from deferred taxes | 15 | - | - | - | (18,750,714) | - | - | - | (18,750,714) |
| Changes to fair value reserves | 15 | - | - | 15,720 | - | - | - | - | 15,720 |
| Adjustments from the application of the equity method | 15 | - | - | - | - | (10,954) | - | - | (10,954) |
| Net profit for the period | - | - | - | - | - | 29,196,933 | 87,767 | 29,284,700 | |
| Comprehensive income for the period | - | - | 15,720 | (18,750,714) | (10,954) | 29,196,933 | 76,762 | 10,527,747 | |
| Balance on 31 December 2019 | 75,000,000 | (8) | 65,852,595 | (49,744,144) | 10,867,301 | 29,196,933 | 242,255 | 131,414,932 | |
| Appropriation of net profit for the year of 2019 | - | - | - | - | 29,196,933 | (29,196,933) | - | - | |
| - | - | - | - | 29,196,933 | (29,196,933) | - | - | ||
| Other movements | 15 | - | - | - | - | (46,047) | - | (6,697) | (52,744) |
| Changes to fair value reserves | 15 | - | - | 436,057 | - | - | - | - | 436,057 |
| Adjustments from the application of the equity method | 15 | - | - | - | - | (6,697) | - | - | (6,697) |
| Net profit for the period | - | - | - | - | - | 4,329,478 | 86,138 | 4,415,616 | |
| Comprehensive income for the period | - | - | 436,057 | - | (52,744) | 4,329,478 | 79,441 | 4,792,232 | |
| Balance on 30 September 2020 (Unaudited) | 75,000,000 | (8) | 66,288,652 | (49,744,144) | 40,011,490 | 4,329,478 | 321,696 | 136,207,164 | |
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20
| CTT-CORREIOS DE PORTUGAL, S.A. CONSOLIDATED CASH FLOW STATEMENT FOR THE NINE MONTH PERIODS ENDED 30 SEPTEMBER 2019 AND 30 SEPTEMBER 2020 |
|||
|---|---|---|---|
| Euro | |||
| Unaudited | Unaudited | ||
| NOTES | 30.09.2019 | 30.09.2020 | |
| Cash flow from operating activities | |||
| Collections from customers | 490,448,687 | 468,505,577 | |
| Payments to suppliers | (218,051,852) | (228,102,554) | |
| Payments to employees | (238,295,501) | (225,693,437) | |
| Banking customer deposits and other loans | 276,245,279 | 287,419,354 | |
| Credit to banking clients | (156,262,009) | (155,908,385) | |
| Cash flow generated by operations | 154,084,604 | 146,220,556 | |
| Payments/receivables of income taxes | 3,117,956 | (7,890,301) | |
| Other receivables/payments | 48,517,104 | 10,600,603 | |
| Cash flow from operating activities (1) | 205,719,663 | 148,930,859 | |
| Cash flow from investing activities | |||
| Receivables resulting from: | |||
| Tangible fixed assets | 152,580 | 870,185 | |
| Investment properties | 1,102,200 | 55,000 | |
| Financial investments | - | 2,401,250 | |
| Debt securities | 8 | 51,780,709 | 198,490,677 |
| Demand deposits at Bank of Portugal | - | 10,485,534 | |
| Other banking financial assets Interest income |
9 | 112,770,310 72,075 |
16,470,000 25,670 |
| Payments resulting from: | |||
| Tangible fixed assets | (13,678,813) | (20,417,359) | |
| Intangible assets | (13,918,310) | (9,153,411) | |
| Financial investments | (114,407,523) | (2,045,054) | |
| Debt securities | 8 | (49,861,401) | (278,565,662) |
| Demand deposits at Bank of Portugal | (5,574,047) | - | |
| Other banking financial assets | 9 | (33,549,849) | (32,050,000) |
| Cash flow from investing activities (2) | (65,112,068) | (113,433,169) | |
| Cash flow from financing activities | |||
| Receivables resulting from: | |||
| Loans obtained | 18 | 69,781,965 | 14,060,695 |
| Other credit institutions' deposits | 170,299,399 | 250,000 | |
| Payments resulting from: | |||
| Loans repaid | 18 | (40,526,328) | (14,118,023) |
| Other credit institutions' deposits | (121,606,942) | (38,131,082) | |
| Other banking financial liabilities | 9 | (213,504,425) | (25,294,138) |
| Interest expenses | (862,085) | (901,270) | |
| Lease liabilities | 18 | (20,520,419) | (21,029,095) |
| Dividends Cash flow from financing activities (3) |
(15,000,000) (171,938,834) |
- (85,162,913) |
|
| Net change in cash and cash equivalents (1+2+3) | (31,331,238) | (49,665,223) | |
| Changes in the consolidation perimeter Cash and equivalents at the beginning of the period |
6,823,653 414,846,614 |
- 414,865,569 |
|
| Cash and cash equivalents at the end of the period | 12 | 390,339,029 | 365,200,346 |
| Cash and cash equivalents at the end of the period | 390,339,029 | 365,200,346 | |
| Sight deposits at Bank of Portugal Outstanding checks of Banco CTT / Checks clearing of Banco CTT |
11,791,465 2,406,868 |
15,438,500 4,947,068 |
|
| Impairment of slight and term deposits | (20,170) | (19,486) | |
| Cash and cash equivalents (Balance sheet) | 404,517,191 | 385,566,428 | |
| 1. | Introduction 23 | |
|---|---|---|
| 2. | Significant accounting policies 23 | |
| 2.1 Basis of presentation 24 | ||
| 3. | Segment reporting 24 | |
| 4. | Tangible fixed assets 27 | |
| 5. | Intangible assets 30 | |
| 6. | Investment properties 32 | |
| 7. | Companies included in the consolidation 33 | |
| 8. | Debt securities 34 | |
| 9. | Other banking financial assets and liabilities 38 | |
| 10. Credit to banking clients 41 | ||
| 11. Deferrals 45 | ||
| 12. Cash and cash equivalents 46 | ||
| 13. Accumulated impairment losses 47 | ||
| 14. Equity 48 | ||
| 15. Own shares, Reserves, Other changes in equity and Retained earnings 50 | ||
| 16. Dividends 52 | ||
| 17. Earnings per share 52 | ||
| 18. Debt 52 | ||
| 19. Provisions, Guarantees provided, Contingent liabilities and commitments 54 | ||
| 20. Accounts payable 57 | ||
| 21. Banking clients' deposits and other loans 57 | ||
| 22. Income taxes receivable /payable 58 | ||
| 23. Staff costs 58 | ||
| 24. Interest expenses and Interest income 60 | ||
| 25. Income tax for the period 60 | ||
| 26. Related parties 63 | ||
| 27. Other information 64 | ||
| 28. Subsequent events 66 |
CTT – Correios de Portugal, S.A. – Sociedade Aberta ("CTT" or "Company"), with head office at Avenida D. João II, no. 13, 1999-001 in Lisbon, had its origin in the "Administração Geral dos Correios Telégrafos e Telefones" government department and its legal form is the result of successive re-organizations carried out by the Portuguese state business sector in the communications area.
Decree-Law no. 49.368, of 10 November 1969 founded the state-owned company CTT - Correios e Telecomunicações de Portugal, E. P., which started operating on 1 January 1970. By Decree-Law no. 87/92, of 14 May, CTT – Correios e Telecomunicações de Portugal, E. P., was transformed into a legal entity governed by private law, with the status of a state-owned public limited company. Finally, with the foundation of the former Telecom Portugal, S.A. by spin-off from Correios e Telecomunicações de Portugal, S.A. under Decree-Law no. 277/92, of 15 December, the Company's name was changed to the current CTT – Correios de Portugal, S.A..
On 31 January 2013 the Portuguese State through the Order 2468/12 – SETF, of 28 December, determined the transfer of the investment owned by the Portuguese State in CTT to Parpública – Participações Públicas, SGPS, S.A..
At the General Meeting held on 30 October 2013, the registered capital of CTT was reduced to 75,000,000 Euros, being from that date onward represented by 150,000,000 shares, as a result of a stock split which was accomplished through the reduction of the nominal value from 4.99 Euros to 0.50 Euros.
During the financial year ended 31 December 2013, CTT's capital was opened to the private sector. Supported by Decree-Law no. 129/2013, of 6 September and the Resolution of the Council of Ministers ("RCM") no. 62- A/2013, of 10 October, the RCM no. 62-B/2013, of 10 October and RCM no. 72-B/2013, of 14 November, the first phase of privatisation of the capital of CTT took place on 5 December 2013. From this date, 63.64% of the shares of CTT (95.5 million shares) were owned by the private sector, of which 14% (21 million shares) were sold in a Public Offering and 49.64% (74.5 million shares) by Institutional Direct Selling. On 31 December 2013 the Portuguese State, through Parpública - Participações Públicas, SGPS, S.A. held 36.36% of the shares of CTT, 30.00% by holding and 6.36% by allocation.
On 5 September 2014, the second phase of the privatisation of CTT took place. The shares held by Parpública - Participações Públicas, SGPS, S.A., which on that date represented 31.503% of CTT's capital, were subject to a private offering of Shares ("Equity Offering") via an accelerated book building process. The Equity Offering was addressed exclusively to institutional investors.
The shares of CTT are listed on Euronext Lisbon.
The financial statements attached herewith are expressed in Euros, as this is the functional currency of the Group.
These interim condensed consolidated financial statements were approved by the Board of Directors and authorised for issue on 4 November 2020.
The accounting policies adopted, including financial risk management policies, are consistent with those followed in the preparation of the consolidated financial statements for the year ended 31 December 2019.
The interim condensed consolidated financial statements have been prepared using accounting policies consistent with International Financial Reporting Standards ("IAS / IFRS") as adopted by the European Union as at 1 January 2020, and in accordance with IAS 34 - Interim Financial Reporting.
In accordance with IFRS 8, the Group discloses the segment financial reporting.
The Board of Directors regularly reviews segmental reports, using them to assess and communicate each segment performance, as well as to decide on how to allocate resources.
The Retail Products previously reported in the Mail segment and the respective operating costs, in order to reflect the changes made in the business organization, were migrated, along with their respective history, to the segment previously designated "Financial Services" and which now was renamed "Financial Services & Retail".
The period of 2019 was restated, for comparison purposes, according to the changes performed.
Therefore, the business of CTT is organised in the following segments:
The amounts reported in each business segment result from the aggregation of the subsidiaries and business units defined in each segment perimeter and the elimination of transactions between companies of the same segment.
The statement of financial position of each subsidiary and business unit is determined based on the amounts booked directly in the companies that compose the segment, including the elimination of balances between companies of the same segment, and excluding the allocation in the segments of the adjustments between segments.
The income statement for each business segment is based on the amounts booked directly in the companies' financial statements and related business units, adjusted by the elimination of transactions between companies of the same segment.
However, as CTT, S.A. has assets in more than one segment it was necessary to split its income and costs by the various operating segments. The Internal Services Rendered refer to services provided across the different CTT, S.A. business areas, and the income is calculated according to standard activities valued through internally set transfer prices.
| for the services mentioned above. After this initial allocation, costs relating to corporate and support areas (CTT Central Structure) previously unallocated, are allocated by nature to the Mail segment and others. |
|||||
|---|---|---|---|---|---|
| The consolidated statement of results by nature and segment of the first 9 months of 2019 and 2020 are as | |||||
| follows: | |||||
| Restated | |||||
| 30.09.2019 | |||||
| Thousand Euros | Express & Parcels | Financial Services & Retail |
Bank | Total | |
| Revenues | 353,247 | 110,071 | 33,360 | 42,872 | 539,551 |
| Sales and services rendered | 348,694 | 109,679 | 32,757 | 15,260 | 506,390 |
| Sales | 6,020 | 560 | 6,032 | - | 12,611 |
| Services rendered | 342,674 | 109,119 | 26,726 | 15,260 | 493,779 |
| Financial Margin | - | - | - | 18,895 | 18,895 |
| Other operating income | 4,553 | 392 | 603 | 8,718 | 14,266 |
| Operating costs excluding depreciations, amortizations, impairment and provisions Staff costs |
294,224 218,988 |
111,737 17,951 |
17,780 1,106 |
42,554 14,124 |
466,294 252,169 |
| External supplies and services | 76,025 | 93,505 | 2,329 | 21,686 | 193,545 |
| Other costs | 8,554 | 2,087 | 5,480 | 4,460 | 20,580 |
| Internal services rendered | (9,343) | (1,806) | 8,865 | 2,283 | - |
| EBITDA | 59,023 | (1,666) | 15,580 | 319 | 73,256 |
| IFRS 16 (impact on EBITDA) | 15,212 | 4,210 | 16 | 993 | 20,431 |
| EBITDA including IFRS 16 | 74,235 | 2,544 | 15,597 | 1,312 | 93,688 |
| Impairment and provisions | (48) | (2,106) | - | (1,825) | (3,980) |
| Depreciation/amortisation and impairment of investments, net | (29,052) | (6,120) | (227) | (4,064) | (39,463) |
| Specific Items | (12,397) | (2,075) | (245) | (1,288) | (16,004) |
| EBIT | 32,739 | (7,757) | 15,125 | (5,866) | 34,241 |
| Financial results Interest expenses |
(7,915) (7,500) |
||||
| Interest income | 197 | ||||
| Gains/losses in subsidiary, associated companies and joint ventures | (612) | ||||
| Earnings before taxes (EBT) | 26,326 | ||||
| (3,444) | |||||
| Net profit for the period | 22,881 | ||||
| Non-controlling interests | (29) | ||||
| Equity holders of parent company | 22,852 | ||||
| Income tax for the period | 30.09.2020 | ||||
| Thousand Euros | Financial | ||||
| Express & Parcels | Services & Retail | Bank | Total | ||
| Revenues | 310,752 | 131,516 | 32,263 | 59,731 | 534,262 |
| Sales and services rendered | 308,210 | 131,111 | 31,900 | 12,681 | 483,902 |
| Sales | 10,537 | 508 | 5,765 | - | 16,810 |
| Services rendered | 297,673 | 130,603 | 26,135 | 12,681 | 467,093 |
| Financial Margin | 0 | - | - | 32,822 | 32,822 |
| Other operating income Operating costs excluding depreciations, amortizations, impairment and provisions |
2,542 283,157 |
405 130,478 |
363 15,865 |
14,227 47,099 |
17,537 476,598 |
| 30.09.2020 | |||||
|---|---|---|---|---|---|
| Thousand Euros | Express & Parcels | Financial Services & Retail |
Bank | Total | |
| Revenues | 310,752 | 131,516 | 32,263 | 59,731 | 534,262 |
| Sales and services rendered | 308,210 | 131,111 | 31,900 | 12,681 | 483,902 |
| Sales | 10,537 | 508 | 5,765 | - | 16,810 |
| Services rendered | 297,673 | 130,603 | 26,135 | 12,681 | 467,093 |
| Financial Margin | 0 | - | - | 32,822 | 32,822 |
| Other operating income | 2,542 | 405 | 363 | 14,227 | 17,537 |
| Operating costs excluding depreciations, amortizations, impairment and provisions | 283,157 | 130,478 | 15,865 | 47,099 | 476,598 |
| Staff costs | 213,005 | 19,479 | 1,439 | 16,725 | 250,647 |
| External supplies and services | 64,689 | 111,404 | 2,155 | 22,894 | 201,142 |
| Other costs | 12,733 | 1,381 | 4,946 | 5,750 | 24,809 |
| Internal services rendered | (7,269) | (1,785) | 7,325 | 1,729 | - |
| EBITDA | 27,595 | 1,038 | 16,398 | 12,632 | 57,663 |
| IFRS 16 (impact on EBITDA) | 14,850 | 4,895 | 84 | 1,126 | 20,956 |
| EBITDA including IFRS 16 | 42,445 | 5,933 | 16,482 | 13,758 | 78,619 |
| Impairment and provisions | (2,382) | (2,286) | - | (8,550) | (13,218) |
| Depreciation/amortisation and impairment of investments, net | (33,728) | (7,321) | (246) | (4,760) | (46,055) |
| Specific Items | (1,667) | (403) | (1) | (5) | (2,076) |
| EBIT | 4,668 | (4,077) | 16,236 | 444 | 17,271 |
| Financial results | (8,382) | ||||
| Interest expenses | (7,310) | ||||
| Interest income | 11 | ||||
| Gains/losses in subsidiary, associated companies and joint ventures | (1,083) | ||||
| Earnings before taxes (EBT) Income tax for the period |
8,889 (4,474) |
||||
| Net profit for the period Non-controlling interests |
4,416 | ||||
| (86) 4,329 |
|||||
| Equity holders of parent company |
The amount recorded as specific items is €2.1m and relates to: (i) business restructurings of €0.8m, (ii) strategic projects recorded €0.8m, mainly in studies in support of the renegotiation of the new concession contract and (iii) other income and expenses recorded €0.5m, of which the gains with the sale of real estate (-€0.6m) and expenses related to the COVID-19 pandemic are highlighted, namely in individual protective equipment, nebulizations, temperature measurement and cleaning reinforcement (+€0.9m).
| CTT –Correios de Portugal, S.A. – | Public Company | |
|---|---|---|
| Restated | ||
| Thousand Euros | 30.09.2019 | 30.09.2020 |
| Mail & Other | 353,247 | 310,752 |
| Transactional mail | 302,999 | 263,322 |
| Editorial mail | 10,697 | 9,439 |
| Parcels (USO) | 4,481 | 4,737 |
| Advertising mail | 16,632 | 13,040 |
| Philately | 4,739 | 3,821 |
| Business Solutions | 7,836 | 12,429 |
| Other | 5,863 | 3,965 |
| Express & Parcels | 110,071 | 131,516 |
| Portugal | 70,547 | 81,224 |
| Parcels | 52,946 | 65,234 |
| Cargo | 9,458 | 8,566 |
| Banking network | 5,006 | 5,007 |
| Logistics | 2,329 | 1,731 |
| Other | 808 | 686 |
| Spain | 37,836 | 48,218 |
| Mozambique | 1,689 | 2,073 |
| Financial Services & Retail | 33,360 | 32,263 |
| Savings & Insurance | 19,283 | 18,535 |
| Money orders | 4,145 | 4,511 |
| Payments | 899 | 1,118 |
| Retail | 8,805 | 7,982 |
| Other | 228 | 116 |
| Bank | 42,872 | 59,731 |
| Net interest income | 9,090 | 12,768 |
| Interest income | 9,710 | 13,525 |
| Interest expense | (620) | (756) |
| Fees & commissions income | 6,046 | 9,459 |
| Own produts | 3,790 | 5,846 |
| Consumer credit & insurance | 2,255 | 3,613 |
| Payments & other | 15,300 | 12,755 |
| 321 Crédito | 12,437 | 24,749 |
| 539,551 | 534,262 | |
| The assets by segment are detailed as follows: | ||||||
|---|---|---|---|---|---|---|
| Restated | ||||||
| 31.12.2019 | ||||||
| Assets (Euros) | Express & Parcels | Financial Services & Retail |
Bank | Non allocated assets | Total | |
| Intagible assets | 20,426,590 | 5,514,463 | 200,198 | 27,682,577 | 8,188,816 | 62,012,644 |
| Tangible fixed assets | 222,255,084 | 33,599,340 | 42,095 | 3,204,855 | 4,341,666 | 263,443,040 |
| Investment properties | - | - | - | - | 7,653,000 | 7,653,000 |
| Goodwill | 6,161,326 | 2,955,753 | - | 61,084,749 | - | 70,201,828 |
| Deferred tax assets | - | - | - | - | 89,329,806 | 89,329,806 |
| Accounts receivable | - | - | - | - | 146,471,712 | 146,471,712 |
| Credit to bank clients Debt securities |
- - |
- - |
- - |
885,820,569 456,411,331 |
- - |
885,820,569 456,411,331 |
| Other banking financial assets | - | - | - | 33,424,335 | - | 33,424,335 |
| Other assets | - | - | - | - | 54,871,239 | 54,871,239 |
| Cash and cash equivalents | - | 5,403,455 | - | 174,819,282 | 262,772,987 | 442,995,724 |
| Non-current assets held for sale | - | - | - | 805,675 | - | 805,675 |
| 248,843,001 | 47,473,011 | 242,294 | 1,643,253,372 | 573,629,227 | 2,513,440,904 | |
| 30.09.2020 | ||||||
| Assets (Euros) | Express & Parcels | Financial Services & Retail |
Bank | Non allocated assets | Total | |
| Intagible assets | 20,684,577 | 5,272,101 | 192,094 | 26,891,529 | 2,482,335 | 55,522,636 |
| Tangible fixed assets | 219,983,712 | 44,319,053 | 67,379 | 3,154,921 | 4,729,871 | 272,254,936 |
| 248,843,001 | 47,473,011 | 242,294 | 1,643,253,372 | 573,629,227 | 2,513,440,904 | |
|---|---|---|---|---|---|---|
| 30.09.2020 | ||||||
| Assets (Euros) | Express & Parcels | Financial Services & Retail |
Bank | Non allocated assets | Total | |
| Intagible assets | 20,684,577 | 5,272,101 | 192,094 | 26,891,529 | 2,482,335 | 55,522,636 |
| Tangible fixed assets | 219,983,712 | 44,319,053 | 67,379 | 3,154,921 | 4,729,871 | 272,254,936 |
| Investment properties | - | - | - | - | 7,049,838 | 7,049,838 |
| Goodwill | 6,161,326 | 2,955,753 | - | 61,084,749 | - | 70,201,828 |
| Deferred tax assets | - | - | - | - | 88,838,685 | 88,838,685 |
| Accounts receivable | - | - | - | - | 152,616,479 | 152,616,479 |
| Credit to bank clients | - | - | - | 1,039,612,200 | - | 1,039,612,200 |
| Debt securities | - | - | - | 535,553,202 | - | 535,553,202 |
| Other banking financial assets | - | - | - | 49,870,449 | - | 49,870,449 |
| Other assets | - | - | - | - | 60,297,887 | 60,297,887 |
| - | 9,784,809 | - | 147,552,605 | 228,229,014 | 385,566,428 | |
| Cash and cash equivalents | - | 2,117,535 | - | 2,117,535 | ||
| Non-current assets held for sale | - | - |
| CTT –Correios de Portugal, S.A. – | Public Company | ||||
|---|---|---|---|---|---|
| Debt by segment is detailed as follows: | Restated | ||||
| Other information (Euros) | Mail Express & Parcels | 31.12.2019 Financial Services & Retail |
Bank | Total | |
| Non-current debt | 127,309,217 | 19,770,671 | 30,858 | 1,487,187 | 148,597,934 |
| Bank loans | 81,702,538 | - | - | - | 81,702,538 |
| Lease liabilities | 45,606,680 | 19,770,671 | 30,858 | 1,487,187 | 66,895,396 |
| Current debt | 12,896,744 | 13,203,570 | 11,589 | 701,665 | 26,813,567 |
| Bank loans | - | 9,749,470 | - | - | 9,749,470 |
| Lease liabilities | 12,896,744 | 3,454,099 | 11,589 | 701,665 | 17,064,097 |
| 140,205,961 | 32,974,241 | 42,447 | 2,188,852 | 175,411,501 | |
| Other information (Euros) | Express & Parcels | 30.09.2020 Financial Services & Retail |
Bank | Total | |
| Non-current debt | 124,512,237 | 24,858,529 | 46,412 | 1,652,111 | 151,069,290 |
| Bank loans | 74,897,593 | - | - | - | 74,897,593 |
| Lease liabilities | 49,614,644 | 24,858,529 | 46,412 | 1,652,111 | 76,171,697 |
| Current debt | 21,253,083 | 14,547,781 | 21,716 | 549,925 | 36,372,505 |
| 140,205,961 | 32,974,241 | 42,447 | 2,188,852 | 175,411,501 |
|---|---|---|---|---|
| Express & Parcels | Financial Services & Retail |
Bank | Total | |
| 151,069,290 | ||||
| 74,897,593 | ||||
| 49,614,644 | 24,858,529 | 46,412 | 1,652,111 | 76,171,697 |
| 21,253,083 | 14,547,781 | 21,716 | 549,925 | 36,372,505 |
| 7,100,000 | 9,749,643 | - | - | 16,849,643 |
| 14,153,083 | 4,798,139 | 21,716 | 549,925 | 19,522,862 |
| 187,441,795 | ||||
| 124,512,237 74,897,593 145,765,320 |
24,858,529 - 39,406,311 |
30.09.2020 46,412 - 68,128 |
1,652,111 - 2,202,036 |
The Group is domiciled in Portugal. The result of its Sales and services rendered by geographical segment is disclosed below:
| Thousand Euros | 30.09.2019 | 30.09.2020 |
|---|---|---|
The financial statements are subject to seasonality, however this does not affect comparability between identical periods in a given year. There are nonetheless atypical / non-recurring factors that may affect comparability between equal periods of the several years such as the number of working days of the period (mobile holidays or weekend holidays), special events (elections, promotional campaigns for clients) which may impact the revenue to increase / decrease from one period to another.
| Tangible fixed assets | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| During the year ended 31 December 2019 and the nine-month period ended 30 September 2020, the | ||||||||||
| movements occurred in Tangible fixed assets, as well as the respective accumulated depreciation, regarding | ||||||||||
| the Group were as follows: | ||||||||||
| 31.12.2019 | ||||||||||
| Land and natural resources | Buildings and other constructions | Basic equipment | Transport equipment | Office equipment | Other tangible fixed assets | Tangible fixed assets in progress | Advance payments to suppliers | Rights of use | Total | |
| Tangible fixed assets | ||||||||||
| Opening balance | 35,591,993 | 334,565,087 | 143,060,832 | 3,597,961 | 63,825,994 | 26,571,051 | 2,409,296 | 174,162 | 217,781,407 | 827,577,785 |
| Acquisitions | - | 289,864 | 5,397,771 | 205,223 | 4,132,769 | 1,087,015 | 5,037,328 | 10,933,074 | - | 27,083,044 |
| New contracts | - | - | - | - | - | - | - | - | 6,995,186 | 6,995,186 |
| Disposals Transfers and write-offs |
(11,962) - |
(302,339) 3,990,959 |
(1,085,186) 8,798,878 |
(828) (199,167) |
(10,822) 714,914 |
- (14,188) |
- (3,990,959) |
- (8,693,236) |
- (1,023,301) |
(1,411,137) (416,100) |
| Terminated contracts | - | - | - | - | - | - | - | - | (47,988,327) | (47,988,327) |
| Remeasurements | - | - | - | - | - | - | - | - | 2,200,608 | 2,200,608 |
| Adjustments | - | 497 | 12,141 | 461 | 875 | 590 | - | - | 108,299 | 122,863 |
| Changes in the consolidation perimeter | - 420,472 |
- | - 692,154 |
175,664 | - | - 1,549,917 |
2,838,207 | |||
| Other movements | - | - | - | - | - 1,826,550 |
35,907 | - | - 1,862,457 |
||
| Closing balance | 35,580,031 | 338,964,540 | 156,184,436 | 3,603,651 | 69,355,884 | 29,646,684 | 3,491,573 | 2,414,000 | 179,623,789 | 818,864,586 |
| Accumulated depreciation | ||||||||||
| Opening balance | 3,739,154 | 210,562,512 | 127,971,545 | 3,428,245 | 58,772,955 | 22,311,709 | - | - | 136,058,784 | 562,844,906 |
| Depreciation for the period | - | 9,445,914 | 5,641,044 | 56,981 | 2,342,240 | 1,803,688 | - | - | 21,631,653 | 40,921,520 |
| Disposals | (1,747) | (192,958) | (1,022,632) | (828) | (14,649) | - | - | - | - | (1,232,814) |
| Transfers and write-offs | - | - 107,382 |
(128,381) | 640,734 | 40,895 | - | - (858,850) |
(198,220) | ||
| Terminated contracts | - | - | - | - | - | - | - | - (47,988,327) |
(47,988,327) | |
| Adjustments Changes in the consolidation perimeter |
- | 89 - 164,081 |
7,736 - |
325 | 759 - 666,123 |
506 121,676 |
- - |
- | - - 89,014 |
9,415 1,040,894 |
| Closing balance | 3,737,406 | 219,979,639 | 132,705,076 | 3,356,342 | 62,408,163 | 24,278,473 | - | - | 108,932,275 | 555,397,374 |
| Accumulated impairment Opening balance |
- | - | - | - | - | 24,255 | - | - | - | 24,255 |
| Other variations | - | - | - | - | - | (83) | - | - | - | (83) |
| Closing balance | - | - | - | - | - | 24,172 | - | - | - | 24,172 |
| Net Tangible fixed assets | 31,842,624 | 118,984,901 | 23,479,360 | 247,308 | 6,947,721 | 5,344,038 | 3,491,573 | 2,414,000 | 70,691,514 | 263,443,040 |
| CTT –Correios de Portugal, S.A. – | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Public Company | ||||||||||
| Land and natural resources | Buildings and other constructions | Basic equipment | Transport equipment | 30.09.2020 Office equipment |
Other tangible fixed assets | Tangible fixed assets in progress | Advance payments to suppliers | Rights of use | Total | |
| Tangible fixed assets | ||||||||||
| Opening balance | 35,580,031 | 338,964,540 | 156,184,436 | 3,603,651 | 69,355,884 | 29,646,684 | 3,491,573 | 2,414,000 | 179,623,789 | 818,864,586 |
| Acquisitions New contracts |
- - |
196,684 - |
3,879,964 - |
6,771 - |
162,253 - |
580,466 - |
6,135,492 - |
566,670 - |
- 24,104,812 |
11,528,299 24,104,812 |
| Disposals | (8,099) | (149,792) | (116,720) | (11,218) | (5,908) | - | - | - | - | (291,738) |
| Transfers and write-offs | (120,713) | (1,624,538) | 1,908,484 | (4,359) | (2,856) | (5,351,960) | (2,567,677) | (396,516) | - | (8,160,135) |
| Terminated contracts | - | - | - | - | - | - | - | - | (10,161,689) | (10,161,689) |
| Remeasurements | - | - | - | - | - | - | - | - | 6,009,702 | 6,009,702 |
| Adjustments | - | (4,041) | (101,090) | (1,519) | (29,811) | (12,072) | - | - | - | (148,532) |
| Other movements | - | - | - | - | - | 794,720 | - | - | - | 794,720 |
| Closing balance | 35,451,219 | 337,382,852 | 161,755,074 | 3,593,326 | 69,479,562 | 25,657,837 | 7,059,387 | 2,584,155 | 199,576,614 | 842,540,025 |
| Accumulated depreciation | ||||||||||
| Opening balance Depreciation for the period |
3,737,406 - |
219,979,639 7,040,618 |
132,705,076 4,799,807 |
3,356,342 44,356 |
62,408,163 1,934,608 |
24,278,473 966,394 |
- - |
- - |
108,932,275 17,955,320 |
555,397,374 32,741,102 |
| Disposals | (460) | (95,058) | (107,162) | (11,218) | (5,627) | - | - | - | - | (219,525) |
| Transfers and write-offs | (17,132) | (1,937,522) | (142,256) | (4,359) | 28,356 | (5,352,763) | - | - | - (7,425,677) |
|
| Terminated contracts | - | - | - | - | - | - | - | - (10,161,689) |
(10,161,689) | |
| Adjustments | - | (1,038) | (55,717) | (3,007) | (6,472) | (4,436) | - | - | - | (70,670) |
| Closing balance | 3,719,814 | 224,986,639 | 137,199,747 | 3,382,114 | 64,359,029 | 19,887,668 | - | - | 116,725,906 | 570,260,917 |
| Accumulated impairment | ||||||||||
| Opening balance | - | - | - | - | - | 24,172 | - | - | - | 24,172 |
| - | - | - | - | - | - | - | - | - | - | |
| Other variations | - | - | - | - | - | 24,172 | - | - | - | 24,172 |
| Closing balance |
The depreciation recorded in the Group amounting to 32,741,102 Euros (30,173,419 Euros on 30 September 2019), is booked under the heading Depreciation/amortisation and impairment of investments, net.
In the year ended 31 December 2019, the caption Changes in the consolidation perimeter in the Group, relates to the balances of the company 321 Crédito – Instituição Financeira de Crédito, S.A. acquired in May 2019.
In the Group as at 30 September 2020, Land and natural resources and Buildings and other constructions include 530,657 Euros (554,730 Euros as at 31 December 2019), related to land and property in co-ownership with MEO – Serviços de Comunicações e Multimédia, S.A..
During the year ended 30 September 2020, the most significant movements in Tangible Fixed Assets were the following:
The movements associated to acquisitions and transfers relate mostly to the capitalisation of repairs in own and third-party buildings of CTT e CTT Expresso.
The caption Transfers and Write-offs includes the amount of 1,415,667 Euros related to the transfer from Investment Properties, as well as the respective accumulated depreciations of 966,556 Euros, regarding a group of properties that were again assigned to the operational activity of the Group.
This heading also includes the transfer to the caption Non-current assets held for sale of the building located in Santarém held by CTT, following the conclusion of the promissory agreement for the sale of this property.
The amount of acquisitions mainly relates to the acquisition of parcel sorting machines in the amount of 3,186 thousand Euros by CTT.
The amount of acquisitions relates essentially the acquisition of office furniture for approximately 88 thousand Euros by CTT.
The amount of acquisitions mainly relates to prevention and safety equipment for approximately 401 thousand Euros by CTT.
The amounts under this heading are related to the capitalisation of improvements in own and third-party properties and the acquisition and assembly of sorting machines by CTT Expresso branch in Spain.
Following the adoption of IFRS 16 the Group recognised rights of use, detailed by type of asset, as follows:
| CTT –Correios de Portugal, S.A. – | Public Company | |||
|---|---|---|---|---|
| Following the adoption of IFRS 16 the Group recognised rights of use, detailed by type of asset, as follows: | ||||
| 31.12.2019 | ||||
| Buildings | Vehicles | Other assets | Total | |
| Tangible fixed assets | ||||
| Opening balance | 187,977,519 | 28,092,244 | 1,711,643 | 217,781,407 |
| New contracts | 3,275,146 | 3,643,838 | 76,202 | 6,995,186 |
| Transfers and write-offs | (1,004,078) | (19,223) | - | (1,023,301) |
| Terminated contracts | (36,450,459) | (11,252,228) | (285,640) | (47,988,327) |
| Remeasurements | 2,200,608 | - | - | 2,200,608 |
| Adjustments | 24,605 | 56,854 | 26,839 | 108,299 |
| Changes in the consolidation perimeter | 1,419,084 | 130,833 | - | 1,549,917 |
| Closing balance | 157,442,425 | 20,652,319 | 1,529,045 | 179,623,789 |
| Accumulated depreciation | ||||
| Opening balance | 123,639,470 | 11,900,424 | 518,891 | 136,058,784 |
| Depreciation for the period | 15,252,183 | 6,015,929 | 363,540 | 21,631,653 |
| Transfers and write-offs | (855,861) | (2,989) | - | (858,850) |
| Terminated contracts | (36,450,459) | (11,252,228) | (285,640) | (47,988,327) |
| Adjustments | 5 | (5) | - | - |
| Changes in the consolidation perimeter | 71,751 | 17,264 | - | 89,014 |
| Closing balance | 101,657,089 | 6,678,395 | 596,791 | 108,932,275 |
| Net Tangible fixed assets | 55,785,336 | 13,973,924 | 932,254 | 70,691,514 |
| 30.09.2020 | ||||
| Buildings | Vehicles | Other assets | Total | |
| Tangible fixed assets | ||||
| Opening balance | 157,442,425 | 20,652,319 | 1,529,045 | 179,623,789 |
| Transfers and write-offs | (855,861) | (2,989) | - | (858,850) |
|---|---|---|---|---|
| 30.09.2020 | ||||
| Buildings | Vehicles | Other assets | Total | |
| Tangible fixed assets | ||||
| Opening balance | 157,442,425 | 20,652,319 | 1,529,045 | 179,623,789 |
| New contracts | 11,075,937 | 12,980,338 | 48,537 | 24,104,812 |
| Terminated contracts | (9,426,610) | (724,193) | (10,886) | (10,161,689) |
| Remeasurements | 6,009,702 | - | - | 6,009,702 |
| Closing balance | 165,101,454 | 32,908,464 | 1,566,696 | 199,576,614 |
| Accumulated depreciation | ||||
| Opening balance | 101,657,089 | 6,678,395 | 596,791 | 108,932,275 |
| Depreciation for the period | 13,265,797 | 4,444,723 | 244,800 | 17,955,320 |
| Terminated contracts | (9,426,610) | (724,193) | (10,886) | (10,161,689) |
| Closing balance | 105,496,276 | 10,398,925 | 830,705 | 116,725,906 |
| Net Tangible fixed assets | 59,605,178 | 22,509,539 | 735,990 | 82,850,708 |
The depreciation recorded, in the Group, in the amount of 17,955,320 Euros (16,446,918 Euros on 30 September 2019), is booked under the heading Depreciation/amortisation and impairment of investments, net.
Information on the liabilities associated with these leases as well as the interest expenses are disclosed on the notes 18 - Debt and 24 - Interest expenses and Interest income, respectively.
In the nine-month period ended 30 September 2020, the Group entered into a sale & lease back agreement for the building held in Sintra. This operation met the requirements of IFRS 15 to be accounted for as a sale of the asset, having originated a capital gain in the amount of 590 thousand Euros, recognised in the caption "Gains / losses on disposal of assets", as well as the registration of a right of use in the amount of 9,629 Euros and a Lease liability of 117,353 Euros.
In the nine-month period ended 30 September 2020, no interest on loans was capitalised, in the Group, as no loans were directly identified attributable to the acquisition or construction of an asset that requires a substantial period of time (greater than one year) to reach its status of use.
According to the analysis of impairment signs with reference to 30 September 2020, no events or circumstances were identified that indicate that the amount for which the Group's tangible fixed assets are recorded may not be recovered.
There are no tangible fixed assets with restricted ownership or any carrying value relative to any tangible fixed assets which have been given as a guarantee of liabilities.
The Group contractual commitments, related to Tangible fixed assets, are as follows:
| CTT –Correios de Portugal, S.A. – Public Company |
|
|---|---|
| 30.09.2020 | |
| Improvements in properties | 1,537,077 |
| Vehicles | 350,930 |
| Upgrades to mail sorting machines | 82,643 |
| Desktops e Laptops | 71,836 |
| Postal furniture | 58,700 |
| Hardware firewall networks | 55,588 |
| Security system | 50,000 |
| Postal delivery equipment | 39,220 |
| DVE - Explosives Detector | 37,968 |
| Access control systems | 1,377 |
| 2,285,340 | |||||||
|---|---|---|---|---|---|---|---|
| 5. | Intangible assets | ||||||
| During the year ended 31 December 2019 and the nine-month period ended 30 September 2020, the | |||||||
| movements which occurred in the main categories of the Group Intangible assets, as well as the respective | |||||||
| accumulated amortisation, were as follows: | |||||||
| 31.12.2019 | |||||||
| Development projects | Computer Software | Industrial property | Other intangible assets | Intangible assets in progress | Advance payments to suppliers | Total | |
| Intangible assets | |||||||
| Opening balance | 4,380,552 | 98,081,032 | 14,252,424 | 444,739 | 15,139,681 | - | 132,298,428 |
| Acquisitions | - | 1,106,752 | 2,365,069 | - | 14,817,787 | 69,072 | 18,358,681 |
| Disposals | - | - | - | - | - | - | - |
| Transfers and write-offs | - | 13,595,464 | 8,579 | - | (14,331,297) | (69,072) | (796,326) |
| Adjustments | - | 1,400 | 9,098 | - | - | - | 10,498 |
| Changes in the consolidation perimeter Closing balance |
- 4,380,552 |
1,092,007 113,876,654 |
213,269 16,848,440 |
- 444,739 |
462,568 16,088,740 |
- - |
1,767,844 151,639,125 |
| Accumulated amortisation Opening balance | |||||||
| 4,375,722 | 61,288,015 | 9,419,396 | 444,739 | - | - | 75,527,871 | |
| Amortisation for the period | 1,272 | 12,754,618 | 782,218 | - | - | - | 13,538,108 |
| Disposals | - | - | - | - | - | - | - |
| Transfers and write-offs | - | (730,878) | 3,624 | - | - | - | (727,254) |
| Adjustments | - | 1,400 | 4,087 | - | - | - | 5,487 |
| Changes in the consolidation perimeter | - | 1,082,878 | 199,390 | - | - | - | 1,282,268 |
| Closing balance | 4,376,994 | 74,396,033 | 10,408,714 | 444,739 | - | - | 89,626,480 |
| Net intangible assets | 3,558 | 39,480,622 | 6,439,725 | - | 16,088,740 | - | 62,012,644 |
| 30.09.2020 | |||||||
| Development projects | Computer Software | Industrial property | Other intangible assets | Intangible assets in progress | Advance payments to suppliers | Total | |
| 30.09.2020 | |||||||
|---|---|---|---|---|---|---|---|
| Development projects | Computer Software | Industrial property | Other intangible assets | Intangible assets in progress | Advance payments to suppliers | Total | |
| Intangible assets | |||||||
| Opening balance | 4,380,552 | 113,876,654 | 16,848,440 | 444,739 | 16,088,740 | - | 151,639,125 |
| Acquisitions | - | 842,598 | 47,696 | - | 5,817,540 | - | 6,707,833 |
| Disposals | - | - | - | - | - | - - |
|
| Transfers and write-offs | - | 13,023,259 | - | - | (12,965,629) | - | 57,630 |
| Adjustments | - | - | (74,508) | - | (80,876) | - | (155,385) |
| Closing balance | 4,380,552 | 127,742,510 | 16,821,627 | 444,739 | 8,859,774 | - | 158,249,202 |
| Accumulated amortisation Opening balance | 4,376,994 | 74,396,033 | 10,408,714 | 444,739 | - | - | 89,626,480 |
| Amortisation for the period | 955 | 12,246,891 | 885,226 | - | - | - | 13,133,072 |
| Disposals | - | - | - | - | - | - | - |
| Transfers and write-offs | - | 3,231 | - | - | - | - | 3,231 |
| Adjustments | - | - | (36,216) | - | - | - | (36,216) |
| Closing balance | 4,377,949 | 86,646,155 | 11,257,725 | 444,739 | - | - | 102,726,568 |
| 2,603 | 41,096,356 | 5,563,902 | - | 8,859,774 | - | 55,522,635 |
The amortisation in the Group for the nine-month period ended 30 September 2020, amounting to 13,133,072 Euros (9,161,087 Euros as at 30 September 2019) was recorded under Depreciation / amortisation and impairment of investments, net.
In the year ended 31 December 2019, the caption Changes in the consolidation perimeter in the Group, relates to the balances of the company 321 Crédito – Instituição Financeira de Crédito, S.A. as at the acquisition date.
The caption Industrial property in the Group includes the license of the trademark "Payshop International" of CTT Contacto, S.A., in the amount of 1,200,000 Euros. This license has an indefinite useful life, therefore it is not amortised.
The transfers occurred in the year ended 31 December 2019 and the nine-month period ended 30 September 2020, from Intangible assets in progress to Computer software refer to IT projects, which were completed during the referred periods.
The amounts of 821,884 Euros and 690,493 Euros were capitalised in computer software or in intangible assets in progress as at 30 September 2019 and 30 September 2020, respectively, related to Group staff costs incurred in the development of these projects.
As at 30 September 2020 the Group Intangible assets in progress, relate to IT projects which are under development, of which the most relevant are:
| The amounts of 821,884 Euros and 690,493 Euros were capitalised in computer software or in intangible | |
|---|---|
| assets in progress as at 30 September 2019 and 30 September 2020, respectively, related to Group staff costs | |
| As at 30 September 2020 the Group Intangible assets in progress, relate to IT projects which are under | |
| Group | |
| New Payment Platform | 864,256 |
| OneBiller Solution | 740,505 |
| Data Governance - software | 661,730 |
| Digital Channels | 569,851 |
| CRM - Pilar Service | 550,673 |
| MiddleWare | 486,775 |
| Zero+ RAID | 453,841 |
| EPM & BI & Analytics | 451,040 |
| 333,504 | |
| Ecosystem CTT Expresso |
The Group has not identified any relevant uncertainties regarding the conclusion of ongoing projects, nor about their recoverability. According to the analysis of impairment signs with reference to 30 September 2020, no events or circumstances were identified that indicate that the amount for which the Group's intangible assets are recorded may not be recovered.
Most of the projects are expected to be completed in 2020.
The amount of research and development expenses incurred by the Group in 2019, in the amount of 1,422,552 Euros was disclosed in Note 25.
There are no intangible assets with restricted ownership or any carrying value relative to any intangible assets which have been given as a guarantee of liabilities.
In the nine-month period ended 30 September 2020, no interest on loans were capitalised, in the Group, as no loans were directly identified attributable to the acquisition or construction of an asset that requires a substantial period of time (greater than one year) to reach its status of use.
Contractual commitments relative to the Group Intangible assets are as follows:
| 30.09.2020 | ||
|---|---|---|
| CBS - Core Banking System | 1,500,000 | |
| PAC Fase 4 | 432,000 | |
| Data Ignition | 350,000 | |
| Business Process Workflow | 323,000 | |
| 318,000 | ||
| Projeto X | ||
| SAC New Release | 172,000 | |
| Commercial Offers Software Accipiens |
74,010 62,791 |
As at 31 December 2019 and 30 September 2020, the Group has the following assets classified as investment properties:
| 31.12.2019 | |||
|---|---|---|---|
| Land and natural resources | Buildings and other constructions | Total | |
| Investment properties | |||
| Opening balance | 3,508,355 | 16,538,633 | 20,046,988 |
| Additions | - | - | - |
| Disposals | (195,997) | (1,528,862) | (1,724,859) |
| Closing balance | 3,312,358 | 15,009,771 | 18,322,129 |
| Accumulated depreciation | |||
| Opening balance | 234,974 | 10,388,531 | 10,623,505 |
| Depreciation for the period | - | 261,092 | 261,092 |
| Disposals | (21,122) | (943,491) | (964,612) |
| Closing balance | 213,853 | 9,706,133 | 9,919,985 |
| Accumulated impairment | |||
| Opening balance | - | 1,243,502 | 1,243,502 |
| Impairment for the period | - | (494,358) | (494,358) |
| Closing balance | - | 749,144 | 749,144 |
| Net Investment properties | 3,098,506 | 4,554,494 | 7,653,000 |
| Accumulated impairment | |||
|---|---|---|---|
| 30.09.2020 | |||
| Land and natural resources | Buildings and other constructions |
Total | |
| Investment properties | |||
| Opening balance | 3,312,358 | 15,009,771 | 18,322,129 |
| Additions | - | - | - |
| Disposals | (14,500) | (43,500) | (58,000) |
| Transfers and write-offs | (75,916) | (1,339,751) | (1,415,667) |
| Closing balance | 3,221,942 | 13,626,519 | 16,848,462 |
| Accumulated depreciation | |||
| Opening balance | 213,853 | 9,706,133 | 9,919,985 |
| Depreciation for the period | - | 181,212 | 181,212 |
| Disposals | - | (4,423) | (4,423) |
| Transfers and write-offs | (7,315) | (959,241) | (966,556) |
| Closing balance | 206,538 | 8,923,682 | 9,130,220 |
| Accumulated impairment | |||
| Opening balance | - | 749,144 | 749,144 |
| Impairment for the period | - | (80,739) | (80,739) |
| Closing balance | - | 668,405 | 668,405 |
| Net Investment properties | 3,015,405 | 4,034,433 | 7,049,838 |
These assets are not allocated to the Group operating activities, being in the market available for lease.
Depreciation for the nine-month period ended on 30 September 2020, of 181,212 Euros (196,587 Euros on 30 September 2019) was recorded in the caption Depreciation/amortisation and impairment of investments, net.
The market value of these assets, which are classified as investment property, in accordance with the valuations obtained at the end of the fiscal year 2019 which were conducted by independent entities, amounts to 12,261,900 Euros.
In the year ended 31 December 2019, the amount recorded under the disposals heading relates to the sale of three properties having the corresponding accounting gains, of 353 thousand Euros, been recorded in the caption Gains/Losses on disposal of assets.
Impairment losses for the year ended 31 December 2019 amounting to (494,358) Euros were recorded in the caption Depreciation/amortisation and impairment of investments, net and are explained by the market value reduction observed in some buildings.
| reduction observed in some buildings. | ||||||||
|---|---|---|---|---|---|---|---|---|
| 7. | Companies included in the consolidation | |||||||
| Subsidiary companies | ||||||||
| As at 31 December 2019 and 30 September 2020, the parent company, CTT - Correios de Portugal, S.A. and | ||||||||
| the following subsidiaries were included in the consolidation: | ||||||||
| 31.12.2019 | 30.09.2020 | |||||||
| Company name | Place of business | Head office | Direct | Percentage of ownership Indirect |
Total | Direct | Percentage of ownership 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 |
| Correio Expresso de Moçambique, S.A. ("CORRE") |
Mozambique | Av. 24 de Julho, Edificio 24, n.º 1097, 3.º Piso, Bairro da Polana Maputo - Mozambique |
50 | - | 50 | 50 | - | 50 |
| Av. D. João II N.º 13 | 100 | - | 100 | 100 | - | 100 | ||
| Banco CTT, S.A. ("BancoCTT") |
Portugal | 1999-001 Lisboa |
| Portugal | ||||||||
|---|---|---|---|---|---|---|---|---|
| In relation to the company CORRE, as the Group has the right to variable returns arising from its involvement and the ability to affect those returns, it is included in the consolidation. |
||||||||
| Joint ventures | ||||||||
| As at 31 December 2019 and 30 September 2020, the Group held the following interests in joint ventures, | ||||||||
| registered through the equity method: | ||||||||
| 31.12.2019 | 30.09.2020 | |||||||
| Company name | Place of business | Head office | Percentage of ownership | Percentage of ownership | ||||
| NewPost, ACE | Portugal | Av. Fontes Pereira de Melo, 40 Lisboa |
Direct 49 |
Indirect - |
Total 49 |
Direct 49 |
Indirect - |
Total 49 |
| PTP & F, ACE | Portugal | Estrada Casal do Canas Amadora |
51 | - | 51 | 51 | - | 51 |
| On 1 July and 3 September 2020, the company MKTPlace - Comércio Eletrónico, S.A., was subject to capital increases in the amount of 2,045,054 Euros made by CTT. Associated companies As at 31 December 2019 and 30 September 2020, the Group held the following interests in associated companies accounted for by the equity method: 31.12.2019 30.09.2020 Percentage of ownership Percentage of ownership Company name Place of business Head office Direct Indirect Total Direct Indirect Multicert - Serviços de Certificação Electrónica, S.A. Lagoas Parque, Edifício 3, Piso 3 20 - 20 - - Portugal ("Multicert") Oeiras Mafelosa, SL (a) Castellon - Spain - 25 25 - 25 Spain Urpacksur, SL (a) Málaga - Spain - 30 30 - 30 Spain |
||||||
|---|---|---|---|---|---|---|
| Total | ||||||
| - | ||||||
| 25 | ||||||
| (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. | 30 | |||||
In August 2020, the investment in Multicert - Serviços de Certificação Electrónica, S.A. was sold, resulting in a capital gain of 707,047 Euros, recorded in the caption Gains/losses in subsidiary, associated companies and joint ventures.
| Other investments | ||||
|---|---|---|---|---|
| In September 2020, the investment in Tagus Park was sold, resulting in a capital gain of 28,507 Euros, recorded | ||||
| in the caption Gains/losses in subsidiary, associated companies and joint ventures. | ||||
| 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 () Chaves Funding No.8 () |
2017 2019 |
Portugal Portugal |
12.2% 100% |
Full Full |
The main impacts of the consolidation of these structured entities on the Group's accounts are the following:
| Ulisses Finance No.1 (*) | 2017 | Portugal | 12.2% | Full |
|---|---|---|---|---|
| The main impacts of the consolidation of these structured entities on the Group's accounts are the following: | ||||
| 31.12.2019 | 30.09.2020 | |||
| Cash and cash equivalents | 7,730,012 | 8,640,686 |
In the year ended 31 December 2019, the consolidation perimeter was changed following the acquisition of 321 Crédito – Instituição Financeira de Crédito, S.A..
During the nine-month period ended 30 September 2020, there were no changes in the consolidation perimeter.
As at 31 December 2019 and 30 September 2020, the caption Debt securities, in the Group, showed the following composition:
| 31.12.2019 | 30.09.2020 | ||
|---|---|---|---|
| Non-current | |||
| Financial assets at fair value through other comprehensive income (1) |
|||
| Government bonds | 528,420 | 11,491,862 | |
| Bonds issued by other entities | - | 7,431,799 | |
| 528,420 | 18,923,661 | ||
| Financial assets at amortised cost | |||
| Government bonds | 409,886,034 | 454,851,482 | |
| Bonds issued by other entities | 14,605,943 | 3,232,078 | |
| Impairment | (169,217) | (178,503) | |
| 424,322,759 | 457,905,057 | ||
| 424,851,179 | 476,828,719 | ||
| Current | |||
| Financial assets at fair value through other comprehensive income (1) |
|||
| Government bonds | 13,727 | 6,637,344 | |
| Bonds issued by other entities | - | 518,263 | |
| 13,727 | 7,155,607 | ||
| Financial assets at amortised cost | |||
| Government bonds | 31,536,069 | 39,101,369 | |
| Bonds issued by other entities | 14,491 | 12,478,646 | |
| Impairment | (4,136) | (11,139) | |
| 31,546,424 | 51,568,876 | ||
| 31,560,152 | 58,724,483 | ||
| 456,411,331 | 535,553,202 |
| (1) As at 31 December 2019 and 30 September 2020 includes the amount of 225 Euros and 15,530 Euros, respectively, regarding Accumulated impairment losses. |
|||||||
|---|---|---|---|---|---|---|---|
| The analysis of the Financial assets at fair Value through other comprehensive income and the Financial assets | |||||||
| at amortised cost, by remaining maturity, as at 31 December 2019 and 30 September 2020 is detailed as | |||||||
| follows: | |||||||
| 31.12.2019 | |||||||
| Due within 3 months | Current Over 3 months and less than 1 year |
Over 1 year and less than 3 years Total |
Non-current Over 3 years |
Total | Total | ||
| Financial assets at fair value through other | |||||||
| comprehensive income (1) | |||||||
| Government bonds National |
13,727 | - | 13,727 | 528,420 | - | 528,420 | 542,147 |
| Foreign | - | - | - | - | - | - | - |
| Bonds issued by other entities | |||||||
| National | - | - | - | - | - | - | - |
| Foreign | - | - | - | - | - | - | - |
| 13,727 | - | 13,727 | 528,420 | - | 528,420 | 542,147 | |
| (1) As at 31 December 2019 includes the amount of 225 Euros regarding Accumulated impairment losses. | |||||||
| 31.12.2019 | |||||||
| Current | Non-current | ||||||
| Due within 3 months | Over 3 months and less than 1 year | Over 1 year and less than 3 years Total |
Over 3 years | Total | Total | ||
| Financial assets at amortised cost | |||||||
| Government bonds | |||||||
| National | 4,538,504 | 4,717,697 | 9,256,202 | 41,143,284 | 236,717,591 | 277,860,875 | 287,117,077 |
| Foreign | 752,422 | 21,527,446 | 22,279,868 | 34,645,814 | 97,379,345 | 132,025,158 | 154,305,026 |
| Bonds issued by other entities | |||||||
| National | 14,491 | - | 14,491 | 14,605,943 | - | 14,605,943 | 14,620,434 |
| Foreign | - | - | - | - | - | - | - |
| 5,305,417 | 26,245,143 | 31,550,561 | 90,395,041 | 334,096,936 | 424,491,976 | 456,042,537 |
| (1) As at 31 December 2019 includes the amount of 225 Euros regarding Accumulated impairment losses. | |||||||
|---|---|---|---|---|---|---|---|
| Due within 3 months | Over 3 months and less than 1 year | Over 1 year and less than 3 years Total |
Over 3 years | Total | |||
| Financial assets at amortised cost | |||||||
| Government bonds | |||||||
| National | 4,538,504 | 4,717,697 | 9,256,202 | 41,143,284 | 236,717,591 | 277,860,875 | 287,117,077 |
| Foreign | 752,422 | 21,527,446 | 22,279,868 | 34,645,814 | 97,379,345 | 132,025,158 | 154,305,026 |
| Bonds issued by other entities | |||||||
| National | 14,491 | - | 14,491 | 14,605,943 | - | 14,605,943 | 14,620,434 |
| Foreign | - | - | - | - | - | - | - |
| 5,305,417 | 26,245,143 | 31,550,561 | 90,395,041 | 334,096,936 | 424,491,976 | 456,042,537 | |
| Current | 30.09.2020 | ||||||
| Current | 30.09.2020 | Non-current | Total | ||||
|---|---|---|---|---|---|---|---|
| Due within 3 months | Over 3 months and less than 1 year | Total | Over 1 year and less than 3 years | Over 3 years | Total | ||
| Financial assets at fair value through other | |||||||
| comprehensive income (1) | |||||||
| Government bonds | |||||||
| National | 100,350 | 6,536,994 | 6,637,344 | 6,181,012 | 5,310,850 | 11,491,862 | 18,129,206 |
| Foreign | - | - | - | - | - | - | - |
| Bonds issued by other entities | |||||||
| National | 14,618 | 503,645 | 518,263 | 7,431,799 | - | 7,431,799 | 7,950,062 |
| Foreign | - | - | - | - | - | - | - |
| CTT –Correios de Portugal, S.A. – | Public Company | ||||||
|---|---|---|---|---|---|---|---|
| 30.09.2020 | |||||||
| Due within 3 months | Current Over 3 months and less than 1 year |
Over 1 year and less than 3 years Total |
Non-current Over 3 years |
Total | Total | ||
| Financial assets at amortised cost | |||||||
| Government bonds | |||||||
| National | 6,248,161 | 12,859,625 | 19,107,785 | 28,965,653 | 243,476,954 | 272,442,607 | 291,550,393 |
| Foreign | 1,413,770 | 18,579,813 | 19,993,583 | 15,994,760 | 166,414,114 | 182,408,875 | 202,402,458 |
| Bonds issued by other entities | |||||||
| National | 9,007,435 | 3,471,211 | 12,478,646 | 3,232,078 | - | 3,232,078 | 15,710,724 |
| Foreign | - | - | - | - | - | - | - |
| 16,669,365 | 34,910,650 | 51,580,015 | 48,192,492 | 409,891,068 | 458,083,560 | 509,663,574 | |
| The impairment losses, for the year ended 31 December 2019 and the nine-month period ended 30 September 2020, are detailed as follows: |
|||||||
| 31.12.2019 | |||||||
| Opening balance | Increases | Reversals | Utilisations | Transfers | Closing balance | ||
| Non-current assets |
| The impairment losses, for the year ended 31 December 2019 and the nine-month period ended 30 | |||||||
|---|---|---|---|---|---|---|---|
| September 2020, are detailed as follows: | |||||||
| 31.12.2019 | |||||||
| Opening balance | Increases | Reversals | Utilisations | Transfers | Closing balance | ||
| Non-current assets | |||||||
| Financial assets at fair value through other | |||||||
| comprehensive income | 504 | 19 | (40,529) | (299) | 40,529 | 225 | |
| Financial assets at amortised cost | 164,379 | 31,512 | (43,292) | - | 16,618 | 169,217 | |
| 164,883 | 31,531 | (83,821) | (299) | 57,147 | 169,442 | ||
| Current assets | |||||||
| Financial assets at fair value through other | 127,286 | - | - | (86,757) | (40,529) | - | |
| comprehensive income | |||||||
| Financial assets at amortised cost | 18,447 | 2,678 | (370) | - | (16,618) | 4,136 | |
| 145,733 | 2,678 | (370) | (86,757) | (57,147) | 4,136 | ||
| Financial assets at fair value through other comprehensive income |
127,790 | 19 | (40,529) | (87,056) | - | 225 | |
| Financial assets at amortised cost | 182,826 | 34,190 | (43,662) | - | - 173,353 |
||
| 310,616 | 34,209 | (84,191) | (87,056) | - | 173,578 | ||
| 30.09.2020 | |||||||
| Opening balance | Increases | Reversals | Utilisations | Transfers | Closing balance | ||
| Non-current assets | |||||||
| Financial assets at fair value through other comprehensive income |
225 | 11,182 | (76) | - | (62) | 11,269 |
| Financial assets at amortised cost | 173,353 | 28,591 | (12,302) | - | - | 189,641 |
|---|---|---|---|---|---|---|
| Regarding the movements in impairment losses of Financial assets at fair value through other comprehensive | ||||||
| income by stages, in the year ended 31 December 2019 and the nine-month period ended 30 September 2020, | ||||||
| 31.12.2019 | 30.09.2020 | |||||
| Stage 1 | Stage 1 | |||||
| Opening balance | 127,790 | 225 | ||||
| Change in the accounting standards | - | - | ||||
| Change in period: | ||||||
| Increases due to origination and acquisition | - | 15,411 | ||||
| Changes due to change in credit risk | 19 | (105) | ||||
| Decrease due to derecognition repayments and disposals | (127,585) | - | ||||
| Write-offs | - | - | ||||
| Changes due to update in the institution's methodology for estimation | - - |
|||||
| Foreign exchange and other | - | - | ||||
| Impairment - Financial assets at fair value through other | ||||||
| comprehensive income | 225 | 15,530 | ||||
The reconciliation of accounting movements related to impairment losses is presented below:
| CTT –Correios de Portugal, S.A. – Public Company |
|||
|---|---|---|---|
| The reconciliation of accounting movements related to impairment losses is presented below: | 31.12.2019 | 30.09.2020 | |
| Stage 1 | Stage 1 | ||
| Opening balance | 127,790 | 225 | |
| Change in the accounting standards | - | - | |
| Change in period: | |||
| ECL income statement change for the period | (40,510) | 15,305 | |
| Stage transfers (net) | - | - | |
| Disposals | - | - | |
| Utilisations during the period | (87,056) | - | |
| Write-offs | - | - | |
| - | - | ||
| Write-off recoveries | |||
| Foreign exchange and other Impairment - Financial assets at fair value through other |
- 225 |
- 15,530 |
For the impairment losses of Financial assets at amortised cost, the movements by stages, in the year ended 31 December 2019 and the nine-month period ended 30 September 2020, they are detailed as follows:
| Foreign exchange and other | - | - |
|---|---|---|
| Impairment - Financial assets at fair value through other | ||
| For the impairment losses of Financial assets at amortised cost, the movements by stages, in the year ended | ||
| 31 December 2019 and the nine-month period ended 30 September 2020, they are detailed as follows: | ||
| 31.12.2019 | 30.09.2020 | |
| Stage 1 | Stage 1 | |
| Opening balance | 182,825 | 173,353 |
| Change in the accounting standards | - | - |
| Change in period: | ||
| Increases due to origination and acquisition | 13,008 | 13,764 |
| Changes due to change in credit risk | (4,033) | 6,661 |
| Decrease due to derecognition repayments and disposals | (18,447) | (4,136) |
| Write-offs | - | - |
| Changes due to update in the institution's methodology for estimation | - - |
|
| Foreign exchange and other | - | - |
| Impairment - Financial assets at amortised cost | 173,353 | 189,641 |
The reconciliation of accounting movements related to impairment losses is presented below:
| Write-offs | - | - |
|---|---|---|
| The reconciliation of accounting movements related to impairment losses is presented below: | ||
| 31.12.2019 | 30.09.2020 | |
| Stage 1 | Stage 1 | |
| Opening balance | 182,825 | 173,353 |
| Change in the accounting standards | - | - |
| Change in period: | ||
| ECL income statement change for the period | (9,473) | 16,289 |
| Stage transfers (net) | - | - |
| Disposals | - | - |
| Utilisations during the period | - | - |
| Write-offs | - | - |
| Write-off recoveries | - | - |
| - | ||
| Foreign exchange and other | - |
According to the current accounting policy, Banco CTT regularly assesses whether there is objective evidence of impairment in its financial asset portfolios at fair value through other comprehensive income and other financial assets at amortized cost, following the criteria defined in the accounting policies.
As at 31 December 2019 and 30 September 2020, the Group headings Other banking financial assets and Other banking financial liabilities showed the following composition:
| Other | banking | financial | assets |
|---|---|---|---|
| Other banking financial liabilities showed the following composition: | As at 31 December 2019 and 30 September 2020, the Group headings Other banking financial assets and | ||
| 31.12.2019 | 30.09.2020 | ||
| Non-current assets | |||
| Investments in credit institutions | - | - | |
| Loans to credit institutions | 18,928,416 | 13,186,231 | |
| Impairment | (166,249) | (4,284) | |
| Other | 1,882 | 2,497 | |
| 18,764,049 | 13,184,444 | ||
| Current assets | |||
| Investments in credit institutions | 1,650,072 | 26,000,061 | |
| Loans to credit institutions | 11,551,960 | 8,515,381 | |
| Impairment | (47,303) | (23,870) | |
| Other | 5,688,014 | 5,458,903 | |
| Impairment | (4,182,457) | (3,264,470) | |
| 14,660,286 | 36,686,005 | ||
| 33,424,335 | 49,870,449 | ||
| Non-current liabilities | |||
| Debt securities issued | 76,060,295 | 50,572,083 | |
| 76,060,295 | 50,572,083 | ||
| Current liabilities | |||
| Debt securities issued | 17,073 | 10,669 | |
| Other | 17,970,646 | 22,172,495 | |
| 17,987,719 | 22,183,165 | ||
| 94,048,014 | 72,755,248 |
Investments in credit institutions and Loans to credit institutions
Regarding the above-mentioned captions, the scheduling by maturity is as follows:
| 31.12.2019 | 30.09.2020 | ||
|---|---|---|---|
| Up to 3 months | 3,367,931 | 19,723,257 | |
| From 3 to 12 months | 9,834,101 | 14,792,185 | |
| From 1 to 3 years | 13,689,301 | 11,172,651 | |
| Over 3 years | 5,239,115 32,130,448 |
2,013,581 47,701,674 |
| Impairment | |||||||
|---|---|---|---|---|---|---|---|
| The impairment losses, for the year ended 31 December 2019 and the nine-month period ended 30 | |||||||
| September 2020, are detailed as follows: | |||||||
| 31.12.2019 | |||||||
| Opening balance | Increases | Reversals | Utilisations | Transfers | Changes in the consolidation perimeter |
Closing balance | |
| Non-current assets | |||||||
| Investments and loans in credit institutions | 217,751 | 91,523 | (244,427) | - | 101,403 | - | 166,249 |
| 217,751 | 91,523 | (244,427) | - | 101,403 | - | 166,249 | |
| Current assets | |||||||
| Investments and loans in credit institutions | 197,018 | 24,916 | (73,229) | - | (101,403) | - | 47,303 |
| Other | 10,927 207,945 |
224,755 249,672 |
(53,534) (126,763) |
- - |
(10,927) (112,330) |
4,011,235 4,011,235 |
4,182,457 4,229,760 |
| CTT –Correios de Portugal, S.A. – | Public Company | |||||||
|---|---|---|---|---|---|---|---|---|
| 30.09.2020 | ||||||||
| Opening balance | Increases | Reversals | Utilisations | Transfers | Changes in the consolidation perimeter |
Closing balance | ||
| Non-current assets Investments and loans in credit institutions |
166,249 | 3,429 | (31,641) | - | (133,753) | - | 4,284 | |
| 166,249 | 3,429 | (31,641) | - | (133,753) | - | 4,284 | ||
| Current assets | ||||||||
| Investments and loans in credit institutions | 47,303 | 19,103 | (176,288) | - | 133,753 | - | 23,870 | |
| Other | 4,182,457 4,229,760 |
32,077 51,179 |
(950,064) (1,126,352) |
- - |
- 133,753 |
- - |
3,264,470 3,288,340 |
Regarding the movements in impairment losses on investments and loans to credit institutions by stages, in the year ended 31 December 2019 and the nine-month period ended 30 September 2020, they are detailed as follows: Stage 1 Stage 1
| 31.12.2019 | 30.09.2020 | |
|---|---|---|
| Stage 1 | Stage 1 | |
| Opening balance | 414,769 | 213,552 |
| Change in the accounting standards | - | - |
| Change in period: | ||
| Increases due to origination and acquisition | 52,737 | 22,531 |
| Changes due to change in credit risk | (64,377) | (182,801) |
| Decrease due to derecognition repayments and disposals | (189,576) | (25,128) |
| Write-offs | - | - |
| Changes due to update in the institution's methodology for estimation | - - |
|
| Foreign exchange and other | - | - |
| Impairment | 213,552 | 28,154 |
The reconciliation of accounting movements related to impairment losses is presented below:
| Write-offs | - | - |
|---|---|---|
| The reconciliation of accounting movements related to impairment losses is presented below: | ||
| 31.12.2019 | 30.09.2020 | |
| Stage 1 | Stage 1 | |
| Opening balance | 414,769 | 213,552 |
| Change in the accounting standards | - | - |
| Change in period: | ||
| ECL income statement change for the period | (201,217) | (185,398) |
| Stage transfers (net) | - | - |
| Disposals | - | - |
| Utilisations during the period | - | - |
| Write-offs | - | - |
| Write-off recoveries | - | - |
| Foreign exchange and other | - | - |
| Impairment | 213,552 | 28,154 |
| 31.12.2019 | 30.09.2020 | |
| Securitisations 76,077,368 |
50,582,753 | |
| 76,077,368 | 50,582,753 | |
This caption showed the following composition:
| Foreign exchange and other | - | - | |
|---|---|---|---|
| 31.12.2019 | 30.09.2020 | ||
| Securitisations | 76,077,368 76,077,368 |
50,582,753 50,582,753 |
| CTT –Correios de Portugal, S.A. – | Public Company | |||||
|---|---|---|---|---|---|---|
| As at 31 December 2019 and 30 September 2020 the Debt securities issued are analysed as follows: | ||||||
| Issue | Issue date | 31.12.2019 Maturity date |
Remuneration | Nominal value | Book value | |
| Ulisses Finance No.1 – Class A | July 2017 | July 2033 | Euribor 1M + 85 b.p. | 61,938,000 | 61,963,646 | |
| Ulisses Finance No.1 – Class B | July 2017 | July 2033 | Euribor 1M + 160 b.p. | 7,000,000 | 7,004,497 | |
| Ulisses Finance No.1 – Class C | July 2017 | July 2033 | Euribor 1M + 375 b.p. | 7,100,000 | 7,109,225 | |
| 76,038,000 | 76,077,368 | |||||
| Issue | Issue date | 30.09.2020 Maturity date |
Remuneration | Nominal value | Book value | |
| Ulisses Finance No.1 – Class A | July 2017 | July 2033 | Euribor 1M + 85 b.p. | 36,463,916 | 36,472,841 | |
| Ulisses Finance No.1 – Class B | July 2017 | July 2033 | Euribor 1M + 160 b.p. | 7,000,000 | 7,003,026 | |
| Ulisses Finance No.1 – Class C | July 2017 | July 2033 | Euribor 1M + 375 b.p. | 7,100,000 | 7,106,885 50,582,753 |
|
| 30.09.2020 | |||||
|---|---|---|---|---|---|
| Ulisses Finance No.1 – Class A | July 2017 | July 2033 | Euribor 1M + 85 b.p. | 36,463,916 | 36,472,841 |
| Ulisses Finance No.1 – Class B Ulisses Finance No.1 – Class C |
July 2017 July 2017 |
July 2033 July 2033 |
Euribor 1M + 160 b.p. Euribor 1M + 375 b.p. |
7,000,000 7,100,000 |
7,003,026 7,106,885 |
| The movement of this item in the year ended 31 December 2019 and the nine-month period ended 30 | ||||||
|---|---|---|---|---|---|---|
| September 2020 is as follows: | ||||||
| 31.12.2019 | ||||||
| Changes in the | ||||||
| Opening balance | consolidation perimeter | Issues | Repayments | Other movements |
Closing balance | |
| Chaves Funding No.7 | - | 201,660,418 | - | (201,600,000) | (60,418) | - |
| Ulisses Finance No.1 | - | 101,060,139 | - | (25,007,517) | 24,746 | 76,077,368 |
| - | 302,720,556 | - | (226,607,517) | (35,672) | 76,077,368 | |
| 30.09.2020 | ||||||
| Changes in the | ||||||
| Opening balance | consolidation | Issues | Repayments | Other | Closing balance | |
| perimeter | movements | |||||
| Chaves Funding No.7 | - | - | - | - | - | - |
| Ulisses Finance No.1 | 76,077,368 | - | - | (25,086,006) | (408,609) | 50,582,753 |
| 31.12.2019 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Opening balance | Changes in the consolidation perimeter |
|||||||
| 30.09.2020 | ||||||||
| Opening balance | Changes in the consolidation perimeter |
Issues | Repayments | Other movements |
Closing balance | |||
| Chaves Funding No.7 | - | - | - | - | - | - | ||
| Ulisses Finance No.1 | 76,077,368 | - | - | (25,086,006) | (408,609) | 50,582,753 | ||
| 50,582,753 | ||||||||
| 76,077,368 | - | - | (25,086,006) | (408,609) | ||||
| The scheduling by maturity regarding this caption is as follows: | ||||||||
| 31.12.2019 | ||||||||
| Current | Non-current | |||||||
| Due within 3 months | Over 3 months and less than 1 year | Total | Over 1 year and less than 3 years |
Over 3 years | Total | Total | ||
| Opening balance | Changes in the consolidation perimeter |
||||||
|---|---|---|---|---|---|---|---|
| The scheduling by maturity regarding this caption is as follows: | |||||||
| Current | 31.12.2019 | Non-current | |||||
| Due within 3 months | Over 3 months and less than 1 year | Total | Over 1 year and less than 3 years |
Over 3 years | Total | Total | |
| Securitisations | 17,073 | - 17,073 |
- 76,060,295 |
76,060,295 | 76,077,368 | ||
| 17,073 | - 17,073 |
- 76,060,295 |
76,060,295 | 76,077,368 | |||
| 30.09.2020 | |||||||
| 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 | |
| Securitisations | 10,669 | - 10,669 |
- 50,572,083 |
50,572,083 | 50,582,753 |
As at 31 December 2019 and 30 September 2020, the Group caption Credit to banking clients was detailed as follows:
| As at 31 December 2019 and 30 September 2020, the Group caption Credit to banking clients was detailed as | ||
|---|---|---|
| 31.12.2019 | 30.09.2020 | |
| Performing loans | 884,922,781 | 1,045,366,622 |
| Mortgage Loans | 405,168,238 | 494,819,980 |
| Auto Loans | 469,774,742 | 542,380,779 |
| Leasings | 8,977,360 | 6,989,913 |
| Overdrafts | 1,002,441 | 1,175,950 |
| Other credits | - | - |
| Overdue loans | 4,875,990 | 7,308,360 |
| Overdue loans - less than 90 days | 740,614 | 856,998 |
| Overdue loans - more than 90 days | 4,135,376 | 6,451,362 |
| 889,798,770 | 1,052,674,982 | |
| (3,978,200) | (13,062,781) | |
| Credit risk impairment |
| The maturity analysis of the Credit to bank clients as at 31 December 2019 and 30 September 2020 is detailed | ||||||||
|---|---|---|---|---|---|---|---|---|
| as follows: | ||||||||
| 31.12.2019 | ||||||||
| Current | Non-current | |||||||
| At sight / Undetermined | Due within 3 months | Over 3 months and less than 1 year |
Total | Over 1 year and less than 3 years | Over 3 years | Total | Total | |
| Mortgage loans | 563 | 2,963,207 | 8,424,196 | 11,387,966 | 22,801,200 | 370,979,635 | 393,780,835 | 405,168,801 |
| Auto Loans | 3,120,988 | 21,508,729 | 53,448,350 | 78,078,067 | 138,181,295 | 256,636,368 | 394,817,663 | 472,895,730 |
| Leasings | 445,221 | 671,623 | 1,843,173 | 2,960,017 | 3,962,260 | 2,500,304 | 6,462,564 | 9,422,580 |
| Overdrafts | 1,682,194 | - | - | 1,682,194 | - | - | - | 1,682,194 |
| Other credits | 629,465 | - | - | 629,465 | - | - | - | 629,465 |
| 5,878,431 | 25,143,559 | 63,715,719 | 94,737,709 | 164,944,755 | 630,116,307 | 795,061,062 | 889,798,770 | |
| 30.09.2020 | ||||||||
| Current | Non-current | Total | ||||||
| At sight / Undetermined | Due within 3 months | Over 3 months and less than 1 year | Total | Over 1 year and less than 3 years | Over 3 years | Total | ||
| Mortgage loans | 475 | 3,439,016 | 10,138,710 | 13,578,201 | 27,983,656 | 453,258,598 | 481,242,254 | 494,820,455 |
| Auto Loans | 5,243,205 | 22,519,774 | 61,608,189 | 89,371,168 | 158,140,488 | 300,112,328 | 458,252,816 | 547,623,984 |
| Leasings | 455,658 | 373,862 | 1,672,651 | 2,502,172 | 3,083,680 | 1,859,720 | 4,943,400 | 7,445,571 |
| Overdrafts | 2,163,114 | - | - | 2,163,114 | - | - | - | 2,163,114 |
| Other credits | 621,858 | - | - | 621,858 | - | - | - | 621,858 |
| 8,484,310 | 26,332,653 | 73,419,550 | 108,236,512 | 189,207,824 | 755,230,646 | 944,438,469 | 1,052,674,982 |
| The breakdown of this heading by type of rate is as follows: | |||||
|---|---|---|---|---|---|
| 31.12.2019 | 30.09.2020 | ||||
| Fixed rate Floating rate |
427,176,016 462,622,754 |
503,126,034 549,548,948 |
|||
| 889,798,770 | 1,052,674,982 | ||||
| Credit risk impairment | (3,978,200) | (13,062,781) |
| 31.12.2019 | 30.09.2020 | |||
|---|---|---|---|---|
| 503,126,034 | ||||
| Fixed rate | 427,176,016 | |||
| Floating rate | 462,622,754 | 549,548,948 | ||
| 889,798,770 | 1,052,674,982 | |||
| Credit risk impairment | (3,978,200) | (13,062,781) |
| CTT –Correios de Portugal, S.A. – | Public Company | ||||
|---|---|---|---|---|---|
| As at 31 December 2019 and 30 September 2020, the analysis of this caption by type of collateral, is presented as follows: |
31.12.2019 | ||||
| Performing Loans |
Overdue Loans | Gross amount | Impairment | Net amount | |
| Asset-backed Loans | 414,131,534 | 733,350 | 414,864,883 | (410,314) | 414,454,569 |
| Other guaranteed Loans | 463,692,443 | 1,651,366 | 465,343,809 | (1,938,840) | 463,404,969 |
| Unsecured Loans | 7,098,804 | 2,491,274 | 9,590,078 | (1,629,045) | 7,961,033 |
| 884,922,781 | 4,875,990 | 889,798,770 | (3,978,200) | 885,820,570 | |
| Performing Loans | Overdue Loans | 30.09.2020 Gross amount |
Impairment | Net amount | |
| (1,254,462) | 501,776,292 | ||||
| Asset-backed Loans | 502,168,991 | 861,763 | 503,030,754 | ||
| Other guaranteed Loans Unsecured Loans |
536,386,941 6,810,690 |
2,801,798 3,644,800 |
539,188,738 10,455,490 |
(7,757,285) (4,051,034) |
531,431,453 6,404,455 |
| Performing | |||||
|---|---|---|---|---|---|
| 30.09.2020 | |||||
| Performing Loans | Overdue Loans | Gross amount | Impairment | Net amount | |
| Asset-backed Loans | 502,168,991 | 861,763 | 503,030,754 | (1,254,462) | 501,776,292 |
| Other guaranteed Loans | 536,386,941 | 2,801,798 | 539,188,738 | (7,757,285) | 531,431,453 |
| Unsecured Loans | 6,810,690 | 3,644,800 | 10,455,490 | (4,051,034) | 6,404,455 |
| 1,045,366,622 | 7,308,360 | 1,052,674,982 | (13,062,781) | 1,039,612,200 | |
| The credit type analysis of the caption, as at 31 December 2019 and 30 September 2020 is detailed as follows: | |||||
| 31.12.2019 | |||||
| Performing Loans |
Overdue Loans | Gross amount | Impairment | Net amount | |
| Mortgage Loans | 405,168,238 | 563 | 405,168,801 | (94,675) | 405,074,126 |
| Auto Loans | 469,774,742 | 3,120,988 | 472,895,730 | (3,339,385) | 469,556,345 |
| The credit type analysis of the caption, as at 31 December 2019 and 30 September 2020 is detailed as follows: | |||||
|---|---|---|---|---|---|
| 31.12.2019 | |||||
| Performing Loans |
Overdue Loans | Gross amount | Impairment | Net amount | |
| Mortgage Loans | 405,168,238 | 563 | 405,168,801 | (94,675) | 405,074,126 |
| Auto Loans | 469,774,742 | 3,120,988 | 472,895,730 | (3,339,385) | 469,556,345 |
| Leasings | 8,977,360 | 445,221 | 9,422,580 | (99,647) | 9,322,933 |
| Overdrafts | 1,002,441 | 679,753 | 1,682,194 | (434,392) | 1,247,802 |
| Other credits | - | 629,465 | 629,465 | (10,101) | 619,364 |
| 884,922,781 | 4,875,990 | 889,798,770 | (3,978,200) | 885,820,571 | |
| 30.09.2020 | |||||
| Performing Loans | Overdue Loans | Gross amount | Impairment | Net amount | |
| Mortgage Loans | 494,819,980 | 475 | 494,820,455 | (476,922) | 494,343,532 |
| Auto Loans | 542,380,779 | 5,243,205 | 547,623,984 | (11,607,290) | 536,016,694 |
| Leasings | 6,989,913 | 455,658 | 7,445,571 | (26,429) | 7,419,143 |
| Overdrafts | 1,175,950 | 987,164 | 2,163,114 | (890,148) | 1,272,966 |
| Other credits | - | 621,858 | 621,858 | (61,992) | 559,865 |
| 1,045,366,622 | 7,308,360 | 1,052,674,982 | (13,062,781) | 1,039,612,200 |
| 30.09.2020 |
|---|
| Performing Loans Overdue Loans Gross amount Impairment Net amount |
| Mortgage Loans 494,819,980 475 494,820,455 (476,922) 494,343,532 |
| Auto Loans 542,380,779 5,243,205 547,623,984 (11,607,290) 536,016,694 |
| Leasings 6,989,913 455,658 7,445,571 (26,429) 7,419,143 |
| Overdrafts 1,175,950 987,164 2,163,114 (890,148) 1,272,966 |
| Other credits - 621,858 621,858 (61,992) 559,865 |
| 1,045,366,622 7,308,360 1,052,674,982 (13,062,781) 1,039,612,200 |
| 31.12.2019 | |||||
|---|---|---|---|---|---|
| Performing | |||||
| Companies | |||||
| Agriculture, forestry and fishing | 1,111,340 | 8,581 | 1,119,921 | (19,854) | 1,100,067 |
| Mining and quarrying | 22,559 | - 22,559 |
(130) | 22,430 | |
| Manufacturing | 3,414,359 | 82,939 | 3,497,297 | (53,265) | 3,444,032 |
| Water supply | 192,904 | 5,712 | 198,615 | (5,806) | 192,809 |
| Construction | 8,289,160 | 198,054 | 8,487,214 | (46,230) | 8,440,985 |
| Wholesale and retail trade | 5,370,786 | 654,597 | 6,025,382 | (41,074) | 5,984,309 |
| Transport and storage | 1,459,131 | 27,086 | 1,486,217 | (35,098) | 1,451,119 |
| Accommodation and food service activities | 1,969,233 | 15,598 | 1,984,831 | (40,979) | 1,943,852 |
| Information and communication | 347,009 | 1,459 | 348,467 | (2,804) | 345,663 |
| Financial and insurance activities | 167,845 | 702 | 168,547 | (2,503) | 166,044 |
| Real estate activities | 1,788,935 | 10,730 | 1,799,665 | (12,427) | 1,787,238 |
| Professional, scientific and technical activities | 1,107,319 | 7,105 | 1,114,424 | (12,141) | 1,102,283 |
| Administrative and support service activities | 1,611,610 | 289,475 | 1,901,084 | (19,749) | 1,881,336 |
| Education | 648,410 | 997 | 649,407 | (4,634) | 644,773 |
| Human health services and social work activities | 876,026 | 851 | 876,878 | (14,683) | 862,195 |
| Arts, entertainment and recreation | 478,756 | 2,074 | 480,830 | (9,266) | 471,564 |
| Other services | 14,038,952 | 34,985 | 14,073,937 | (106,888) | 13,967,049 |
| Individuals | |||||
| Mortgage Loans | 405,168,238 | 563 | 405,168,801 | (94,675) | 405,074,126 |
| Consumer Loans | 436,860,210 | 3,534,481 | 440,394,691 | (3,455,994) | 436,938,697 |
| 884,922,781 | 4,875,989 | 889,798,770 | (3,978,200) | 885,820,570 |
| CTT –Correios de Portugal, S.A. – | Public Company | ||||
|---|---|---|---|---|---|
| 30.09.2020 | |||||
| Performing Loans | Overdue Loans | Gross amount | Impairment | Net amount | |
| Companies | |||||
| Agriculture, forestry and fishing | 1,260,050 | 15,086 | 1,275,135 | (40,714) | 1,234,422 |
| Mining and quarrying | 130,440 | 0 | 130,440 | (1,337) | 129,104 |
| Manufacturing | 2,948,965 | 159,018 | 3,107,983 | (85,635) | 3,022,349 |
| Water supply | 156,092 | 5,712 | 161,803 | (5,840) | 155,963 |
| Construction | 6,214,827 | 633,913 | 6,848,741 | (177,038) | 6,671,703 |
| Wholesale and retail trade | 4,648,794 | 424,303 | 5,073,097 | (18,215) | 5,054,882 |
| Transport and storage | 1,331,475 | 21,485 | 1,352,960 | (74,748) | 1,278,212 |
| Accommodation and food service activities | 1,684,660 | 18,430 | 1,703,090 | (61,532) | 1,641,558 |
| Information and communication | 269,746 | 2,088 | 271,834 | (2,854) | 268,980 |
| Financial and insurance activities | 157,662 | 1,461 | 159,124 | (3,236) | 155,888 |
| Real estate activities | 1,437,266 | 11,450 | 1,448,716 | (19,190) | 1,429,526 |
| Professional, scientific and technical activities | 940,773 | 6,983 | 947,756 | (23,661) | 924,094 |
| Administrative and support service activities | 1,406,381 | 290,563 | 1,696,944 | (80,269) | 1,616,675 |
| Public administration and defence, compulsory social security | 17,453 | - | 17,453 | (185) | 17,268 |
| Education | 588,655 | 1,005 | 589,660 | (10,810) | 578,850 |
| Human health services and social work activities | 810,491 | 3,800 | 814,292 | (33,140) | 781,152 |
| Arts, entertainment and recreation | 430,802 | 7,829 | 438,631 | (31,700) | 406,931 |
| Other services | 20,831,074 | 70,355 | 20,901,429 | (456,525) | 20,444,903 |
| Individuals | |||||
| Mortgage Loans | 494,819,980 | 475 | 494,820,455 | (476,922) | 494,343,532 |
| 505,281,038 | 5,634,402 | 510,915,440 | (11,459,230) | 499,456,211 | |
| Consumer Loans | 1,045,366,622 | 7,308,360 | 1,052,674,982 | (13,062,781) | 1,039,612,200 |
| 980,153,237 | ||||
|---|---|---|---|---|
| (2,062,682) | (5,218,239) | |||
| 39,336,322 | 43,437,818 | |||
| 40,207,967 (871,645) |
45,300,038 (1,862,221) |
|||
| 11,588,496 | 16,021,146 | |||
| 12,632,369 (1,043,873) |
22,003,468 (5,982,322) |
|||
| 31.12.2019 834,895,752 836,958,434 |
30.09.2020 985,371,476 |
The caption Credit to bank clients includes the effect of traditional securitisation operations, through Special Purpose Entities (SPE) and subject to consolidation in accordance with IFRS 10.
The caption credit to bank clients includes the following amounts related to finance leases contracts:
| The caption credit to bank clients includes the following amounts related to finance leases contracts: Amount of future minimum payments Interest not yet due Present value |
31.12.2019 9,632,194 (654,835) 8,977,360 |
30.09.2020 7,534,598 (544,685) 6,989,913 |
|---|---|---|
| Purpose Entities (SPE) and subject to consolidation in accordance with IFRS 10. | ||
| The caption Credit to bank clients includes the effect of traditional securitisation operations, through Special | ||
The amount of future minimum payments of lease contracts, by maturity terms, is analysed as follows:
| 31.12.2019 | 30.09.2020 | |
|---|---|---|
| Interest not yet due | (654,835) | (544,685) |
| The amount of future minimum payments of lease contracts, by maturity terms, is analysed as follows: | 31.12.2019 | 30.09.2020 |
| Due within 1 year Due between 1 to 5 years |
2,532,976 5,835,429 |
1,955,964 4,575,367 |
| Over 5 years | 1,263,789 | 1,003,268 |
The analysis of financial leases contracts, by type of client, is presented as follows:
| CTT –Correios de Portugal, S.A. – | Public Company | |
|---|---|---|
| The analysis of financial leases contracts, by type of client, is presented as follows: 31.12.2019 |
30.09.2020 | |
| Individuals | 1,097,230 | 955,422 |
| Home | 95,072 | 90,531 |
| Consumer Others |
- 1,002,158 |
- 864,892 |
| Companies | 7,880,129 | 6,034,491 |
| Equipment Real Estate |
634,577 7,245,552 |
309,800 5,724,691 |
| Impairment losses | ||||||||
|---|---|---|---|---|---|---|---|---|
| During the year ended 31 December 2019 and the nine-month period ended 30 September 2020, the | ||||||||
| 31.12.2019 | ||||||||
| Opening balance | Increases | Reversals | Utilisations | Transfers | PPA adjustments | Changes in the consolidation perimeter |
Closing balance | |
| Credit to banking clients | 225,968 | 2,298,517 | (1,777,703) | (469,677) | 611,781 | (5,446,614) | 7,149,174 | 2,591,450 |
| 225,968 | 2,298,517 | (1,777,703) | (469,677) | 611,781 | (5,446,614) | 7,149,174 | 2,591,450 | |
| Credit to banking clients | 231,556 | 5,409,498 | (2,876,295) | (705,364) | (611,781) | (12,694,345) | 12,633,482 | 1,386,750 |
| movement in the Group under the Accumulated impairment losses caption (Note 13) was as follows: Non-current assets Current assets |
231,556 457,525 |
5,409,498 7,708,015 |
(2,876,295) (4,653,998) |
(705,364) (1,175,041) |
(611,781) - |
(12,694,345) (18,140,959) |
12,633,482 19,782,656 |
1,386,750 3,978,200 |
| 31.12.2019 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Opening balance | Increases | Reversals | 30.09.2020 Utilisations |
Transfers | Other adjustments | Changes in the consolidation perimeter |
Closing balance | |
| Non-current assets | ||||||||
| Credit to banking clients | 2,591,450 | 6,647,793 | (1,007,486) | (18,552) | 1,064 | 298,489 | - | 8,512,757 |
| 2,591,450 | 6,647,793 | (1,007,486) | (18,552) | 1,064 | 298,489 | - | 8,512,757 | |
| Current assets | ||||||||
| Credit to banking clients | 1,386,750 | 3,553,210 | (538,496) | (9,916) | (1,064) | 159,540 | - | 4,550,024 |
| 1,386,750 | 3,553,210 | (538,496) | (9,916) | (1,064) 0 |
159,540 458,029 |
- - |
4,550,024 13,062,781 |
|
| 3,978,200 | 10,201,003 | (1,545,983) | (28,468) |
| The impairment losses of Credit to banking clients (increases net of reversals) in the Group for the nine-month | ||||
|---|---|---|---|---|
| period ended 30 September 2020, amounting to 8,655,020 Euros (1,923,754 Euros at 30 September 2019) | ||||
| was recorded under the caption Impairment of accounts receivable, net. | ||||
| Regarding the movements in impairment losses by stages, in the year ended 31 December 2019 and the nine | ||||
| month period ended 30 September 2020, they are detailed as follows: | ||||
| Stage 1 | 31.12.2019 Stage 2 |
Stage 3 | Total | |
| Opening balance | 184,341 | 67,195 | 205,989 | 457,525 |
| Change in period: | ||||
| Increases due to origination and acquisition | 2,553,925 | 305,614 | 230,886 | 3,090,425 |
| 1,469,995 | (49,602) | 577,742 | ||
| Changes due to change in credit risk | (842,651) | |||
| Changes due to modifications without derecognition | - | - | - | - |
| Decrease due to derecognition repayments and disposals | (139,146) | (64,702) | (410,302) | (614,150) |
| Write-offs | - | - | (1,175,041) | (1,175,041) |
| Changes due to update in the institution's methodology for estimation | - | - | - | - |
| Transfers to: | ||||
| Stage 1 | 403,848 | (373,530) | (30,318) | - |
| Stage 2 | (82,928) | 121,868 | (38,940) | - |
| Stage 3 | (14,707) | (717,728) | 732,435 | - |
| Foreign exchange and other Impairment |
- 2,062,682 |
62,932 871,644 |
1,578,765 1,043,873 |
1,641,697 3,978,200 |
| CTT –Correios de Portugal, S.A. – | Public Company | |||
|---|---|---|---|---|
| 30.09.2020 | ||||
| Stage 1 | Stage 2 | Stage 3 | Total | |
| Opening balance | 2,062,682 | 871,644 | 1,043,873 | 3,978,200 |
| Change in period: | ||||
| Increases due to origination and acquisition | 1,630,658 | 442,421 | 216,089 | 2,289,168 |
| Changes due to change in credit risk | 1,372,349 | 1,133,164 | 4,421,576 | 6,927,089 |
| Changes due to modifications without derecognition | - | - | - | - |
| Decrease due to derecognition repayments and disposals | (163,815) | (31,607) | (365,815) | (561,237) |
| Write-offs | - | - | (28,468) | (28,468) |
| Changes due to update in the institution's methodology for estimation | - | - | - | - |
| Transfers to: | ||||
| Stage 1 | 436,253 | (352,195) | (84,058) | - |
| Stage 2 | (126,350) | 236,602 | (110,252) | - |
| Stage 3 | (35,849) | (607,204) | 643,053 | - |
| Foreign exchange and other | 42,311 | 169,395 | 246,324 | 458,030 |
| Impairment | 5,218,239 | 1,862,221 | 5,982,322 | 13,062,781 |
| - | - | (720,935) | (720,935) |
| Transfers to: | ||||
|---|---|---|---|---|
| Stage 1 | 436,253 | (352,195) | (84,058) | - |
| Stage 2 | (126,350) | 236,602 | (110,252) | - |
| Stage 3 | (35,849) | (607,204) | 643,053 | - |
| Foreign exchange and other | 42,311 | 169,395 | 246,324 | 458,030 |
| The reconciliation of accounting movements related to impairment losses is presented below: | ||||
| Stage 1 | 31.12.2019 Stage 2 |
Stage 3 | Total | |
| Opening balance | 184,341 | 67,195 | 205,989 | 457,525 |
| Change in period: | ||||
| ECL income statement change for the period | 1,572,128 | 1,710,907 | (229,018) | 3,054,017 |
| Stage transfers (net) | 306,213 | (969,390) | 663,177 | - |
| Disposals | - | - | - | - |
| Utilisations during the period | - | - | - | - |
| Write-offs | - | - | (1,175,041) | (1,175,041) |
| Write-off recoveries | - | - | - | - |
| Foreign exchange and other | - | 62,932 | 1,578,765 | 1,641,697 |
| Impairment | 2,062,682 | 871,644 | 1,043,873 | 3,978,200 |
| 30.09.2020 | ||||
| Stage 1 | Stage 2 | Stage 3 | Total | |
| Opening balance | 2,062,682 | 871,644 | 1,043,873 | 3,978,200 |
| Change in period: | ||||
| ECL income statement change for the period | 2,839,192 | 1,543,978 | 4,271,850 | 8,655,020 |
| 30.09.2020 | ||||
|---|---|---|---|---|
| Opening balance | 2,062,682 | 871,644 | 1,043,873 | 3,978,200 |
| Change in period: | ||||
| ECL income statement change for the period | 2,839,192 | 1,543,978 | 4,271,850 | 8,655,020 |
| Stage transfers (net) | 274,054 | (722,797) | 448,743 | - |
| Disposals | - | - | - | - |
| Utilisations during the period | - | - | - | - |
| Write-offs | - | - | (28,468) | (28,468) |
| Write-off recoveries | - | - | - | - |
| Foreign exchange and other | 42,311 | 169,395 | 246,324 | 458,030 |
| 5,218,239 | 1,862,221 | 5,982,322 | 13,062,781 |
As at 31 December 2019 and 30 September 2020, the Deferrals included in current assets and current and non-current liabilities of the Group showed the following composition:
| CTT –Correios de Portugal, S.A. – | Public Company | ||
|---|---|---|---|
| 31.12.2019 | 30.09.2020 | ||
| Assets deferrals Current |
|||
| Rents payable | 1,391,768 | 1,567,886 | |
| Meal allowances | 1,486,218 | 1,451,792 | |
| Other | 4,427,275 | 5,472,128 | |
| 7,305,261 | 8,491,806 | ||
| Liabilities deferrals | |||
| Non-current | |||
| Investment subsidy | 294,490 | 286,089 | |
| 294,490 | 286,089 | ||
| Current | |||
| Investment subsidy | 11,201 | 11,201 | |
| Contratual liabilities | 1,533,212 | 1,411,762 | |
| Other | 1,910,064 | 1,366,661 | |
| 3,454,477 | 2,789,624 | ||
| 3,748,967 | 3,075,713 |
The variation in the caption Other assets deferrals essentially results from the renewal of software license contracts and insurance contracts.
The caption Contractual liabilities results from the application of IFRS 15 - Revenue from Contracts with Customers and stands for the amount already invoiced but not yet recognised as revenue because the performance obligations have not yet been met as recommended by the standard.
The "Contractual liabilities" recognised by the Group essentially refer to values related to stamps and prepaid postage of priority mail in the amount of 852,129 Euros (1,028,940 Euros on 31 December 2019 and to objects invoiced and not delivered on 30 September 2020 in the express segment, in the amount of 559,633 Euros (504,272 Euros as of 31 December 2019), whose revenue is recognised upon delivery in the following month.
The revenue recognised by the Group in the period, included in the balance of Contractual liabilities at the beginning of the period amounted to 1,397,729 Euros.
No "Assets resulting from contracts" associated with the application of IFRS 15 - Revenue from contracts with customers were recognised.
As at 31 December 2019 and 30 September 2020, cash and cash equivalents correspond to the value of cash, sight deposits, term deposits and cash investments on the monetary market, net of bank overdrafts and equivalent short-term bank financing, and is detailed as follows:
| CTT –Correios de Portugal, S.A. – Public Company |
||
|---|---|---|
| 31.12.2019 | 30.09.2020 | |
| Cash | 59.266.424 | 97.385.310 |
| Slight deposits | 182.192.757 | 120.939.618 |
| Demand deposits at Bank of Portugal | 29.497.627 | 86.264.424 |
| Deposits in other credit institutions | 107.376.274 | 27.004.545 |
| Term deposits | 64.662.643 | 53.972.531 |
| Cash and cash equivalents (Balance sheet) | 442.995.724 | 385.566.428 |
| Bank overdrafts | - | - |
| Sight deposits at Bank of Portugal | (25.924.034) | (15.438.500) |
| Outstanding checks / Checks clearing | (2.226.045) | (4.947.068) |
| Impairment of slight and term deposits | 19.924 | 19.486 |
| Cash and cash equivalents (Cash flow statement) | 414.865.569 | 365.200.346 |
In accordance with the provisions of Regulation (EU) No. 1358/2011 of European Central Bank of 14 December 2011, the minimum cash requirements kept as demand deposits at Bank of Portugal amounts to 1% of deposits and other liabilities.
Therefore, the item Demand deposits at Bank of Portugal includes, as at 30 September 2020, a total amount of demand deposits of 86,264,424 Euros, of which 15,438,500 Euros were allocated to the fulfilment of the above mentioned mandatory minimum cash requirements at Banco de Portugal.
In the scope of IFRS 9 – Financial instruments the Group has begun to recognised impairment on sight and term deposits as well as on investments in credit institutions. Therefore, in the year ended 31 December 2019 and the nine-month period ended 30 September 2020, the movement recorded under the caption "Impairment of sight and term deposits" (Note 13) related to the Group is detail as follows: Opening balance Increases Reversals Utilisations Closing balance Sight and term deposits 21,295 5,351 (6,723) - 19,924 21,295 5,351 (6,723) - 19,924
| 31.12.2019 | |||||
|---|---|---|---|---|---|
| Opening balance | Increases | Reversals | Utilisations | Closing balance | |
| Sight and term deposits | 21.295 | 5.351 | (6.723) | $\overline{\phantom{a}}$ | 19.924 |
| 21.295 | 5.351 | (6, 723) | - | 19,924 |
| sight and term deposits" (Note 13) related to the Group is detail as follows: | |||||
|---|---|---|---|---|---|
| 31.12.2019 | |||||
| 30.09.2020 | |||||
| Opening balance | Increases | Reversals | Utilisations | Closing balance | |
| Sight and term deposits | 19,924 | 3,131 | (3,568) | - | 19,486 |
| 19,924 | 3,131 | (3,568) | - | 19,486 |
The impairment losses (increases net of reversals) of sight and term deposits in the Group for the nine-month period ended 30 September 2020, amounting to (438) Euros ((1,126) Euros at 30 September 2019) was recorded under the heading Impairment of accounts receivable, net.
During the year ended 31 December 2019 and the nine-month period ended 30 September 2020, the following movements occurred in the Group's impairment losses:
| CTT –Correios de Portugal, S.A. – Public Company 31.12.2019 Changes in the consolidation Opening balance Increases Reversals Utilisations Transfers PPA adjustments Closing balance perimeter Non-current assets Tangible fixed assets 24,256 - (83) - - - - 24,173 Investment properties 1,243,502 - (494,358) - - - - 749,144 1,267,758 - (494,442) - - - - 773,316 Debt securities 164,883 31,531 (83,821) (299) 57,147 - - 169,441 Other non-current assets 1,982,890 - - - 116,906 - - 2,099,796 Credit to banking clients 225,968 2,298,517 (1,777,703) (469,674) 611,781 7,149,174 (5,446,614) 2,591,449 Other banking financial assets 217,751 91,523 (244,428) - 101,403 - - 166,249 2,591,492 2,421,571 (2,105,952) (469,973) 887,237 7,149,174 (5,446,614) 5,026,935 3,859,250 2,421,571 (2,600,394) (469,973) 887,237 7,149,174 (5,446,614) 5,800,251 Current assets Accounts receivable 33,436,621 7,204,092 (766,236) (1,892,645) - - - 37,981,832 Credit to banking clients 231,556 5,409,498 (2,876,295) (705,365) (611,781) 12,633,482 (12,694,345) 1,386,750 Debt securities 145,733 2,678 (370) (86,758) (57,147) - - 4,136 Other current assets 7,516,988 1,585,794 (100,275) (554,795) (105,979) - - 8,341,734 Other banking financial assets 207,945 249,671 (126,763) - (112,330) 4,011,236 - 4,229,759 Slight and term deposits 21,295 5,352 (6,723) - - - - 19,923 41,560,139 14,457,085 (3,876,662) (3,239,562) (887,237) 16,644,718 (12,694,345) 51,964,134 Non-current assets held for sale - 9 (3,059) - - 187,659 - 184,609 - 9 (3,059) - - 187,659 - 184,609 Merchandise 1,824,111 313,018 (1,129) (19,695) - - - 2,116,305 Raw, subsidiary and consumable 633,526 91,662 - - - - - 725,188 2,457,637 404,680 (1,129) (19,695) - - - 2,841,493 44,017,776 14,861,773 (3,880,850) (3,259,257) (887,237) 16,832,377 (12,694,345) 54,990,236 |
47,877,025 17,283,344 (6,481,244) (3,729,231) - 23,981,551 (18,140,959) 60,790,487 |
||||||||
|---|---|---|---|---|---|---|---|---|---|
| 30.09.2020 | |||||||||
| perimeter | |||||||||
| Changes in the consolidation Opening balance Increases Reversals Utilisations Transfers Other movements PPA adjustments Closing balance |
|||||||||
| Non-current assets | - | - - |
- | - | - | 24,172 | |||
| Tangible fixed assets 24,172 - |
|||||||||
| 30.09.2020 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Opening balance | Increases | Reversals | Utilisations | Transfers | Changes in the consolidation perimeter |
Other movements | PPA adjustments | Closing balance | |
| Non-current assets | |||||||||
| Tangible fixed assets | 24,172 | - | - | - - |
- | - | - | 24,172 | |
| Investment properties | 749,144 | - | (80,739) | - - |
- | - | - | 668,405 | |
| 773,316 | - | (80,739) | - - |
- | - | - | 692,577 | ||
| Debt securities | 169,441 | 38,093 | (11,656) | - (6,107) |
- | - | - | 189,771 | |
| Other non-current assets | 2,099,796 | - | - | - 398,684 |
- | - | - | 2,498,480 | |
| Credit to banking clients | 2,591,449 | 6,647,793 | (1,007,486) | (18,552) | 1,064 | - | 298,489 | - | 8,512,757 |
| Other banking financial assets | 166,249 | 3,429 | (31,641) | - (133,753) |
- | - | - | 4,284 | |
| 5,026,935 | 6,689,314 | (1,050,783) | (18,552) | 259,889 | - | 298,489 | - | 11,205,292 | |
| 5,800,251 | 6,689,314 | (1,131,522) | (18,552) | 259,889 | - | 298,489 | - | 11,897,868 | |
| Current assets Accounts receivable | |||||||||
| 37,981,832 | 3,994,509 | (925,763) | (1,097,022) | 624 | - | - | - | 39,954,180 | |
| Credit to banking clients | 1,386,750 | 3,553,210 | (538,497) | (9,915) | (1,064) | - | 159,540 | - | 4,550,024 |
| Debt securities | 4,136 | 5,908 | (751) | - 6,107 |
- | - | - | 15,400 | |
| Other current assets | 8,341,734 | 1,711,903 | (68,735) | (49,822) | 156,270 | - | - | - | 10,091,349 |
| Other banking financial assets | 4,229,759 | 51,179 | (1,126,352) | - 133,753 |
- | - | - | 3,288,339 | |
| Slight and term deposits | 19,923 51,964,134 |
3,131 9,319,840 |
(3,567) (2,663,666) |
(1,156,759) | - - 295,689 |
- - |
- 159,540 |
- - |
19,486 57,918,778 |
| Non-current assets held for sale | 184,609 | 80,219 | - | - - |
- | - | - | 264,828 | |
| 184,609 | 80,219 | - | - - |
- | - | - | 264,828 | ||
| Merchandise | 2,116,305 | 448,373 | - | (104,705) | - | - | - | - | 2,459,973 |
| Raw, subsidiary and consumable | 725,188 | 17,840 | (7,310) | (2,255) | - | - | - | - | 733,463 |
| 2,841,493 | 466,213 | (7,310) | (106,960) | - | - | - | - | 3,193,436 | |
| 54,990,236 | 9,866,272 | (2,670,976) | (1,263,719) | 295,689 | - | 159,540 | - | 61,377,042 | |
| 16,555,586 | (3,802,499) | (1,282,271) | 555,579 | - | 458,029 | - | 73,274,911 |
As at 30 September 2020, the Group review the expected credit losses ("ECL") to be applied to amounts receivable and bank deposits, with reformulation of the risk parameters in order to reflect in the forwardlooking component the economic deterioration resulting from the situation of COVID-19, considering for this purpose the combination of the projected changes in unemployment rate and GDP. This revision of the parameters had an impact of around €3.2m in the consolidated accounts of the Group.
As at 30 September 2020, the Company share capital was composed of 150,000,000 shares with the nominal value of 0.50 Euros each. The share capital is fully underwritten and paid-up.
As at 31 December 2019 and 30 September 2020 the Company's shareholders with greater than or equal to 2% shareholdings, according to the information reported, are as follows:
| CTT –Correios de Portugal, S.A. – | Public Company | |||
|---|---|---|---|---|
| 31.12.2019 | ||||
| Shareholder | No. of shares | % | Nominal value | |
| Manuel Champalimaud, SGPS, S.A. (1) | 19,271,134 | 12.847% | 9,635,567 | |
| Manuel Carlos de Melo Champalimaud | 353,185 | 0.235% | 176,593 | |
| Manuel Carlos de Melo Champalimaud (1) | Total | 19,624,319 | 13.083% | 9,812,160 |
| GreenWood Builders Fund I, LP (2) | 8,759,082 | 5.839% | 4,379,541 | |
| GreenWood Investors LLC(2) | Total | 8,759,082 | 5.839% | 4,379,541 |
| Global Portfolio Investments, S.L. (3) | 8,492,745 | 5.662% | 4,246,373 | |
| Indumenta Pueri, S.L. (3) | Total | 8,492,745 | 5.662% | 4,246,373 |
| Norges Bank | Total | 5,834,490 | 3.890% | 2,917,245 |
| BlackRock, Inc.(4) | Total | 4,496,864 | 2.998% | 2,248,432 |
| BBVA Asset Management, SA SGIIC (5) | Total | 3,495,499 | 2.330% | 1,747,750 |
| Wellington Management Group LLP(6) | Total | 3,321,219 | 2.214% | 1,660,610 |
| BPI Gestão de Activos (7) | Total | 3,044,307 | 2.030% | 1,522,154 |
| CTT, S.A. (own shares) (8) | Total | 1 | 0.000% | 1 |
| Other shareholders | Total | 92,931,474 | 61.954% | 46,465,737 |
| Total | 150,000,000 | 100.000% | 75,000,000 |
| CTT –Correios de Portugal, S.A. – | Public Company | ||||
|---|---|---|---|---|---|
| 30.09.2020 | |||||
| Shareholder | No. of shares | % | Nominal value | ||
| Manuel Champalimaud, SGPS, S.A. (1) | 19,330,084 | 12.887% | 9,665,042 | ||
| Manuel Carlos de Melo Champalimaud | 353,185 | 0.235% | 176,593 | ||
| Manuel Carlos de Melo Champalimaud (1) | Total | 19,683,269 | 13.122% | 9,841,635 | |
| Global Portfolio Investments, S.L. (2) | 15,057,937 | 10.039% | 7,528,969 | ||
| Indumenta Pueri, S.L. (2) | Total | 15,057,937 | 10.039% | 7,528,969 | |
| GreenWood Builders Fund I, LP (3) | 10,020,000 | 6.680% | 5,010,000 | ||
| GreenWood Investors LLC(3) | Total | 10,020,000 | 6.680% | 5,010,000 | |
| Norges Bank | Total | 7,581,206 | 5.054% | 3,790,603 | |
| BBVA Asset Management, SA SGIIC (4) | Total | 3,495,499 | 2.330% | 1,747,750 | |
| BPI Gestão de Activos (5) | Total | 3,044,307 | 2.030% | 1,522,154 | |
| CTT, S.A. (own shares) (6) | Total | 1 | 0.000% | 1 | |
| Other shareholders | Total | 91,117,781 | 60.745% | 45,558,891 | |
| Total | 150,000,000 | 100.000% | 75,000,000 |
(1) Includes 19,246,815 shares directly held by Manuel Champalimaud, SGPS, S.A. and 83,269 shares held by the members of its Board of Directors, of which Duarte Palma Leal Champalimaud, non-executive member of the Board of Directors of CTT, is Vice-Chairman. Qualified shareholding directly and indirectly attributable to Manuel Carlos de Melo Champalimaud.
The commercial legislation regarding own shares requires that a non-distributable reserve must be created for the same amount of the acquisition price of such shares. This reserve is not available for distribution while the shares stay in the Company's possession. In addition, the applicable accounting standards determine that the gains or losses obtained with the sale of such shares are recognised in reserves.
As at 30 September 2020, CTT held 1 own share, with a nominal value of 0.50€, being all the inherent rights suspended pursuant to article 324 of the Portuguese Companies Code.
Own shares held by CTT are within the limits established by the Articles of Association of the Company and by the Portuguese Companies Code. These shares are recorded at acquisition cost.
| CTT –Correios de Portugal, S.A. – | Public Company | ||||
|---|---|---|---|---|---|
| Reserves | |||||
| As at 31 December 2019 and 30 September 2020, the Group heading Reserves showed the following composition: |
|||||
| Legal reserves | Own shares reserves | 31.12.2019 Fair Value reserves |
Other reserves | Total | |
| Opening balance Assets fair value |
15,000,000 - |
8 - |
270 15,720 |
50,836,597 - |
65,836,875 15,720 |
| 31.12.2019 | |||||
|---|---|---|---|---|---|
| Legal reserves | Own shares reserves | 30.09.2020 Fair Value |
Other reserves | Total | |
| reserves | |||||
| Opening balance | 15,000,000 | 8 | 15,990 | 50,836,597 | 65,852,595 |
| Assets fair value | - | - | 436,057 | - | 436,057 |
The commercial legislation establishes that at least 5% of the annual net profit must be allocated to reinforce the legal reserve, until it represents at least 20% of the share capital. This reserve is not distributable except in the event of the liquidation of the Company but may be used to absorb losses after all the other reserves have been depleted or incorporated in the share capital.
As at 30 September 2020, this caption includes the amount of 8 Euros related to the creation of an unavailable reserve for the same amount of the acquisition price of the own shares held.
This heading records the profits transferred to reserves that are not imposed by the law or articles of association, nor constituted pursuant to contracts signed by the Company.
During the year ended 31 December 2019 and the nine-month period ended 30 September 2020, the following movements were made in the Group heading Retained earnings:
| This heading records the profits transferred to reserves that are not imposed by the law or articles of | ||
|---|---|---|
| association, nor constituted pursuant to contracts signed by the Company. | ||
| During the year ended 31 December 2019 and the nine-month period ended 30 September 2020, the following movements were made in the Group heading Retained earnings: |
31.12.2019 | 30.09.2020 |
| Opening balance | 4,378,984 | 10,867,301 |
| Application of the net profit of the prior year | 21,499,271 | 29,196,933 |
| Distribution of dividends | (15,000,000) | - |
| Changes to accounting polices | - | - |
| Adjustments from the application of the equity method | (10,954) | (6,697) |
| Other movements | - | (46,047) |
The actuarial gains/losses associated to post-employment benefits, as well as the corresponding deferred taxes, are recognised in this heading.
Thus, for the year ended 31 December 2019 and the nine-month period ended 30 September 2020, the movements occurred in this heading, in the Group, were as follows:
| Thus, for the year ended 31 December 2019 and the nine-month period ended 30 September 2020, the | ||
|---|---|---|
| movements occurred in this heading, in the Group, were as follows: | ||
| 31.12.2019 | 30.09.2020 | |
| Opening balance | (30,993,430) | (49,744,144) |
| Actuarial gains/losses Tax effect (Note 25) |
(25,769,253) 7,018,539 |
- - |
According to the dividend distribution proposal included in the 2018 Annual Report, at the General Meeting of Shareholders, which was held on 23 April 2019, a dividend distribution of 15,000,000 Euros, corresponding to a dividend per share of 0.10 Euros, regarding the financial year ended 31 December 2018 was proposed and approved. The dividend amount assigned to own shares was transferred to Retained earnings, totalling 0.10 Euros.
At the General Meeting of Shareholders, which was held on 29 April 2020, the non-distribution of dividends regarding the year ended 31 December 2019 was proposed and approved. The net income in the amount of 29,196,933 Euros was transferred to retained earnings.
During the periods ended 30 September 2019 and 30 September 2020, the earnings per share were calculated as follows:
| Earnings per share | ||
|---|---|---|
| During the periods ended 30 September 2019 and 30 September 2020, the earnings per share were calculated | ||
| 30.09.2019 | 30.09.2020 | |
| Net income for the period | 22,852,183 | 4,329,479 |
| Average number of ordinary shares | 149,999,999 | 149,999,999 |
| Earnings per share | ||
| Basic | 0.15 | 0.03 |
| Diluted | 0.15 | 0.03 |
| 30.09.2019 | 30.09.2020 | |
| Shares issued at begining of the period | 150,000,000 | 150,000,000 |
| Own shares effect | 1 | 1 |
The average number of shares is detailed as follows:
| Earnings per share | ||
|---|---|---|
| The average number of shares is detailed as follows: | 30.09.2019 | 30.09.2020 |
| 150,000,000 | 150,000,000 | |
| Shares issued at begining of the period Own shares effect |
1 | 1 |
The basic earnings per share are calculated dividing the net profit attributable to equity holders of the parent company by the average ordinary shares, excluding the average number of own shares held by the Group.
As at 30 September 2020, the number of own shares held is 1 and its average number for the year ended 30 September 2020 is also 1, reflecting the fact that no acquisitions or sales/attribution have occurred in the given period.
There are no dilutive factors of earnings per share.
As at 31 December 2019 and 30 September 2020, Debt of the Group showed the following composition:
| CTT –Correios de Portugal, S.A. – | Public Company | ||
|---|---|---|---|
| 31.12.2019 | 30.09.2020 | ||
| Non-current liabilities | |||
| Bank loans | 81,702,538 | 74,897,593 | |
| Lease liabilities | 66,895,396 | 76,171,697 | |
| 148,597,934 | 151,069,290 | ||
| Current liabilities | |||
| Bank loans | 9,749,470 | 16,849,643 | |
| Lease liabilities | 17,064,097 | 19,522,862 | |
| 26,813,567 | 36,372,505 | ||
| 175,411,501 | 187,441,795 |
| December 2019: 1.25% and 1.875%). | ||||||
|---|---|---|---|---|---|---|
| Bank loans and other loans | ||||||
| As at 31 December 2019 and 30 September 2020, the details of the Group bank loans were as follows: | ||||||
| 31.12.2019 | 30.09.2020 | |||||
| Amount used | Amount used | |||||
| Limit | Current | Non-current | Limit | Current | Non-current | |
| Bank loans | ||||||
| 11,250,000 | 9,749,470 | - | 11,250,000 | 9,749,643 | - | |
| - | 46,891,381 | - | 7,250,000 | 40,029,480 | ||
| Millennium BCP | - | 34,868,113 | ||||
| BBVA / Bankinter | 75,000,000 | |||||
| Novo Banco | - | - | 34,811,157 | - | ||
| Banco Montepio BIM - (Mozambique) |
- 44,870 |
- - |
- - |
25,000,000 40,928 |
- - |
- - |
| Other loans BIM - (Mozambique) |
- | - | - | - | - | - |
On 27 September 2017, a financing contract between CTT and BBVA and Bankinter was signed, for an initial period of 5 years and for a total amount of 90 million Euros, with the possibility of using the funds until September 2018. As no amount was used until the mentioned date, the contract was renegotiated on 27 September 2018, having the total amount been altered to 75 million Euros, while maintaining the one-year term for the use of the funds. Regarding 31 December 2018, the amount of 25 million Euros was used, presented in the balance sheet net of commission in the amount of 24,276,250 Euros. As at 30 September 2020 the referred amount corresponded to 47,279,480 Euros. By a company decision, the remaining available amount was not used.
On 22 April 2019, a simple credit agreement was signed between CTT and Novo Banco for a period of 60 months, with a grace period of two years, and may be extended for a period of 24 months, for a total amount of 35 million Euros. Regarding 30 September 2020, the 35 million Euros were used and are presented in the balance sheet net of commission in the amount of 34,868,113 Euros.
On 21 May 2020, a Commercial Paper Issue Placement Agreement was signed in the maximum amount of 25 million Euros, with a term of 3 years, renewable for the same period. As of 30 September 2020, no amount was used.
Bank loans obtained are subject to compliance with financial covenants, namely clauses of Cross default, Negative Pledge and Assets Disposal's limits. Additionally, the loans obtained also require compliance with rations of Net Debt over EBITDA and financial autonomy. Compliance with financial covenants is regularly monitored by the Group and is measured by counterparties on an annual basis based on the Financial Statements as at 31 December.
The Group presents lease liabilities which future payments, undiscounted and discounted amounts presented in the financial position, are detailed as follows:
| The Group presents lease liabilities which future payments, undiscounted and discounted amounts presented | |||
|---|---|---|---|
| in the financial position, are detailed as follows: | |||
| 31.12.2019 | 30.09.2020 | ||
| Due within 1 year | 20,168,630 | 27,409,892 | |
| Due between 1 to 5 years | 63,131,546 | 65,160,141 | |
| Over 5 years | 14,737,518 | 20,687,828 | |
| Total undiscounted lease liabilities | 98,037,694 | 113,257,860 | |
| Current | 17,064,097 | 19,522,862 | |
| Non-current | 66,895,396 | 76,171,697 | |
| Lease liabilities included in the statement of financial position | 83,959,493 | 95,694,559 | |
| The amounts recognised in the income statement are detailed as follows: | |||
| 30.09.2019 | 30.09.2020 | ||
| Lease liabilities interests (note 24) | 2,785,371 | 2,483,170 | |
| Variable payments not included in the measurament of the lease liability | 1,978,235 | 2,314,591 |
The amounts recognised in the income statement are detailed as follows:
| 30.09.2019 | 30.09.2020 | |
|---|---|---|
| The amounts recognised in the Cash flow statement are as follows: | 30.09.2019 | 30.09.2020 |
The amounts recognised in the Cash flow statement are as follows:
| 30.09.2019 | 30.09.2020 |
|---|---|
The movement in the rights of use underlying these lease liabilities can be analysed in note 4.
| 19. | Provisions, | Guarantees | provided, | |||||
|---|---|---|---|---|---|---|---|---|
| Contingent liabilities and commitments | ||||||||
| Provisions | ||||||||
| For the year ended 31 December 2019 and the nine-month period ended 30 September 2020, in order to face | ||||||||
| legal proceedings and other liabilities arising from past events, the Group recognised provisions, which showed | ||||||||
| the following movement: | 31.12.2019 | |||||||
| Opening balance | Increases | Reversals | Utilisations | Transfers | Changes in the consolidation perimeter |
PPA adjustments | Closing balance | |
| Non-current provisions | ||||||||
| Litigations | 3,149,620 | 1,975,191 | (1,652,175) | (691,483) | 67,824 | - | - | 2,848,977 |
| Restructuring | 1,842,159 | 100,826 | (863,627) | (39,610) | - | - | - | 1,039,748 |
| Other provisions | 9,021,484 | 210,045 | (675,510) | (2,942) | (67,824) | 1,499,282 | 397,421 | 10,381,956 |
| Sub-total - caption "Provisions (increases)/reversals" Restructuring |
14,013,263 1,026,902 |
2,286,062 7,504,481 |
(3,191,312) - |
(734,035) (7,852,242) |
- - |
1,499,282 - |
397,421 - |
14,270,681 679,141 |
| Other provisions | 979,174 | 1,826,549 | - | (120,167) | - | - | - | 2,685,556 |
| 16,019,339 | 11,617,093 | (3,191,312) | (8,706,444) | - | 1,499,282 | 397,421 | 17,635,379 | |
| 30.09.2020 | ||||||||
| Opening balance | Increases | Reversals | Utilisations | Transfers | Changes in the consolidation perimeter |
Closing balance | ||
| Non-current provisions | ||||||||
| Litigations | 2,848,977 | 720,150 | (511,750) | (141,086) | (110,610) | - | 2,805,681 | |
| Restructuring | 1,039,748 | - | - | - | - | - | 1,039,748 | |
| Other provisions | 10,381,956 | 985,918 | (271,488) | (333,841) | 110,610 | - | 10,873,155 | |
| Sub-total - caption "Provisions (increases)/reversals" | ||||||||
| 14,270,681 | 1,706,067 | (783,237) | (474,927) | - | - | 14,718,584 | ||
| Restructuring Other provisions |
2,685,556 | 679,141 | 149,861 794,720 |
- - |
(703,202) (671,863) |
- - |
- - |
125,800 2,808,413 |
The net amount between increases and reversals of provisions was recorded in the consolidated income statement under the caption Provisions, net and amounted to (511,271) Euros as at 30 September 2019 and 922,830 Euros as at 30 September 2020.
The provisions for litigations were set up to face the liabilities resulting from lawsuits brought against the Group and are estimated based on information from their lawyers as well as on the termination of the mentioned lawsuits. The final amount and the timing of the outflows regarding the provision for litigations depend on the outcome of the respective proceedings.
The reversal of the provision for litigations, in the amount of 1,652,175 Euros as at 31 December 2019 and 511,750 Euros as at 30 September 2020, essentially results from lawsuits whose decision, which was made known in the course of 2019 or 2020, respectively, proved to be favourable to the Group, or, not being favourable, resulted in the condemnation to pay amounts that proved to be lower than the estimated amounts (and reflected in this provision item).
On 19 December 2017, CTT approved an Operational Transformation Plan, which emphasises the purposes of optimising the retail network and reinforcing the HR optimisation programme. Following the maintenance, in 2018 and 2019, on the HR optimisation programme, the provision created for this purpose amounted to 125,800 Euros as at 30 September 2020, in the Group and has been recorded against the caption Staff costs in the income statement. It is expected that this provision will be substantially used in 2020.
The utilisations recorded in the same period regard mainly the payment of indemnities foreseen when the provision was booked as well as the costs incurred with the closing of post offices.
Also, within the scope of the Operational Transformation Plan, in the area of optimisation of the delivery network and mail processing operations, the Group, in the period ended 31 December 2018, created a provision for restructuring in the amount of 1,397,647 Euros which was recognised under "Provisions (increases) / reversals" in the income statement by nature. As at 31 December 2019 following an update/revision of the underlying criteria, the provision, in the Group, amounted to 1,039,748 Euros. As at 30 September 2020 the value has not been changed.
As at 30 September 2020, the provision, in the Group to cover any contingencies relating to labour litigation proceedings not included in the current court proceedings related to remuneration differences and attendance bonuses that can be claimed by workers, amounts to 6,701,284 Euros (6,891,248 Euros as at 31 December de 2019). The amount of the provision corresponds to the Group's best estimate for the outflow, and it is not possible to estimate the expected moment for the outflow as it depends on the moment when proceedings are initiated by the Group's employees.
As at 30 September 2020, a provision is recognised in CTT Expresso branch in Spain to face the notification issued by the Spanish National Commission on Markets and Competition, which has now been the subject of an appeal to the Spanish Audiencia Nacional (National High Court). The amount provisioned, of 1,400,000 Euros, is the result of the evaluation carried out by its legal advisors and the Group is awaiting the outcome of the process.
As at 30 September 2020, in addition to the previously mentioned situations, this heading also includes in the Group:
the amount of 1,952,449 Euros to cover costs of operational vehicles restoration.
| As at 31 December 2019 and 30 September 2020, the Group had provided bank guarantees to third parties as | ||
|---|---|---|
| Description | 31.12.2019 | 30.09.2020 |
| Contencioso Administrativo da Audiência Nacional (National Audience Administrative Litigation) and | ||
| CNMC - Comission Nacional de los Mercados y la Competencia - Espanha (National Commission on | ||
| Markets and Competition - Spain) | ||
| Autoridade Tributária e Aduaneira (Portuguese Tax and Customs Authority) | 3,148,845 8,211,715 |
3,148,845 2,261,290 |
| 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 |
| AMBIMOBILIÁRIA- INVESTIMENTOS E NEGÓCIOS, S.A. (Real estate company) | - | 480,000 |
| O Feliz - Imobiliaria (Real estate company) | 381,553 | 381,553 |
| EUROGOLD (Real estate company) | 288,384 | 288,384 |
| Courts | 281,830 | 275,830 |
| CIVILRIA (Real estate company) | - | 224,305 |
| TRANSPORTES BERNARDO MARQUES , S.A. | - | 223,380 |
| TIP - Transportes Intermodais do Porto, ACE (Oporto intermodal transport) | 150,000 | 150,000 |
| Municipalities | 118,658 | 118,658 |
| INCM - Imprensa Nacional da Casa da Moeda (Portuguese Mint and Official Printing Office) | 85,056 | 85,056 |
| Solred (Repsol's fuel cards) | 80,000 | 80,000 |
| EPAL - Empresa Portuguesa de Águas Livres (Multi-municipal System of Water Supply and Sanitation of | ||
| the Lisbon Area) | 68,895 | 68,895 |
| Companhia Carris de Ferro de Lisboa, EM, SA (Portuguese Railway company) ANA - Aeroportos de Portugal (Airports of Portugal) |
55,000 34,000 |
55,000 34,000 |
| EMEL, S.A. (Municipal company managing parking in Lisbon) | 26,984 | 26,984 |
| Águas do Norte (Water Supply of the Northern Region) | 23,804 | 23,804 |
| Other entities | 16,144 | 22,144 |
| Instituto de Gestão Financeira Segurança Social (Social Security Financial Management Institute) | 21,557 | 21,557 |
| Serviços Intermunicipalizados Loures e Odivelas (Inter-municipal Services of Water Supply and Sanitation | ||
| of the Loures and Odivelas Areas) | 17,000 | 17,000 |
| Direção Geral do Tesouro e Finanças (Directorate General of Treasury and Finance) |
16,867 | 16,867 |
| Portugal Telecom, S.A. (Telecommunication Company) | 16,658 | 16,658 |
| Refer (Public service for the management of the national railway network infrastructure) | 16,460 | 16,460 |
| SMAS de Sintra (Services of Water Supply and Sanitation of the city of Sintra) | 15,889 | 15,889 |
| Repsol (Oil and Gas Company) | 15,000 | 15,000 |
| Administração Regional de Saúde - Lisboa e Vale do Tejo ( Regional Health Authority of the Lisbon Area) |
13,000 | 13,000 |
| Lagos em Forma - Gestão desportiva, E.M., S.A. (Municipal company managing sports in Lagos) | 11,000 | 11,000 |
| Águas do Porto, E.M (Services of Water Supply and Sanitation of the city of Porto) | 10,720 | 10,720 |
| ADRA - Águas da Região de Aveiro (Services of Water Supply and Sanitation of the city of Aveiro) | 10,475 | 10,475 |
| SMAS Torres Vedras (Services of Water Supply and Sanitation of the city of Torres Vedras) | 9,910 | 9,910 |
| Promodois (Real estate company) Consejeria Salud ( Local Health Service/Spain) |
6,273 4,116 |
6,273 4,116 |
| Instituto do Emprego e Formação Profissional (Employment and Professional Training Institute) | 3,718 | 3,719 |
| EMARP - Empresa de Aguas e Resíduos de Portimão (Services of Water Supply and Sanitation of the city of Portimão) | 3,100 | 3,100 |
| IFADAP (National Support Institute for Farming and Fishing) |
1,746 | 1,746 |
| ADAM - Águas do Alto Minho (Services of Water Supply and Sanitation of theRegion of Alto Minho) | 466 | 466 |
| 16,991,290 | 11,968,552 |
According to the terms of some lease contracts of the buildings occupied by the Company's services, at the moment that the Portuguese State ceased to hold the majority of the share capital of CTT, bank guarantees on first demand had to be provided. These guarantees amount to 3,826,468 Euros as at 31 December 2019 and 30 September 2020, in the Group.
CTT Expresso branch in Spain provided a bank guaranty to the Sixth Section of the National Audience Administrative Litigation and to the Spanish National Commission on Markets and Competition ("Comisión Nacional de los Mercados y la Competencia") in the amount of 3,148,845 Euros, while the appeal presented by CTT Expresso branch in Spain in the National Audience in Spain proceeds.
As at 31 December 2019 and 30 September 2020, the Group subscribed promissory notes amounting to approximately 43.7 thousand Euros and 35.9 thousand Euros, respectively, for various credit institutions intended to secure complete and timely compliance with the corresponding financing contracts.
The Group also assumed financial commitments (comfort letters) in the amount of 1,170,769 Euros regarding the branch of CTT Expresso in Spain which are still active as at 30 September 2020.
In addition, the Group also assumed commitments relating to real estate rents under lease contracts and rents for other leases.
The Group contractual commitments related to Tangible fixed assets and Intangible assets are detailed respectively in Notes 4 and 5.
As at 31 December 2019 and 30 September 2020, the Group's heading Accounts payable showed the following composition:
| As at 31 December 2019 and 30 September 2020, the Group's heading Accounts payable showed the | ||
|---|---|---|
| 31.12.2019 | 30.09.2020 | |
| Current | ||
| Advances from customers | 2,824,160 | 2,895,687 |
| CNP money orders | 87,890,044 | 89,930,182 |
| Suppliers | 76,261,148 | 75,822,666 |
| Invoices pending confirmation | 10,560,107 | 8,890,979 |
| Fixed assets suppliers | 14,189,288 | 4,173,777 |
| Invoices pending confirmation (fixed assets) | 9,543,900 | 3,111,840 |
| Values collected on behalf of third parties | 8,495,311 | 6,290,521 |
| Postal financial services | 153,139,714 | 128,957,644 |
| Advances regarding disposals | 14,108 | 125,081 |
| Other accounts payable | 10,872,886 | 14,901,936 |
| 373,790,665 | 335,100,314 | |
| 373,790,665 | 335,100,314 |
The value of CNP money orders refers to the money orders received from the National Pensions Center (CNP), whose payment date to the corresponding pensioners will occur in the month after the closing of the period.
This heading records mainly the amounts collected related to taxes, insurance, savings and treasury certificates and other money orders, whose settlement date should occur in the month following the end of the period. The decrease seen is mainly due to the significant reduction observed in the subscription of treasury certificates.
As at 31 December 2019 and 30 September 2020, the composition of the heading Banking clients' deposits and other loans in the Group is as follows:
| Banking clients' deposits and other loans | ||
|---|---|---|
| As at 31 December 2019 and 30 September 2020, the composition of the heading Banking clients' deposits | ||
| 31.12.2019 | 30.09.2020 | |
| Sight deposits | 961,771,839 | 1,134,647,771 |
| Term deposits | 169,581,292 | 158,403,337 |
| Savings deposits | 152,214,134 | 277,702,933 |
| Banking clients' deposits | 1,283,567,265 | 1,570,754,041 |
| Other credit institutions' deposits Other credit institutions' deposits |
37,850,777 37,850,777 |
- - |
The above-mentioned amounts relate to Banco CTT clients' deposits. Savings deposits are deposits associated with current accounts and which allow the client to obtain a remuneration above the slight deposits, which can be mobilised at any time, with no subscription limit, and it is possible to schedule transfers from and for this account. These deposits are different from term deposits as they have a definite date of constitution and maturity, and the savings accounts are fully mobilizable without penalty on remuneration.
| with current accounts and which allow the client to obtain a remuneration above the slight deposits, which can | |||||||
|---|---|---|---|---|---|---|---|
| be mobilised at any time, with no subscription limit, and it is possible to schedule transfers from and for this | |||||||
| account. These deposits are different from term deposits as they have a definite date of constitution and | |||||||
| maturity, and the savings accounts are fully mobilizable without penalty on remuneration. | |||||||
| As at 31 December 2019 and 30 September 2020, the residual maturity of banking client deposits and other | |||||||
| loans, is detailed as follows: | |||||||
| 31.12.2019 | |||||||
| No defined maturity | Due within 3 months | Over 3 months and less than 1 year |
Over 1 year and less than 3 years |
Over 3 years | Total | ||
| Sight deposits and saving accounts | 1,113,985,973 | - | - | - | - | 1,113,985,973 | |
| Term deposits | - | 53,164,869 | 116,416,423 | - | - | 169,581,292 | |
| Banking clients' deposits | 1,113,985,973 | 53,164,869 | 116,416,423 | - | - | 1,283,567,265 | |
| Other credit institutions' deposits | - | 37,850,777 | - | - | - | 37,850,777 | |
| Other credit institutions' deposits | - | 37,850,777 | - | - | - | 37,850,777 | |
| 1,113,985,973 | 53,164,869 | 116,416,423 | - | - | 1,321,418,042 | ||
| 30.09.2020 | |||||||
| Over 1 year and | |||||||
| No defined maturity | Due within 3 months | Over 3 months and less than 1 | less than 3 years | Over 3 years | Total | ||
| Sight deposits and saving accounts | 1,412,350,703 | - | - | - | - | 1,412,350,703 | |
| Term deposits | - | 68,881,854 | 89,521,483 | - | - | 158,403,337 | |
| Banking clients' deposits | 1,412,350,703 | 68,881,854 | 89,521,483 | - | - | 1,570,754,041 | |
| Other credit institutions' deposits | - | - | - | - | - | - | |
| 30.09.2020 | ||||||||
|---|---|---|---|---|---|---|---|---|
| No defined maturity Due within 3 months Over 3 months and less than 1 Over 1 year and |
Over 3 years Total |
|||||||
| less than 3 years | ||||||||
| Sight deposits and saving accounts | 1,412,350,703 | - | - | - | - | 1,412,350,703 | ||
| - | 68,881,854 | 89,521,483 | - | - | 158,403,337 | |||
| Term deposits | ||||||||
| Banking clients' deposits | 1,412,350,703 | 68,881,854 | 89,521,483 | - | - | 1,570,754,041 | ||
| Other credit institutions' deposits | - | - | - | - | - | - | ||
| Other credit institutions' deposits | - | - | - | - | - | - |
The caption Other credit institutions' deposits refer to sales transactions with a repurchase agreement by credit institutions abroad.
As at 30 September 2020 the caption reflects the difference between the estimated income tax regarding the nine-month period ended 30 September 2020 and the amounts already paid regarding payments on account and additional payments on account.
During the periods ended 30 September 2019 and 30 September 2020, the composition of the Group heading Staff Costs was as follows:
| During the periods ended 30 September 2019 and 30 September 2020, the composition of the Group heading | ||
|---|---|---|
| 30.09.2019 | 30.09.2020 | |
| Remuneration | 197,429,060 | 196,999,058 |
| 2,392,805 | 3,703,602 | |
| 9,678,075 | 722,542 | |
| Employee benefits Indemnities |
||
| 43,695,734 | 43,152,138 | |
| Social Security charges Occupational accident and health insurance |
3,348,841 | 3,239,963 |
| Social welfare costs Other staff costs |
5,557,609 33,930 |
3,523,281 100,925 |
| Remuneration | |||||||
|---|---|---|---|---|---|---|---|
| The change in the "Remuneration" caption arises essentially from the combined effects of the workers exits | |||||||
| observed at the end of 2019 under the HR Optimization Program and absenteeism following COVID-19, both | |||||||
| with an impact on the remunerations of 2020. | |||||||
| As at 30 September 2019 and 30 September 2020, the fixed and variable remunerations attributed to the | |||||||
| members of the statutory bodies of CTT, SA, were as follows: | |||||||
| 30.09.2019 | |||||||
| Company | Board of Directors | Audit Comittee | Remuneration Board | General Meeting of Shareholders | Total | ||
| Short-term remuneration | |||||||
| Fixed remuneration | 1,903,141 | 140,357 | 41,850 | 14,000 | 2,099,348 | ||
| Annual variable remuneration | - | - | - | - | - | ||
| 1,903,141 | 140,357 | 41,850 | 14,000 | 2,099,348 | |||
| Long-term remuneration Defined contribution plan RSP |
157,554 | - | - | - | 157,554 | ||
| Long-term variable remuneration | 38,160 | - | - | - | 38,160 | ||
| 195,714 | - | - | - | 195,714 | |||
| 2,098,855 | 140,357 | 41,850 | 14,000 | 2,295,062 | |||
| 30.09.2020 | |||||||
| Company | Board of Directors | Audit Comittee | Remuneration Board | General Meeting of Shareholders | Total | ||
| Short-term remuneration | |||||||
| Long-term remuneration | |||||
|---|---|---|---|---|---|
| 30.09.2020 | |||||
| Company | Board of Directors | Audit Comittee | Remuneration Board | General Meeting of Shareholders | Total |
| Short-term remuneration | |||||
| Fixed remuneration | 1,854,834 | 121,998 | 26,960 | 14,000 | 2,017,792 |
| Annual variable remuneration | - | - | - | - | - |
| 1,854,834 | 121,998 | 26,960 | 14,000 | 2,017,792 | |
| Long-term remuneration | |||||
| Defined contribution plan RSP | 199,892 | - | - | - | 199,892 |
| Long-term variable remuneration | - | - | - | - | - |
| 199,892 | - | - | - | 199,892 | |
| 2,054,726 | 121,998 | 26,960 | 14,000 | 2,217,684 |
For the year ended 31 December 2019, the amount of 801,968 Euros was recognised as Annual Variable Compensation for the members of the Statutory Bodies which was determined by the Remuneration Committee supported on a study carried out by an independent entity. Due to the COVID-19 pandemic, and by resolution of the Annual General Meeting, the non-payment of profit-sharing bonuses was approved, and the annual variable remuneration was suspended.
The change registered in the caption Employee benefits mainly reflects the liability reduction related to the benefit "Telephone subscription charge" which occurred during the nine-month period ended on 30 September 2019.
During the period ended 30 September 2020, this caption includes manly indemnities related to the termination of employment contracts.
Social welfare costs relate almost entirely to health costs incurred by the Group with the active workers, as well as expenses related to Health and Safety at work.
As at 30 September 2019 and 30 September 2020, the Group heading Staff costs includes the amounts of 600,754 Euros and 406,183 Euros respectively, related to expenses with workers' representative bodies.
For the period ended 30 September 2020, the average number of staff of the Group was 12,172 employees (12,386 employees in the period ended 30 September 2019).
| 24. Interest expenses and Interest income |
|||||||
|---|---|---|---|---|---|---|---|
| For the periods ended 30 September 2019 and 30 September 2020, the heading Interest Expenses of the Group had the following detail: |
|||||||
| 30.09.2019 | 30.09.2020 | ||||||
| Interest expenses | |||||||
| Bank loans | 35,031 | 1,241,045 | |||||
| Lease liabilities | 2,785,371 | 2,483,170 | |||||
| Other interest | 635,832 | 169,846 | |||||
| Interest costs from employee benefits | 4,021,073 | 3,345,437 | |||||
| 22,873 | 70,380 | ||||||
| Other interest costs | 7,309,878 |
The amount of 345,126 Euros previously reported as Other interest as at 30 September 2019 was reclassified to the caption Bank loans.
During the periods ended 30 September 2019 and 30 September 2020, the Group heading Interest income was detailed as follows:
| During the periods ended 30 September 2019 and 30 September 2020, the Group heading Interest income | ||
|---|---|---|
| 30.09.2019 | 30.09.2020 | |
| Interest income | ||
| Deposits in credit institutions | 33,390 | 10,755 |
| 163,479 | - | |
| Other supplementary income |
Companies with head office in Portugal are subject to tax on their profit through Corporate Income Tax ("IRC") at the normal tax rate of 21%, whilst the municipal tax is established at a maximum rate of 1.5% of taxable profit, and State surcharge is 3% of taxable profit above 1,500,000 Euros and 5% of taxable profit above 7,500,000 Euros up to 35,000,000 Euros and 9% of the taxable profit above 35,000,000 Euros. CTT – Expresso, S.A., Spain branch is subject to income taxes in Spain, through income tax (Impuesto sobre Sociedades - "IS") at a rate of 25%, and the subsidiary CORRE is subject to corporate income tax in Mozambique ("IRPC") at a rate of 32%.
Corporate income tax is levied on CTT and its subsidiaries CTT – Expresso, S.A., Payshop Portugal, S.A, CTT Contacto, S.A. and Banco CTT, S.A., through the Special Regime for the Taxation of Groups of Companies ("RETGS"). The remaining companies are taxed individually.
For the periods ended 30 September 2019 and 30 September 2020, the reconciliation between the nominal rate and the effective income tax rate of the Group was as follows:
| CTT –Correios de Portugal, S.A. – Public Company |
||
|---|---|---|
| 30.09.2019 | 30.09.2020 | |
| Earnings before taxes (a) | 26,325,796 | 8,889,357 |
| Nominal tax rate | 21.0% | 21.0% |
| 5,528,417 | 1,866,765 | |
| Tax Benefits | (341,585) | (279,964) |
| Accounting capital gains/(losses) | (89,014) | (129,057) |
| Tax capital gains/(losses) | 733 | 69,750 |
| Equity method | 128,468 | 381,826 |
| Provisions not considered in the calculation of deferred taxes | 17,059 | 8,783 |
| Impairment losses and reversals | 99,450 | 415,160 |
| Compensation for insurable events | 129,988 | 52,813 |
| Depreciation and car rental charges | 47,837 | 50,178 |
| Credits uncollectible | 20,804 | 8,120 |
| Fines, interest, compensatory interest and other charges | 10,102 | 34,703 |
| Other situations, net | 683,059 | (506,670) |
| Adjustments related with - autonomous taxation | 468,811 | 456,716 |
| Adjustments related with - undistributed variable remuneration | 241,543 | 904,893 |
| Tax losses without deferred tax | 1,867,956 | - |
| Insuficiency / (Excess) estimated income tax | (7,681,188) | (165,075) |
| Subtotal (b) | 1,132,440 | 3,168,941 |
| (b)/(a) | 4.30% | 35.65% |
| Adjustments related with - Municipal Surcharge | 655,381 | 355,314 |
| Adjustments related with - State Surcharge | 1,656,575 | 949,486 |
| Income taxes for the period | 3,444,396 | 4,473,740 |
| Effective tax rate | 13.08% | 50.33% |
| Income taxes for the period | ||
| Current tax | 6,263,396 | 4,366,441 |
| Deferred tax | 4,862,188 | 272,374 |
| Insuficiency / (Excess) estimated income tax | (7,681,188) | (165,075) |
| 3,444,396 | 4,473,740 |
As at 31 December 2019 and 30 September 2020, the balance of the Group deferred tax assets and liabilities was composed as follows:
| 31.12.2019 | 30.09.2020 | |
|---|---|---|
| Deferred tax assets | ||
| Employee benefits - healthcare | 76,839,990 | 76,854,171 |
| Employee benefits - pension plan | 84,668 | 80,926 |
| Employee benefits - other long-term benefits | 2,868,626 | 2,450,527 |
| Impairment losses and provisions | 5,032,656 | 5,096,841 |
| Tax losses carried forward | 1,289,985 | 1,289,985 |
| Impairment losses in tangible fixed assets | 385,810 | 437,849 |
| Land and buildings | 356,809 | 356,809 |
| Tangible assets' tax revaluation regime | 1,924,292 | 1,683,755 |
| Other | 546,970 | 587,822 |
| 89,329,806 | 88,838,685 | |
| Deferred tax liabilities | ||
| Revaluation of tangible fixed assets before IFRS | 2,137,282 | 1,986,827 |
| Suspended capital gains | 718,036 | 697,531 |
| Non-current assets held for sale | 83,010 | 83,010 |
| Other | 19,787 | 54,524 |
| 2,958,115 | 2,821,892 |
The deferred tax asset related to Tangible assets tax revaluation regime was recognised following the Companies' accession to the regime established in Decree-Law no. 66/2016, of 3 November. In the year ended 30 September 2020 the deferred tax asset amounts to 1,683,755 Euros.
As at 30 September 2020, the expected amount of deferred tax assets and liabilities to be settled within 12 months is 3.2 million Euros and 0.2 million Euros, respectively, regarding the Group.
| 31.12.2019 | 30.09.2020 | |
|---|---|---|
| Deferred tax assets | ||
| Opening balances | 81,734,114 | 89,329,806 |
| Changes in the consolidation perimeter | 1,679,394 | - |
| Effect on net profit | ||
| Employee benefits - healthcare Employee benefits - pension plan |
(664,362) (10,581) |
14,181 (3,742) |
| Employee benefits - other long-term benefits | 223,382 | (418,099) |
| Impairment losses and provisions | (287,039) | 64,185 |
| Tax losses carried forward | (2,904) | - |
| Impairment losses in tangible fixed assets | 102,337 | 52,039 |
| Land and buildings | (95,203) | - |
| Tangible assets' tax revaluation regime | (320,715) | (240,537) |
| Other | (47,157) | 40,852 |
| Effect on equity | ||
| Employee benefits - healthcare | 7,000,770 | - |
| Employee benefits - pension plan | ||
| Closing balance | 89,329,806 | 88,838,685 |
| 31.12.2019 | 30.09.2020 | |
| Deferred tax liabilities | ||
| Opening balances | 3,108,662 | 2,958,115 |
| Changes in the consolidation perimeter | 83,010 | - |
| Effect on net profit | ||
| Revaluation of tangible fixed assets before IFRS adoption | (200,606) | (150,455) |
| Suspended capital gains | (27,341) | (20,505) |
| Other | (5,610) | 34,737 |
| Closing balance | 2,958,115 | 2,821,892 |
| The tax losses carried forward are related to the losses of the previous subsidiaries Tourline and Transporta | |||
|---|---|---|---|
| (currently CTT Expresso, branch in Spain and CTT Expresso, respectively), which were merged by incorporation | |||
| Company | Tax losses | Deferred tax assets | |
| CTT – Expresso, S.A., branch in Spain | 47,586,402 | - | |
| CTT Expresso/Transporta | 6,142,786 | 1,289,985 | |
| Total | 53,729,188 | 1,289,985 | |
Regarding CTT – Expresso, S.A., branch in Spain (prior Tourline), the tax losses of the years 2008, 2009 and 2011 may be reported in the next 15 years, the tax losses related to 2012, 2013 and 2014 may be carried forward in the next 18 years and the tax losses of the years 2015, 2016, 2017 and 2018 have no time limit for deduction. Regarding CTT Expresso the tax losses refer to the years 2017 and 2018 of the company Transporta, which was merged in CTT Expresso during the year 2019 and may be carried forward in the next 5 years.
The sensitivity analysis performed allows us to conclude that a 1% reduction in the underlying rate of deferred tax would imply an increase in the income tax for the period of about 2.2 million Euros in the Group.
The Group's policy for recognition of fiscal credits regarding SIFIDE is to recognise the credit at the moment of the effective receipt from the commission certification statement, certifying the eligibility of expenses presented in the applications for tax benefits.
For the year ended 31 December 2018 the expenses incurred with R&D, of 737,089 Euros the Group will have the possibility of benefiting from a tax deduction in corporate income tax estimated at 248,131 Euros. According to the notification of the Certification Commission, for eligible expenses incurred with R&D in the amount of 682,312 Euros, a tax credit of 230,328 Euros was attributed.
For the year ended 31 December 2019, with the delivery of the application, the expenses incurred with R&D, of 1,422,552 Euros the Group will have the possibility of benefiting from a tax deduction in corporate income tax estimated at 753,235 Euros.
Pursuant to the legislation in force in Portugal, income tax returns are subject to review and correction by the tax authorities for a period of four years (five years for Social Security), except when there have been tax losses, tax benefits have been received, or when inspections, claims or challenges are in progress, in which cases, depending on the circumstances, these years are extended or suspended. Therefore, CTT's income tax returns from 2017 and onwards may still be reviewed and corrected.
The Board of Directors of the Company believes that any corrections arising from reviews/inspections by the tax authorities of these income tax returns will not have a significant effect on the consolidated financial statements as at 30 September 2020.
The Regulation on Assessment and Control of transactions with CTT related parties defines related party as: qualified shareholder, manager or third party with any of these related through relevant commercial or personal interest (under the terms of IAS 24) and also subsidiaries, associates and joint ventures of CTT. It is considered that there is a "relevant commercial or personal interest" in relation to (i) close family members of the managers and qualified shareholder(s) who, at each moment, have significant influence (as defined above) on CTT, as well as (ii) controlled entities (individually or jointly), either by management, qualified shareholders or by the persons referred to in (i). For this purpose, "control" is considered to exist when the party has, directly or indirectly, the power to guide the financial and operational policies of an entity in order to obtain benefits from its activities. Additionally, "close family members" are: (i) the spouse or domestic partner and (ii) the children and dependents of the person and persons referred to in (i).
According to the Regulation, the significant transactions with related parties, as well as transactions that members of the Board of Directors of CTT and/or its subsidiaries conduct with CTT and/or its subsidiaries, must be previously approved by the Audit Committee of CTT.
| be previously approved by the Audit Committee of CTT. | ||||||
|---|---|---|---|---|---|---|
| The other related parties' transactions are communicated to the Audit Committee for the purpose of subsequent examination. |
||||||
| During the periods ended 30 September 2019 and 30 September 2020, the following transactions took place and the following balances existed with related parties, regarding the Group: |
||||||
| Accounts receivable | Accounts payable | 30.09.2019 Revenues |
Costs | Dividends | ||
| Shareholders | - | - | - | - | 15,000,000 | |
| Group companies | ||||||
| Associated companies | 2,760 | 12,854 | 8,427 | 70,526 | - | |
| Jointly controlled | 318,991 | - | 339,152 | - | - | |
| Members of the | (Note 23) | |||||
| Board of Directors | - | - | - | 1,903,141 | - | |
| Audit Committee | - | - | - | 140,357 | - | |
| Remuneration Committee | - | - | - | 41,850 | - | |
| General Meeting | - | - | - | 14,000 | - |
| CTT –Correios de Portugal, S.A. – Public Company |
|||||||||
|---|---|---|---|---|---|---|---|---|---|
| 30.09.2020 | |||||||||
| Accounts receivable | Accounts payable | Revenues | Costs | Dividends | |||||
| Shareholders | - | - | - | - | - | ||||
| Group companies | |||||||||
| Associated companies | - | - | 6,675 | 63,788 | - | ||||
| Jointly controlled | 343,583 | - | 845,547 | 500 | - | ||||
| Members of the | (Note 23) | ||||||||
| Board of Directors | - | 848 | - | 1,876,582 | - | ||||
| Audit Committee | - | - | - | 121,998 | - | ||||
| Remuneration Committee | - | - | - | 26,960 | - | ||||
| General Meeting | - | - | - | 14,000 | - | ||||
| 343,583 | 848 | 852,221 | 2,103,828 | - |
In the context of transactions with related parties, no commitments were made, nor were any guarantees given or received in addition to the comfort letters assumed regarding CTT Expresso, branch in Spain, mentioned in Note 19.
No provision was recognised for doubtful debts or expenses recognised during the period in respect of bad or doubtful debts owed by related parties.
The transactions and balances between subsidiaries are eliminated in the consolidation process and are not disclosed in this note.
Under the Universal Postal Service Concession Contract, on 13 March 2020, CTT invoked force majeure before the Grantor, following the public health emergency of international scope declared by the World Health Organization. Since then, the need for CTT to comply with the public health standards issued by the competent authorities has been maintained, as well as the necessary and appropriate measures to protect workers and customers, while continuing to ensure the functioning and continuity of postal services. CTT also continues to periodically submit an update on the situation to the Government, as a counterparty in the contract, and to ANACOM, the regulatory authority responsible for overseeing the provision of the universal postal service.
The legal proceedings relating to ANACOM's Decision regarding the parameters of quality of service and performance objectives applicable to the provision of the universal postal service, issued in July 2018, are still pending. The arbitration proceedings brought against the Portuguese State, as the grantor in the Concession Agreement, are in the stage of producing evidence. In the administrative proceedings brought against ANACOM, the first regarding the same decision and the second concerning the December 2018 resolution regarding the new measurement procedures to be applied to the quality of service indicators, there were no relevant developments.
The process related to the proposal of the imposition of 11 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 and the administrative proceedings had no significant developments.
ANACOM is currently analysing the price proposal for international mail services within the scope of the universal postal service, which was presented by CTT on 15 September 2020.
ANACOM has determined the application of the compensation mechanism to users for non-compliance in 2019 with the QoS performance targets, i.e. (a) the deduction of 1 percentage point from the weighted average change in the prices of the basket of letter mail, parcels and editorial mail services, allowed for the year 2020, a variation which corresponds 0.41% and will benefit all the users of those services; and (b) the deduction of
0.31% from the prices in force for bulk mail subject to special prices in the domestic service. The form of its implementation is under consideration.
On 14 September, ANACOM announced that it considered the results of the cost accounting system of CTT for the financial years of 2016 and 2017 were produced in accordance with ANACOM's decision on the reformulation of those results and imposing new criteria for the separation of costs between the postal activity and the banking activity of the Company. According to the reports of the audit firm appointed by ANACOM, the impact of the reformulation of the results of CTT cost accounting system on the provision of the Universal Postal Service in those two years was of around €1.3m in 2016 and circa €5m in 2017, on a like-for-like basis.
The results of the public consultation that took place between 26 June and 18 August regarding the provision of the universal postal service after the expiration of the current concession are awaited. CTT timely presented its contribution, hence ANACOM's public consultation report and its final decision are awaited. It should be noted that the current concession contract is in force until the end of this year.
Following the public health emergency declared by the World Health Organization and as in the 3rd quarter of 2020 a gradual opening up from lockdown took place in Portugal as well as in most international markets, which allowed for some economic recovery, the CTT Group has been implementing the measures taken in the meantime to strengthen its financial position and liquidity and ensure its operational response, while preserving the value of traditional services and focusing on and boosting new ones, more linked to digital platforms and ecommerce. As an example, the following services were created:
Although the performance of the E&P business unit also resented the effect of the COVID-19 pandemic, it was strongly impacted by the growth of CEP in the nine months of 2020, even if the 1H20 was particularly affected by the COVID-19 pandemic and the effects of the restrictions imposed on most sectors of the economy, which had a strong impact on the profile of shipments, with a reduction in B2B volumes and, on the other hand, strong growth in e-commerce activity. In 3Q20, the strong pace of e-commerce activity was maintained and there was a recovery in the B2B segment.
The Financial Services & Retail business unit was most impacted, with a significant reduction in Public Debt Certificates subscriptions, particularly in 2Q20, a situation which is already showing a sustainable trend towards recovery.
In Banco CTT business unit the impacts were more visible in terms of mortgage loans and auto loans. The volume of auto loans production was strongly affected by the closure of auto dealerships, as a result of the confinement measures, and began in mid-March a downward trend of new proposals captured which lasted until the second week of May, when the trend was reversed. As at 30 September public moratorium requests reached a total exposure of €41.2m, representing 3.91% of the total gross credit portfolio. On 30 September, the private auto credit moratoria in the amount of €27.7m ended, which represented 5.42% of the total of this portfolio.
Due to the context of uncertainty, at the Annual General Meeting of 29 April, CTT decided to suspend the payment of the 2019 dividend and allocate the 2019 net profit to Retained Earnings.
In the 9-month period ended on 30 September 2020 and as the pandemic context is maintained, the Group continued to carry out the following assessments:
Although the high uncertainty regarding the evolution of the pandemic and its effects on the Group's businesses continues, it is the understanding of the Board of Directors that in view of its financial and liquidity situation, the Group will overcome the negative impacts of this crisis, without jeopardizing the continuity of the business. Management will continue to monitor the threat evolution and its implications in the business and provide all necessary information to its stakeholders.
After 30 September 2020 and up to the present date, no relevant or material facts have occurred in the Group's activity that have not been disclosed in the notes to the financial statements.
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