CTT-Correios de Portugal

Investor Presentation • Nov 4, 2020

9M20

Results Presentation

4 November 2020

Disclaimer

DISCLAIMER

This document has been prepared by CTT - Correios de Portugal, S.A. (the "Company" or "CTT") exclusively for use during the presentation of the 9M20 results. As a consequence thereof, this document may not be disclosed or published, nor used by any other person or entity, for any other reason or purpose without the express and prior written consent of CTT. This document (i) may contain summarised information and be subject to amendments and supplements, and (ii) the information contained herein has not been verified, reviewed nor audited by any of the Company's advisors or auditors.

Except as required by applicable law, CTT does not undertake any obligation to publicly update or revise any of the information contained in this document. Consequently, the Company does not assume liability for this document if it is used for a purpose other than the above. No express or implied representation, warranty or undertaking is made as to, and no reliance shall be placed on, the accuracy, completeness or correctness of the information or the opinions or statements expressed herein. Neither the Company nor its subsidiaries, affiliates, directors, employees or advisors assume liability of any kind, whether for negligence or any other reason, for any damage or loss arising from any use of this document or its contents. Neither this document nor any part of it constitutes a contract, nor may it be used for incorporation into or construction of any contract or agreement.

This document has an informative nature and does not constitute, nor must it be interpreted as, an offer to sell, issue, exchange or buy any financial instruments (namely any securities issued by CTT or by any of its subsidiaries or affiliates), nor a solicitation of any kind by CTT, its subsidiaries or affiliates. Distribution of this document in certain jurisdictions may be prohibited, and recipients into whose possession this document comes shall be solely responsible for informing themselves about, and observing any such restrictions. Moreover, the recipients of this documentare invited and advised to consult the public information disclosed by CTT on its website (www.ctt.pt) as well as on the Portuguese Securities Exchange Commission's website (www.cmvm.pt). In particular, the contents of this presentation shall be read and understood in light of the financial information disclosed by CTT, through such means, which prevail in regard to any data presented in this document. By attending the meeting where this presentation is made and reading this document, you agree to be bound by the foregoing restrictions.

FORWARD-LOOKING STATEMENTS

This presentation contains forward-looking statements. All the statements herein which are not historical facts, including, but not limited to, statements expressing our current opinion or, as applicable, those of our directors regarding the financial performance, the business strategy, the management plans and objectives concerning future operations and investments are forward-looking statements. Statements that include the words "expects", "estimates", "foresees", "predicts", "intends", "plans", "believes", "anticipates", "will", "targets", "may", "would", "could", "continues" and similar statements of a future or forward-looking nature identify forward-looking statements.

All forward-looking statements included herein involve known and unknown risks and uncertainties. Accordingly, there are or will be important factors that could cause our actual results, performance or achievements to differ materially from those indicated in these statements. Any forward-looking statements in this document reflect our current views concerning future events and are subject to these and other risks, uncertainties and assumptions relating to the results of our operations, growth strategy and liquidity, and the wider environment (specifically, market developments, investment opportunities and regulatory conditions).

Although CTT believes that the assumptions bevond such forward-looking statements are reasonable when made, any third parties are cautioned that forward-looking information and statements are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond the control of CTT, what could cause the models, objectives, plans, estimates and / or projections to be materially reviewed and / or actual results and developments to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements.

Forward-looking statements (in particular, the objectives, estimates and projections as well as the corresponding assumptions) do neither represent a commitment regarding the models and plans to be implemented, nor are they guarantees of future performance, nor have they been reviewed by the auditors of CTT. You are cautioned not to place undue reliance on the forward-looking statements herein.

All forward-looking statements included herein speak only as at the date of this presentation. Except as required by applicable law, CTT does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

ctt Committed to deliver

3Q20 highlights

01

Quarter marked by slow recovery of mail volumes and sustained strong growth in parcels

$\epsilon$ 185.1m Revenue
$\vert$ +0.3% yoy
+3.3% excl. elections

$\epsilon$ 24.3m EBITDA 1
$-9.6\%$ yoy
-2.7% excl. elections

$E12.4m$ EBIT
$-14.6\%$ yoy
$-1.6\%$ excl. elections

Revenues return to growth, despite the challenging comparison effect $(\epsilon$ 5.3m impact of the legislative elections on 3Q19 revenues)

Addressed mail volumes decline 14.2%, excluding elections, as the structural pressures are exacerbated by the COVID-19 pandemic

Express & Parcels volumes receive a strong boost from e-commerce, increasing 35.8%, while investments drive market share gains

Banco CTT returned to positive Net profit in the quarter, as revenues growth remains robust, despite stricter lending standards

The steady recovery of retail activity continues. 9M20 public debt placements exceed the prior year's strong performance

The COVID-19 pandemic is accelerating the diversification away from mail into parcels and banking

Double-digit revenues increase and path to solid profitability in the growth levers still not counteracting the declines in the legacy businesses

Mail & other

Partnership with the Portuguese Institute of Records and Notary to deliver (online) citizen cards to the homes of the Portuguese people, utilizing the digitalization of the economy to increase mail volumes

Express & Parcels
EBITDA 1 Revenues EBIT
€46.4m	$E$ 0.9m	$ E$ 0.6m
$(+24.5%)$	$(+199.1\%)$	$(+82.3%)$

• "Green delivery" partnership with Nespresso for customers orders to be delivered by electric vehicles
• Lockers 24 offer as an effective answer to the "last-mile" delivery challenge

Revenues	EBITDA 1	EBIT
€21.3m	€5.4m	€2.7m
$(+10.4\%)$	$(+47.1%)$	$(+95.5\%)$

• Partnership with BNP Paribas to provide factoring solutions for SMEs, with no capital requirements for CTT
• Payshop digital wallet offer for municipalities to manage cashless payments in schools

Growth levers

• Reopening of 7 post offices in 3Q20 (20 in total), reinforcing the proximity to the population and the commitment to public service
• Launch of a new store concept with 24h self-service

Lower-than-expected mail recovery when freight and lockdown restrictions were lifted, while Business Solutions revenues are growing rapidly

The build-up of our Iberian Express & Parcels platform continues, with the goal to consolidate the market leadership position in Portugal and increase scale in Spain

Building an Iberian platform

Continued investment in logistics infrastructure

New backup facilities in Lisbon & Oporto, new facilities in Barcelona & Valencia (13,500 m²)

Increasing processing capacity and II. dynamic routing

New equipment in Madrid & Barcelona with capacity to sort up to 15k parcels / hour

Launch of new cross-border Iberian linehauls D+1 product offer Made possible by the investment in

infrastructure and sorting capacity

Widening the product portfolio in Portugal

• Launch of a premium international product offer $\bullet$
• Two-man deliveries for furniture and home appliances, $\bullet$ a rapidly growing market segment
• Same-day delivery, boosting capacity for the peak season $\bullet$
• Evening delivery $(7 \text{ pm} 10 \text{ pm})$ and Saturday delivery $\bullet$
• Cargo turnaround to transform into a fully-fledged packet to pallet $\bullet$ provider (domestic cargo market worth > €100m)

Aligning capabilities with clients' needs in Spain

• Seizing the opportunity to gain scale with customer acquisition of large etailers such as Amazon and AliExpress with expected c. 60k parcels / workday boost on volumes
• Increased own sales & distribution (ys. franchisee) to $52\%$ & $70\%$ of total in 3Q20 (from 43% & 35% in 3Q19), respectively, to align capabilities with clients' e-commerce needs (led to temporary increase in unit costs)
• Unit costs have begun to decline since Sep-20, and are expected to continue their downward trajectory in 4Q20 and in 2021, as volumes from newly acquired clients are starting to increase network scale, while the improved share of own sales & distribution boosts operational leverage

The stellar growth in parcels volumes continues, as CTT investments in e-commerce meet clients' rapidly evolving needs, spurred by the pandemic

Despite easing down from very high levels in 2Q20, Spanish parcels stellar growth continued in 3Q20. The recapture of Amazon as a client in Sep-20 will provide an impulse in the subsequent quarters

Credit activity remained resilient, especially in auto, despite the stricter lending standards

The growth of Financial Services volumes, despite the challenging operational environment, reflects CTT's proximity to the population and its continued commitment to public service

534.3

9M20

revenues

Lower mail revenues exert pressure on results, heading into the seasonally strong fourth quarter

Revenues¹ Revenues breakdown € million; % change vs. prior year; % of total $\epsilon$ million; % change vs. prior year Financial Services & Retail 2 $-1.0%$ $32.3(-3.3%)$ 539.6 $-42.5$ $+16.9$ Banco CTT $-1.1$ 59.7 (+39.3%) $11\%$ $+12.3$ $+21.4$ 321 Crédito 534.3 Express 58% 25% & Parcels $+10.4$ $(-1.0\%)$ 131.5 (+19.5%) Mail & other³ Spain $310.8(-12.0\%)$ $\triangle$ Mail & other $\triangle$ E&P $\triangle$ Banco CTT $\triangle$ FS & Retail 9M19 $\sqrt{X\%}$ % of total revenues² revenues $1$ revenues revenues revenues

• Excluding the 321 Crédito effect (inorganic in the first four months of 2020) and the one-time impact of elections (€5.3m) in 3Q19, revenues declined by €12.3m (-2.4%), as strong growth in Express & Parcels and Banco CTT was unable to offset the declines in the legacy businesses, exacerbated by the pandemic

¹ Excluding specific items.

² The business line "Retail sales" of the Mail & other business unit migrated to the Financial Services & Retail business unitin 1Q20 (proforma figures presented for 9M19 throughout the presentation). ³ Including Central Structure.

The growth of parcels volumes and the 321 Crédito integration are the main drivers behind the increase in operating costs

Operating costs $1$

$\epsilon$ million; % change vs. prior year

Operating costs¹ breakdown

$\epsilon$ million; % change vs. prior year

• Staff costs, excluding 321 Crédito, declined €3.3m (-1.3%). Healthcare costs decreased €2.2m (-25.3%), as the pandemic caused €1.8m lower utilization of the healthcare plan by employees
• External Supplies & Services, excluding 321 Crédito, increased by $\epsilon$ 6.2m (3.2%), as reductions in terminal dues (€3.1m) and marketing costs (€2.5m) were more than offset by the $\bullet$ €10.2m increase in parcels transport & distribution costs, as a result of higher volumes
• Other costs, excluding 321 Crédito, increased by $\epsilon$ 3.0m (15.2%), as a result of the direct costs of launching new businesses & partnerships ( $\epsilon$ 4.7m) $\bullet$

^<sup>1 Excluding Specific items & IFRS 16 impacts, depreciation, amortization, impairments and provisions. ² Including Central Structure. ³ The business line "Retail sales" of the Mail & other business unit migrated to the Financial Services & Retail business unitin 1Q20 (proforma figures presented for 9M19 throughout the presentation).

The unprecedented business disruption in Mail, as a result of the pandemic, and the uncommon level of provisions at Banco CTT, weigh on profitability

Net profit impacted by the negative evolution of Mail EBIT, while profitability increases in the remaining business units

Liquidity and net financial debt remain stable

9M20 Cash flow

$\epsilon$ million; impact on cash flow vs. prior year

30 September 2020 Net financial debt² $\epsilon$ million

385.6 Cash & cash equivalents Net Financial Services & other payables 206.5 44.0 Banco CTT liabilities, net Other $3$ 20.4 114.6 Own cash $91.7$ Financial debt Net cash position €23m . . . . . . . . . . 95.7 Leases liabilities (IFRS 16) 72.8 Net financial debt

1The 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 regarding the Change in working capital, which no longe allowance.² Does not consider Employee benefits, net.³ Including€15.4m Banco CTT cash deposits at Bank of Portugal.

ctt Committed to deliver

03 Guidance update

FY20 quidance update

• Ambition to attain low single-digit growth in full-year revenues $\bullet$
• Commitment to achieve €90m of EBITDA and €30m of EBIT

1 The impact of the upcoming partial confinement measures on the Portuguese economy is still unclear. This guidance update assumes no significant disruptive impacts on the business units' performance from the new confineme

ctt $\mathbf{O} \mathbf{Z}$ Committed to deliver Appendix

The ever-increasing relevance of Banco CTT to the Group results is reflected in the consolidated Balance sheet

30 September 2020 Balance sheet

€ million; % change vs. 31 December 2019

Mail profitability impaired by the atypical volumes decline, higher than expected at the start of the year, due to the COVID-19 pandemic

Revenues 1 $\epsilon$ million; % change vs. prior year		EBITDA 2 $\epsilon$ million		EBIT $\epsilon$ million
Transactional Advertising		€263.3m $(-13.1%)$ €13.0m $(-21.6%)$		$-53.2%$ 59.0				$-85.7%$
Editorial		€9.4m $(-11.8%)$
Business Solutions		€12.4m (+58.6%)			27.6		32.7
USO Parcels		€4.7m $(+5.7%)$
Philately & other 1		€7.8m $(-26.6%)$						4.7
Total		€310.8m (-12.0%)		9M19	9M20		9M19	9M20
Volumes by type (mitems)
Matric	Ava mail prices	Addressed mail	Trancactional		Advarticing	Editorial		Linaddressed mail

Metric	Avg. mail prices	Addressed mail	ransactional	Advertising	Editorial	Unaddressed mail
9M20	N/D	387.3	336.7	28.5	つつ 22.I	305.3
vs. 9M19	$-1.5%$	$17.1\%$ $\sim$	$-17.0%$	$-20.0%$	13.2%	$-18.9%$

¹ Including Central Structure. The business line "Retail sales" of the Mail & other business unit migrated to the Financial Services & Retail business unit in 1Q20 (proforma figures presented for 9M19). ² Excluding Specific items & IFRS 16 impacts, depreciation, amortization, impairments and provisions.

22

Strong parcels growth in Portugal is translating into increased profitability, while Spain's main focus is to increase scale

Revenues Consolidated view; € million; % change vs. prior year			EBITDA 1,2 $\epsilon$ million		EBIT 2 $\epsilon$ million
Portugal	$€81.2m (+15.1%)$			$+97.7%$ 8.6	$\rightarrow$ 5.9
Parcels	$£65.2m (+23.2%)$	eliminations Portugal &	4.3
Cargo	€8.6m $(-9.4%)$				0.9
Banking network	€5.0m $(+0.0%)$
Logistics	€1.7m $(-25.7%)$
Other	€0.7m $(-15.0%)$			$-28.9%$	$-17.1%$
Spain	€48.2m (+27.4%)	Spain
Mozambique	€2.1m $(+22.8%)$
Total	€131.5m (+19.5%)		$-6.2$	$-7.9$	$-8.8$ $-10.3$
Volumes by region (mitems)			9M19	9M20	9M19 9M20
Metric	Total	Portugal		Spain	Mozambique
9M20	36.4	19.7		16.7	0.03
vs. 9M19	$+34.6%$	$+27.6%$		$+44.0%$	$-29.5%$

¹ Excluding Specific items & IFRS 16 impacts, depreciation, amortization, impairments and provisions. ² Individual company views (not consolidated).

Banco CTT net interest and fees & commissions income growth remains robust; strong operational leverage carries profitability improvements

Revenues $\epsilon$ million; % change vs. prior year				EBITDA 1 $\epsilon$ million	EBIT $\epsilon$ million
Net interest income		€12.8m (+40.5%)		$\rightarrow$			$+107.6\%$
Interest income		€13.5m (+39.3%)		12.6			0.4
Interest expense		$-60.8m(-22.0%)$
Fees & commissions income		€9.5m (+56.5%)
Own products		€5.8m $(+54.2%)$
Third-party products		€3.6m $(+60.2%)$		0.3
Payments & other		€12.8m $(-16.6%)$				$-5.9$
321 Crédito (auto loans)		€24.7m (+99.0%)		9M19 9M20		9M19	9M20
Total		€59.7m (+39.3%)
	Selected Banco CTT Balance sheet indicators
Metric	Assets $(\epsilon m)$	Cash & equivalents	Investments	Credit to clients (net of impairments)	Customer deposits $(\epsilon m)$		Equity $(\epsilon m)$ / CET 1 Fully implemented (%)

Metric	Assets (€m)	Cash & equivalents l	Investments	$\sim$ . $\sim$ (net of impairments)		$-$ - $ -$ $(\epsilon m)$	$-$ q with $\gamma$ ( $-$ CET 1 Fully implemented $(\%)$
30-Sep-20	⊥,886.6	195.2	535.6	1,039.6	505k current	1,570.8	209.9 / 17.2%
vs. 31-Dec-19	13.3%	$-5.6%$	$17.3\%$	17.4%	accounts $(+9.4\%)$	22.4% ⊥ລ≏	$-0.7\%$ / $-1.8$ p.p.

¹ Excluding Specific items & IFRS 16 impacts, depreciation, amortization, impairments and provisions.

Financial Services & Retail provides a solid contribution to profitability, despite the challenging brick-and-mortar retail environment

Revenues 1 € million; % change vs. prior year		EBITDA 2 $\epsilon$ million	EBIT $\epsilon$ million
Savings & insurance	€18.5m $(-3.9%)$	$+5.2%$ 16.4 15.6	$+7.3%$ 16.2 15.1
Money orders	€4.5m (+8.8%)
Payments	€1.1m $(+24.5%)$
Retail products & services	€8.0m $(-9.3%)$
Other	€0.1m $(-49.1%)$
Total	€32.3m $(-3.3%)$	9M20 9M19	9M19 9M20

Financial Services volumes by type

Metric	Savings & insurance flows (€bn)	Placements	Redemptions	Money orders (m ops.)
9M20	.	of which ت . ے $2.9 (+1.3%)$	U.b	---
vs. 9M19	$\perp$ . Z /o	public debt 770/ - 1	$+6.1\%$	$+5.4\%$

¹The business line "Retail sales" of the Mail & other business unit migrated to the Financial Services & Retail business unit in 1Q20 (proforma figures presented for 9M19). ² Excluding Specific items & IFRS 16 impacts, depreciation, amortization, impairments and provisions.

Consolidated Income statement

Income statement

		Reported		With Banco CTT under equity method
	9M19	9M20	9M19	9M20
Revenues	539.6	534.3	510.4	486.4
Operating costs	466.3	476.6	434.0	439.0
EBITDA	73.3	57.7	76.4	47.4
EBITDA including IFRS 16	93.7	78.6	96.4	67.8
Impairments & provisions	4.0	13.2	2.2	4.7
Depreciation & amortization	39.5	46.1	35.9	41.9
of which IFRS 16 impact	16.4	18.0	16.0	17.4
Specific items	16.0	2.1	14.7	2.1
EBIT	34.2	17.3	43.6	19.2
Net financial income / (costs)	$-7.3$	$-7.3$	$-7.3$	$-7.3$
of which IFRS 16 impact	$-2.8$	$-2.5$	$-2.8$	$-2.5$
Associated companies - gains / (losses)	$-0.6$	$-1.1$	$-8.3$	$-2.9$
Earnings before taxes	26.3	8.9	28.0	9.0
Net profit attributable to equity holders	22.9	4.3	22.9	4.4

26

Consolidated Balance sheet

Balance sheet

$\epsilon$ million

	Reported		With Banco CTT under equity method
	31-Dec-19	30-Sep-20	31-Dec-19	30-Sep-20
Non-current assets	1,734.7	1,923.9	615.8	614.5
Current assets	778.8	795.6	456.9	443.2
Assets	2,513.4	2,719.5	1,072.8	1,057.7
Equity	131.4	136.2	131.4	136.3
Liabilities	2,382.0	2,583.3	941.3	921.4
Non-current liabilities	512.8	488.6	432.0	432.3
Current liabilities	1,869.2	2,094.7	509.3	489.1
Equity and Liabilities	2,513.4	2,719.5	1,072.8	1,057.7

Consolidated Cash flow statement

Cash flow	Reported			With Banco CTT under equity method
$\epsilon$ million	9M19	9M20	$\triangle$ 20/19	9M19	9M20	$\triangle$ 20 / 19
EBITDA	73.3	57.7	$-15.6$	76.4	47.4	$-29.0$
Specific items affecting EBITDA	14.6	2.1	12.5	13.3	2.1	11.3
Capex	18.5	18.2	0.2	15.3	15.4	$-0.2$
Change in working capital	$-16.5$	$-21.3$	$-4.8$	$-15.7$	$-16.1$	$-0.4$
Operating cash flow 1	23.7	16.0	$-7.6$	32.2	13.8	$-18.4$
Tax	3.1	$-7.9$	$-11.0$	5.3	$-2.5$	$-7.8$
Employee benefits	$-10.6$	$-8.3$	2.3	$-10.6$	$-8.3$	2.3
Free cash flow	16.2	$-0.2$	$-16.3$	26.9	3.0	$-23.8$
Debt (principal + interest)	59.1	$-0.9$	$-60.0$	59.1	$-0.9$	$-60.0$
Dividends	$-15.0$	0.0	15.0	$-15.0$	0.0	15.0
Financial investments & other	$-107.6$	0.4	107.9	$-113.6$	0.4	114.0
Net change in own cash	$-47.3$	$-0.7$	46.6	$-42.7$	2.4	45.1
Change in liabilities FS & other & Banco CTT (net) 2	22.8	$-48.9$	$-71.8$	11.8	$-32.6$	$-44.4$
Change in other $3$	6.3	$-7.8$	$-14.1$	0.0	0.0	0.0
Net change in cash	$-18.2$	$-57.4$	$-39.2$	$-30.9$	$-30.2$	0.7

1The 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 mobility allowance; ²The change in net liabilities of Financial Services and Banco CTT reflects the evolution of credit balances with third parties, depositors or other banking financial labilities, net of the amounts in entities of the CTT Group providing financial services, namely the financial services of CTT, Payshop, Banco CTT and 321 Crédito; 3 The change in other cash items reflects the evolution of Banco CTT's sight deposits at Ban cheques, and impairment of sight and term deposits and bank applications.

Specific items with minimal impact on the 9M20 P&L

Specific items

$\epsilon$ million

	9M19	9M20
EBIT excluding Specific items	50.2	19.3
Specific items	16.0	2.1
Revenues	$-0.6$	$-0.6$
Staff costs	10.0	0.8
ES&S & other op. costs	6.6	1.9
EBIT	34.2	17.3

9M20 Specific items:

• €0.6m capital gain related to the sale of a non-strategic real estate asset
• €0.8m of Staff costs of which €0.6m related to HR optimization program
• €1.9m of ES&S & other op. costs, of which €0.8m of strategic studies (mainly related to the new concession contract) and €0.8m related to COVID-19

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