CTT-Correios de Portugal

Investor Presentation • Aug 5, 2020

1H2O

Results Presentation

City Committed to deliver

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 1st half 2020 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 oblicly update or revise any of the information containedinthis document. Consequently, the Company does not assume liability for this documentif 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 of the information or the opinions or statements expressed herein. Neither the Company nor its subsidiaries, 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-LOOKINGSTATEMENTS

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 that include the words "expects", "estimates", "foresees", "predicts", "intends", "plans", "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 risks and uncertainties. Accordingly, there are or will be important factors that could cause our actual results, performance or achievements to differ materially from those indicated in these statements. Any forward-looking statements in this document reflect our current views with respect to future events and are subject to these and other risks, uncertainties and assumptions relating to the results of our operations, growth strategy and liquidity, and the wider environment (specifically, market developments, investment opportunities and regulatory conditions).

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

Forward-looking statements (in particular, the objectives, estimates and projections as well as the corresponding assumptions) do neitherrepresent a commitment reqarding 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 this presentation. Except as required by applicable law, CTT does not undertake any oblicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Cit OL Committed to deliver

Key takeaways & 2Q20 highlights

Key takeaways

Challenging 2Q20, in which CTT's six-pillar response to COVID-19 has been proven rather effective, namely in prioritizing employee and customer safety, in investingin new B2B and B2C clientrelations (e-commerce, BP0, business solutions), thus enabling a more dynamic, growth-oriented business for the future

The Company chose not to participate in government layoff schemes, despite the extra costs incurred with excess capacity, focusing instead on providing a lifeline to communities and demonstrating its commitment to a sustainable universal postal service

Strong performance of the growth levers, propelt in parcels with improved profitability, despite the testing shift in mix between B2B and B2C. Increased confidence of the Spanish parcels business is aligned with the communicated plan, based on the performance of the local management, market share qains, and favorable market conditions towards e-commerce

Conservative provisioning in order to prepare Banco CTT to face potentially challenging macroeconomic scenarios in 2H2O. Throughout the pandemic crisis, CTT preserved its solid Balance sheet, cash generation capacity, and low level of net financial debt

Margin and cost focus coming to the foreground in 2120, with various operational improvement initiatives being launched. The notable recovery towards the end of 2Q20 provides a stepingstone for the year. As a result of sales countermeasures to cope with the sudden decline in mail, CTT expects to achieve growth in revenuesdriven by parcels, more than €30m in EBIT in FV20

2Q20 highlights

Notable recovery as the quarter progressed, benefiting from the easing of the lockdown restrictions and the gradual return to normality by businesses, individuals and cargo

• Addressed mail volumes, affected by delayed or cancelled clients' mail campaigns and air & freight disruptions, declined by 24.5% (recovering to amore customary 6.9% decline in June, after a steep 28.4% drop in April), producing a 19.3% decrease in Mail revenues

Stellar Express & Parcels volumes growth in Portugal (37.4%) and Spain (91.5%) الحالة gave rise to a record €11.7m increase in revenues. Margins improved, despite the initial investment in the e-commerce ecosystem; divisional EBIT turned positive (€0.3m)

Banco CTT's activity was not immune to the pandemic, which caused reduced hours of operation at the retail network and partial closure of auto dealerships; however, EBITDA benefited from growth in net interest & commissions income and strict cost control

Public debt certificates placements amounted to €1.9bn (+11.1%) in 1H2O, despite the 31.0% decline experienced in 2Q20. The activity, which went down by >50% at peak of the crisis in April, has been steadily recovering since then

Mail volumes, severely impacted by the global restrictions on the movement & operations of individuals, businesses & cargo in April & May, staged a meaningful recovery in June

Mail volumes

million items

• · The lockdown restrictions and the reduced retail network hours of operation impacted individuals and SME customers and led to diminished demand by large (banking, telecoms & utilities) clients, resulting in totally atypical mail volumes decline in April and May
• Registered mail, which was affected by delays in the issuance of statements by Government entities (such as tax notices and notifications from courts), as the relevant bodies were not operating at full capacity during the months of April and May, recovered in June
• International inbound mail volumes began to recover in June, as the limitations in global air freight capacity, especially pronounced in the period from February to May, started to ease

Record quarterly growth in parcels, as CTT initiatives to foster the development of e-commerce are starting to bear fruit; public debt placements are gaining momentum

Parcels volumes

million items

• Portugal's population long-awaited embrace of online shopping is quickly becoming a reality, as CTT investments in e-commerce meet rapidly changing clients' needs, spurred by the pandemic. >300 (out of >1000 contracted so far) SME clients' online shops have been made operational to date, while Dott reached 1K online vendors & 150K registeredusers in June
• The capture of new global B2C e-tailer clients in Spain, albeit at lower margins, more than compensated for the decline in B2B volumes

Public debt placements

€ million

Public debt sales benefited from the lifting of restrictions on the movement of people and the resumption of normal retail activity along the quarter, with placements almost doubling from €6.1m/workday in April to €11.5m/workday in June

Banco CTT customers' flight to safety was evident in the renewed strong capture of deposits; credit activity is gradually recovering, under stricter lending standards

Credit to clients

€ million

• Auto loans production, impacted by the closure of the auto dealerships as nonessential businesses during the lockdown, recovered strongly in the month of June
• Mortgage production remained resilient in April & May, but diminished in June, due to the natural 2/3-month lag between initial customer inquiry and contract closure

Customer deposits

€ million

Deposits capture recovered strongly, evidencing Banco CTT's excellent standing the population, despite the amonq introduction of new debit card commissions in the quarter

02 1H20 financials

Cit Committed to deliver

RESULTS PRESENTATION | 1H20

The unprecedented business interruption in Mail and the uncommon level of provisions at Banco CTT posed a temporary profitability challenge in 2Q20

Key financial indicators

€ million; % change vs. prior year

		Quarter			Half
	2019	2Q20	4%	1H19	1H20	4%
Revenues	178.1	169.3	-5.0%	355.0	349.2	-1.6%
Operating costs 1	152.7	156.1	2.2%	308.6	315.8	2.3%
EBITDA *	25.4	13.2	-48.2%	46.4	33.4	-28.0%
lmpairments and provisions	1.9	8.2	>>	2.3	11.1	>>
Depreciation and amortization	13.2	15.6	18.3%	26.4	30.0	13.6%
Specific items	6.1	0.8	-87.3%	11.7	0.8	-93.2%
EBIT	11.0	-4.4	<<	19.7	4.9	-75.3%
Net profit attributable to equity holders	5.3	-5.7	<<	9.0	-2.0	<<

RESULTS PRESENTATION | 1H20

Strong performance in the growth levers, led by an acceleration in parcels in 2Q20, was unable to offset the impact of the atypical addressed mail volumes decline on revenues

· Excluding the inpact of 321 Crist of 2020, revenues declined y €27, as stellined y €27, as stell parcels growth and €5.4m (62.9%) increase in Banco CTT net interestandfees & commissions in offset he Mairevenues decline, which resulted higher than the ear do COVID-19

1 IncludingCentral Structure.

² Thebusiness line "Retail of the Mail & other hancial Services & Retail business untin 1 Q 20 (proformaligures presented on 11.19 troughouther presentation)

Efforts to build a more dynamic and growth-oriented business, by investing in the e-commerce ecosystem and providing a lifeline to communities, have brought a short-term increase in costs

• Excluding 321 Credito, a company acquired in May -19, and the 1H19 costs structure more tifficult, operating costs increased by € 3.1m (1.0%)
• · Staff costs, excluding 32 Credity, decired by 60.9m (-0.5%), Staff healthcare costs decreased E.2.8m as the heathcare system by the employees. CTT chose not oparicipate in forlought partemicand instead sought to provide a lifeline to communities and strengthen its readionship with levels on stomers
• External Supplies & Services & Other costs, excluding 2.0%), as the C.2m reduction in marketing costs vas more than offset by the increase indirect sales costs related to the capture of new clients (€2.6m) and the related increase in parcels transport & distribution costs in both Portugal & Spain (€ 4.5m)

4 Excluding Specific items & IFRS 16 impacts, depreciation, impairments and provisions. 2 Including Central Structure. ² The business line "Relails of the Mall & other sunting at the Financial Services & Real business presented on 1419 throughout the presentation,

1 100 13

EBITDA was affected by the extraordinarily challenging operational environment in Mail in the months of March to May, despite the positive evolution in all remaining business units

4 Excluding Specific items & IFRS 16 impacts, depreciation, impairments and provisions. 2 Including Central Structure.

4 The business line "Realisation in the manal Services & Realbusiness uniti 1020 probres presented on 1419 troughouther presentation,

Conservative provisioning policy and an increase in depreciation & amortization, stemming from recent growth in Capex, offset the favourable impact of lower specific items on EBIT

• Specificitems decreased by 9.2% vs pior vealer and extra expendiures related to the new concession contract regorizionard the COVI-19 partemic
• · Impairnents & provisions were einforced in in imparments and additional €3.1m in provisions from and on expected by erfuller CDP qrowth and projected increase in unemployment), registered in the 321 Crédito lending book in 2020, as a result of Banco CTT s conservative provisioning policy

CTT faces the current period of economic uncertainty with a solid Balance sheet...

Balance sheet – 30 June 2020

...ample liquidity and a low level of net financial debt

Net financial debt 2

The 100% of consisted be comprade with bard 0,200 h 2009 tienning of coluding the Carry confinition contribution in the may indival price in the may included this not model p allowance. 2 Does not consider Employee benefits, net. 3 Including €14.2m Banco CTT cash deposits at Bank of Portugal.

FY 20 outlook

Assuming gradual recovery of the economy and continued improvement of the pandemic situation, CTT expects that the positive dynamics in its growth levers will endure

Significant reductions in letter (statements) and advertising mail are expected to lead to double-digit addressed mail volumes decline for the year

Express & Parcels will continue to be the main growth engine, spurred by fast e-commerce adoption and continued market share gains

Banco CTT is currently well provisioned and capitalized to face potential challenges in 2H2O, assuming a gradual recovery of the economy

The Portuguese population's propensity to save has been steadily increasing after the pandemic, which bodes well for a strong placement of public debt

CTT expects to achieve growth in revenues driven by parcels, more than €90m in EBITDA 1 and more than €30m in EBIT in FY20

Cit 04. Committed to deliver

Appendix

Mail experienced a total loss of profitability in the semester, as a result of the extraordinary volumes decline, due to the pandemic-driven interruption from March to May

Revenues 1		EBITDA 1,2	EBIT 1,3
€ million; % change vs. prior year		€ million	€ million
Transactional	€173.1m (-14.9%)	-62.8%
Advertising	€8.6m (-21.3%)	41.2	-99.9%
Editorial	€6.4m (-13.0%)		22.3
Business Solutions	€8.3m (+49.8%)
USO Parcels	€2.7m (-13.4%)	15.3
Philately & other 1	€5.1m (-28.6%)		0.0
Total	€204.2m (-14.0%)	1H19 1H20	1H19 1H20

Volumes by type (m items)

Metric	Avg. mail prices	Addressed mail	l ransactional	Advertising	Editorial	Unaddressed mail
1H20	N/D	263.0	228.3	19.6	15.1	183.2
vs. 1H19	+1.0%	-18.0%	-18.2%	-19.5%	-12.5%	-22.9%

I houding Central Structure. The Mall & of the Mall & other business unit migrated on the U.Services on the 1020 proformaligures presented of 1.1.1.9,

2 Excluding Specificitems & IFRS 16 impacts, depreciation, impairments and provisions.

3 Including Specific items & IFRS 16 impacts, depreciation, impairments and provisions.

The tremendous growth in parcels was reflected in the improved profitability, despite the continued CTT investments in the e-commerce infrastructure

Revenues		EBITDA ²		EBIT ²
Consolidated view; € million; % change vs. prior year			€ million	+70.8%	€ million >>
Portugal	€51.8m (+12.8%)			4.5	2.6
Parcels	€41.5m (+20.2%)	eliminations Portugal &	2.6
Cargo	€5.4m (-17.2%)				0.6
Banking network	€3.4m (+1.2%)
Logistics	€1.2m (-17.8%)
Other	€0.4m (+160.0%)			-33.8%	-27.9%
Spain	€31.9m (+23.2%)	Spain
Mozambique	€1.4m (+43.2%)		-3.4
Total	€85.1m (+16.9%)			-4.6	-4.9 -6.2
Volumes by region (mitems)			1H19	1H20	1H19 1H20
Metric	Total	Portugal		Spain	Mozambique
1H20	23.7	12.4		11.3	0.02
vs. 1H19	+33.9%	+26.1%		+43.9%	-28.7%

² ExcludingSpecificitems & IFRS 16 impacts, depreciation, impairments and provisions. Individual company views (not consolidated). 2 IncludingSpecificitems & IFRS 16 impacts, depreciation, impairments and provisions. Individual company views (not consolidated),

Banco CTT EBIT was impacted by the prudent increase in auto loans impairments and provisions in 2Q20

Revenues		EBITDA +	EBIT 2
€ million; % change vs. prior year		€ million	€ million
Net interest income	€8.3m (+63.2%)	>>
Interest income	€8.8m (+61.6%)	7.2	+68.9%
Interest expense	-€0.5m (-39.4%)
Fees & commissions income	€5.8m (+62.5%)
Own products	€3.4m (+48.4%)		-2.3
Consumer credit & insurance	€2.3m (+88.9%)
Payments & other	€8.0m (-18.1%)
321 Crédito (auto loans)	€16.3m (+220.0%)	-3.3	-7.2
Total	€38.4m (+63.0%)	1H19 1H20	1H19 1H20
Selected Banco CTT Balance sheet indicators

Metric	Assets (€m)	Cash & equivalents	Investments	Credit to clients (net of impairments)		Customer deposits (Em)	Equity (€m) / CET 1 Fully implemented(%)
31-Jun-20	1,841.4	214.2	523.3	988.3		489kcurrent \ 1,511.9	208.7 / 17.5%
vs. 31-Dec-19	+10.5%	+3.6%	+14.7%	+11.6%	accounts	(+6.0%) +17.8% ==	-1.2% / -1.6p.p.

4 Excluding Specificitems & IFRS 16 impacts, depreciation, impairments and provisions. ² Including Specificitems & IFRS 16 impacts, depreciation, impairments and provisions.

Solid performance by Financial Services & Retail, despite the operational challenges faced by the retail network for a large part of the semester, related to the state of emergency

Revenues		EBITDA ²	EBIT 3
€ million; % change vs. prior year		€ million	€ million
Savings & Insurance	€12.6m (+6.3%)	+14.5% 10.7	+17.7% 10.6
Money orders	€3.0m (+7.4%)	9.3	9.0
Payments	€0.8m (+21.0%)
Retail products & services	€5.0m (-12.1%)
Other	€0.1m (-81.5%)
Total	€21.5m (+1.2%)	1H19 1H20	1H19 1H20

Financial Services volumes by type

Metric	Savings & insurance flows (€bn)	Placements		Redemptions	Money orders (m ops.)
1H20	2.3	1.9 -	of which	0.4	7.7
vs. 1H19	+4.6%	+9.2% public debt	1.9 (+11.1%)	-14.3%	+4.3%

4 The business line "Retails ales" of the Mail & othe Financial Services & Retail business unitin 1 Q 20 (proformaligures presented for IH 19)

2 Excluding Specificitems & IFRS 16 impacts, depreciation, impairments and provisions.

3 Including Specific items & IFRS 16 impacts, depreciation, impairments and provisions.

Consolidated Income statement

Income statement

€ million	Reported		With Banco CTT under equity method
	1H19	1H20	1H19	1H20
Revenues	355.0	349.2	340.3	318.4
Operating costs	308.6	315.8	288.4	291.1
EBITDA	46.4	33.4	51.8	27.3
EBITDA including IFRS 16	60.1	46.7	65.3	40.3
Impairments & provisions	2.3	11.1	1.7	3.7
Depreciation & amortization	26.4	30.0	24.1	27.3
of which IFRS 16 impact	11.1	11.4	10.8	11.0
Specific items	11.7	0.8	10.5	0.8
EBIT	19.7	4.9	29.1	8.5
Net financial income / (costs)	-4.8	-4.7	-4.8	-4.7
of which IFRS 16 impact	-1.9	-1.6	-1.9	-1.6
Associated companies - gains / (losses)	-0.2	-1.2	-7.6	-4.1
Earnings before taxes	14.7	-1.0	16.6	-0.3
Net profit attributable to equity holders	9.0	-2.0	9.0	-1.9

Consolidated Balance sheet

Balance sheet

€ million

	Reported		With Banco CTT under equity method
	31-Dec-19	30-Jun-20	31-Dec-19	30-Jun-20
Non-current assets	1,734.7	1,864.9	615.8	608.4
Current assets	778.8	775.4	456.9	415.4
Assets	2,513.4	2,640.3	1,072.8	1,023.7
Equity	131.4	129.8	131.4	129.9
Liabilities	2,382.0	2,510.5	941.3	893.9
Non-current liabilities	512.8	497.3	432.0	430.7
Current liabilities	1,869.2	2,013.2	509.3	463.1
Equity and Liabilities	2,513.4	2,640.3	1,072.8	1,023.7

Consolidated Cash flow statement

Cash flow

€ million	Reported			With Banco CTT under equity method
	1H19	1H20	മ 20/19	1H19	1H20	ﺔ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤﺘﺤﺪﺓ ﺍﻟﻤ
EBITDA	46.4	33.4	-13.0	51.8	27.3	-24.5
Specific items affecting EBITDA	11.7	0.8	10.9	10.5	0.8	9.7
Capex	14.7	10.9	3.8	12.0	ਹੈ.3	2.7
Change in working capital	-13.8	-17.8	-4.0	-20.3	-14.3	5.9
Operating cash flow	6.2	3.9	-2.3	d:1	2.9	-6.2
Tax	-1.6	0.6	2.3	0.1	1.0	0.8
Employee benefits	-6.7	-5.1	1.6	-6.7	-5.1	1.6
Free cash flow	-2.1	-0.6	1.5	2.6	-1.2	-3.7
Debt (principal + interest)	36.7	-0.7	-37.5	36.7	-0.7	-37.5
Dividends	-15.0	0.0	15.0	-15.0	0.0	15.0
Financial investments & other	-106.1	0.0	106.1	-112.2	0.0	112.2
Net change in own cash	-86.4	-1.3	85.1	-87.8	-1.9	85.9
Change in liabilities FS & other & Banco CTT (net)	19.4	-34.9	-54.3	19.7	-49.8	-69.5
Change in other	8.0	-10.2	-18.2	0.0	0.0	0.0
Net change in cash	-59.0	-46.4	12.6	-68.2	-51.7	16.4

Specific items with minimal impact on the semester P&L

Specific items

€ million

	1H19	1H20
EBIT excluding Specific items	31.4	5.7
Specific items	11.7	0.8
Revenues	-0.2	-0.6
Staff costs	7.5	0.1
ES&S & other op. costs	4.4	1.3
EBIT	19.7	4.9

1H20 Specific items:

• €0.6m capital gain related to the sale of a non-strategic real estate asset
• · €1.3m of ES&S & other op. costs, of which €0.5m of strategic studies (including €0.3m related to the new concession contract) and €0.5m related to COVID-19

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Citi Correios de Portugal, S.A. Investor Relations

Contacts: Phone: +351 210 471 087 E-mail: investors@ctt.pt

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