CTT-Correios de Portugal

Investor Presentation • Oct 30, 2019

OM10

Results Presentation

DISCLAIMER

This document has been prepared by CTT - Correios de Portugal, S.A. (the "Company" or "CTT") exclusively for use during the roadshows and conferences of the 3rd quarter 2019 results. As a consequence thereof, this document 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 a 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 t 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, warran 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, emplo 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 b 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 subsi 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 responsibl about, and observing any such restrictions. Moreover, the recipients of this document are invited and advised to consult the public information disclosed by CTT on its website (www.ctt.pt) as well as on the Portuguese Secu 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 d 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 dire 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", "pr "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 diff 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 growth strategy and liquidity, and the wider environment (specifically, market developments, investment opportunities and requlatory 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 u 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 t 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 the 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 st result of new information, future events or otherwise.

highlights Robust growth of Banco CTT and Financial Services

• Express & Parcels volumes recover in Portugal (+13.9%), after a slow start to the year

• New contract signed with Amazon for the delivery of parcels in Portugal
• Spanish parcels business underperforming new turnaround plan is being announced

• Landmark quarter for Banco CTT¹ as it achieves EBITDA breakeven 4 years after launch, with the successful integration of 321 Crédito Rapid customer acquisition (c. 10k / month) and bias towards young & digital clients

€€

• Considerable Financial Services EBITDA margin improvement by virtue of the growth acceleration of public debt certificates placements in the quarter (+77.6%), already from a high base

FRITDA 2

Solid performance of higher-value mail (+€5.5m) and 1.8% effective price increase in the period were unable to fully offset the declines of letter $(-E11.2m)$ and advertising $\frac{1}{2}$ (-€1.4m) mail revenues. Legislative elections contributed positively $\frac{1}{1}$ (+€5.3m) to 3Q19 revenues

5

Parcels volumes recover strongly in Portugal after a slow start to the year; the growth in public debt certificates placements accelerates

Banco CTT with an attractive mass market value proposition and strong potential to build a growing and profitable business

• Rapid customer acquisition (~10k clients / month since the bank's inception in Mar-16), with a bias towards young and highly digital customers
• Seamless integration with partners for sale of specialised products: off-Balance Sheet customer funds (retirement funds) reaching €250m only 10 months after launch & stock of off-Balance Sheet consumer credit¹ now standing at $E107m$
• Loan-to-deposit ratio improved from 17% in March 18 to 69% in September 19, after the successful integration of 321 Crédito

The successful execution of the Operational Transformation Plan and newly implemented measures

allow us to upgrade the overall costs savings ambition

Operating costs savings¹

$\epsilon$ million; % change vs prior year

• €15.1m of FY19 operating costs savings secured $(vs \in 15.0m$ initial objective)
• €13.8m of the costs savings secured already visible through the P&L in 9M19
• FY19 operating costs savings target increased to €16.0m & FY20 target to €18.0m (from $€15.0m$ )

2

financials Register further

improvement

Key financial indicators

$\epsilon$ million; % change vs prior year

		Year-to-date			Quarter
	9M18	9M19	Δ%	3Q18	3Q19	$\Delta\%$
Revenues	524.8	539.6	$+2.8%$	169.7	184.6	$+8.8%$
Operating costs $1$	459.8	466.3	$+1.4%$	150.7	157.7	$+4.6%$
EBITDA	65.0	73.3	$+12.7%$	19.0	26.9	$+41.7%$
EBITDA including IFRS 16	89.9	93.7	$+4.2%$	27.2	33.6	$+23.5%$
Specific items	20.5	16.0	$-21.8%$	3.2	4.3	$+33.8%$
EBIT	26.6	34.2	$+28.7%$	8.5	14.5	$+71.1%$
Net profit	11.4	22.9	$+99.7%$	4.0	13.9	$+245.1%$
Operating cash flow	1.9	23.7	$\rightarrow$	7.6	17.5	$+130.9%$

Positively impacted by a one-time corporate tax refund of €6.8m as a result of a favourable Tax Authority decision on the deduction of the tax loss on CTT Expresso's sale of Tourline in 2016

Revenues returned to growth, underpinned by strong organic and inorganic evolution in Banco CTT and solid performance in Financial Services

• Positive mix effect in Mail and 1.8% effective price increase in the period unable to offset the addressed mail volumes decline of -9.5%
• Express & Parcels revenues recovered in 3Q19 in Portugal, on the back of 13.9% volumes growth; Spain affected by the loss of a large customer with -€6.1m impact year-to-date $\bullet$
• Strong increase in Banco CTT business unit revenues, driven by net interest margin (+€3.6m), fees & commissions income (+€2.6m) and inorganic growth

• Robust pace of public debt certificates placements (€2.8bn, +68.0%), driving high double-digit Financial Services revenues growth $\bullet$

• Staff costs, excluding 321 Crédito, were practically flat (-€0.2m, -0.1%), as savings from negotiated exits (-€6.1m) were offset by new admissions in growth areas, salary $\bullet$ increases negotiated with unions and seasonal temporary hiring

• ES&S costs, excluding 321 Crédito, grew by €1.1m (+0.6%), as reductions in facilities & fleet costs (-€5.8m) only partially offset increases in transport & distribution costs related to parcels volumes growth in Portugal (+€3.7m) and international mail operators due to elections (+€1.8m), & the incremental costs related to the new regulatory measures (+€1.2m)

Double-digit EBITDA growth underpinned by banking & financial services - Banco CTT achieves breakeven with the inorganic contribution of 321 Crédito

¹ Excluding Specific items & IFRS 16 impacts, depreciation, amortisation, impairments and provisions. ² Including Central Structure.

The Balance Sheet reflects the successful expansion of Banco CTT business unit, already

representing two thirds of total assets

Balance Sheet - 30 September 2019

€ million; % change vs 31 December 2018

Cash flow

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

$\epsilon$ million

EBITDA					$73.3(+68.2m)$
Specific items affecting EBITDA			$-14.6$		$(+64.6m)$
Capex		$-18.5$		$(-6.7m)$
Change in working capital	$-16.5$		$(+£15.7m)$
Operating cash flow		$23.7$ (+ $E21.8m$ )
Tax		$3.1$ (+ $69.7m$ )
Employee benefits	$-10.6$	$(-E1.0m)$
Free cash flow		$16.2$ (+€30.5m)

(+) Cash & cash equivalents	405
(-) Net Financial Services & other payables	214
(-) Banco CTT liabilities, net	78
$(-)$ Other	14
(=) Own cash	99
(-) Financial debt	91
(=) Net cash position	9
(-) Leases liabilities (IFRS 16)	87
Net financial cash (debt) 1

B

strategy update Turnaround plan for the Spanish parcels business

Spain remains a key growth pillar for the CTT Express & Parcels business, due to its market size and growth dynamics

¹ 2017 figures (Source: Studies conducted by 3^rd parties for CTT. Same source for B2C growth.). ² 2018 figures (Source: Trading Economics). ³ 2018 figures (Source: Eurostat).

Tourline's gradual recovery was halted in 2019 by the loss of a key account and cost pressures, prompting a change of management and the launch of a new turnaround plan

Tourline track record and future perspectives

• The previous strategy had started to exhibit a $\bullet$ gradual recovery trend...
• ... which was halted in 2019 by the loss of a $\bullet$ key account and by the increase of the minimum wage in Spain
• The new management team has deep local $\bullet$ and sector knowledge and experience in turnaround processes
• The new strategy focuses on organic B2C $\bullet$ growth and targets EBITDA breakeven during 2021

The new turnaround plan is aiming for strong organic B2C growth and profitability enhancements, driven by operational efficiency measures

New local management team, with sector & turnaround knowledge & experience

• Improve efficiency of direct sales and franchises through a new contractual approach

• Grow B2C business mainly through direct sales in major cities

• Optimise the operation model and its efficiency by progressively increasing control over the distribution

• Improve the customer mix, focusing on more profitable clients

• Reinforce the quality of service in distribution: reduce breakage and loss

• Revamp the brand image and awareness

• Internal reorganisation

• Improve the management information systems

$\bullet$

• Increase regional focus
• Strengthen operations coordination with Portugal

Supported by Capex of up to €12m for the period of the plan

appendix Business units and detailed financials

9M19 Mail & other revenues		EBITDA 1	EBIT 2
$\epsilon$ million; % change vs prior year		$\epsilon$ million	$\epsilon$ million
- Transactional	€303.0m $(-1.8%)$	$-6.8%$ 63.6 59.3
- Advertising	€16.6m $(-7.5%)$
- Editorial	€10.7m $(-2.5%)$		$-1.6%$
- Business Solutions	€7.8m $(+9.7%)$		33.5 33.0
- USO Parcels	€4.5m $(-9.2%)$
$-$ Retail & other	€16.3m $(-16.0%)$
Total	$C358.9m(-2.8%)$
		9M18 9M19	9M18 9M19

$\equiv \frac{1}{2}$ Mail volumes by type (mitems)

Metric	Avg. mail prices	Addressed mail	Transactional	Advertising	Editorial	Unaddressed mail
9M19	N/D	467.0	405.9	35.6	25.5	376.5
vs 9M18	$+1.8%$	$-9.5%$	$-8.8%$	$-17.3%$	$-7.5%$	$+18.8%$

$^{1}$ Excluding Specific items & IFRS 16 impacts, depreciation, amortisation, impairments and provisions.
² Including Specific items & IFRS 16 impacts, depreciation, amortisation, impairments and provisions.

Express & Parcels

9M19 E&P revenues

€ million; % change vs prior year

- Portugal	€70.5m (+5.9%)
– Parcels	€52.9m $(+8.3%)$
- Cargo	€9.5m $(-2.5%)$
- Banking network	€5.0m $(+5.9%)$
– Logistics	€2.3m $(+5.1%)$
– Other	€0.8m $(-25.4%)$
- Spain	€37.8m $(-6.9%)$
- Mozambique	€1.7m $(+16.5%)$
Total	€110.1m $(+1.3%)$

$\epsilon$ million

EBIT²

$\epsilon$ million

A E&P volumes by region (mitems)

Metric	Total	Portugal	Portugal (excl. Cargo)	Spain	Mozambique
9M19	27.1	15.5	13.2	11.6	0.04
vs 9M18	$-0.1%$	$+7.5%$	$+6.3%$	$-8.7%$ +9.6% excl. loss of key	$-9.7%$
	.			account

¹ Excluding Specific Items & IFRS 16 impacts, depreciation, amortisation, impairments and provisions. ² Including Specific Items & IFRS 16, depreciation, amortisation, impairments and provisions.

Banco CTT

9M19 Banco CTT revenues 1		EBITDA 2	EBIT 3
$\epsilon$ million; change vs prior year		$\epsilon$ million	$\epsilon$ million
		0.3
- Net interest income	€9.1m (+€3.6m)
- Interest income	€9.7m (+€3.7m)
- Interest expense	$-E0.6m(-E0.1m)$		$-5.9$
- Fees & commissions income	€6.0m (+€2.6m)
- Own products	€3.8m (+ $€1.2m$ )
- Consumer credit & insurance	€2.3m ( $+€1.4m$ )	$-9.0$	$-12.2$
- Payments & other	€15.3m ( $-$ €0.5m)
-321 Crédito	€12.4m (+€12.4m)	$\geq$	$-51.8^{\circ}$
Total	€42.9m (+€18.1m)	9M18 9M19	9M18 9M19

Selected Banco CTT Balance Sheet indicators

Metric (Consolidated)	Assets $(\epsilon m)$	lash & equivalents		redit to clients (net of impairments)	Customer deposits $\mathcal{E}(\epsilon)$	Equity (Em) / CET 1 (%) 4
30-Sep-19	1,558.3	193.5	447.9	803.8	1,160.4 438k current	191.9 / 17.3%
vs 31-Dec-18	$+55.6%$	$-25.6%$	$-1.4%$	$+224.0\%$	accounts $+31.3%$	$+114.4\%$ / +5.8 p.p.

¹ Part of the payments services of the Financial Services business unit (billing and invoicing, Western Union transfers, integrated solutions and tolls) migrated to the Banco CTT business unit in 1Q19 (proforma figures p

² Excluding Specific items & IFRS 16 impacts, depreciation, amortisation, impairments and provisions.

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

⁴Fully implemented.

EE FS volumes by type

Metric	Savings & insurance flows (€bn)	Placements	Redemptions	Money orders $(m$ ops)
9M19	3.6	3.0	0.6	10.9
vs 9M18	$+37.6\%$	$+65.8\%$	$-24.9\%$	$-3.3%$

¹ Part of the payments services of the Financial Services business unit (billing and invoicing, Western Union transfers, integrated solutions and tolls) migrated to the Banco CTT business unit in 1Q19 (proforma figures p ² Excluding Specific items & IFRS 16 impacts, depreciation, amortisation, impairments and provisions.

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

$\epsilon$ million		Reported	Reported with Banco CTT under equity method $1$
	9M18	9M19	9M18	9M19
Revenues	524.8	539.6	513.3	510.4
Operating costs	459.8	466.3	435.9	434.0
EBITDA (excl. IFRS 16 impact)	65.0	73.3	77.4	76.4
IFRS 16 impact:	24.9	20.4	24.3	20.0
EBITDA (incl. IFRS 16 impact)	89.9	93.7	101.7	96.4
Depreciation, amortisation, impairments & provisions	42.9	43.4	39.8	38.1
of which, IFRS 16 impact:	19.4	16.4	18.9	16.0
Specific items	20.5	16.0	19.8	14.7
EBIT	26.6	34.2	42.1	43.6
Net financial income / (costs)	$-7.3$	$-7.3$	$-7.3$	$-7.3$
of which, IFRS 16 impact:	$-3.2$	$-2.8$	$-3.2$	$-2.8$
Associated companies - gains / (losses)	0.1	$-0.6$	$-12.2$	$-8.3$
Earnings before taxes (EBT)	19.4	26.3	22.7	28.0
Income tax for the period	7.9	3.4	11.2	5.2
Non-controlling interests	0.0	0.0	0.0	0.0
Net profit attributable to equity holders	11.4	22.9	11.4	22.9

$\epsilon$ million	CTT		under equity method $1$	With Banco CTT
	31-Dec-18	30-Sep-19	31-Dec-18	30-Sep-19
Non-current assets	1,108.1	1,638.6	486.6	575.1
Current assets	746.3	728.4	456.9	437.1
Assets	1,854.5	2,367.0	943.5	1,012.2
Equity	135.9	143.6	135.9	143.6
Liabilities	1,718.6	2,223.4	807.6	868.5
Non-current liabilities	364.3	499.0	363.5	408.0
Current liabilities	1,354.3	1,724.4	444.1	460.5
Equity and Liabilities	1,854.5	2,367.0	943.5	1,012.2

Cash flow

	Reported			With Banco CTT under equity method $1$
$\epsilon$ million	9M18	9M19	$\triangle$ 19/18	9M18	9M19	$\triangle$ 19/18
EBITDA	65.0	73.3	8.2	77.4	76.4	$-1.0$
Specific items affecting EBITDA	19.3	14.6	$-4.6$	18.6	13.3	$-5.2$
Capex	11.7	18.5	6.7	7.3	15.3	7.9
Change in working capital	$-32.2$	$-16.5$	15.7	$-33.0$	$-15.7$	17.4
Operating cash flow	1.9	23.7	21.8	18.5	32.2	13.7
Tax	$-6.6$	3.1	9.7	$-11.8$	5.3	17.1
Employee benefits	$-9.6$	$-10.6$	$-1.0$	$-9.6$	$-10.6$	$-1.0$
Free cash flow	$-14.3$	16.2	30.5	$-2.9$	26.9	29.7
Debt (principal + interest)	$-6.1$	59.1	65.2	$-6.1$	59.1	65.2
Dividends	$-57.0$	$-15.0$	42.0	$-57.0$	$-15.0$	42.0
Financial investments		$-114.4$	$-114.4$	$-25.0$	$-113.6$	$-88.6$
Changes to the consolidation perimeter		6.8	6.8			$\qquad \qquad$
Net change in own cash	$-77.5$	$-47.3$	30.1	$-91.0$	$-42.7$	48.3
$\Delta$ Liabilities Financial Services & other & Banco CTT (net)	$-98.7$	22.8	121.6	22.9	11.8	$-11.1$
$\Delta$ Other	$-24.8$	6.3	31.1	0.0	0.0	0.0
Net change in cash	$-201.0$	$-18.2$	182.8	$-68.2$	$-30.9$	37.3

$\epsilon$ million	Specific items
	9M18	9M19
EBIT excluding Specific items	47.1	50.2
Specific items	20.5	16.0
Revenues	$-0.1$	$-0.6$
Staff costs	16.0	10.0
ES&S & other op. costs	3.4	5.2
Provisions	1.1
Impairments and D&A	0.1	1.4
EBIT	26.6	34.2

Of which €8.9m of indemnities related to negotiated staff exits

Of which €4.7m of M&A costs & strategic studies: €1.3m related to the 321 Crédito $acquisition$ , $E1.6m$ related to the
Operational Transformation Plan and
$E1.5m$ related to new regulatory measures

Investor Relations

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

CTT - Correios de Portugal, S.A.