FULL YEAR 2016 Results Presentation

CTT – Correios de Portugal, S.A.

9 March 2017

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 full year 2016 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 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 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 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 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.

01. Key highlights

KEY HIGHLIGHTS: THE LAUNCH OF BANCO CTT TO THE PUBLIC WAS THE LANDMARK

EVENT OF 2016

BANCO CTT &	Banco CTT opened to the public in 51 CTT post offices, closing the year with 202 branches countrywide, 105 thousand clients, more than 74 thousand current accounts & more than €250m in customer deposits
FINANCIAL SERVICES	Another strong year for savings placements (€3.8 billion of savings were captured), with revenues from the placement of public debt posting 6.3% growth vis-à-vis 2015

	The decline of addressed mail volumes stood at -4.2%, within the [-3% to -5%] guidance range; the average change of the prices of the Universal Service versus the previous year was +1.1%
MAIL	Relevant decrease in registered mail usage by the Government and the Public Administration (the Tax Authority in particular) with c.€10m impact on revenues

EXPRESS &	Revenues in Spain decreased due to a 12.3% drop in volumes as a result of the strategy implemented in 1Q16, namely the contract terminations of 2 unprofitable for Tourline large clients
PARCELS	Various commercial and marketing initiatives carried out in Portugal with small impact on revenues in 2016, although with signs of recovery in the last 3 months of the year (volumes growth of 8.6%)

COSTS &	Focus on efficiency improvements was maintained, allowing for 4.1% reduction in the recurring operating costs excluding Banco CTT, compensating more than two-thirds of the revenues decline
EARNINGS	As expected, the recurring EBITDA was impacted by the recurring costs with the Banco CTT project still at its launch stage and with no relevant revenues; excluding these costs it declined 6.3%

¹ It was subject to Competition Authority approval in 2017, therefore, not consolidated in the 2016 accounts.

LAUNCH OF BANCO CTT IMPACTED THE 2016 RESULTS

FY16 financial and operational performance

€ million, except when otherwise indicated

		Including Banco CTT			Excluding Banco CTT 1
Financial indicators:	2015	2016	Δ%	2015	2016	Δ%
Recurring revenues	727.2	695.1	-4.4%	727.2	693.8	-4.6%
Recurring operating costs	583.2	575.6	-1.3%	578.2	554.2	-4.1%
Recurring EBITDA	144.0	119.5	-17.0%	149.0	139.6	-6.3%
Reported net profit	72.1	62.2	-13.7%	80.9	85.5	+5.6%

	Addressed mail (million items)	Unaddressed mail (million items)	Parcels (million items)	FS savings flows (€ billion)	Banco CTT current accounts (thousand)
2016 volumes	780.2	497.8	26.9	4.7	74.1
2016 vs. 2015	-4.2%	+5.1%	-5.5%	-11.0%	N/A

¹ Excluding Banco CTT revenues and costs booked in Banco CTT, FS and Mail and other business units.

STRONG 4th QUARTER WITH RELEVANT IMPACT ON EBITDA

4Q16 financial and operational performance

€ million, except when otherwise indicated

		Including Banco CTT			Excluding Banco CTT 1
Financial indicators:	4Q15	4Q16	Δ%	4Q15	4Q16	Δ%
Recurring revenues	189.1	178.0	-5.9%	189.1	177.2	-6.3%
Recurring operating costs	149.9	149.4	-0.3%	147.7	142.7	-3.4%
Recurring EBITDA	39.2	28.5	-27.2%	41.4	34.5	-16.8%
Reported net profit	21.4	16.1	-24.8%	24.6	23.0	-6.8%

The decline of addressed mail volumes stood at -7.2% in 4Q16, causing Mail revenues to decrease 5.6% as a result of higher than anticipated impact of the 3 less working days in the same period (reinstatement of national holidays) and reduced consumption of large and medium business customers, due to both the normal effect of e-substitution and changes in the consumption profile
E&P revenues decline of -7.1% (mainly influenced by the delayed launches of both the new modular offer in Portugal and the Amazon contract in Spain) offset the solid FS revenues performance. Notable was the 56.1% Savings & Insurance revenues increase in 4Q16, resulting in close to flat revenues in this product line for the full year, as expected
Revenues generation initiatives in Mail (e.g. new advertising mail offer), Financial Services (e.g. payments), Banco CTT (e.g. consumer credit & mortgage offers), and Express & Parcels (e.g. modular offer) now all underway, but with no real impact in 4Q16

KEY HIGHLIGHTS: THE PLANNED REVENUES GENERATION INITIATIVES (NOW ALL

UNDERWAY) HAD NO REAL IMPACT IN 2016 DUE TO LAUNCH DELAYS

Mail revenues declined due to strong mix effect (registered mail decline impact of circa €10m, primarily centred in 9M16) and 4.2% decline in addressed mail volumes, partially offset by 1.1% average price increase in the year
E&P revenues were affected primarily by the restructuring process in Spain, resulting in volumes (-12.3%) and revenues (-12.6%) decline in the region
FS revenues were impacted by structural trends in payments & transfers, while savings & insurance revenues recovered along the year to close almost flat, as expected

DECLINE IN FY16 RECURRING OPERATING COSTS, ABSORBING BANCO CTT COSTS

Staff costs declined primarily due to the remuneration policy with an emphasis on variable component (-€8.6m impact), decline in Tourline staff costs (-€2.9m), and reduction in the telephone subscription fee benefit (-€2.4m), partially offset by the increase in Banco CTT recurring staff costs (+€7.4m) and by the extension of the coverage of work accidents insurance to the "Caixa Geral de Aposentações" workers (+€1.3m)
ES&S costs reduced by €1.4m, as efficiency measures fully absorbed the impact on those costs from the Banco CTT launch (+€9.5m vs. 2015); COGS decreased by €2.4m due to lower activity, namely in lottery and merchandising

¹ Booked in Banco CTT business unit (€2.3m Staff costs and €2.4m ES&S and other costs) and in Mail business unit (€0.4m ES&S and other costs).

¹⁰ ² Excluding Banco CTT recurring op. costs: €5.0m in 2015 (€4.7m booked in in Banco CTT, €0.4m in Mail business unit) and €21.3m in 2016 (€21.8m booked in Banco CTT business unit, -€0.5m in Mail business unit).

³ Booked in Banco CTT business unit (€9.6m Staff costs and €12.2m ES&S and other costs) and in Mail business unit (-€0.5m Staff costs and €0.1m ES&S costs).

KEY HIGHLIGHTS: RECURRING EBITDA DROPPED 6.3% AS A RESULT OF LOWER THAN EXPECTED REVENUES, ONLY PARTIALLY OFFSET BY DECLINE IN OPERATING COSTS

Recurring EBITDA strongly influenced by the lower than expected revenues, notwithstanding the positive impact of efficiency management efforts

¹ Excluding Banco CTT recurring revenues: €1.3m in 2016 (€1.0m booked in Banco CTT business unit, €0.2m in Mail & other business unit and €0.1m in FS business unit).

² Excluding Banco CTT recurring op. costs: €5.0m in 2015 (€4.7m booked in in Banco CTT, €0.4m in Mail business unit) and €21.3m in 2016 (€21.8m booked in Banco CTT business unit, -€0.5m in Mail business unit).

³ Booked in Banco CTT business unit (-€20.8m), Mail and other (€0.7m) and in FS business unit (€0.1m).

KEY HIGHLIGHTS: THE BOARD REAFFIRMS THE COMMITMENT TO GROWING THE

DIVIDEND, IN A YEAR OF STRONG INVESTMENT IN BANCO CTT

Cash flow
€ million
	Reported		Adjusted 1
	2016	∆ %	2016	∆%
From operating activities	268.2	>>	269.4	187.0
Cash flow excl. Banco CTT	42.5	17.8	43.6	-55.1
Banco CTT cash flow	225.8	>>	225.8	>>
From investing activities	-185.6	<<	-185.6	<<
2 Capex payments	-29.5	-4.1	-29.5	-4.1
of which Banco CTT	-10.0	-0.7	-10.0	-0.7
Banco CTT financial assets	-164.8	N/A	-164.8	N/A
Operating free cash flow	82.6	>>	83.8	22.6
From financing activities	-72.4	-6.1	-72.4	-6.1
of which Dividends	-70.3	-0.7	-70.3	-0.7
Other	5.0	>>	5.0	>>
Net change in cash	15.2	124.9	16.3	>>

Working capital registered a visible improvement in 4Q16

Dividend policy goal achieved with the utilisation of a small amount (c.€10m) of distributable reserves

1 Cash flow from operating activities excluding changes in net Financial Services payables of -€61.0m (2015) and -€1.1m (2016), respectively. Cash at the end of the period excluding net Financial Services payables of €324.7m (Dec-15) and €323.5m (Dec-16).

² Capex payments presented in the table; Capex expense was €42.2m in 2016 (€32.3m in 2015).

ACQUISTIONS AND DEPOSITS PICKED UP ALONG THE YEAR

Strong liquidity (106%) and own cash position (€199m) was maintained, supporting the investment in Banco CTT

¹ Including Financial Services receivables of €6.4m and €8.6m as at Dec-15 and Dec-16, respectively, and €69.2m in Banco CTT current financial assets (Dec-16). ² Including €98.5m in Banco CTT non-current financial assets (Dec-16).

02. Business units

WEIGHED ON MAIL PERFORMANCE IN 2016

Mail volumes by type

Metric	Avg. mail prices	Addressed mail	Transactional	Advertising	Editorial	Unaddressed mail
2016 volumes (m)	N/A	780.2	662.8	74.2	43.3	497.8
2016 vs. 2015	+1.1%	-4.2%	-3.7%	-7.5%	-6.4%	+5.1%

Metric	Total	Portugal	Spain	Mozambique
2016 volumes (m)	26.9	14.6	12.3	0.1
2016 vs. 2015	-5.5%	+1.1%	-12.3%	-2.4%

¹ Including internal and other revenues, and internal transactions with Spain and Mozambique.

FS volumes by type

Metric	Savings placements (€bn)	Payments (m ops)	Money orders & transfers (m ops)	Credit (€m)
2016 volumes	3.8	57.6	18.6	10.4
2016 vs. 2015	-10.8%	-6.2%	-4.4%	+24.4%

03. 2017 outlook

2017 OUTLOOK: GOAL OF SMALL GROWTH IN REVENUES AND FLAT RECURRING EBITDA (EX-ALTICE); DIVIDEND POLICY REAFFIRMED

			Including Banco CTT			Excluding Banco CTT 1
€ million	Reported		Recurring 2		Reported			Recurring 2
	2015	2016	2015	2016	2015	2016	2015	2016
Revenues	727.2	696.8	727.2	695.1	727.2	695.5	727.2	693.8
Operating costs	592.6	594.8	583.2	575.6	581.2	566.5	578.2	554.2
EBITDA	134.6	102.1	144.0	119.5	146.0	129.0	149.0	139.6
EBITDA margin	18.5%	14.6%	19.8%	17.2%	20.1%	18.5%	20.5%	20.1%
Depreciation, amortisation, provisions and impairments	24.6	11.2	24.2	24.8	24.5	8.6	24.0	23.0
EBIT	109.9	90.9	119.8	94.7	121.6	120.5	125.0	116.5
Financial income, net	-5.4	-5.9	-5.4	-5.9	-5.4	-5.9	-5.4	-5.9
Gains / (losses) in associated companies	0.1	0.2	0.1	0.2	0.1	0.2	0.1	0.2
Earnings before taxes (EBT)	104.6	85.2	114.4	89.0	116.2	114.8	119.6	110.9
Income tax for the period	32.5	23.3	32.9	25.4	35.3	29.6	34.4	31.8
Non-controlling interests	0.01	-0.26	0.01	-0.26	0.01	-0.26	0.01	-0.26
Net profit attributable to equity holders	72.1	62.2	81.6	63.9	80.9 3	85.5 3	85.2	79.3

¹ Excluding revenues / costs of Banco CTT and Banco CTT project reported in CTT S.A.

² Recurring net profit excludes non-recurring revenues and costs and considers the theoretical (nominal) tax rate of CTT.

³ Considers the effective tax rate of the period of CTT S.A. and Banco CTT.

€ million
	2015	2016	∆
Reported EBITDA	134.6	102.1	-32.5
Non-recurring items affecting EBITDA	9.4	17.4	8.0
Revenues	0.0	-1.8	-1.8
Staff costs	0.0	10.0	10.0
ES&S & other op. costs	9.4	9.2	-0.2
Recurring EBITDA	144.0	119.5	-24.5

Reported EBIT	109.9	90.9	-19.0
Non-recurring costs affecting only EBIT	0.4	-13.6	-14.1
Provisions (reinforcements / reductions)	0.0	-15.1	-15.1
Impairments (losses / reductions)	0.4	1.5	1.1
Non-recurring items affecting EBITDA & EBIT	9.8	3.8	-6.0

Recurring EBIT	119.8	94.7	-25.1

CTT Investor Relations

Upcoming Events:

10 Mar. – Lisbon

• Roadshow with Caixa BI

13 Mar. – Edinburgh

• Roadshow with JP Morgan

14 Mar. – London

Roadshow with Barclays
15 Mar. Frankfurt
Roadshow with Morgan Stanley
16 Mar. Madrid
Roadshow with BPI
30 Mar. Paris
30th ESN European Conference

Contacts: Phone: +351 210 471 857 E-mail: [email protected]

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