Quarterly Report • Oct 30, 2019
Quarterly Report
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| HIGHLIGHTS 4 | ||
|---|---|---|
| 1. | OPERATIONAL AND FINANCIAL PERFORMANCE OF THE BUSINESS UNITS 5 | |
| 2. | OTHER HIGHLIGHTS 14 | |
| INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 19 |
HIGHLIGHTS
| € million | ||||||
|---|---|---|---|---|---|---|
| 3Q18 | ∆ % | 9M18 | ∆ % | |||
| Restated | 3Q19 | 19/18 | Restated | 9M19 | 19/18 | |
| Revenues | 169,7 | 184,6 | 8,8% | 524,8 | 539,6 | 2,8% |
| Mail & Other | 118,4 | 119,0 | 0,5% | 372,5 | 362,0 | -2,8% |
| 117,2 | 118,2 | 0,8% | 369,1 | 358,9 | -2,8% | |
| Central Structure | 1,2 | 0,8 | -33,8% | 3,4 | 3,1 | -7,7% |
| Express & Parcels | 35,9 | 37,3 | 3,7% | 108,7 | 110,1 | 1,3% |
| Banco CTT 1 | 9,0 | 19,3 | 113,8% | 24,8 | 42,9 | 73,1% |
| Financial Services 1 | 6,3 | 9,0 | 42,5% | 18,9 | 24,6 | 30,3% |
| Operating costs 2 | 150,7 | 157,7 | 4,6% | 459,8 | 466,3 | 1,4% |
| EBITDA | 19,0 | 26,9 | 41,7% | 65,0 | 73,3 | 12,7% |
| Leases (IFRS 16) | 8,2 | 6,7 | -18,4% | 24,9 | 20,4 | -17,9% |
| EBITDA including IFRS 16 | 27,2 | 33,6 | 23,5% | 89,9 | 93,7 | 4,2% |
| Impairments & provisions | 0,8 | 1,7 | 101,3% | 0,5 | 4,0 | » |
| Depreciation & amortisation | 14,6 | 13,0 | -10,9% | 42,4 | 39,5 | -6,9% |
| Specific items | 3,2 | 4,3 | 33,8% | 20,5 | 16,0 | -21,8% |
| EBIT | 8,5 | 14,5 | 71,1% | 26,6 | 34,2 | 28,7% |
| Financial results (+/-) | -2,4 | -2,9 | -21,6% | -7,2 | -7,9 | -10,2% |
| Income tax for the period | 2,1 | -2,3 | -209,0% | 7,9 | 3,4 | -56,6% |
| Non-controlling interests | 0,00 | 0,03 | » | 0,03 | 0,03 | 6,9% |
| Net profit for the period 3 | 4,0 | 13,9 | 245,1% | 11,4 | 22,9 | 99,7% |
1 In 2019 and in the same period of the previous year (proforma), part of the payments segment of the Financial Services business unit is considered within Banco CTT business unit, to which it migrated, and excluded from Financial Services. 321 Crédito was merged into Banco CTT business unit in 2019. 2 Excluding depreciation / amortisation, impairments and provisions, as well as the impact of IFRS 16 and specific items.
3 Attributable to equity holders.
The revenues of the Mail business unit reached €358.9m in the 9 months of 2019, a decrease of €10.2m (-2.8%) vis-à-vis the same period of 2018, although the 3rd quarter posted a slight increase (+0.8%) due to the positive impact of the elections (+€5.3m).
The decrease is is mainly due to the combined effect of the decline of €8.0m (-2.4%) in the revenues of addressed mail and of €1.4m (-22.2%) in philately, mitigated by revenue growth of €0.7m (+12.4%) in unaddressed advertising mail and of €0.7m (+9.7%) in Business Solutions, and the effective increase in the average price of the basket of national and international services under the Universal Service4 (+1.8%).
| Million items | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 3Q18 | 3Q19 | ∆% | 9M18 | 9M19 | ∆% | ∆% / | |||||
| working day | |||||||||||
| Transactional mail | 137.6 | 127.0 | -7.7% | 445.2 | 405.9 | -8.8% | -8.3% | ||||
| Advertising mail | 12.5 | 11.2 | -9.9% | 43.1 | 35.6 -17.3% | -16.9% | |||||
| Editorial mail | 8.4 | 8.2 | -2.2% | 27.5 | 25.5 | -7.5% | -7.0% | ||||
| Addressed mail | 158.4 | 146.4 | -7.6% | 515.7 | 467.0 | -9.5% | -9.0% | ||||
| Unaddressed mail | 105.6 | 138.9 | 31.4% | 316.8 | 376.5 | 18.8% | 19.5% | ||||
The evolution of transactional mail volumes (-8.8%) was influenced by the decrease of domestic ordinary mail volumes (-10.1%) with less 34.7 million items, mainly in the banking and insurance, utilities & telcos, and Government sectors, as well as of priority mail volumes (-16.9%) that posted a reduction of 3.0 million items. Green mail grew (+19.8%) due to some product substitution, as the prepaid line of registered mail and priority mail products was discontinued.
Inbound international mail volumes continued to contribute positively to the revenues with an increase of €2.9m (+10.2%). Revenues of the outbound international mail (+€4.5m; +14.7%) were positively influenced by the items associated with the 2019 legislative election process, which led to an increase of €4.8m in the 3 rd quarter of 2019 over the same period of the previous year.
The downward trend of addressed advertising mail volumes slowed down in the 3rd quarter of 2019 to -9.9% (which compares to -15.7% and -25.2% in the 1st and 2nd quarters, respectively) reaching a decline of 17.3% in the 9 months of 2019. The implementation of the new General Data Protection Regulation (GDPR) and the dematerialisation of processes, the change of the business model and the communication and marketing media to other advertising solutions continued to affect this product.
Unaddressed advertising mail maintained an upward trend in the 3rd quarter of 2019 (+31.4%), which compares to 5.9% and 18.5% in the 1st and 2nd quarters, respectively, allowing for a consolidated growth in volumes of 18.8% in the 9 months of 2019 due to the gain of market share. As a result of the legislative elections process, an important infomail communication service was obtained, with a positive influence in the last month of the 3rd quarter.
Business solutions revenues grew €0.7m (+9.7%) vis-à-vis the 9 months of 2018. Special note to the new geographical services offer leveraged by new technological tools and new document production services.
4 Including letter mail, editorial mail and parcels of the Universal Service, excluding inbound international mail.
The Express & Parcels revenues amounted to €110.1m in the 9 months of 2019, +€1.4m (+1.3%) vs the same period of the previous year.
Revenues in Portugal totalled €70.5m, +5.9% compared to the same period of 2018. The development of this business in Portugal resulted mostly from the CEP business, which achieved €52.9m (+8.3%), the banking activity that totalled €5.0m (+5.9%), and logistics that reached €2.3m (+5.1%). The cargo business totalled €9.5m (-2.5%). The performance in Portugal has evolved over the year, with the 3rd quarter growing by +9.7% year-onyear in terms of revenues, which compares with growth of +3.5% and +4.4% in 1st and 2nd quarters, respectively. This evolution results from the better development of the CEP and logistics businesses, which grew by +13.1% and +21.8%, respectively.
Volumes in Portugal totalled 15.5 million items, +7.5% over the same period of the previous year. CEP growth was the result of the entry of new customers (mainly in the B2B segment), the increased activity of the B2B and B2C segments, the e-commerce growth and the good performance of the international business. The international business contributed €0.9m (+18.7%) to the CEP business, reflecting, on the one hand, the growing volumes to Russia and Switzerland and, on the other, a significant increase in volumes originating in Germany and Brazil as a result of trade agreements with operators in those countries. The growth in the banking sector delivery business was due to the entry into force of the renegotiations concluded in 2018 and already during 2019, as well as to the award of new services by the customers.
It should be noted that the Dott marketplace (a partnership between CTT and Sonae) is a strategic lever for the development of the B2C market in Portugal, enabling online sales from 561 sales partners; by September it had reached 20 thousand registered users and 10 thousand buyers in the platform. In addition to Dott, the launch of CTT NOW has reinforced CTT's portfolio of digital services as the most complete and innovative in the market, enabling, in a digital environment through the CTT NOW app, to command the collection and delivery of items within two hours in the Greater Lisbon area.
Revenues in Spain stood at €37.8m, -€2.8m (-6.9%), vis-à-vis the same period of the previous year mainly due to the 8.7% decline in volumes, greatly influenced by the loss of one of the largest customers of Tourline. Excluding the impact of this large customer, the evolution of revenues and volumes in the 9 months of 2019 would have been +9.7% and +9.6%, respectively, as a result of the capture of new customers and the growth of the franchise network.
In the 3rd quarter of 2019 a new management team with deep local and sector knowledge and experience in turnaround processes took office at Tourline. A Strategic Plan has been designed that focuses on organic growth in companies operating in the B2C segment and aims at achieving operating (EBITDA) breakeven during 2021. The implementation of this plan entails an investment of €12m.
Revenues in Mozambique amounted to €1.7m, +16.5% vs the same period of 2018. This confirms the positive trajectory started in 2018 with the CEP and banking businesses positively contributing to this growth and allowing for the continued increase of the EBITDA of this operation.
The revenues of Banco CTT reached €42.9m in the 9 months of 2019, a year-on-year growth of €18.1m (+73.1%). These revenues were achieved with a €12.4m contribution from 321 Crédito, acquired in May 2019.
5 The Banco CTT business unit includes Banco CTT, Payshop, CTT non-postal payments services and 321 Crédito.
Excluding the inorganic effect of the acquisition of 321 Crédito, the revenues amounted to €30.4m, reflecting a year-on-year increase of €5.7m (+22.9%). The revenue growth of this business unit was positively impacted by net interest income growth (+€3.6m; +65.4%) as the 3 rd quarter of 2019 registered 83.2% growth corresponding to an improvement in the trend of the 1st and the 2nd quarters of 2019 which grew by 66.3% and 43.1%, respectively.
The commissions received grew by 87.2% in the 3rd quarter of 2019, particularly those from Cetelem, Retirement Savings Plans ("PPR") products and from transactionality.
Noteworthy was the operating performance of Banco CTT, which led to a significant growth of accounts opened to 438 thousand accounts (+121 thousand than in the 9 months of 2018), along with the continued growth of customer deposits to €1,160.4m (+47.0%) and the mortgage loan portfolio growth, net of impairment losses, to €358.6m (+94.8%). With the acquisition of 321 Crédito, Banco CTT structurally boosted the loan-to-deposit ratio of its credit portfolio from 25.6% as at 30 September 2018 to 69.3% as at 30 September 2019, through the integration in its credit portfolio of an amount of €443.9m, mainly car loans, and the sustained growth of mortgage loans.
Financial Services revenues stood at €24.6m in the 9 months of 2019, a 30.3% growth over the same period of 2018.
Savings & Insurance products contributed €19.3m to the revenues, corresponding to a 50.9% year-on-year growth. Public Debt Certificates6 placements reached €2,834.6m (+68.0%), generating additional revenues of €18.1m (+61.7%). This growth is less than proportional to the evolution of the amount of subscriptions due to the 5 bp reduction in the Company's placement fees, in May 2018.
With regard to Money Orders (national and international), 10.9 million transactions were carried out, which represented a decrease of 3.3% vis-à-vis the same period of 2018 and translated into €4.1m (-11.0%) in revenues. In the Payments business, mainly tax collections, 878 thousand transactions were processed in this period, representing a decrease of 11.2% compared to same period of the previous year, corresponding to revenues of €0.9m.
Operating costs7 totalled €466.3m, +€6.5m vs the same period of the previous year. Excluding 321 Crédito, operating costs totalled €461.6m (+€1.8m; +0.4%).
| € million | ||||
|---|---|---|---|---|
| 9M18 | 9M19 | ∆ | ∆% | |
| Operating costs | 459.8 | 466.3 | 6.5 | 1.4% |
| Staff costs | 250.1 | 252.2 | 2.0 | 0.8% |
| ES&S | 190.5 | 193.5 | 3.1 | 1.6% |
| Other operating costs | 19.2 | 20.6 | 1.4 | 7.4% |
6 Savings Certificates and Treasury Certificates Poupança Crescimento.
7 Excluding depreciation / amortisation, impairments and provisions, as well as the impact of IFRS 16 and specific items.
External supplies & services costs increased by €3.1m year-on year, of which €1.9m resulted from the integration of 321 Crédito. Excluding the corresponding inorganic effect, growth is the result of a set of initiatives with good results in physical resources management (buildings and fleet; -€5.8m) that more than offset the increase in direct costs (+€5.0m) from the evolution of the business, including the terminal dues from the legislative elections (+€3.4m), but did not allow to cover the costs with the quality of service measurement as per indicators defined by the regulator (+€1.2m).
Staff costs increased by €2.0m in the 9 months of 2019 but decreased by €0.2m excluding the effect of 321 Crédito. The initiatives within the Operational Transformation Plan have generated savings of €6.1m which offset the salary increases in the 3rd quarter of 2019 (+€1.4m), the increase of fixed-term contracts (+€2.2m), the increase of the number of permanent staff in Banco CTT and Tourline (+€1.2m), as well as career progressions and staff rejuvenation.
Other operating costs grew by €1.4m mostly due to: (i) the increase in interbank fees paid (+€0.8m; +46.7%), as a result of the increase in the number of bank accounts of Banco CTT (+38.2%), which entails higher total transactionality costs; and (ii) the inorganic effect of 321 Crédito (+€0.6m).
The successful execution of the Operational Transformation Plan in the 9 months of 2019 and the recent additional measures implemented allow the Company to update the previously announced savings objectives. Thus, for the full year 2019 it is estimated that the operating costs savings reach €16m vs the initial target of €15m, while the 2020 full-year target is set for €18m vs the previous forecast of €15m.
As at 30 September 2019, the CTT headcount (permanent and fixed-term staff) consisted of 12,679 employees, 89 more (+0.7%) than in the same period of 2018. This increase is explained by the increase in Banco CTT (+154, of whom 119 result from the integration of 321 Crédito in this business unit) and in the Express & Parcels (+21) business units, which was partly offset by the decrease in the Mail & Other (-83) business unit. Excluding the effect of the integration of 321 Crédito, the number of employees decreased by 30 (-0.2%).
| 30.09.2018 | 30.09.2019 | Δ 2019/2018 | ||
|---|---|---|---|---|
| Mail & Other | 11.159 | 11.076 | -83 | -0,7% |
| Express & Parcels | 1.149 | 1.170 | 21 | 1,8% |
| Banco CTT (*) | 251 | 405 | 154 | 61,4% |
| Financial Services (*) | 31 | 28 | -3 | -9,7% |
| Total, of which: | 12.590 | 12.679 | 89 | 0,7% |
| Permanent | 10.875 | 10.833 | -42 | -0,4% |
| Fixed-term contracts | 1.715 | 1.846 | 131 | 7,6% |
| Total in Portugal | 12.133 | 12.207 | 74 | 0,6% |
(*) In 2019 and in the same period of the previous year (proforma), the figures include the migration of the payments services from the Financial Services business unit to Banco CTT.
There was a decrease of 42 in the number of permanent staff and an increase of 131 in the number of staff with fixed-term contracts. The reduction of permanent staff in the Mail & Other business unit (-204) had a notable impact on this evolution.
Together, the areas of operations and distribution (5,988 employees, of whom 4,385 delivery postmen and women) and the retail network (with 2,558 employees) represent circa 67% of CTT permanent staff.
It should be highlighted that these figures already include 102 staff exits that occurred in 2019, to which are added 429 exits, split into 161 in 2017 and 268 in 2018, which occurred in the context of the Human Resources Optimisation Programme.
The Company generated an EBITDA8 of €73.3m in the 9 months of 2019, +€8.2m (+12.7%) vs the 9 months of 2018, with an EBITDA margin of 13.6% (12.4% in the same period of 2018). Excluding the effect of 321 Crédito, EBITDA amounted to €65.5m (+€0.5m; +0.8%).
The evolution of EBITDA was due to the increase in the operating margins of Banco CTT (+€9.4m) and Financial Services (+€7.0m), which offset the decrease in those of Mail & Other (-€4.3m) and Express & Parcels (-€3.8m).
| € million | |||
|---|---|---|---|
| 9M18 | 9M19 | ∆ | ∆% |
| 65.0 | 73.3 | 8.2 | 12.7% |
| 63.6 | 59.3 | -4.3 | -6.8% |
| 97.3 | 90.2 | -7.1 | -7.3% |
| - 33.8 | - 31.0 | 2.8 | 8.2% |
| 2.2 | - 1.7 | -3.8 | -176.6% |
| - 9.0 | 0.3 | 9.4 | 103.5% |
| 8.3 | 15.3 | 7.0 | 84.7% |
(*) In 2019 and in the same period of the previous year (proforma), the figures include the migration of the payments services from the Financial Services business unit to Banco CTT.
In the 9 months of 2019, CTT recorded specific items for an amount of €16.0m, broken down as shown in the table below:
| € million | ||||
|---|---|---|---|---|
| 9M18 | 9M19 | ∆ | ∆% | |
| Specific items | 20.5 | 16.0 | -4.5 | -21.8% |
| Corporate restructuring costs and strategic projects | 19.3 | 14.7 | -4.6 | -23.7% |
| Other non-recurring revenues and costs | 1.2 | 1.3 | 0.1 | 10.2% |
The impact on the results of corporate restructuring and strategic projects (-€14.7m) relates mostly to: (i) costs related to termination of employment contracts by mutual agreement and suspension agreements (-€8.9m) both within the Human Resources Optimisation Programme and costs with consultancy services (-€1.6m) in the context of the Operational Transformation Plan underway; (ii) costs related to the acquisition of 321 Crédito (-€1.3m); and (iii) costs related to the implementation of the changes to the Quality of Service Indicators measurement system (-€1.0m), as required by ANACOM.
8 Excluding depreciation / amortisation, impairments, provisions, as well as the impact of IFRS 16 and specific items.
EBIT stood at €34.2m in the 9 months of 2019, corresponding to +€7.6m (+28.7%) vis-à-vis the 9 months of 2018 with a margin of 6.3% (5.1% in the same period of 2018).
The consolidated financial results totalled -€7.9m, which represents a decrease of €0.7m (-10.2%) compared to the 9 months of 2018.
| Financial Results | ||||||
|---|---|---|---|---|---|---|
| € million | ||||||
| 9M18 | 9M19 | ∆ | ∆% | |||
| Financial results | -7.2 | -7.9 | -0.7 | -10.2% | ||
| Financial income, net | -7.3 | -7.3 | -0.0 | -0.3% | ||
| Financial costs and losses | -7.3 | -7.5 | -0.2 | -2.5% | ||
| Financial income | 0.0 | 0.2 | 0.2 | 440.1% | ||
| Gains /losses in subsidiaries, associated companies and joint ventures |
0.1 | -0.6 | -0.7 | -726.8% |
Financial costs and losses incurred amounted to €7.5m, mainly incorporating financial costs related to post-employment and long-term employee benefits of €4.0m, as well as to the interest associated to finance leases liabilities linked to the implementation of IFRS 16 for an amount of €2.8m.
In the 9 months of 2019, CTT obtained a consolidated net profit attributable to equity holders of the CTT group of €22.9m, which reflects an increase of €11.4m (+99.7%). This increase is positively impacted by a 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 to CTT, S.A. in the 2016 financial year, by the integration of 321 Crédito with a net contribution of +€4.3m to the consolidation, and by the reduction of specific items (-€4.5m), which more than offset the increase in impairments and provisions (+€3.5m).
Capex of the Group stood at €18.5m in the 9 months of 2019, +57.5% (+€6.7m) compared to that of the same period of 2018. This growth was mostly due to the acquisition of postal processing equipment (+€6.7m) in the context of the Modernisation & Investment Plan.
In the 9 months of 2019, CTT generated an operating cash flow of €23.7m, an improvement (+€21.8m) over the same period of 2018.
Cash flow9 e 10
| € million | |||
|---|---|---|---|
| 9M18 | 9M19 | ∆ | |
| EBITDA | 65.0 | 73.3 | 8.2 |
| Specific items* | 19.3 | 14.6 | -4.6 |
| CAPEX | 11.7 | 18.5 | 6.7 |
| Δ Working capital | -32.2 | -16.5 | 15.7 |
| Operating cash flow | 1.9 | 23.7 | 21.8 |
| Employee benefits | -9.6 | -10.6 | -1.0 |
| Tax | -6.6 | 3.1 | 9.7 |
| Free cash flow | -14.3 | 16.2 | 30.5 |
| Debt (principal + interest) | -6.1 | 59.1 | 65.2 |
| Dividends | -57.0 | -15.0 | 42.0 |
| Financial investiments | 0.0 | -114.4 | -114.4 |
| Net change in organic own cash | -77.5 | -54.2 | 23.3 |
| Changes to consolidation perimeter - 321Crédito | 0.0 | 6.8 | 6.8 |
| Change in own cash | -77.5 | -47.3 | 30.1 |
| Δ Liabilities related to Financial Services9 & other |
|||
| & Banco CTT, net | -98.7 | 22.8 | 121.6 |
| Δ Other10 | -24.8 | 6.3 | 31.1 |
| Net change in cash (Balance Sheet) | -201.0 | -18.2 | 182.8 |
*Specific items affecting EBITDA.
The positive evolution of the change in working capital vs the same period of 2018 resulted mainly from: (i) the lower amount of payments related to company restructuring in the context of the HR optimisation programme which impacted positively the third-party liabilities (+€12.0m), and (ii) a positive evolution in the management of accounts receivable (+€3.7m).
The change in working capital in the 9 months of 2019 (-€16.5m) was mainly impacted by the change in items related to capex (-€9.7m) and by accounts receivable (-€3.9m), related to the growth of the business.
The €65.2m increase in debt is related to financing operations aimed at carrying out the forecast investment plan and optimise the capital structure.
Financial investments (-€114.4m) correspond to the amount of the acquisition of 321 Crédito (€110.8m) and the capital increases made in the company Mktplace – Comércio Eletrónico, S.A. (€3.6m), better known as the Dott brand.
The CTT Group consolidated balance sheet excluding Banco CTT from the full consolidation perimeter and accounting it as a financial investment measured by the equity method would be as follows:
9 The change in net liabilities of Financial Services & other 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.
10 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.
| € million | ||||
|---|---|---|---|---|
| 31.12.2018 restated |
30.09.2019 | ∆ | ∆% | |
| Non-current assets | 486.6 | 575.1 | 88.5 | 18.2% |
| Current assets | 456.9 | 437.1 | -19.8 | -4.3% |
| Assets | 943.5 | 1,012.2 | 68.7 | 7.3% |
| Equity | 135.9 | 143.6 | 7.7 | 5.7% |
| Liabilities | 807.6 | 868.5 | 61.0 | 7.5% |
| Non-current liabilities | 363.5 | 408.0 | 44.6 | 12.3% |
| Current liabilities | 444.1 | 460.5 | 16.4 | 3.7% |
| Equity and Liabilities | 943.5 | 1,012.2 | 68.7 | 7.3% |
| € million | ||||
|---|---|---|---|---|
| 31.12.2018 restated |
30.09.2019 | ∆ | ∆% | |
| Non-current assets | 1,108.1 | 1,638.6 | 530.4 | 47.9% |
| Current assets | 746.3 | 728.4 | -17.9 | -2.4% |
| Assets | 1,854.5 | 2,367.0 | 512.5 | 27.6% |
| Equity | 135.9 | 143.6 | 7.7 | 5.7% |
| Liabilities | 1,718.6 | 2,223.4 | 504.8 | 29.4% |
| Non-current liabilities | 364.3 | 499.0 | 134.7 | 37.0% |
| Current liabilities | 1,354.3 | 1,724.4 | 370.1 | 27.3% |
| Equity and Liabilities | 1,854.5 | 2,367.0 | 512.5 | 27.6% |
The key aspects of the comparison between the balance sheet as at 30.09.2019 and that at the end of the 2018 financial year (restated) are:
As at 30 September 2019, the liabilities related to employee benefits (post-employment and long-term benefits) decreased to €258.6m, -€3.1m than in December 2018, as specified in the table below:
| € million | ||||
|---|---|---|---|---|
| 31.12.2018 | 30.09.2019 | ∆ | ∆% | |
| Total liabilities | 261.7 | 258.6 | -3.1 | -1.2% |
| Healthcare | 251.8 | 249.3 | -2.5 | -1.0% |
| Suspension agreements | 1.6 | 0.8 | -0.8 | -50.4% |
| Other long-term employee benefits | 7.9 | 8.1 | 0.2 | 2.9% |
| Pension plan | 0.3 | 0.3 | -0.0 | -5.1% |
| Other benefits | 0.1 | 0.1 | 0.0 | 41.9% |
CTT Group net debt excluding Banco CTT from the full consolidation perimeter and accounting it for as a financial investment measured by the equity method would be as follows:
| € million | |||
|---|---|---|---|
| 31.12.2018 restated |
30.09.2019 | ∆ | |
| Cash & cash equivalents | 277,4 | 246,5 | -30,9 |
| Other cash items | 0,0 | 0,0 | 0,0 |
| Cash & cash equivalents at the end of the period | 277,4 | 246,5 | -30,9 |
| Financial Services & other payables, net | 201,8 | 213,6 | 11,8 |
| Own cash | 75,6 | 32,9 | -42,7 |
| Short-term & long-term debt | 126,5 | 174,8 | 48,4 |
| of which financial leases (IFRS 16) | 95,6 | 84,3 | -11,4 |
| Net debt with Banco CTT under equity method | 50,8 | 141,9 | 91,1 |
| € million | |||
|---|---|---|---|
| 31.12.2018 | 30.09.2019 | ∆ | |
| restated | |||
| Cash & cash equivalents | 422,7 | 404,5 | -18,2 |
| Other cash items | 7,9 | 14,2 | 6,3 |
| Cash & cash equivalents at the end of the period | 414,8 | 390,3 | -24,5 |
| Financial Services & other payables, net & | 268,6 | 291,4 | 22,8 |
| Banco CTT liabilities, net | |||
| Own cash | 146,3 | 98,9 | -47,3 |
| Short-term & long-term debt | 127,4 | 177,1 | 49,7 |
| of which financial leases (IFRS 16) | 96,5 | 86,6 | -10,0 |
| Net debt | -18,9 | 78,2 | 97,1 |
The key aspects of the comparison between the financial cash as at 30.09.2019 and that at the end of the 2018 financial year (restated) are as follows:
On 01.07.2019, the new procedures stipulated by ANACOM in its decision of 28 December 2018 regarding the changes to the Quality of Service Indicators measurement system were implemented.
On 26.07.2019, ANACOM stipulated that CTT should amend its procedures manuals to clarify that postal agencies should accept complaints regarding all services, including those not rendered by the agency, and that the Company should purchase a CTT's own complaints book for all postal agencies in public administration bodies. ANACOM was notified of the implementation of the measures within the due deadline, on 08.10.2019.
On 26.08.2019, ANACOM issued its final decision on the process it had started on 10.01.2019 when it instructed CTT to submit a proposal to complement the density targets of the postal network and minimum service offer in force until then. This decision, made after a public consultation, confirmed the draft decision of 11.07.2019 and accepted CTT's proposal, to be implemented within 60 days. During this period CTT will have to improve the procedures and corresponding documents on the training and management of postal agencies located in more densely populated areas.
This press release is based on CTT – Correios de Portugal, S.A. interim condensed consolidated financial statements for the 9 months of 2019, which are attached.
Lisbon, 30 October 2019
The Board of Directors
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's Investor Relations website at: http://www.ctt.pt/ctt-e-investidores/relacoes-cominvestidores/comunicados.html?com.dotmarketing.htmlpage.language=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 9 months of 2019 and has a mere 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 summarised 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 in www.ctt.pt and in 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 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 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
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2018 AND 30 SEPTEMBER 2019
Euros
| Unaudited | ||||
|---|---|---|---|---|
| Restated | Restated | |||
| NOTES | 01.01.2018 | 31.12.2018 | 30.09.2019 | |
| ASSETS | ||||
| Non-current assets | ||||
| Tangible fixed assets | 5 | 306,619,741 | 264,708,624 | 253,178,278 |
| Investment properties | 7 | 6,164,849 | 8,179,980 | 7,297,834 |
| Intangible assets | 6 | 47,501,684 | 56,770,556 | 55,744,644 |
| Goodwill | 8 | 9,523,180 | 9,523,180 | 72,765,801 |
| Investments in associated companies | 296,260 | 296,260 | 296,260 | |
| Investments in joint ventures | - | 496,076 | 3,509,847 | |
| Other investments | 1,503,572 | 1,379,137 | 1,379,137 | |
| Investment securities | 9 | 245,827,759 | 429,038,681 | 415,192,074 |
| Other non-current assets | 1,375,223 | 1,526,644 | 1,714,967 | |
| Credit to banking clients | 11 | 64,263,949 | 231,797,420 | 725,528,911 |
| Financial assets available for sale | 9 | 3,175,180 | - | - |
| Other banking financial assets | 10 | 11,831,122 | 22,692,434 | 21,511,315 |
| Deferred tax assets Total non-current assets |
25 | 91,954,991 790,037,510 |
81,734,114 1,108,143,106 |
80,454,621 1,638,573,689 |
| Current assets | ||||
| Inventories | 5,696,996 | 5,568,114 | 6,086,391 | |
| Accounts receivable | 132,480,130 | 135,855,195 | 136,573,681 | |
| Credit to banking clients | 11 | 15,083,442 | 16,252,561 | 78,244,353 |
| Income taxes receivable | 22 | 1,552,005 | 5,040,275 | - |
| Deferrals | 12 | 6,600,115 | 6,691,359 | 9,010,812 |
| Investment securities | 9 | 15,721,373 | 25,063,201 | 32,738,217 |
| Other current assets | 32,338,234 | 35,517,214 | 44,164,524 | |
| Financial assets available for sale | 9 | 2,576,194 | - | - |
| Other banking financial assets | 10 | 91,417,084 | 93,621,151 | 16,617,388 |
| Cash and cash equivalents | 626,825,397 | 422,717,478 | 404,517,191 | |
| Non-current assets held for sale | 930,290,968 - |
746,326,549 - |
727,952,557 477,691 |
|
| Total current assets | 930,290,968 | 746,326,549 | 728,430,248 | |
| Total assets | 1,720,328,478 | 1,854,469,655 | 2,367,003,937 | |
| EQUITY AND LIABILITIES | ||||
| Equity | ||||
| Share capital | 14 | 75,000,000 | 75,000,000 | 75,000,000 |
| Own shares | 15 | (8) | (8) | (8) |
| Reserves | 15 | 79,947,883 | 65,836,875 | 65,856,123 |
| Retained earnings Other changes in equity |
15 15 |
48,787,928 (32,634,996) |
4,378,984 (30,993,430) |
10,726,432 (30,993,430) |
| Net profit | - | 21,499,271 | 22,852,183 | |
| Equity attributable to equity holders | 171,100,807 | 135,721,692 | 143,441,299 | |
| Non-controlling interests | 146,738 | 165,494 | 193,281 | |
| Total equity | 171,247,545 | 135,887,186 | 143,634,579 | |
| Liabilities Non-current liabilities |
||||
| Medium and long term debt | 18 | 96,387,393 | 100,282,203 | 150,446,769 |
| Employee benefits | 252,919,533 | 244,562,078 | 242,092,202 | |
| Provisions | 19 | 26,028,332 | 16,019,339 | 18,781,753 |
| Deferrals | 12 | 316,892 | 305,691 | 297,290 |
| Other banking financial liabilites | 10 | - | - | 84,479,686 |
| Deferred tax liabilities | 25 | 3,399,121 | 3,108,662 | 2,909,185 |
| Total non-current liabilities | 379,051,271 | 364,277,973 | 499,006,885 | |
| Current liabilities | ||||
| Accounts payable | 20 | 384,533,294 | 322,276,222 | 325,247,336 |
| Banking clients' deposits and other loans | 21 | 619,229,680 | 883,950,534 | 1,228,049,796 |
| Employee benefits | 17,100,808 | 17,119,105 | 16,516,257 | |
| Income taxes payable | - | - | 2,322,706 | |
| Short term debt | 18 | 38,297,176 | 27,096,073 | 26,673,111 |
| Deferrals | 12 | 1,432,696 | 2,708,090 | 2,659,693 |
| Other current liabilities Other banking financial liabilities |
10 | 91,553,848 17,882,160 |
86,203,693 14,950,779 |
102,085,818 20,807,757 |
| Total current liabilities | 1,170,029,662 | 1,354,304,496 | 1,724,362,473 | |
| Total liabilities | 1,549,080,933 | 1,718,582,469 | 2,223,369,358 | |
| Total equity and liabilities | 1,720,328,478 | 1,854,469,655 | 2,367,003,937 |
CONSOLIDATED INCOME STATEMENT FOR THE NINE MONTH PERIODS ENDED 3O SEPTEMBER 2018 AND 30 SEPTEMBER 2019
Euros
| Nine months ended | Three months ended | |||||
|---|---|---|---|---|---|---|
| Unaudited Restated |
Unaudited | Unaudited Restated |
Unaudited | |||
| NOTES | 30.09.2018 | 30.09.2019 | 30.09.2018 | 30.09.2019 | ||
| Sales and services rendered | 4 | 508,140,647 | 506,389,732 | 164,481,451 | 169,211,986 | |
| Financial margin | 5,497,113 | 18,894,786 | 2,182,186 | 9,807,036 | ||
| Other operating income | 11,163,596 | 14,266,027 | 3,013,004 | 5,536,090 | ||
| 524,801,356 | 539,550,545 | 169,676,641 | 184,555,112 | |||
| Cost of sales | (9,673,293) | (9,456,408) | (3,281,608) | (3,110,872) | ||
| External supplies and services | (168,447,019) | (177,833,811) | (56,576,498) | (61,552,387) | ||
| Staff costs | 23 | (266,101,746) | (262,136,055) | (82,950,002) | (85,455,104) | |
| Impairment of accounts receivable, net | (284,593) | (4,197,162) | 7,660 | (2,207,824) | ||
| Impairment of other financial banking assets | 27,121 | (1,686,179) | (114,566) | (1,171,609) | ||
| Provisions, net | 19 | (978,207) | 511,271 | 235,558 | 314,381 | |
| Depreciation/amortisation and impairment of investments, net | (42,821,536) | (39,462,952) | (14,607,988) | (13,022,185) | ||
| Other operating costs | (10,063,315) | (11,502,611) | (4,026,593) | (4,055,860) | ||
| Gains/losses on disposal of assets | 3 | 138,113 | 454,222 | 127,889 | 234,702 | |
| (498,204,476) | (505,309,685) | (161,186,148) | (170,026,759) | |||
| 26,596,881 | 34,240,860 | 8,490,493 | 14,528,353 | |||
| Interest expenses | 24 | (7,315,290) | (7,500,181) | (2,401,195) | (2,561,645) | |
| Interest income | 24 | 36,449 | 196,869 | 11,488 | 83,460 | |
| Gains/losses in associated companies | 97,593 | (611,752) | - | (427,127) | ||
| (7,181,248) | (7,915,064) | (2,389,707) | (2,905,312) | |||
| Earnings before taxes | 19,415,633 | 26,325,796 | 6,100,786 | 11,623,041 | ||
| Income tax for the period | 25 | (7,942,392) | (3,444,396) | (2,083,191) | 2,271,635 | |
| Net profit for the period | 11,473,241 | 22,881,400 | 4,017,595 | 13,894,676 | ||
| Net profit for the period attributable to: | ||||||
| Equity holders | 11,445,913 | 22,852,183 | 4,017,637 | 13,863,738 | ||
| Non-controlling interests | 27,328 | 29,218 | (42) | 30,938 | ||
| Earnings per share: | 17 | 0.08 | 0.15 | 0.03 | 0.09 |
The attached notes are an integral part of these financial statements.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE NINE MONTH PERIODS ENDED 30 SEPTEMBER 2018 AND 30 SEPTEMBER 2019
Euros
| Nine months ended | Three months ended | ||||
|---|---|---|---|---|---|
| Unaudited | Unaudited | Unaudited | Unaudited | ||
| Restated | Restated | ||||
| NOTES | 30.09.2018 | 30.09.2019 | 30.09.2018 | 30.09.2019 | |
| Net profit for the period | 11,473,241 | 22,881,400 | 4,017,595 | 13,894,676 | |
| Adjustments from application of the equity method (non re-classifiable adjustment to profit and loss) |
15 | (2,005) | (1,431) | 1,159 | 1,733 |
| Changes to fair value reserves | 15 | (12,744) | 19,247 | (1,309) | 30,683 |
| Other changes in equity | (2,005) | (151,823) | 1,160 | (148,659) | |
| Other comprehensive income for the period after taxes | (16,753) | (134,007) | 1,010 | (116,243) | |
| Comprehensive income for the period | 11,456,487 | 22,747,394 | 4,018,605 | 13,778,432 | |
| Attributable to non-controlling interests | 25,323 | 27,787 | 1,117 | 3,581 | |
| Attributable to shareholders of CTT | 11,431,164 | 22,719,607 | 4,017,488 | 13,774,852 |
CTT-CORREIOS DE PORTUGAL, S.A.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AS AT 31 DECEMBER 2018 AND 30 SEPTEMBER 2019
Euros
| NOT ES |
Sha pital re ca |
Own Sha res |
Rese rves |
Othe r cha in equi nges ty |
Reta ined ning ear s |
Net prof it for the yea r |
Non ing inter troll -con ests |
Tota l |
|
|---|---|---|---|---|---|---|---|---|---|
| ry 2 018 Rep orte d ba lanc 1 Ja e on nua |
75,0 00,0 00 |
(8) | 79,9 47,8 83 |
(32, ) 634 ,996 |
34,2 68,0 89 |
27,2 63,2 44 |
146 ,738 |
183 ,990 ,949 |
|
| of IF RS 1 6 (ne t of t ax) Impa ct on initi al ap plica tion |
3 | - | - | - | - | (12, 743 ,405 ) |
- | - | (12, 743 ,405 ) |
| Res tate d ba lanc 1 Ja ry 2 018 e on nua |
75,0 00,0 00 |
(8) | 79,9 47,8 83 |
(32, 634 ,996 ) |
21,5 24,6 84 |
27,2 63,2 44 |
146 ,738 |
171 ,247 ,544 |
|
| Adju al ap plica of IF RS 9 (net of ta x) stme nt on initi tion |
- | - | - | - | (185 ,718 ) |
- | - | (185 ,718 ) |
|
| Adju of IF RS 1 5 (ne t of t ax) stme nt on initi al ap plica tion |
- | - | - | - | (1,2 81,9 46) |
- | - | (1,2 81,9 46) |
|
| ry 2 018 Adj uste d ba lanc 1 Ja e on nua |
75,0 00,0 00 |
(8) | 79,9 47,8 83 |
(32, ) 634 ,996 |
20,0 57,0 19 |
27,2 63,2 44 |
146 ,738 |
169 ,779 ,879 |
|
| App n of rofit for t he y f 20 17 iatio net p ropr ear o |
- | - | - | - | 27,2 63,2 44 |
(27, 263 ,244 ) |
- | - | |
| Divi dend s |
16 | (15, 372 ,222 ) |
(41, 627 ,778 ) |
(57, 000 ,000 ) |
|||||
| - - |
- - |
(15 ) ,372 ,222 |
- - |
(14, ) 364 ,534 |
- (27, ) 263 ,244 |
- - |
(57 ) ,000 ,000 |
||
| Othe ents r mo vem |
15 | - | - | 1,31 1,26 7 |
- | (1,3 11,2 67) |
- | (2,2 35) |
(2,2 35) |
| Actu l gai ns/l s - H ealth Car t fro m de ferr ed ta aria osse e, ne xes |
15 | 1,64 1,56 6 |
1,64 1,56 6 |
||||||
| Cha to fa lue r ir va nges eser ves |
15 | - | - | - (50, 053 ) |
- | - | - | (50, 053 ) |
|
| Adju stme nts f the appl icati f the ity m etho d rom on o equ |
15 | - - |
- - |
- | - - |
- (2,2 35) |
- - |
- - |
(2,2 35) |
| Rest ated net prof it for the peri od |
15 | - | - | - | - | - | 21,4 99,2 71 |
20,9 90 |
21,5 20,2 62 |
| Res tate d co ehen sive inco me f or th riod mpr e pe |
- | - | 1,26 1,21 4 |
1,64 1,56 6 |
(1,3 01) 13,5 |
21,4 99,2 71 |
18,7 56 |
23,1 07,3 06 |
|
| Res d ba lanc 31 Dec ber 20 18 tate e on em |
75,0 00,0 00 |
(8) | 65,8 36,8 75 |
(30, ) 993 ,430 |
4,37 8,98 4 |
21,4 99,2 71 |
165 ,494 |
135 ,887 ,186 |
|
| App iatio n of rofit ated for t he y f 20 18 net p rest ropr ear o |
- | - | - | - | 21,4 99,2 71 |
(21, ) 499 ,271 |
- | - | |
| Divi dend s |
16 | - | (15, ) 000 ,000 |
(15, ) 000 ,000 |
|||||
| - | - - |
- - |
- - |
6,49 9,27 1 |
- (21, ) 499 ,271 |
- - |
(15 ) ,000 ,000 |
||
| Othe ents r mo vem |
15 | - | - | - | - | (150 ) ,392 |
- | (1,4 31) |
(151 ) ,823 |
| Cha to fa lue r ir va nges eser ves |
15 | - | - | 19,2 47 |
- | - | - | - | 19,2 47 |
| nts f f the Adju stme the appl icati ity m etho d rom on o equ |
15 | - | - | - | - | (1,4 31) |
- | - | (1,4 31) |
| Net prof it for the peri od |
15 | - | - | - | - | - | 22,8 52,1 83 |
29,2 18 |
22,8 81,4 00 |
| Com preh ensi ve in e for the peri od com |
- | - | 19,2 47 |
- | (15 3) 1,82 |
22,8 52,1 83 |
27,7 87 |
22,7 47,3 94 |
|
| 19 ( ed) Bala 30 S ber 20 Una udit ept nce on em |
75,0 00,0 00 |
(8) | 65,8 56,1 23 |
(30, ) 993 ,430 |
10,7 26,4 32 |
22,8 52,1 83 |
193 ,281 |
143 ,634 ,579 |
Euro CONSOLIDATED CASH FLOW STATEMENT FOR THE NINE MONTH PERIODS ENDED 30 SEPTEMBER 2018 AND 30 SEPTEMBER 2019
| Unaudited Restated |
Unaudited | ||
|---|---|---|---|
| NOTES | 30.09.2018 | 30.09.2019 | |
| Cash flow from operating activities | |||
| Collections from customers | 503,569,359 | 490,448,687 | |
| Payments to suppliers | (202,992,535) | (219,161,325) | |
| Payments to employees | (253,052,054) | (238,295,501) | |
| Banking customer deposits and other loans | 170,470,832 | 276,245,279 | |
| Credit to banking clients | (122,091,986) | (156,262,009) | |
| Cash flow generated by operations | 95,903,616 | 152,975,131 | |
| Payments/receivables of income taxes | (6,553,799) | 3,117,956 | |
| Other receivables/payments | 22,008,507 | 46,841,287 | |
| Cash flow from operating activities (1) | 111,358,324 | 202,934,374 | |
| Cash flow from investing activities Receivables resulting from: |
|||
| Tangible fixed assets | 179,199 | 152,580 | |
| Investment properties | 1,368,204 | 1,102,200 | |
| Financial investments | 8 | 222,028 | - |
| Investment securities | 9 | 39,185,531 | 51,780,709 |
| Demand deposits at Bank of Portugal | 26,215,172 | - | |
| Other banking financial assets | 91,295,000 | 112,770,310 | |
| Interest income | 170,304 | 72,075 | |
| Payments resulting from: | |||
| Tangible fixed assets | (9,760,817) | (13,678,813) | |
| Intangible assets | (12,313,741) | (13,918,310) | |
| Financial investments | 8 | (50,000) | (114,407,523) |
| Investment securities | 9 | (230,956,899) | (49,861,401) |
| Demand deposits at Bank of Portugal Other banking financial assets |
- (108,110,000) |
(5,574,047) (33,549,849) |
|
| Cash flow from investing activities (2) | (202,556,019) | (65,112,068) | |
| Cash flow from financing activities | |||
| Receivables resulting from: | |||
| Loans obtained | 13,702,654 | 69,781,965 | |
| Other credit institutions' deposits | - | 170,299,399 | |
| Payments resulting from: | |||
| Loans repaid | (19,825,198) | (40,526,328) | |
| Other credit institutions' deposits | - | (121,606,942) | |
| Other banking financial liabilities | - | (213,504,425) | |
| Interest expenses | (142,198) | (862,085) | |
| Finance leases | (25,717) | (21,626) | |
| Lease liabilities - IFRS 16 | (21,698,922) | (17,713,503) | |
| Dividends | 16 | (57,000,000) | (15,000,000) |
| Cash flow from financing activities (3) | (84,989,381) | (169,153,545) | |
| Net change in cash and cash equivalents (1+2+3) | (176,187,076) | (31,331,238) | |
| Changes in the consolidation perimeter | - | 6,823,653 | |
| Cash and equivalents at the beginning of the period | 592,677,415 | 414,846,614 | |
| Cash and cash equivalents at the end of the period | 416,490,340 | 390,339,029 | |
| Cash and cash equivalents at the end of the period | 416,490,340 | 390,339,029 | |
| Sight deposits at Bank of Portugal | 6,540,809 | 11,791,465 | |
| Outstanding checks of Banco CTT / Checks clearing of Banco CTT | 2,835,452 | 2,406,868 | |
| Impairment of slight and term deposits | (46,723) | (20,170) | |
| Cash and cash equivalents (Balance sheet) | 425,819,877 | 404,517,191 |
| 1. | INTRODUCTION 24 | |
|---|---|---|
| 2. | SIGNIFICANT ACCOUNTING POLICIES 24 | |
| 3. | CHANGES TO ACCOUNTING POLICIES, ERRORS AND ESTIMATES 25 | |
| 4. | SEGMENT REPORTING 28 | |
| 5. | TANGIBLE FIXED ASSETS 33 | |
| 6. | INTANGIBLE ASSETS 35 | |
| 7. | INVESTMENT PROPERTIES 37 | |
| 8. | COMPANIES INCLUDED IN THE CONSOLIDATION 38 | |
| 9. | INVESTMENT SECURITIES 41 | |
| 10. | OTHER BANKING FINANCIAL ASSETS AND LIABILITIES 43 | |
| 11. | CREDIT TO BANK CLIENTS 45 | |
| 12. | DEFERRALS 48 | |
| 13. | ACCUMULATED IMPAIRMENT LOSSES 49 | |
| 14. | EQUITY 50 | |
| 15. | OWN SHARES, RESERVES, OTHER CHANGES IN EQUITY AND RETAINED EARNINGS 52 | |
| 16. | DIVIDENDS 53 | |
| 17. | EARNINGS PER SHARE 53 | |
| 18. | DEBT 54 | |
| 19. | PROVISIONS, GUARANTEES PROVIDED, CONTINGENT LIABILITIES AND COMMITMENTS 55 | |
| 20. | ACCOUNTS PAYABLE 58 | |
| 21. | BANKING CLIENTS' DEPOSITS AND OTHER LOANS 59 | |
| 22. | INCOME TAXES RECEIVABLE /PAYABLE 59 | |
| 23. | STAFF COSTS 60 | |
| 24. | INTEREST EXPENSES AND INTEREST INCOME 61 | |
| 25. | INCOME TAX FOR THE PERIOD 62 | |
| 26. | RELATED PARTIES 65 | |
| 27. | OTHER INFORMATION 65 | |
| 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-organisations 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 no. 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 onwards 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 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 detention 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 bookbuilding process. The Equity Offering was addressed exclusively to institutional investors.
The shares of CTT are listed on Euronext Lisbon.
The interim condensed consolidated 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 30 October 2019.
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 2018, except for the changes mentioned in section 3. Changes to accounting policies, errors and estimates.
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 2019, and in accordance with IAS 34 - Interim Financial Reporting.
The Group has adopted, as at 1 January 2019, IFRS 16 Leases.
IFRS 16 introduces a single lessee accounting model and removes the classification of leases as either operating leases or finance leases.
The lessee is required to recognise assets and liabilities for all leases on the balance sheet at the beginning of the contract and to recognise:
The adoption of IFRS 16 also impacts the income statement considering that the depreciations of the RoU asset and interest on the lease liability are recognised separately instead of the previously recognition of the leases as External Supplies and Services.
Under IFRS 16 the lessee may opt for the non-application of this standard to:
The Group adopted the new standard with effect from 1 January 2019 according to the full retrospective transition approach, not having applied the abovementioned exemptions.
The CTT Group conducted a survey of all lease and service contracts that may include rights-of-use assets, and identified three major groups of leases:
Real estate lease agreements that constitute, under IFRS 16, a right of use, having as lease period the initial periods of duration of the contracts and the renewal periods that depend exclusively on CTT's decision and that CTT is reasonably certain of exercising.
As a practical expedient, the fixed services associated with each property (variable component) were included in the accounting for the right of use.
The initial duration periods of the contracts and the renewal periods that depend exclusively on CTT's decision and that CTT is reasonably certain to exercise were assumed.
The amount of the lease rental depends on the number of kilometres the vehicle travels over the contract period. For this reason, only the minimum rents for the valuation of liabilities and right of use were considered.
As a practical expedient, the fixed services associated with each vehicle (variable component) were included in the accounting for the right of use.
Other lease contracts were also identified for stackers and printers, for instance.
The initial duration periods of the contracts and the renewal periods that depend exclusively on CTT's decision and that CTT is reasonably certain to exercise were assumed.
As a practical expedient, the fixed services associated with each asset (variable component) were included in the accounting for the right of use.
Taking into account that the lease contracts do not have an implicit rate, an incremental interest rate is considered for the discount of the rents.
The incremental interest rate depends on the maturity/duration of the lease contract.
The impacts of the IFRS 16 adoption, with effects as at 1 January 2018, transition date and 31 December 2018 are detailed as follows:
| Consolidated statement of financial position - 01.01.2018 | |||
|---|---|---|---|
| Adjustments | |||
| Caption | Reported amount | IFRS 16 | Restated amount |
| Tangible fixed assets | 199,855,908 | 106,763,833 | 306,619,741 |
| Deferred tax assets | 87,155,739 | 4,799,252 | 91,954,991 |
| Other assets' captions | 1,321,753,745 | - | 1,321,753,746 |
| Total assets | 1,608,765,392 | 111,563,085 | 1,720,328,478 |
| Retained earnings | 61,531,333 | (12,743,405) | 48,787,928 |
| Other equity's captions | 122,459,617 | - | 122,459,617 |
| Total equity | 183,990,950 | (12,743,405) | 171,247,545 |
| Non-current debt | 73,689 | 96,313,704 | 96,387,393 |
| Current debt | 10,304,390 | 27,992,786 | 38,297,176 |
| Other liabilities' captions | 1,414,396,363 | - | 1,414,396,364 |
| Total liabilities | 1,424,774,442 | 124,306,490 | 1,549,080,933 |
| Adjustments | |||
|---|---|---|---|
| Caption | Reported amount | IFRS 16 | Restated amount |
| Tangible fixed assets | 182,986,001 | 81,722,623 | 264,708,624 |
| Deferred tax assets | 81,733,398 | 716 | 81,734,114 |
| Income taxes receivable | 1,108,421 | 3,931,854 | 5,040,275 |
| Other assets' captions | 1,502,986,642 | - | 1,502,986,642 |
| Total assets | 1,768,814,462 | 85,655,193 | 1,854,469,655 |
| Retained earnings Net profit Other equity's captions |
17,122,389 19,621,263 110,008,931 |
(12,743,405) 1,878,008 - |
4,378,984 21,499,271 110,008,931 |
| Total equity | 146,752,583 | (10,865,397) | 135,887,186 |
| Non-current debt Current debt Other liabilities' captions |
24,282,526 6,575,160 1,591,204,193 |
75,999,677 20,520,913 - |
100,282,203 27,096,073 1,591,204,193 |
| Total liabilities | 1,622,061,879 | 96,520,590 | 1,718,582,469 |
| Adjustments | Reclassifications | |||
|---|---|---|---|---|
| Caption | Reported amount | IFRS 16 | Gains/losses on disposal of assets (1) |
Restated amount |
| Other operating income | 11,301,709 | - | (138,113) | 11,163,596 |
| External supplies and services | (193,329,526) | 24,882,507 | - | (168,447,019) |
| Depreciation/amortisation and impairment of investments, net |
(23,377,369) | (19,444,167) | - | (42,821,536) |
| Other operating costs | (10,063,315) | - | - | (10,063,315) |
| Gains/losses on disposal of assets | - | - | 138,113 | 138,113 |
| Interest expenses | (4,131,704) | (3,183,586) | - | (7,315,290) |
| Gains/losses in subsidiary, associated companies and joint ventures |
97,593 | - | - | 97,593 |
| Income tax for the period | (7,241,053) | (701,339) | - | (7,942,392) |
| Other captions | 236,663,492 | - | - | 236,663,492 |
| Net profit for the period | 9,919,826 | 1,553,415 | - | 11,473,241 |
| Other comprehensive income | (16,753) | - | - | (16,753) |
| Comprehensive income for the period | 9,903,073 | 1,553,415 | 138,113 | 11,456,488 |
| Net profit for the period attributable to: | ||||
| Equity holders | 9,892,498 | 1,553,415 | - | 11,445,913 |
| Non-controlling interests | 27,328 | - | - | 27,328 |
(1) Gains and losses related to assets disposals, previously recognised in the captions "Other operating income" and "Other operating costs" are now recognised under the caption "Gains/losses on disposal of assets" by the net amount.
| Caption | Reported amount | Adjustments IFRS 16 |
Restated amount |
|---|---|---|---|
| Cash flow from operating activities | |||
| Payments to suppliers | (211,423,003) | 8,430,468 | (202,992,535) |
| Other receivables/payments | 8,740,053 | 13,268,453 | 22,008,507 |
| Other operating receivables/payments | 292,342,352 | - | 292,342,352 |
| Cash flow from operating activities (1) | 89,659,403 | 21,698,922 | 111,358,324 |
| Cash flow from investing activities | |||
| Other investing receivables/payments | (202,556,019) | - | (202,556,019) |
| Cash flow from investing activities (2) | (202,556,019) | - | (202,556,019) |
| Cash flow from financing activities | |||
| Lease liabilities - IFRS 16 | - | (21,698,922) | (21,698,922) |
| Other financing receivables/payments | (63,290,459) | - | (63,290,459) |
| Cash flow from financing activities (3) | (63,290,459) | (21,698,922) | (84,989,381) |
| Cash and equivalents at the beginning of the period | 592,677,415 | - | 592,677,415 |
| Cash and cash equivalents at the end of the period | 416,490,340 | - | 416,490,340 |
The impacts on the nine-month period ended 30 September 2019 can be analysed in notes 5, 18 and 24.
The underlying estimates and assumptions were determined based on the best knowledge of the on-going events and transactions, at the time the financial statements were approved, as well as on the experience of past and/or current events.
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.
In 2019, changes were made to the management information structure.
The purpose of this amendment is allowing the evolution of the consolidated revenues to be seen as the sum of the performance of external products that make up the Group, removing the effects of internal revenues with companies from other business areas. As a result of this change, revenues are now deducted from the respective segments' cost amounts, thus ensuring that the Operating costs and revenue structure is aligned with the actual expenses and revenues of each segment.
b. IFRS16 adoption
The adoption of IFRS16 has changed the manner in which statutory accounts are presented with respect to costs with Fleet and Buildings, which are no longer considered in External Supplies and Services and are accounted for in depreciations and interest. This change had an impact not only on the reporting period (3rd quarter of 2019) but also on the historical (3rdquarter of 2018), which was restated to allow the comparability of the periods.
c. Migration of the payments business
Some payment services in the Financial Services segment (billing and invoicing, Western Union transfers, integrated solutions and tolls) migrated to the segment Bank.
d. Allocation of the Central Structure costs by Segment
The Central Structure reflects a structure of costs with revenues of a negligible value, leaving a net cost structure that until 2018, in terms of central / corporate costs, was split between two segments – 99.7%for the Mail segment and 0.3% for the Financial Services segment. Considering the immateriality of the value allocated to the Financial Services segment and given the migration of some Payment services from the Financial Services segment to the Bank segment, the Company simplified this allocation by placing 100% of the central structure allocation under the Mail segment.
Any non-recurring items are recognised under the caption "Specific items".
The nine-month period of 2018 was restated, for comparison purposes, according to the changes performed.
Therefore, the business of CTT is organised in the following segments:
The segments cover the three CTT business areas, as follows:
Besides the four above mentioned segments, there are two sales channels, which are common to all businesses and products, the Retail Network and the Sales Department. In this analysis, the Retail Network, which is connected to the obligations of the universal postal service concession, is incorporated in the Mail segment as well as the Sales Departments, and integrates internal revenues related to the provision of services to other segments, as well as the sale in its network of third-party products and services.
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.
Initially, CTT, S.A. operating costs are allocated to the different segments by charging the internal transactions 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 income statement by nature and segment of the 3rd quarter 2018 and 3rd quarter 2019 are as follows:
| Restated 30.09.2018 |
|||||||
|---|---|---|---|---|---|---|---|
| Thousand Euros | Express & Parcels | Financial Services |
Bank | Total | |||
| Revenues | 372,475 | 108,708 | 18,853 | 24,766 | 524,801 | ||
| Sales and services rendered | 366,140 | 107,994 | 18,230 | 15,776 | 508,141 | ||
| Sales | 13,514 | 590 | - | - | 14,103 | ||
| Services rendered | 352,626 | 107,405 | 18,230 | 15,776 | 494,038 | ||
| Financial Margin | - | - | - | 5,497 | 5,497 | ||
| Other operating income | 6,335 | 714 | 623 | 3,492 | 11,164 | ||
| Operating costs excluding depreciations, amortizations, impairment and provisions | 308,888 | 106,533 | 10,543 | 33,813 | 459,777 | ||
| Staff costs | 221,706 | 16,956 | 756 | 10,710 | 250,128 | ||
| External supplies and services | 80,365 | 89,516 | 2,867 | 17,743 | 190,492 | ||
| Other costs | 14,373 | 1,724 | 140 | 2,921 | 19,157 | ||
| Internal services rendered | (7,557) | (1,662) | 6,780 | 2,439 | - | ||
| EBITDA | 63,587 | 2,175 | 8,310 | (9,047) | 65,024 | ||
| IFRS 16 (impact on EBITDA) | 20,284 | 3,947 | 4 | 647 | 24,883 | ||
| EBITDA including IFRS 16 | 83,871 | 6,123 | 8,313 | (8,400) | 89,907 | ||
| Impairment and provisions | 188 | (723) | - | 60 | (475) | ||
| Depreciation/amortisation and impairment of investments, net | (33,237) | (5,833) | (164) | (3,145) | (42,378) | ||
| Specific Items | (17,331) | (2,069) | (361) | (695) | (20,457) | ||
| EBIT | 33,491 | (2,503) | 7,788 | (12,180) | 26,597 | ||
| Financial results | (7,181) | ||||||
| Interest expenses | (7,315) | ||||||
| Interest income | 36 | ||||||
| Gains/losses in subsidiary, associated companies and joint ventures | 98 | ||||||
| Earnings before taxes (EBT) | 19,416 | ||||||
| Income tax for the period | (7,942) | ||||||
| Net profit for the period | 11,473 | ||||||
| Non-controlling interests | (27) | ||||||
| Equity holders of parent company | 11,446 |
| 30.09.2019 | ||||||
|---|---|---|---|---|---|---|
| Thousand Euros | Express & Parcels | Financial Services |
Bank | Total | ||
| Revenues | 362,047 | 110,071 | 24,560 | 42,872 | 539,551 | |
| Sales and services rendered | 357,192 | 109,679 | 24,260 | 15,260 | 506,390 | |
| Sales | 12,052 | 560 | - | - | 12,611 | |
| Services rendered | 345,140 | 109,119 | 24,260 | 15,260 | 493,779 | |
| Financial Margin | - | - | - | 18,895 | 18,895 | |
| Other operating income | 4,855 | 392 | 301 | 8,718 | 14,266 | |
| Operating costs excluding depreciations, amortizations, impairment and provisions | 302,791 | 111,737 | 9,213 | 42,554 | 466,294 | |
| Staff costs | 219,380 | 17,951 | 714 | 14,124 | 252,169 | |
| External supplies and services | 76,253 | 93,505 | 2,101 | 21,686 | 193,545 | |
| Other costs | 13,919 | 2,087 | 115 | 4,460 | 20,580 | |
| Internal services rendered | (6,761) | (1,806) | 6,284 | 2,283 | - | |
| EBITDA | 59,256 | (1,666) | 15,347 | 319 | 73,256 | |
| IFRS 16 (impact on EBITDA) | 15,212 | 4,210 | 16 | 993 | 20,431 | |
| EBITDA including IFRS 16 | 74,468 | 2,544 | 15,364 | 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) | (39,462) | |
| Specific Items | (12,397) | (2,075) | (245) | (1,288) | (16,004) | |
| EBIT | 32,972 | (7,757) | 14,892 | (5,866) | 34,241 | |
| Financial results | (7,915) | |||||
| Interest expenses | (7,500) | |||||
| Interest income | 197 | |||||
| Gains/losses in subsidiary, associated companies and joint ventures | (612) | |||||
| Earnings before taxes (EBT) | 26,326 | |||||
| Income tax for the period | (3,444) | |||||
| Net profit for the period | 22,881 | |||||
| Non-controlling interests | (29) | |||||
| Equity holders of parent company | 22,852 |
The amount recorded under specific items relates mostly to corporate restructuring and strategic projects (- €14.7m) of which stand out: (i) costs related to termination of employment contracts by mutual agreement and suspension of contracts in 3Q19 (-€8.9m) within the Human Resources Optimisation Programme and costs with consultancy services (-€1.6m) in the context of the Operational Transformation Plan in progress, (ii) costs related to the acquisition of 321 Crédito (-€1.3m); and (iii) costs related to the implementation of the changes to the Quality of Service Indicators (-€1.0m) measurement system, as required by ANACOM.
The revenues are detailed as follows:
| Thousand Euros | Restated 30.06.2018 |
30.09.2019 |
|---|---|---|
| 372,475 | 362,047 | |
| Transactional mail | 308,664 | 304,192 |
| Editorial mail | 10,972 | 10,697 |
| Parcels (USO) | 4,934 | 4,481 |
| Advertising mail | 17,988 | 16,632 |
| Retail | 9,210 | 8,550 |
| Philately | 6,094 | 4,739 |
| Business Solutions | 7,144 | 7,836 |
| Other | 7,468 | 4,919 |
| Express & Parcels | 108,708 | 110,071 |
| Financial Services | 18,853 | 24,560 |
| Bank | 24,766 | 42,872 |
| 524,801 | 539,551 |
The assets by segment are detailed as follows:
| 31.12.2018 Restated | |||||||
|---|---|---|---|---|---|---|---|
| Assets (Euros) | Express & Parcels | Financial Services |
Bank | Non allocated assets |
Total | ||
| Intagible assets | 15,705,987 | 5,114,530 | 356,968 | 25,038,271 | 10,554,799 | 56,770,556 | |
| Tangible fixed assets | 227,289,861 | 33,467,166 | 338 | 1,588,479 | 2,362,780 | 264,708,624 | |
| Investment properties | - | - | - | - | 8,179,980 | 8,179,980 | |
| Goodwill | 6,161,326 | 2,955,753 | - | 406,101 | - | 9,523,180 | |
| Deferred tax assets | - | - | - | - | 81,734,114 | 81,734,114 | |
| Accounts receivable | - | - | - | - | 135,855,195 | 135,855,195 | |
| Credit to bank clients | - | - | - | 248,049,981 | - | 248,049,981 | |
| Investment securities | - | - | - | 454,101,882 | - | 454,101,882 | |
| Other banking financial assets | - | - | - | 116,313,585 | - | 116,313,585 | |
| Other assets | - | - | - | - | 56,515,079 | 56,515,079 | |
| Cash and cash equivalents | - | 5,378,204 | - | 145,339,778 | 271,999,495 | 422,717,478 | |
| 249,157,174 | 46,915,653 | 357,306 | 990,838,078 | 567,201,444 | 1,854,469,655 |
| 30.09.2019 | ||||||
|---|---|---|---|---|---|---|
| Assets (Euros) | Express & Parcels | Financial Services |
Bank | Non allocated assets |
Total | |
| Intagible assets | 11,961,441 | 4,777,509 | 187,778 | 25,785,524 | 13,032,392 | 55,744,644 |
| Tangible fixed assets | 211,261,128 | 31,025,507 | - | 3,090,542 | 7,801,101 | 253,178,278 |
| Investment properties | - | - | - | - | 7,297,834 | 7,297,834 |
| Goodwill | 6,161,326 | 2,955,753 | - | 63,648,722 | - | 72,765,801 |
| Deferred tax assets | - | - | - | - | 80,454,621 | 80,454,621 |
| Accounts receivable | - | - | - | - | 136,573,681 | 136,573,681 |
| Credit to bank clients | - | - | - | 803,773,265 | - | 803,773,265 |
| Investment securities | - | - | - | 447,930,291 | - | 447,930,291 |
| Other banking financial assets | - | - | - | 38,128,703 | - | 38,128,703 |
| Other assets | - | - | - | - | 66,161,938 | 66,161,938 |
| Cash and cash equivalents | - | 5,189,763 | - | 158,025,056 | 241,302,372 | 404,517,191 |
| Non-current assets held for sale | - | - | - | 477,691 | - | 477,691 |
| 229,383,895 | 43,948,532 | 187,778 | 1,540,859,794 | 552,623,939 | 2,367,003,937 |
| 31.12.2018 Restated | ||||||||
|---|---|---|---|---|---|---|---|---|
| Other information (Euros) | Express & Parcels | Financial Services | Bank | Total | ||||
| Non-current debt | 77,975,310 | 21,545,162 | - | 761,731 | 100,282,203 | |||
| Bank loans | 24,276,250 | - | - | - | 24,276,250 | |||
| Lease liabilities | 53,699,060 | 21,545,162 | - | 761,731 | 76,005,953 | |||
| Current debt | 16,813,808 | 10,101,678 | - | 180,587 | 27,096,073 | |||
| Bank loans | - | 6,558,116 | - | - | 6,558,116 | |||
| Lease liabilities | 16,813,808 | 3,543,562 | - | 180,587 | 20,537,957 | |||
| 94,789,118 | 31,646,839 | - | 942,318 | 127,378,276 | ||||
| 30.09.2019 | ||||||||
| Other information (Euros) |
| Other information (Euros) | Express & Parcels | Financial Services | Bank | Total | |
|---|---|---|---|---|---|
| Non-current debt | 128,841,790 | 19,870,590 | - | 1,734,389 | 150,446,769 |
| Bank loans | 81,623,987 | - | - | - | 81,623,987 |
| Lease liabilities | 47,217,803 | 19,870,590 | - | 1,734,389 | 68,822,781 |
| Current debt | 13,736,147 | 12,383,370 | - | 553,594 | 26,673,111 |
| Bank loans | - | 8,935,200 | - | - | 8,935,200 |
| Lease liabilities | 13,736,147 | 3,448,170 | - | 553,594 | 17,737,911 |
| 142,577,938 | 32,253,959 | - | 2,287,982 | 177,119,879 |
The Group CTT is domiciled in Portugal. The result of its Sales and services rendered by geographical areas is disclosed below:
| Thousand Euros | 30.09.2018 | 30.09.2019 |
|---|---|---|
| Revenue - Portugal | 430,599 | 427,786 |
| Revenue - other countries | 77,542 | 78,604 |
| 508,141 | 506,390 |
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.
During the year ended 31 December 2018 and nine-month period ended 30 September 2019, the movements occurred in Tangible fixed assets, as well as in the respective accumulated depreciation, were as follows:
| Restated* | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 31.12.2018 | ||||||||||
| 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 | 37,102,139 | 342,655,745 | 146,667,392 | 3,381,283 | 62,174,555 | 26,040,114 | 1,500,567 | 391,109 | 265,370,129 | 885,283,033 |
| Acquisitions | - 555,859 |
2,768,963 | 16,788 | 1,715,971 | 775,513 | 4,134,480 | 10,256 | - | 9,977,829 | |
| New contracts | - - |
- | - | - | - | - | - | 31,613,659 | 31,613,659 | |
| Disposals | (545,455) | (1,769,365) | (2,217,254) | (35,899) | (23,810) | (962) | - | - | - | (4,592,744) |
| Transfers and write-offs | (964,691) | (6,671,760) | (4,104,444) | 236,348 | - | (239,712) | (3,225,750) | (179,594) | - | (15,149,603) |
| Terminated contracts | - - |
- | - | - | - | - | - | (95,976,048) | (95,976,048) | |
| Adjustments | - (205,393) |
(53,825) | (559) | (40,721) | (3,903) | - | (47,608) | - | (352,008) | |
| Closing balance | 35,591,993 | 334,565,087 | 143,060,832 | 3,597,961 | 63,825,994 | 26,571,051 | 2,409,296 | 174,162 | 201,007,740 | 810,804,117 |
| Accumulated depreciation | ||||||||||
| Opening balance | 3,851,494 | 207,661,484 | 128,294,129 | 3,271,073 | 55,716,402 | 21,213,074 | - | - | 189,582,691 | 609,590,346 |
| Depreciation for the period | - 9,932,112 |
6,073,870 | 45,576 | 3,081,613 | 1,252,572 | - | - | 25,678,474 | 46,064,217 | |
| Disposals | (13,595) | (790,864) | (2,113,563) | (35,899) | (23,810) | (962) | - | - | - | (2,978,692) |
| Transfers and write-offs | (98,745) | (6,240,250) | (4,282,904) | 147,416 | (1,534) | (153,097) | - | - | - | (10,629,115) |
| Terminated contracts | - - |
- | - | - | - | - | - | (95,976,048) | (95,976,048) | |
| Adjustments | - 31 |
13 | 79 | 285 | 122 | - | - | - | 531 | |
| Closing balance | 3,739,154 | 210,562,513 | 127,971,545 | 3,428,245 | 58,772,955 | 22,311,709 | - | - | 119,285,117 | 546,071,239 |
| Accumulated impairment | ||||||||||
| Opening balance | - - |
- | - | - | 49,340 | - | - | - | 49,340 | |
| Other variations | - - |
- | - | - | (25,085) | - | - | - | (25,085) | |
| Closing balance | - - |
- | - | - | 24,255 | - | - | - | 24,255 | |
| Net Tangible fixed assets | 31,852,839 | 124,002,575 | 15,089,287 | 169,716 | 5,053,039 | 4,235,087 | 2,409,296 | 174,162 | 81,722,623 | 264,708,624 |
| * Restated values: see note 3 | ||||||||||
| 30.09.2019 | ||||||||||
| 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 | 201,007,740 | 810,804,117 |
| Acquisitions | - 172,289 |
1,126,869 | 182,559 | 1,010,694 | 508,609 | 1,372,702 | 6,442,944 | - | 10,816,668 | |
| New contracts | - - |
- | - | - | - | - | - | 6,163,927 | 6,163,927 | |
| Disposals | (11,962) | (302,339) | (627,322) | (828) | (7,681) | - | - | - | - | (950,132) |
| Transfers and write-offs | - 2,377,326 |
55,609 | (1,821) | 30,407 | (88,670) | (2,377,326) | - | - | (4,475) | |
| Terminated contracts | - - |
- | - | - | - | - | - | (14,872,010) | (14,872,010) | |
| Adjustments | - 1,121 |
22,908 | 994 | 2,032 | 1,300 | - | - | (19,223) | 9,131 | |
| Changes in the consolidation perimeter | - 420,472 |
- | - | 692,154 | 175,664 | - | - | 1,568,767 | 2,857,057 | |
| Closing balance | 35,580,031 | 337,233,956 | 143,638,897 | 3,778,865 | 65,553,599 | 27,167,954 | 1,404,673 | 6,617,106 | 193,849,200 | 814,824,282 |
| Accumulated depreciation | ||||||||||
| Opening balance | 3,739,154 | 210,562,513 | 127,971,545 | 3,428,245 | 58,772,955 | 22,311,709 | - | - | 119,285,117 | 546,071,239 |
| Depreciation for the period | - 7,057,767 |
4,249,747 | 41,426 | 1,713,797 | 663,765 | - | - | 16,446,918 | 30,173,419 | |
| Disposals | (1,747) | (192,958) | (600,831) | (828) | (7,512) | - | - | - | - | (803,876) |
| Transfers and write-offs Terminated contracts |
- - - - |
119,549 - |
(43) - |
(36,900) - |
(87,081) - |
- - |
- - |
- (14,872,010) |
(4,475) (14,872,010) |
|
| Adjustments | - 212 |
15,161 | 713 | 1,722 | 1,152 | - | - | (2,402) | 16,559 | |
| Changes in the consolidation perimeter | - 164,081 |
- | - | 666,123 | 121,676 | - | - | 89,014 | 1,040,894 | |
| Closing balance | ||||||||||
| Accumulated impairment | 3,737,406 | 217,591,615 | 131,755,171 | 3,469,514 | 61,110,185 | 23,011,221 | - | - | 120,946,636 | 561,621,750 |
During the nine-month period ended 30 September 2019, Land and natural resources and Buildings and other constructions include 563.637 Euros (590,362 Euros as at 31 December 2018), related to land and property in co-ownership with MEO – Serviços de Comunicações e Multimédia, S.A..
Opening balance - - - - - 24,255 - - - 24,255 Other variations - - - - - - - - - - Closing balance - - - - - 24,255 - - - 24,255 Net Tangible fixed assets 31,842,624 119,642,341 11,883,726 309,351 4,443,414 4,132,478 1,404,673 6,617,106 72,902,564 253,178,278
During the nine-month period ended 30 September 2019, 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 and Tourline.
The amount of acquisitions mainly relates to the purchase of printers, labelling machines, monitors and optical readers in the amount of 356 thousand Euros and the upgrade of sorting machines worth about 179 thousand Euros by CTT.
The amount of acquisitions relates essentially the acquisition of several micro-computing equipment for approximately 826 thousand Euros by CTT.
The amount of acquisitions mainly relates to prevention and safety equipment for approximately 323 thousand Euros by CTT.
The amounts under this heading are related to the capitalisation of improvements in own and third-party properties.
Following the adoption of IFRS 16 the Group recognised rights of use, detailed by type of asset, as follows:
| Restated* 31.12.2018 |
||||||
|---|---|---|---|---|---|---|
| Buildings | Vehicles | Other assets | Total | |||
| Tangible fixed assets | ||||||
| Opening balance | 233,881,680 | 23,480,135 | 8,008,314 | 265,370,129 | ||
| New contracts | 16,169,120 | 14,079,082 | 1,365,457 | 31,613,659 | ||
| Terminated contracts | (78,846,948) | (9,466,973) | (7,662,127) | (95,976,048) | ||
| Closing balance | 171,203,852 | 28,092,244 | 1,711,643 | 201,007,740 | ||
| Accumulated depreciation | ||||||
| Opening balance | 167,335,774 | 15,294,025 | 6,952,892 | 189,582,691 | ||
| Depreciation for the period | 18,376,976 | 6,073,372 | 1,228,126 | 25,678,474 | ||
| Terminated contracts | (78,846,948) | (9,466,973) | (7,662,127) | (95,976,048) | ||
| Closing balance | 106,865,802 | 11,900,424 | 518,891 | 119,285,117 | ||
| Net Tangible fixed assets | 64,338,050 | 16,191,821 | 1,192,753 | 81,722,623 |
* Restated values: see note 3
| 30.09.2019 | ||||||
|---|---|---|---|---|---|---|
| Buildings | Vehicles | Other assets | Total | |||
| Tangible fixed assets | ||||||
| Opening balance | 171,203,852 | 28,092,244 | 1,711,643 | 201,007,740 | ||
| New contracts | 3,437,137 | 2,698,756 | 28,034 | 6,163,927 | ||
| Terminated contracts | (5,057,111) | (9,631,286) | (183,613) | (14,872,010) | ||
| Adjustments | - | (19,223) | - | (19,223) | ||
| Changes in the consolidation perimeter | 1,419,084 | 149,683 | - | 1,568,767 | ||
| Closing balance | 171,002,962 | 21,290,174 | 1,556,064 | 193,849,200 | ||
| Accumulated depreciation | ||||||
| Opening balance | 106,865,802 | 11,900,424 | 518,891 | 119,285,117 | ||
| Depreciation for the period | 11,377,029 | 4,806,995 | 262,893 | 16,446,918 | ||
| Terminated contracts | (5,057,111) | (9,631,286) | (183,613) | (14,872,010) | ||
| Adjustments | - | (2,402) | - | (2,402) | ||
| Changes in the consolidation perimeter | 71,751 | 17,264 | - | 89,014 | ||
| Closing balance | 113,257,472 | 7,090,994 | 598,171 | 120,946,636 | ||
| Net Tangible fixed assets | 57,745,491 | 14,199,180 | 957,893 | 72,902,564 |
The information on the liabilities associated with these leases as well as the interest expenses can be found disclosed on Debt (note 18) and Interest expenses and income notes (note 24), respectively.
The depreciation recorded in the amount of 30,173,419 Euros (34,332,367 Euros on 30 September 2018), is booked under the heading Depreciation/amortisation and impairment of investments, net.
| 30.09.2019 | |
|---|---|
| Mail Sorting Machines | 15,507,888 |
| Improvements in properties | 88,697 |
| Forklifts | 14,995 |
| Crusher | 380 |
| 15,611,960 | |
Contractual commitments related to Tangible fixed assets are as follows:
During the year ended 31 December 2018 and nine-month period ended 30 September 2019, the movements which occurred in the main categories of Intangible assets, as well as the respective accumulated amortisation, were as follows:
| 31.12.2018 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Development projects |
Computer Software Industrial property | Other intangible assets |
Intangible assets in progress |
Total | ||||
| Intangible assets | ||||||||
| Opening balance | 4,380,552 | 80,235,963 | 13,297,151 | 444,739 | 13,254,456 | 111,612,861 | ||
| Acquisitions | - | 2,332,323 | 953,564 | - | 17,445,188 | 20,731,075 | ||
| Transfers and write-offs | - | 15,512,745 | - | - | (15,559,963) | (47,218) | ||
| Adjustments | - | - | 1,709 | - | - | 1,709 | ||
| Closing balance | 4,380,552 | 98,081,032 | 14,252,424 | 444,739 | 15,139,681 | 132,298,428 | ||
| Accumulated amortisation | ||||||||
| Opening balance | 4,371,234 | 50,542,647 | 8,752,556 | 444,739 | - | 64,111,177 | ||
| Amortisation for the period | 4,488 | 10,745,367 | 665,827 | - | - | 11,415,682 | ||
| Transfers and write-offs | - | - | - | - | - | - | ||
| Adjustments | - | - | 1,012 | - | - | 1,012 | ||
| Closing balance | 4,375,722 | 61,288,015 | 9,419,396 | 444,739 | - | 75,527,871 | ||
| Net intangible assets | 4,830 | 36,793,017 | 4,833,029 | - | 15,139,681 | 56,770,556 |
| 30.09.2019 | |||||||
|---|---|---|---|---|---|---|---|
| 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 | - | 489,744 | 10,802 | - | 7,068,787 | 69,072 | 7,638,405 |
| Transfers and write-offs | - | 3,779,190 | - | - | (3,779,190) | - | - |
| Adjustments | - | 1,400 | 20,519 | - | - | - | 21,919 |
| Changes in the consolidation perimeter | - | 1,092,007 | 213,269 | - | 462,568 | - | 1,767,844 |
| Closing balance | 4,380,552 | 103,443,372 | 14,497,014 | 444,739 | 18,891,847 | 69,072 | 141,726,596 |
| Accumulated amortisation | |||||||
| Opening balance | 4,375,722 | 61,288,015 | 9,419,396 | 444,739 | - | - | 75,527,871 |
| Amortisation for the period | 954 | 8,603,901 | 556,232 | - | - | - | 9,161,087 |
| Transfers and write-offs | - | - | - | - | - | - | - |
| Adjustments | - | 1,400 | 9,326 | - | - | - | 10,726 |
| Changes in the consolidation perimeter | - | 1,082,878 | 199,390 | - | - | - | 1,282,268 |
| Closing balance | 4,376,676 | 70,976,194 | 10,184,343 | 444,739 | - | - | 85,981,952 |
| Net intangible assets | 3,876 | 32,467,178 | 4,312,671 | - | 18,891,847 | 69,072 | 55,744,644 |
The caption Industrial property includes the license of the trademark "Payshop Internacional" of CTT Contacto, S.A., of 1,200,000 Euros. This license has an indefinite useful life, therefore it is not being amortised.
The transfers occurred in the nine-month period ended 30 September 2019 in Intangible assets in progress to Computer software refer to IT projects which were completed during the period.
The amounts of 710,560 Euros and 821,884 Euros that were capitalised in Computer software or in Intangible assets in progress as at 30 September 2018 and 30 September 2019, respectively, related to the staff costs incurred in the development of these projects.
As at 30 September 2019, Intangible assets in progress relate to IT projects which are under development, of which the most relevant are:
| 30.09.2019 | |
|---|---|
| SAP Hana & Hybris Billing | 2,871,255 |
| CRM - software | 1,027,747 |
| Payment Services Directive 2 - software | 725,666 |
| NAVE evolution | 709,643 |
| Mortgage loans - software | 633,407 |
| Digital channels - software | 580,434 |
| SIGPOSTAL - software | 545,061 |
| Routing Location and Control - Software | 508,455 |
| e-Fullfilment | 486,747 |
| Aplica Legacy adaptations | 472,337 |
| Mailmanager - software | 465,816 |
| Management information - Software | 447,309 |
| Customs portal | 384,809 |
| Transaction Monitoring - software | 373,631 |
| Data Governance - software | 331,735 |
| Servers, storage e backup | 316,583 |
| IQS 10 - Tempos de Espera | 308,564 |
| Broker Transacional - software | 291,089 |
| International Accounts - Software | 241,355 |
| SAP developments | 218,985 |
| Robotic Process Automation - software | 194,355 |
| Security and Backup Information | 182,935 |
| DOL - Treatment and generation of schedules | 160,881 |
| Lease Management - software | 158,273 |
| Recibos On-line - software | 147,375 |
| IT Asset Management - Implementation | 145,330 |
| Identity and Access Management | 140,526 |
| 13,070,300 |
The amortisation for the period, of 9,161,087 Euros (8,307,449 Euros as at 30 September 2018), was recorded under Depreciation / amortisation and impairment of investments, net.
There are no Intangible assets with restricted ownership or any carrying amounts relative to any Intangible Assets which have been given as a guarantee of liabilities.
| 30.09.2019 | |
|---|---|
| CBS - Core Banking System | 994,437 |
| SAP S/4 Hana e SAP Hybris | 677,109 |
| Middleware Software | 193,838 |
| Enterprise Content Management | 154,700 |
| Housing credit evolution | 135,136 |
| Banking Platform | 115,441 |
| Quality Indicators | 83,541 |
| Transaction Monitoring | 56,275 |
| Payment Services Directive 2 | 50,905 |
| Smart Mailboxes | 45,020 |
| ISTM Solution | 44,730 |
| SIG Postal | 44,441 |
| Purchasing Portal | 40,299 |
| Data Protection | 20,490 |
| 2,656,362 |
Contractual commitments relative to Intangible assets are as follows:
As at 31 December 2018 and 30 September 2019, the Group has the following assets classified as investment properties:
| 31.12.2018 | ||||||
|---|---|---|---|---|---|---|
| Land and natural resources |
Buildings and other constructions |
Total | ||||
| Investment properties | ||||||
| Opening balance | 2,882,477 | 11,824,326 | 14,706,803 | |||
| Disposals | (98,874) | (812,552) | (911,425) | |||
| Transfers and write-offs | 724,752 | 5,529,376 | 6,254,128 | |||
| Other movements | - | (2,518) | (2,518) | |||
| Closing balance | 3,508,355 | 16,538,633 | 20,046,988 | |||
| Accumulated depreciation | ||||||
| Opening balance | 166,541 | 7,282,857 | 7,449,397 | |||
| Depreciation for the period | - | 299,932 | 299,932 | |||
| Disposals | (10,982) | (528,516) | (539,498) | |||
| Transfers and write-offs | 79,415 | 3,334,258 | 3,413,674 | |||
| Closing balance | 234,974 | 10,388,531 | 10,623,505 | |||
| Accumulated impairment | ||||||
| Opening balance | - | 1,092,556 | 1,092,556 | |||
| Impairment for the period | - | (732,506) | (732,506) | |||
| Transfers | - | 883,452 | 883,452 | |||
| Closing balance | - | 1,243,502 | 1,243,502 - |
|||
| Net Investment properties | 3,273,381 | 4,906,599 | 8,179,980 |
| 30.09.2019 | ||||||
|---|---|---|---|---|---|---|
| Land and natural resources |
Buildings and other constructions |
Total | ||||
| Investment properties | ||||||
| Opening balance | 3,508,355 | 16,538,633 | 20,046,988 | |||
| Disposals | (195,997) | (1,516,135) | (1,712,131) | |||
| Transfers and write-offs | - | - | - | |||
| Other movements | - | - | - | |||
| Closing balance | 3,312,358 | 15,022,498 | 18,334,857 | |||
| Accumulated depreciation | ||||||
| Opening balance | 234,974 | 10,388,531 | 10,623,505 | |||
| Depreciation for the period | - | 196,587 | 196,587 | |||
| Disposals | (21,122) | (937,902) | (959,024) | |||
| Transfers and write-offs | - | - | - | |||
| Closing balance | 213,853 | 9,647,215 | 9,861,068 | |||
| Accumulated impairment | ||||||
| Opening balance | - | 1,243,502 | 1,243,502 | |||
| Impairment for the period | - | - | - | |||
| Transfers | - | (67,547) | (67,547) | |||
| Closing balance | - | 1,175,955 | 1,175,955 - |
|||
| Net Investment properties | 3,098,506 | 4,199,328 | 7,297,834 |
These assets are not allocated to the Group's operating activities, nor have a specific future use.
In the year ended 31 December 2018, the amount recorded under the disposals heading relates to the sale of three properties having the corresponding accounting gains, of 138 thousand Euros, been recorded in the caption Gains/Losses on disposal of assets.
During the nine-month period ended 30 September 2019, the amount of disposals relates to the sale of seven properties having the corresponding gains, of 349 thousand Euros, been recorded in the caption Gains/Losses on disposal of assets.
The Depreciation for the period, of 196,587 Euros (181,720 Euros on 30 September 2018), was recorded in the caption Depreciation / amortisation and impairment of investments, net.
As at 31 December 2018 and 30 September 2019, the parent company, CTT - Correios de Portugal, S.A. and the following subsidiaries in which it holds control were included in the consolidation:
| 31.12.2018 | 30.09.2019 | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Company name | Place of business | Head office | Percentage of ownership | Percentage of ownership | |||||
| Direct | Indirect | Total | Direct | 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 | Portugal | Av. D. João II N.º 13 | |||||||
| Logística, S.A. ("CTT Expresso") | 1999-001 Lisboa | 100 | - | 100 | 100 | - | 100 | ||
| Payshop Portugal, S.A. | Av. D. João II N.º 13 | ||||||||
| ("Payshop") | Portugal | 1999-001 Lisboa | - | 100 | 100 | - | 100 | 100 | |
| CTT Contacto, S.A. | Av. D. João II N.º 13 | ||||||||
| ("CTT Con") | Portugal | 1999-001 Lisboa | 100 | - | 100 | 100 | - | 100 | |
| Tourline Express Mensajería, SLU. | Spain | Calle Alcarria, numero 8, | |||||||
| ("TourLine") | 28823 Coslada, Madrid | 100 | - | 100 | 100 | - | 100 | ||
| Av. 24 de Julho, Edificio 24, n.º 1097, | |||||||||
| Correio Expresso de Moçambique, S.A. | 3.º Piso | ||||||||
| Mozambique | Bairro da Polana | ||||||||
| ("CORRE") | Maputo - Mozambique | 50 | - | 50 | 50 | - | 50 | ||
| Banco CTT, S.A. | Portugal | Av. D. João II N.º 13 | |||||||
| ("BancoCTT") | 1999-001 Lisboa | 100 | - | 100 | 100 | - | 100 | ||
| Transporta - Transportes Porta a Porta, S.A. | Estrada de São Marcos N.º 15 | ||||||||
| ("Transporta") | Portugal | 2735-521 Cacém | 100 | - | 100 | - | - | - | |
| 321 Crédito - Instituição Financeira de Crédito, S.A. | Av. Duque d'Ávila, 46, 7º B | ||||||||
| ("321 Crédito") | Portugal | 1050-083 Lisboa | - | - | - | - | 100 | 100 | |
On 31 December 2018, but producing effects as of 1 January 2018, were registered the mergers by incorporation of Mailtec Comunicação, S.A. and Escrita Inteligente, S.A. in CTT – Correios de Portugal through the global transfer of the assets. These transactions had no impact on the consolidation perimeter.
On 26 April 2019 a share capital increase was made in Banco CTT in the amount of 110 million Euros, currently its share capital amounts to 266,400,000 Euros.
As at 2 May 2019 100% of the share capital of 321 Crédito – Instituição Financeira de Crédito, S.A. was acquired for the amount of 110,782,000 Euros.
On 11 September 2019, but producing effects as of 1 January 2019, was registered the merger by incorporation of Transporta – Transportes Porta a Porta, S.A. in CTT Expresso – Serviços Postais e Logística, S.A. through the global transfer of the assets. This transaction had no impact on the consolidation perimeter.
As at 31 December 2018 and 30 September 2019, the Group held the following interests in joint ventures, accounted for by the equity method:
| 31.12.2018 | 30.09.2019 | |||||||
|---|---|---|---|---|---|---|---|---|
| Company name | Place of business | Head office | Percentage of ownership | Percentage of ownership | ||||
| Direct | Indirect | Total | Direct | Indirect | Total | |||
| NewPost, ACE | Portugal | Av. Fontes Pereira de Melo, 40 Lisboa |
49 | - | 49 | 49 | - | 49 |
| PTP & F, ACE | Portugal | Estrada Casal do Canas Amadora |
51 | - | 51 | 51 | - | 51 |
| MKTPlace - Comércio Eletrónico, S.A ("MKTP") |
Portugal | Rua Eng.º Ferreira Dias 924 Esc. 5 Porto |
50 | - | 50 | 50 | - | 50 |
On 8 August 2018, MKTPlace - Comércio Eletrónico, S.A., a partnership with Sonae - SGPS, S.A., was formed, regarding the creation of an e-commerce platform to provide integrated services for the intermediation of commercial relations between sellers and consumers. Each shareholder, CTT and Sonae, owns 50% of the share capital of the referred entity.
On 2 April, 6 May and 6 August 2019, the company MKTPlace - Comércio Eletrónico, S.A., was subject to capital increases in the amount of 3,625,523 Euros made by CTT.
As at 31 December 2018 and 30 September 2019, the Group held the following interests in associated companies accounted for by the equity method:
| 31.12.2018 | 30.09.2019 | |||||||
|---|---|---|---|---|---|---|---|---|
| Company name | Place of business | Head office | Percentage of ownership | Percentage of ownership | ||||
| Direct | Indirect | Total | Direct | Indirect | Total | |||
| Multicert - Serviços de Certificação Electrónica, S.A. ("Multicert") |
Portugal | Lagoas Parque, Edifício 3, Piso 3 Oeiras |
20 | - | 20 | 20 | - | 20 |
| Mafelosa, SL (a) | Spain | Castellon - Spain | - | 25 | 25 | - | 25 | 25 |
| Urpacksur, SL (a) | Spain | Málaga - Spain | - | 30 | 30 | - | 30 | 30 |
(a) Company held by Tourline Mensajeria, SLU, which currently has no activity.
During the period ended 31 December 2018, the consolidation perimeter was changed with the creation on 8 August 2018 of MKTPlace - Comércio Eletrónico, S.A., whose interests are accounted in accordance with the equity method.
During the nine-month period ended 30 September 2019, the consolidation perimeter was changed following the acquisition of 321 Crédito – Instituição Financeira de Crédito, S.A. on 2 May 2019. An initial goodwill in the amount of 63,242,621 Euros has been recognised.
The Purchase Price Allocation (PPA) is ongoing and the Group is still evaluating the assumptions and criteria for the fair value assessment of the assets and liabilities acquired, with special relevance to 321 Crédito's credit portfolio and will be concluded within the 12 months after the acquisition date as required by IFRS 3 – Business Combinations.
Therefore, the initial Goodwill assessed on the date of the acquisition of 321 Crédito is as follow:
| Initial recognition | |||
|---|---|---|---|
| 412,734,469 | |||
| 365,195,090 | |||
| 47,539,379 | |||
| 63,242,621 | |||
| 110,782,000 | |||
The Income Statement of 321 Crédito as at 30 September 2019 is as follows (months of May to September):
| Caption | Amount |
|---|---|
| Financial margin | 9,528,012 |
| Other operating income and costs | (2,157,034) |
| Impairments and provisions | (1,939,177) |
| Other costs | (10,457) |
| Earnings before taxes | 5,421,344 |
| Income tax | (1,458,789) |
| Net profit for the period | 3,962,555 |
As at 31 December 2018 and 30 September 2019, the caption Investment securities showed the following composition:
| 31.12.2018 | 30.09.2019 | |
|---|---|---|
| Non-current | ||
| Investment securities measured at Fair Value through Other Comprehensive Income (1) | ||
| Debt securities and other fixed-income securities | ||
| Public issuers | 546,260 | 534,385 |
| Other issuers | 311,385 | - |
| 857,645 | 534,385 | |
| Investment securities measured at amortised cost | ||
| Debt securities and other fixed-income securities | ||
| Public issuers | 403,296,616 | 368,922,563 |
| Other issuers | 25,048,798 | 45,904,063 |
| Impairment | (164,378) | (168,937) |
| 428,181,036 | 414,657,689 | |
| 429,038,681 | 415,192,074 | |
| Current | ||
| Investment securities measured at Fair Value through Other Comprehensive Income (1) | ||
| Debt securities and other fixed-income securities | ||
| Public issuers | 13,765 | 8,889 |
| Other issuers | 617,658 | - |
| 631,423 | 8,889 | |
| Investment securities measured at amortised cost | ||
| Debt securities and other fixed-income securities | ||
| Public issuers | 14,292,141 | 26,516,420 |
| Other issuers | 10,158,084 | 6,219,057 |
| Impairment | (18,447) | (6,149) |
| 24,431,778 | 32,729,328 | |
| 25,063,201 | 32,738,217 | |
| 454,101,881 | 447,930,291 |
(1) As at 31 December 2018 and 30 September 2019 includes the amount of 127,791 Euros and 224 Euros, respectively, regarding Accumulated impairment losses.
The analysis of the Investment securities measured at Fair Value through Other Comprehensive Income and the residual maturity of the investment securities as at 31 December 2018 and 30 September 2019 is detailed as follows:
| 31.12.2018 | |||||||
|---|---|---|---|---|---|---|---|
| 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 | |
| Investment securities measured at Fair Value through Other Comprehensive Income (1) | |||||||
| Debt securities and other fixed-income securities | |||||||
| Public-debt securities | |||||||
| National | 13,765 | - | 13,765 | 546,260 | - | 546,260 | 560,025 |
| Foreign | - | - | - | - | - | - | - |
| Other issuers | |||||||
| National | - | - | - | - | - | - | - |
| Foreign | 9,163 | 608,495 | 617,658 | 311,385 | - | 311,385 | 929,043 |
| 22,928 | 608,495 | 631,423 | 857,645 | - | 857,645 | 1,489,068 |
(1) As at 31 December 2018 includes the amount of 127,791 Euros regarding Accumulated impairment losses.
| 31.12.2018 | |||||||
|---|---|---|---|---|---|---|---|
| Current | Non-current | ||||||
| Due within 3 months |
Over 3 months and less than 1 year |
Over 1 year and less than 3 years |
Over 3 years | Total | Total | ||
| Investment securities measured at amortised cost | |||||||
| Debt securities and other fixed-income securities | |||||||
| Public-debt securities | |||||||
| National | 4,704,139 | 6,551,473 | 11,255,612 | 18,070,554 | 267,159,988 | 285,230,542 | 296,486,154 |
| Foreign | 497,547 | 2,538,983 | 3,036,529 | 42,443,006 | 75,623,068 | 118,066,074 | 121,102,603 |
| Other issuers | |||||||
| National | 5,258,084 | 4,900,000 | 10,158,084 | 17,878,512 | 7,170,286 | 25,048,798 | 35,206,882 |
| Foreign | - | - | - | - | - | - | - |
| 10,459,770 | 13,990,455 | 24,450,225 | 78,392,071 | 349,953,342 | 428,345,414 | 452,795,639 |
| 30.09.2019 | |||||||
|---|---|---|---|---|---|---|---|
| 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 | |
| Investment securities measured at Fair Value through Other Comprehensive Income (1) | |||||||
| Debt securities and other fixed-income securities | |||||||
| Public-debt securities | |||||||
| National | 8,889 | - | 8,889 | 534,385 | - 534,385 |
543,274 | |
| Foreign | - - |
- | - | - - |
- | ||
| Other issuers | |||||||
| National | - - |
- | - | - - |
- | ||
| Foreign | - - |
- | - | - - |
- | ||
| 8,889 | - | 8,889 | 534,385 | - 534,385 |
543,274 |
(1) As at 30 September 2019 includes the amount of 224 Euros regarding Accumulated impairment losses.
| 30.09.2019 | ||||||||
|---|---|---|---|---|---|---|---|---|
| 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 | ||
| Investment securities measured at amortised cost | ||||||||
| Debt securities and other fixed-income securities | ||||||||
| Public-debt securities | ||||||||
| National | 4,808,085 | - | 4,808,085 | 18,488,196 | 231,586,246 | 250,074,442 | 254,882,528 | |
| Foreign | 818,140 | 20,890,195 | 21,708,335 | 34,341,366 | 84,506,755 | 118,848,120 | 140,556,455 | |
| Other issuers | ||||||||
| National | 1,463,643 | 4,755,415 | 6,219,057 | 11,794,528 | 34,109,536 | 45,904,063 | 52,123,120 | |
| Foreign | - | - | - | - | - | - | - | |
| 7,089,868 | 25,645,609 | 32,735,477 | 64,624,089 | 350,202,536 | 414,826,626 | 447,562,103 |
The impairment losses, for the year ended 31 December 2018 and the nine-month period ended 30 September 2019, are detailed as follows:
| 31.12.2018 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Changes in the | |||||||||
| Opening balance | Increases | Reversals | Utilisations | accounting standards |
Closing balance | ||||
| Non-current assets | |||||||||
| Investment securities measured at Fair Value through Other Comprehensive Income |
- | 4,325 | (8,387) | - | 4,566 | 504 | |||
| Investment securities measured at amortised cost | - | 110,568 | (190,198) | - | 244,008 | 164,379 | |||
| - | 114,893 | (198,585) | - | 248,575 | 164,883 | ||||
| Current assets | |||||||||
| Investment securities measured at Fair Value through Other Comprehensive Income |
- | 121,166 | - | - | 6,120 | 127,286 | |||
| Investment securities measured at amortised cost | - | 15,383 | - | - | 3,064 | 18,447 | |||
| - | 136,549 | - | - | 9,184 | 145,733 | ||||
| Investment securities measured at Fair Value through Other Comprehensive Income |
- | 125,491 | (8,387) | - | 10,686 | 127,790 | |||
| Investment securities measured at amortised cost | - | 125,951 | (190,198) | - | 247,072 | 182,825 | |||
| - | 251,442 | (198,585) | - | 257,759 | 310,616 |
| 30.09.2019 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Opening balance | Increases | Reversals | Utilisations | Changes in the accounting standards |
Closing balance | |||
| Non-current assets | ||||||||
| Investment securities measured at Fair Value through Other Comprehensive Income |
504 | 18 | (299) | - | - | 224 | ||
| Investment securities measured at amortised cost | 164,379 | 27,784 | (23,226) | - | - | 168,937 | ||
| 164,883 | 27,802 | (23,525) | - | - | 169,161 | |||
| Current assets | ||||||||
| Investment securities measured at Fair Value through Other Comprehensive Income |
127,286 | - | (40,230) | (87,056) | - | - | ||
| Investment securities measured at amortised cost | 18,447 | - | (12,298) | - | - | 6,149 | ||
| 145,733 | - | (52,528) | (87,056) | - | 6,149 | |||
| Investment securities measured at Fair Value through Other Comprehensive Income |
127,790 | 18 | (40,529) | (87,056) | - | 224 | ||
| Investment securities measured at amortised cost | 182,826 | - | (35,524) | - | - | 175,086 | ||
| 310,616 | 27,802 | (76,053) | (87,056) | - | 175,310 |
As at 31 December 2018 and 30 September 2019, the headings Other banking financial assets and Other banking financial liabilities showed the following composition:
| 31.12.2018 | 30.09.2019 | |
|---|---|---|
| Non-current assets | ||
| Loans to credit institutions | 22,910,185 | 21,700,559 |
| Impairment | (217,751) | (190,597) |
| Other | - | 1,353 |
| 22,692,434 | 21,511,315 | |
| Current assets | ||
| Investments in credit institutions | 78,314,989 | 1,150,195 |
| Loans to credit institutions | 14,004,877 | 12,901,822 |
| Impairment | (197,018) | (48,261) |
| Other | 1,509,230 | 6,611,454 |
| Impairment | (10,927) | (3,997,821) |
| 93,621,151 | 16,617,388 | |
| 116,313,585 | 38,128,703 | |
| Non-current liabilities | ||
| Liabilities represented by securities | - | 84,479,686 |
| - | 84,479,686 | |
| Current liabilities | ||
| Liabilities represented by securities | - | 17,239 |
| Other | 14,950,779 | 20,790,519 |
| 14,950,779 | 20,807,757 | |
| 14,950,779 | 105,287,443 |
Investments in credit institutions and Loans to credit institutions Regarding these captions the scheduling by maturity is as follows:
| 31.12.2018 | 30.09.2019 | |
|---|---|---|
| Up to 3 months | 24,472,036 | 4,573,495 |
| From 3 to 6 months | 56,031,030 | 3,367,815 |
| From 6 to 12 months | 11,816,800 | 6,110,707 |
| From 1 to 3 years | 14,251,127 | 14,879,204 |
| Over 3 years | 8,659,058 | 6,821,355 |
| 115,230,051 | 35,752,576 |
The impairment losses, for the year ended 31 December 2018 and the nine-month period ended 30 September 2019, are detailed as follows:
| 31.12.2018 | |||||||
|---|---|---|---|---|---|---|---|
| Opening balance | Increases | Reversals | Utilisations | Transfers | Changes in the accounting standards Closing balance |
||
| Non-current assets | |||||||
| Investments and loans in credit institutions | - | 564,091 | (462,633) | - | 116,293 | 217,751 | |
| - | 564,091 | (462,633) | - | 116,293 | 217,751 | ||
| Current assets | |||||||
| Investments and loans in credit institutions | - | - | (310,086) | - | 507,104 | 197,018 | |
| Other | - | 10,927 | - | - | - | 10,927 | |
| - | 10,927 | (310,086) | - | 507,104 | 207,945 | ||
| - | 575,018 | (772,719) | - | 623,397 | 425,696 | ||
| 30.09.2019 | |||||||
| Changes in the | |||||||
| Opening balance | Increases | Reversals | Utilisations | Transfers | consolidation perimeter |
Closing balance | |
| Non-current assets | |||||||
| Investments and loans in credit institutions | 217,751 | 84,713 | (111,866) | - | - | - | 190,597 |
| 217,751 | 84,713 | (111,866) | - | - | - | 190,597 | |
| Current assets | |||||||
| Investments and loans in credit institutions | 197,018 | - | (148,757) | - | - | - | 48,261 |
| Other | 10,927 | 17,325 | (30,739) | - | (10,927) | 4,011,235 | 3,997,821 |
| 207,945 | 17,325 | (179,496) | - | (10,927) | 4,011,235 | 4,046,082 | |
| 425,696 | 102,038 | (291,362) | - | (10,927) | 4,011,235 | 4,236,680 |
This caption showed the following composition:
| - | 84,496,925 |
|---|---|
| - | 84,496,925 |
As at 30 September 2019 the Liabilities represented by securities are analysed as follows:
| Issue | Issue date | Maturity date | Remuneration | Nominal value | Book value |
|---|---|---|---|---|---|
| Ulisses Finance No.1 – Class A | July 2017 | July 2033 | Euribor 1M + 85 b.p. | 70,721,966 | 70,444,996 |
| Ulisses Finance No.1 – Class B | July 2017 | July 2033 | Euribor 1M + 160 b.p. | 7,000,000 | 6,974,039 |
| Ulisses Finance No.1 – Class C | July 2017 | July 2033 | Euribor 1M + 375 b.p. | 7,100,000 | 7,077,891 |
| 84,821,966 | 84,496,925 |
During June 2019, the Group decided to early redeem Chaves Funding no. 7. This securitisation transaction included an auto loan and leasing portfolio and had a nominal value of 197.200.000 Euros at the time of its redemption.
The scheduling by maturity regarding this caption is as follows:
| 30.09.2019 | ||||||||
|---|---|---|---|---|---|---|---|---|
| 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 | ||
| Securitisations | 17,239 | - | 17,239 | - | 84,479,686 | 84,479,686 | 84,496,925 | |
| 17,239 | - | 17,239 | - | 84,479,686 | 84,479,686 | 84,496,925 |
As at 31 December 2018 and 30 September 2019, the caption Credit to bank clients was detailed as follows:
| 31.12.2018 | 30.09.2019 | |
|---|---|---|
| Performing loans | 248,114,654 | 810,277,186 |
| Mortgage Loans | 238,667,450 | 358,694,290 |
| Auto Loans | - | 439,969,857 |
| Leasings | - | 10,566,791 |
| Overdrafts | 529,154 | 1,046,248 |
| Other credits | 8,918,050 | - |
| Overdue loans | 392,852 | 15,638,083 |
| Overdue loans - less than 90 days | 60,947 | 788,280 |
| Overdue loans - more than 90 days | 331,905 | 14,849,802 |
| 248,507,506 | 825,915,269 | |
| Credit risk impairment | (457,525) | (22,142,004) |
| 248,049,981 | 803,773,265 |
As at 31 December 2018 and 30 September 2019, this caption showed the following composition:
| 31.12.2018 | |||||||
|---|---|---|---|---|---|---|---|
| Performing Loans | Overdue Loans | Gross amount | Impairment | Net amount | |||
| Mortgage Loans | 238,667,450 | - | 238,667,450 | (232,315) | 238,435,135 | ||
| Auto Loans | - | - | - | - | - | ||
| Leasings | - | - | - | - | - | ||
| Factoring operations | - | - | - | - | - | ||
| Overdrafts | 529,154 | 392,852 | 922,006 | (224,843) | 697,163 | ||
| Other credits | 8,918,050 | - | 8,918,050 | (367) | 8,917,683 | ||
| 248,114,654 | 392,852 | 248,507,506 | (457,525) | 248,049,981 |
| 30.09.2019 | |||||
|---|---|---|---|---|---|
| Performing Loans | Overdue Loans | Gross amount | Impairment | Net amount | |
| Mortgage Loans | 358,694,290 | 332 | 358,694,622 | (108,550) | 358,586,073 |
| Auto Loans | 439,969,857 | 8,152,250 | 448,122,108 | (15,119,712) | 433,002,395 |
| Leasings | 10,566,791 | 3,981,657 | 14,548,448 | (4,276,142) | 10,272,305 |
| Factoring operations | - | 2,917,947 | 2,917,947 | (2,255,913) | 662,034 |
| Overdrafts | 1,046,248 | 585,895 | 1,632,143 | (381,686) | 1,250,457 |
| Other credits | - | - | - | - | - |
| 810,277,186 | 15,638,082 | 825,915,268 | (22,142,004) | 803,773,265 |
The maturity analysis of the Credit to bank clients as at 31 December 2018 and 30 September 2019 is detailed as follows:
| 31.12.2018 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 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 | - | 1,722,857 | 4,921,205 | 6,644,062 | 13,332,739 | 218,690,649 | 232,023,388 | 238,667,450 | |
| Auto Loans | - | - | - | - | - | - | - | - | |
| Leasings | - | - | - | - | - | - | - | - | |
| Overdrafts | 922,006 | - | - | 922,006 | - | - | - | 922,006 | |
| Other credits | - | 8,918,050 | - | 8,918,050 | - | - | - | 8,918,050 | |
| 922,006 | 10,640,907 | 4,921,205 | 16,484,118 | 13,332,739 | 218,690,649 | 232,023,388 | 248,507,506 |
| 30.09.2019 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 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 | - | 2,619,677 | 7,422,502 | 10,042,179 | 20,098,747 | 328,553,696 | 348,652,443 | 358,694,622 | ||
| Auto Loans | 8,152,250 | 19,966,983 | 50,725,546 | 78,844,780 | 132,876,886 | 236,400,442 | 369,277,328 | 448,122,108 | ||
| Leasings | 3,981,657 | 771,895 | 2,089,856 | 6,843,409 | 4,649,193 | 3,055,846 | 7,705,039 | 14,548,448 | ||
| Overdrafts | 1,632,144 | - | - | 1,632,144 | - | - | - | 1,632,144 | ||
| Other credits | 2,917,947 | - | - | 2,917,947 | - | - | - | 2,917,947 | ||
| 16,683,999 | 23,358,556 | 60,237,905 | 100,280,459 | 157,624,826 | 568,009,984 | 725,634,810 | 825,915,269 |
The breakdown of this heading by type of rate is as follows:
| 31.12.2018 | 30.09.2019 | |
|---|---|---|
| Fixed rate | 922,006 | 414,307,220 |
| Floating rate | 247,585,500 | 411,608,048 |
| 248,507,506 | 825,915,269 | |
| Credit risk impairment | (457,525) | (22,142,004) |
| 248,049,981 | 803,773,265 |
As at 31 December 2018 and 30 September 2019, the analysis of this caption by type of collateral, is presented as follows:
| 31.12.2018 | |||||
|---|---|---|---|---|---|
| Performing Loans | Overdue Loans | Gross amount | Impairment | Net amount | |
| Asset-backed Loans | 238,667,450 | - | 238,667,450 | (232,315) | 238,435,135 |
| Other guaranteed Loans | - | - | - | - | - |
| Unsecured Loans | 9,447,204 | 392,852 | 9,840,056 | (225,210) | 9,614,846 |
| 248,114,654 | 392,852 | 248,507,506 | (457,525) | 248,049,981 |
| 30.09.2019 | |||||
|---|---|---|---|---|---|
| Performing Loans | Overdue Loans | Gross amount | Impairment | Net amount | |
| Asset-backed Loans | 368,571,532 | 2,451,403 | 371,022,935 | (1,893,049) | 369,129,885 |
| Other guaranteed Loans | 435,103,116 | 5,655,139 | 440,758,256 | (12,323,659) | 428,434,596 |
| Unsecured Loans | 6,602,538 | 7,531,540 | 14,134,078 | (7,925,295) | 6,208,782 |
| 810,277,186 | 15,638,082 | 825,915,268 | (22,142,004) | 803,773,264 |
The analysis of credit to bank clients as at 31 December 2018 and 30 September 2019, by sector of activity, is as follows:
| 31.12.2018 | |||||||
|---|---|---|---|---|---|---|---|
| Performing Loans | Overdue Loans | Gross amount | Impairment | Net amount | |||
| Companies | |||||||
| Public administration and defence, compulsory social security |
8,918,050 | - | 8,918,050 | (367) | 8,917,683 | ||
| Individuals | |||||||
| Mortgage Loans | 238,667,450 | - | 238,667,450 | (232,315) | 238,435,135 | ||
| Consumer Loans | 529,154 | 392,852 | 922,006 | (224,843) | 697,163 | ||
| 248,114,654 | 392,852 | 248,507,506 | (457,525) | 248,049,981 |
| 30.09.2019 | |||||
|---|---|---|---|---|---|
| Performing Loans | Overdue Loans | Gross amount | Impairment | Net amount | |
| Companies | |||||
| Agriculture, forestry and fishing | 195,016 | 45,945 | 240,961 | (40,462) | 200,499 |
| Mining and quarrying | - | 231,242 | 231,242 | (231,238) | 5 |
| Manufacturing | 2,056,490 | 664,779 | 2,721,269 | (804,232) | 1,917,036 |
| Water supply | 194,014 | 102,735 | 296,748 | (96,717) | 200,031 |
| Construction | 6,248,109 | 1,505,413 | 7,753,522 | (1,852,549) | 5,900,973 |
| Wholesale and retail trade | 2,298,611 | 2,778,138 | 5,076,749 | (2,176,966) | 2,899,784 |
| Transport and storage | 412,261 | 884,239 | 1,296,500 | (860,251) | 436,249 |
| Accommodation and food service activities | 719,012 | 67,219 | 786,231 | (83,874) | 702,357 |
| Information and communication | 155,394 | 26,233 | 181,627 | (24,988) | 156,639 |
| Financial and insurance activities | 3,095 | 11,865 | 14,959 | (11,186) | 3,774 |
| Real estate activities | 1,644,631 | 25,487 | 1,670,118 | (24,580) | 1,645,538 |
| Professional, scientific and technical activities | 237,298 | 118,954 | 356,251 | (112,348) | 243,903 |
| Administrative and support service activities | 64,033 | 1,031,720 | 1,095,752 | (776,570) | 319,182 |
| Education | 248,089 | 15,402 | 263,492 | (15,498) | 247,994 |
| Human health services and social work activities | 215,101 | 4,291 | 219,392 | (4,895) | 214,497 |
| Arts, entertainment and recreation | - | 5,375 | 5,375 | (5,059) | 317 |
| Other services | 25,439,968 | 152,296 | 25,592,265 | (414,201) | 25,178,064 |
| Individuals | |||||
| Mortgage Loans | 358,799,357 | 332 | 358,799,689 | (110,176) | 358,689,512 |
| Consumer Loans | 411,346,708 | 7,966,417 | 419,313,125 | (14,496,213) | 404,816,912 |
| 810,277,186 | 15,638,082 | 825,915,268 | (22,142,004) | 803,773,264 |
The caption credit to bank clients includes the following amounts related to finance leases contracts:
| 31.12.2018 | 30.09.2019 | |
|---|---|---|
| Amount of future minimum payments | - | 11,276,116 |
| Interest not yet due | - | (709,326) |
| Present value | - | 10,566,791 |
The amount of future minimum payments of lease contracts, by maturity terms, is analysed as follows:
| 31.12.2018 | 30.09.2019 | |
|---|---|---|
| Due within 1 year | - | 477,571 |
| Due between 1 to 5 years | - | 7,930,370 |
| Over 5 years | - | 2,868,176 |
| Amount of future minimum payments | - | 11,276,116 |
The analysis of financial leases contracts, by type of client, is presented as follows:
| 31.12.2018 | 30.09.2019 | |
|---|---|---|
| Individuals | - | 1,420,949 |
| Home | - | 105,581 |
| Consumer | - | - |
| Others | - | 1,315,369 |
| Companies | - | 9,145,842 |
| Equipment | - | 713,436 |
| Real Estate | - | 8,432,405 |
| - | 10,566,791 |
During the year ended 31 December 2018 and nine-month period ended 30 September 2019, the movement in the Credit to bank clients' impairment caption was as follows:
| 31.12.2018 | ||||||
|---|---|---|---|---|---|---|
| Opening balance | Increases | Reversals | Utilisations | Changes in the accounting standards |
Closing balance | |
| Non-current assets | ||||||
| Credit to banking clients | 59,078 | 230,708 | (57,229) | - | (6,589) | 225,968 |
| 59,078 | 230,708 | (57,229) | - | (6,589) | 225,968 | |
| Current assets | ||||||
| Credit to banking clients | 58,573 | 169,107 | - | - | 3,876 | 231,556 |
| 58,573 | 169,107 | - | - | 3,876 | 231,556 | |
| 117,651 | 399,816 | (57,229) | - | (2,713) | 457,525 | |
| 30.09.2019 | ||||||
| Opening balance | Increases | Reversals | Utilisations | Changes in the consolidation perimeter |
Closing balance | |
| Non-current assets | ||||||
| Credit to banking clients | 225,968 | 181,343 | (301,413) | - | - | 105,898 |
| 225,968 | 181,343 | (301,413) | - | - | 105,898 | |
| Current assets | ||||||
| Credit to banking clients | 231,556 | 2,223,965 | (180,141) | (21,931) | 19,782,656 | 22,036,106 |
| 231,556 | 2,223,965 | (180,141) | (21,931) | 19,782,656 | 22,036,106 | |
| 457,525 | 2,405,308 | (481,554) | (21,931) | 19,782,656 | 2,359,348 |
The total credit portfolio, split by stage according to IFRS 9, is analysed as follows:
| 31.12.2018 | 30.09.2019 | |
|---|---|---|
| Stage 1 | 246,487,327 | 758,043,715 |
| Gross amount | 246,671,668 | 760,194,882 |
| Impairment | (184,341) | (2,151,167) |
| Stage 2 | 1,434,865 | 36,548,612 |
| Gross amount | 1,502,060 | 38,464,446 |
| Impairment | (67,195) | (1,915,834) |
| Stage 3 | 127,789 | 9,180,938 |
| Gross amount | 333,777 | 27,255,940 |
| Impairment | (205,988) | (18,075,003) |
| 248,049,981 | 803,773,265 |
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.
As at 31 December 2018 and 30 September 2019, the Deferrals included in Current assets and Current and Noncurrent liabilities showed the following composition:
| 31.12.2018 | 30.09.2019 | |
|---|---|---|
| Assets deferrals | ||
| Current | ||
| Rents payable | 1,299,445 | 1,461,095 |
| Meal allowances | 1,541,263 | 1,500,203 |
| Other | 3,850,652 | 6,049,514 |
| 6,691,359 | 9,010,812 | |
| Liabilities deferrals | ||
| Non-current | ||
| Investment subsidy | 305,691 | 297,290 |
| 305,691 | 297,290 | |
| Current | ||
| Phone-ix top ups | 110,597 | - |
| Investment subsidy | 11,201 | 11,201 |
| Contratual liabilities | 1,402,125 | 1,441,869 |
| Other | 1,184,167 | 1,206,623 |
| 2,708,090 | 2,659,693 | |
| 3,013,781 | 2,956,983 |
The caption "Contractual liabilities" results from the adoption, as at 1 January 2018, 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.
During the year ended 31 December 2018 and nine-month period ended 30 September 2019, the following movements occurred in impairment losses:
| 31.12.2018 | |||||||
|---|---|---|---|---|---|---|---|
| Changes in the | |||||||
| Opening balance | Increases | Reversals | Utilisations | Transfers | consolidation perimeter |
Closing balance | |
| Non-current assets | |||||||
| Tangible fixed assets | 49,341 | - | (25,085) | - | - | - | 24,256 |
| Investment properties | 1,092,556 | - | (732,506) | - | 883,452 | - | 1,243,502 |
| 1,141,897 | - | (757,591) | - | 883,452 | - | 1,267,758 | |
| Investment securities | - | 114,893 | (198,585) | - | - | 248,575 | - |
| Other non-current assets | 1,786,729 | 196,161 | - | - | - | - | 1,982,890 |
| Credit to banking clients | 59,078 | 230,708 | (57,229) | - | - | (6,589) | 225,968 |
| Other banking financial assets | - | 564,091 | (462,633) | - | - | 116,293 | 217,751 |
| 1,845,807 | 1,105,853 | (718,447) | - | - | 358,279 | 2,591,492 | |
| 2,987,704 | 1,105,853 | (1,476,038) | - | 883,452 | 358,279 | 3,859,250 | |
| Current assets | |||||||
| Accounts receivable | 32,583,555 | 4,693,073 | (2,465,765) | (490,358) | - | (883,883) | 33,436,621 |
| Credit to banking clients | 58,573 | 169,107 | - | - | - | 3,876 | 231,556 |
| Investment securities | - | 136,549 | - | - | - | 9,184 | 145,733 |
| Other current assets | 7,335,098 | 431,796 | (226,769) | (23,137) | - | - | 7,516,988 |
| Other banking financial assets | - | 10,927 | (310,086) | - | - | 507,104 | 207,945 |
| Slight and term deposits | - | 8,271 | (393,885) | - | - | 406,909 | 21,295 |
| 39,977,226 | 5,449,724 | (3,396,505) | (513,495) | - | 43,190 | 41,560,139 | |
| Merchandise | 1,719,745 | 145,341 | (1,585) | (39,390) | - | - | 1,824,111 |
| Raw, subsidiary and consumable | 658,137 | - | (24,611) | - | - | - | 633,526 |
| 2,377,882 | 145,341 | (26,196) | (39,390) | - | - | 2,457,637 | |
| 42,355,108 | 5,595,065 | (3,422,701) | (552,885) | - | 43,190 | 44,017,776 | |
| 45,342,812 | 6,700,917 | (4,898,739) | (552,885) | 883,452 | 401,469 | 47,877,025 |
| 30.09.2019 | |||||||
|---|---|---|---|---|---|---|---|
| Changes in the | |||||||
| Opening balance | Increases | Reversals | Utilisations | Transfers | consolidation perimeter |
Closing balance | |
| Non-current assets | |||||||
| Tangible fixed assets | 24,256 | - | - | - | - | - | 24,256 |
| Investment properties | 1,243,502 | - | (67,547) | - | - | - | 1,175,955 |
| Non-current assets held for sale | - | - | (95) | (500) | - | 187,659 | 187,064 |
| 1,267,758 | - | (67,642) | (500) | - | 187,659 | 1,387,275 | |
| Investment securities | 164,883 | 27,802 | (23,525) | - | - | - | 169,160 |
| Other non-current assets | 1,982,890 | - | - | - | 105,692 | - | 2,088,582 |
| Credit to banking clients | 225,968 | 2,252,526 | (481,554) | (21,931) | - | 19,782,656 | 21,757,665 |
| Other banking financial assets | 217,751 | 102,038 | (142,605) | - | - | 4,011,235 | 4,188,419 |
| 2,591,492 | 2,382,366 | (647,684) | (21,931) | 105,692 | 23,793,891 | 28,203,826 | |
| 3,859,249 | 2,382,366 | (715,326) | (22,431) | 105,692 | 23,981,550 | 29,591,100 | |
| Current assets | |||||||
| Accounts receivable | 33,436,621 | 4,363,911 | (475,615) | (398,352) | - | - | 36,926,566 |
| Credit to banking clients | 231,556 | 152,782 | - | - | - | - | 384,338 |
| Investment securities | 145,733 | - | (52,528) | (87,056) | - | - | 6,149 |
| Other current assets | 7,516,988 | 374,646 | (64,654) | (194,141) | (94,765) | - | 7,538,073 |
| Other banking financial assets | 207,945 | - | (148,757) | - | (10,927) | - | 48,261 |
| Slight and term deposits | 21,295 | 3,239 | (4,365) | - | - | - | 20,169 |
| 41,560,139 | 4,894,578 | (745,919) | (679,549) | (105,692) | - | 44,923,557 | |
| Merchandise | 1,824,111 | 151,190 | - | (19,694) | - | - | 1,955,607 |
| Raw, subsidiary and consumable | 633,526 | 74,666 | - | - | - | - | 708,192 |
| 2,457,637 | 225,856 | - | (19,694) | - | - | 2,663,799 | |
| 44,017,776 | 5,120,434 | (745,919) | (699,243) | (105,692) | - | 47,587,356 | |
| 47,877,025 | 7,502,800 | (1,461,245) | (721,674) | - | 23,981,550 | 77,178,456 |
The net amount between increases and reversals of impairment losses of inventories is recorded in the Consolidated income statement under the caption Cost of sales.
As at 30 September 2019, the Company's 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 2018 and 30 September 2019 the Company's shareholders with greater than or equal to 2% shareholdings, according to the information reported, are as follows:
| 31.12.2018 | |||||
|---|---|---|---|---|---|
| Shareholder | No. of shares | % | Nominal value | ||
| Gestmin SGPS, S.A. (1) (2) | 18,589,534 | 12.393% | 9,294,767 | ||
| Manuel Carlos de Melo Champalimaud | 284,885 | 0.190% | 142,443 | ||
| Manuel Carlos de Melo Champalimaud (3) | Total | 18,874,419 | 12.583% | 9,437,210 | |
| Global Portfolio Investments, S.L. (4) | 8,492,745 | 5.662% | 4,246,373 | ||
| Indumenta Pueri, S.L. (4) | Total | 8,492,745 | 5.662% | 4,246,373 | |
| GreenWood Builders Fund I, LP | 7,500,502 | 5.000% | 3,750,251 | ||
| GreenWood Builders Fund I, LP | Total | 7,500,502 | 5.000% | 3,750,251 | |
| Norges Bank | Total | 6,399,190 | 4.266% | 3,199,595 | |
| BlackRock, Inc.(5) | Total | 3,881,095 | 2.587% | 1,940,548 | |
| BBVA Asset Management, SA SGIIC (6) | Total | 3,495,499 | 2.330% | 1,747,750 | |
| Wellington Management Group LLP(7) | Total | 3,105,222 | 2.070% | 1,552,611 | |
| CTT, S.A. (own shares) | Total | 1 | 0.000% | 0.50 | |
| Other shareholders | Total | 98,251,327 | 65.501% | 49,125,664 | |
| Total | 150,000,000 | 100.000% | 75,000,000 |
(1) Gestmin SGPS, S.A. changed its corporate name to Manuel Champalimaud, SGPS, S.A. as published in the Lisbon Commercial Registry Office on 28 February 2019.
| 30.09.2019 | ||||
|---|---|---|---|---|
| Shareholder | No. of shares | % | Nominal value | |
| Manuel Champalimaud, SGPS, S.A. (1) | 19,257,584 | 12.838% | 9,628,792 | |
| Manuel Carlos de Melo Champalimaud | 353,185 | 0.235% | 176,593 | |
| Manuel Carlos de Melo Champalimaud (1) | Total | 19,610,769 | 13.074% | 9,805,385 |
| 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 | 5,466,641 | 3.644% | 2,733,321 |
| BlackRock, Inc.(4) | Total | 3,937,451 | 2.625% | 1,968,726 |
| BBVA Asset Management, SA SGIIC (5) | Total | 3,495,499 | 2.330% | 1,747,750 |
| Wellington Management Group LLP (6) | Total | 3,105,222 | 2.070% | 1,552,611 |
| CTT, S.A. (own shares) (7) | Total | 1 | 0.000% | 0.50 |
| Other shareholders | Total | 97,132,590 | 64.755% | 48,566,295 |
| Total | 150,000,000 | 100.000% | 75,000,000 |
As at 31 December 2018 and 30 September 2019, the heading Reserves is detailed as follows:
| 31.12.2018 | ||||||
|---|---|---|---|---|---|---|
| Legal reserves | Own shares reserves | Fair Value reserves | Other reserves | Total | ||
| Opening balance | 15,000,000 | 8 | 50,323 | 64,897,551 | 79,947,883 | |
| Distribution of dividends (Note 16) | - | - | - | (15,372,222) | (15,372,222) | |
| Other movements | - | - | - | 1,311,267 | 1,311,267 | |
| Assets fair value | - | - | (50,053) | - | (50,053) | |
| Closing balance | 15,000,000 | 8 | 270 | 50,836,597 | 65,836,875 |
| 30.09.2019 | ||||||
|---|---|---|---|---|---|---|
| Legal reserves | Own shares reserves | Fair Value reserves | Other reserves | Total | ||
| Opening balance | 15,000,000 | 8 | 270 | 50,836,597 | 65,836,875 | |
| Assets fair value | - | - | 19,247 | - | 19,247 | |
| Closing balance | 15,000,000 | 8 | 19,518 | 50,836,597 | 65,856,123 |
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 2019, 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 the articles of association, nor constituted pursuant to contracts signed by the Company.
During the year ended 31 December 2018 and nine-month period ended 30 September 2019, the following movements were made in the heading Retained earnings:
| Restated | ||
|---|---|---|
| 31.12.2018* | 30.09.2019 | |
| Opening balance | 21,524,684 | 4,378,984 |
| Application of the net profit of the prior year | 27,263,244 | 21,499,271 |
| Distribution of dividends | (41,627,778) | (15,000,000) |
| Changes to accounting polices | (1,467,664) | - |
| Adjustments from the application of the equity method | (2,235) | (1,431) |
| Other movements | (1,311,267) | (150,392) |
| Closing balance | 4,378,984 | 10,726,432 |
* Restated values: see note 3
The amount of 1,467,664 Euros relates to the effect of the adoption of IFRS 9 and IFRS 15.
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 2018 and nine-month period ended 30 September 2019, the movements occurred in this heading were as follows:
| 31.12.2018 | 30.09.2019 | |
|---|---|---|
| Opening balance | (32,634,996) | (30,993,430) |
| Actuarial gains/losses | 2,181,712 | - |
| Tax effect | (540,146) | - |
| Closing balance | (30,993,430) | (30,993,430) |
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.
During the nine-month periods ended 30 September 2018 and 30 September 2019, the earnings per share were calculated as follows:
| Restated | ||
|---|---|---|
| 30.09.2018* | 30.09.2019 | |
| Net income for the period | 11,445,913 | 22,852,183 |
| Average number of ordinary shares | 149,999,999 | 149,999,999 |
| Earnings per share | ||
| Basic | 0.08 | 0.15 |
| Diluted | 0.08 | 0.15 |
* Restated values: see note 3
The average number of shares is detailed as follows:
| 30.09.2018 | 30.09.2019 | ||
|---|---|---|---|
| Shares issued at begining of the period | 150,000,000 | 150,000,000 | |
| Own shares effect | 1 | 1 | |
| Average number of shares during the period | 149,999,999 | 149,999,999 |
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 2019, the number of own shares held by the Group is 1 and its average number for the period ended 30 September 2019 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 2018 and 30 September 2019, Debt of the Group showed the following composition:
| Restated | |
|---|---|
| 31.12.2018* | 30.09.2019 |
| 24,276,250 | 81,623,987 |
| 76,005,953 | 68,822,781 |
| 100,282,203 | 150,446,769 |
| 6,558,116 | 8,935,200 |
| 20,537,957 | 17,737,911 |
| 27,096,073 | 26,673,111 |
| 127,378,276 | 177,119,880 |
* Restated values: see note 3
The interest rates applied to other loans, as at 31 December 2018 and 30 September 2019, were between 1.25% and 1.875%.
As at 31 December 2018 and 30 September 2019, the details of the Group bank loans were as follows:
| 31.12.2018 | 30.09.2019 | |||||
|---|---|---|---|---|---|---|
| Financing entity | Amount used | Amount used | ||||
| Limit Limit Current Non-current |
Current | Non-current | ||||
| Bank loans | ||||||
| Millennium BCP | 11,250,000 | 6,543,879 | - | 11,250,000 | 8,935,200 | - |
| BBVA / Bankinter | 75,000,000 | - | 24,276,250 | - | - | 46,655,700 |
| Novobanco | - | - | - | 34,968,287 | ||
| BIM - (Mozambique) | 14,237 | 14,237 | - | 44,870 | - | - |
| Other loans | ||||||
| BIM - (Mozambique) | 6,049 | - | - | - | - | - |
| 86,270,286 | 6,558,116 | 24,276,250 | 11,294,870 | 8,935,200 | 81,623,987 |
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 2019 the referred amount corresponded to 46,655,700 Euros. By a company decision, the remaining available amount will not be used.
On April 22, 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 2019, the 35 million Euros were used and are presented in the balance sheet net of commission in the amount of 34,968,287 Euros.
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 undiscounted payments are detailed as follows:
| Restated* | 30.09.2019 | |
|---|---|---|
| 31.12.2018 | ||
| Due within 1 year | 25,395,404 | 21,163,936 |
| Due between 1 to 5 years | 68,887,559 | 56,580,632 |
| Over 5 years | 21,517,489 | 24,575,824 |
| Total undiscounted lease liabilities | 115,800,452 | 102,320,392 |
| Current | 20,537,957 | 17,737,911 |
| Non-current | 76,005,953 | 68,822,781 |
| Lease liabilities included in the statement of financial position |
96,543,910 | 86,560,692 |
* Restated values: see note 3
In the nine-month periods ended 30 September 2018 and 30 September 2019 the interest expenses associated with these leases were 3,184,114 Euros and 2,785,371 Euros, respectively (note 24).
The movement in the rights of use underlying these lease liabilities can be analysed in note 5.
For the year ended 31 December 2018 and nine-month period ended 30 September 2019, in order to face legal proceedings and other liabilities arising from past events, the Group recognised Provisions, which showed the following movement:
| 31.12.2018 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Opening balance | Increases | Reversals | Utilisations | Transfers | Closing balance | |||
| Non-current provisions | ||||||||
| Litigations | 3,390,479 | 1,209,497 | (1,294,790) | (261,423) | 105,858 | 3,149,620 | ||
| Restructuring | 1,729,651 | 1,509,881 | (394,567) | (119,354) | (883,452) | 1,842,159 | ||
| Other provisions | 8,338,601 | 1,534,560 | (644,556) | (101,264) | (105,858) | 9,021,484 | ||
| Sub-total - caption "Provisions (increases)/reversals" | 13,458,730 | 4,253,937 | (2,333,913) | (482,041) | (883,452) | 14,013,263 | ||
| Restructuring | 11,903,172 | 16,731,772 | (286,479) | (27,321,562) | - | 1,026,902 | ||
| Other provisions | 666,430 | 316,802 | (4,058) | - | - | 979,174 | ||
| 26,028,332 | 21,302,512 | (2,624,450) | (27,803,603) | (883,452) | 16,019,339 | |||
| 30.09.2019 | Changes in the | |||||||
| Opening balance | Increases | Reversals | Utilisations | Transfers | consolidation perimeter |
Closing balance | ||
| Non-current provisions | ||||||||
| Litigations | 3,149,620 | 892,175 | (1,380,691) | (352,182) | 47,214 | - | 2,356,136 | |
| Restructuring | 1,842,159 | - | - (34,611) |
- | - | 1,807,548 | ||
| Other provisions | 9,021,484 | 186,670 | (209,425) | (2,455) | (47,214) | 3,197,679 | 12,146,739 | |
| Sub-total - caption "Provisions (increases)/reversals" | 14,013,263 | 1,078,845 | (1,590,116) | (389,247) | - | 3,197,679 | 16,310,423 | |
| Restructuring | 1,026,902 | 8,324,130 | - (7,855,141) |
- | - | 1,495,892 | ||
| Other provisions | 979,174 | - | - (3,737) |
- | - | 975,437 |
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 ((978,207) Euros as at 30 September 2018).
16,019,339 9,402,975 (1,590,116) (8,248,125) - 3,197,679 18,781,753
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 its lawyers.
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. In 2018, following the continuation of the HR optimisation programme, reinforcements of this provision in the amount of 16,731,772 Euros were recorded in the Group against the caption Staff costs in the income statement. As at 31 December 2018 the provision amounts to 1,026,902 Euros. In the nine-month period ended 30 September 2019 this provision was increased by 8,324,130 Euros, amounting to 1,495,892 Euros as at 30 September 2019.
The utilisations recorded in the nine-month period ended 30 September 2019 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 year 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 30 September 2019 the amount provisioned is the same.
For the nine-month period ended 30 September 2019, the provision to cover contingencies relating to employment litigation actions not included in the current court proceedings and related to remuneration differences that can be claimed by workers, amounts to 6,984,810 Euros (7,197,562 Euros as at 31 December 2018).
On 30 September 2018, a provision was recognised in Tourline to face the notification issued by the National Commission on Markets and Competition. The amount provisioned, of 1,400,000 Euros, is the result of the evaluation carried out by its legal advisors.
The amount provisioned in 321 Crédito, S.A. amounting to 3,259,228 Euros as at 30 September 2019 (3,197,679 Euros at the acquisition date) is essentially the result of the risk assessment associated with tax contingencies.
As at 30 September 2019, in addition to the previously mentioned situations, this heading also includes:
As at 31 December 2018 and 30 September 2019, the Group had provided bank guarantees to third parties as follows:
| Description | 31.12.2018 | 30.09.2019 |
|---|---|---|
| Autoridade Tributária e Aduaneira (Portuguese Tax and Customs | ||
| Authority) | 10,863,848 | 6,423,965 |
| Contencioso Administrativo da Audiência Nacional (National | ||
| Audience Administrative Litigation) and CNMC - Comission | 3,148,845 | 3,148,845 |
| Nacional de los Mercados y la Competencia - Espanha (National | ||
| Commission on Markets and Competition - Spain) | ||
| 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 |
| Courts | 232,687 | 275,830 |
| TIP - Transportes Intermodais do Porto, ACE (Oporto intermodal | 150,000 | 150,000 |
| transport) | ||
| Municipalities | 122,165 | 122,165 |
| INCM - Imprensa Nacional da Casa da Moeda (Portuguese Mint | 85,056 | 85,056 |
| and Official Printing Office) | ||
| Solred (Repsol's fuel cards) | 80,000 | 80,000 |
| EPAL - Empresa Portuguesa de Águas Livres (Multi-municipal | 68,895 | 68,895 |
| System of Water Supply and Sanitation of the Lisbon Area) | ||
| ANA - Aeroportos de Portugal (Airports of Portugal) | 34,000 | 34,000 |
| EMEL, S.A. (Municipal company managing parking in Lisbon) | 26,984 | 26,984 |
| Administração Regional de Saúde - Lisboa e Vale do Tejo | 13,086 | 26,086 |
| ( Regional Health Authority of the Lisbon Area) | ||
| Águas do Norte (Water Supply of the Northern Region) | 23,804 | 23,804 |
| Serviços Intermunicipalizados Loures e Odivelas (Inter-municipal | ||
| Services of Water Supply and Sanitation of the Loures and | 17,000 | 17,000 |
| Odivelas Areas) | ||
| 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 |
| Instituto de Gestão Financeira Segurança Social (Social Security | ||
| Financial Management Institute) | 16,406 | 16,406 |
| 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 |
| Lagos em Forma - Gestão desportiva, E.M., S.A. (Municipal | ||
| company managing sports in Lagos) | - | 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 |
| SMAS Torres Vedras (Services of Water Supply and Sanitation of | ||
| the city of Torres Vedras) | 9,909 | 9,909 |
| Other entities | 14,103 | 9,144 |
| Instituto de Segurança Social (Social Security Institute) | 8,190 | 8,190 |
| Promodois (Real estate company) | 6,273 | 6,273 |
| Consejeria Salud ( Local Health Service/Spain) | 4,116 | 4,116 |
| Instituto do Emprego e Formação Profissional (Employment and | ||
| Professional Training Institute) | 3,718 | 3,718 |
| EMARP - Empresa de Aguas e Resíduos de Portimão (Services of | ||
| Water Supply and Sanitation of the city of Portimão) | - | 3,100 |
| Casa Pia de Lisboa, I.P. (Public institute for the promotion and | ||
| protection of the children and youngsters' rights) | 1,863 | 1,863 |
| IFADAP (National Support Institute for Farming and Fishing) | 1,746 | 1,746 |
| Águas de Coimbra (Services of Water Supply and Sanitation of the | 870 | 870 |
| city of Coimbra) | ||
| Fonavi, Nave Hospitalet | 40,477 | - |
| ACT Autoridade Condições Trabalho (Authority for Working | 12,460 | - |
| Conditions) | ||
| Secretaria-Geral do Ministério da Administração Interna (General | 3,644 | - |
| Secretariat of the Ministry of Internal Administration) | ||
| 18,908,206 | 14,487,501 |
According to the terms of some lease contracts of the buildings occupied by the Group'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 2018 and as at 30 September 2019.
The amounts relating to the Portuguese Tax and Customs Authority ("Autoridade Tributária e Aduaneira") arise essentially from tax enforcement proceedings arising from the inspection process regarding VAT of fiscal years 2014 and 2015.
Following the risk assessment carried out by its legal advisors, the Group provided bank guarantees under the opposition presented in the arbitral tribunal, considering these proceedings as contingent liabilities.
Tourline Express Messageria, SLU 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 Tourline in the National Audience in Spain proceeds.
As at 30 September 2019, the Group had subscribed promissory notes amounting to approximately 44.9 thousand Euros, for various credit institutions intended to secure complete and timely compliance with the corresponding financing contracts.
The Group assumed financial commitments (comfort letters) in the amount of 1,170,769 Euros for the subsidiary Tourline, which are still active as at 30 September 2019.
In addition, the Group also assumed commitments relating to real estate rents under lease contracts and rents for operating and financial leases.
The contractual commitments related to Tangible fixed assets and Intangible assets are detailed respectively in Notes 5 and 6.
As at 31 December 2018 and 30 September 2019, the heading Accounts payable showed the following composition:
| 31.12.2018 | 30.09.2019 | |
|---|---|---|
| Current | ||
| Advances from customers | 2,939,052 | 2,714,913 |
| CNP money orders | 85,601,930 | 88,674,208 |
| Suppliers | 68,209,836 | 66,573,162 |
| Invoices pending confirmation | 12,332,620 | 10,802,032 |
| Fixed assets suppliers | 5,996,962 | 2,167,944 |
| Invoices pending confirmation (fixed assets) | 9,367,220 | 3,508,239 |
| Values collected on behalf of third parties | 11,491,455 | 7,022,578 |
| Postal financial services | 115,408,707 | 134,530,620 |
| Advances regarding disposals | 12,253 | 14,598 |
| Other accounts payable | 10,916,185 | 9,239,042 |
| 322,276,222 | 325,247,336 |
The amount of CNP money orders refers to the money orders received from the National Pensions Centre (CNP), whose payment date to the corresponding pensioners must occur in the month after the closing of the period.
Postal financial services
This heading records mainly the amounts collected related to taxes, insurance, savings certificates and other money orders.
As at 31 December 2018 and 30 September 2019, the composition of the heading Banking clients' deposits and other loans is as follows:
| 883,950,534 | 1,228,049,796 | |
|---|---|---|
| Other credit institutions' deposits | - | 67,683,244 |
| Other credit institutions' deposits | - | 67,683,244 |
| Banking clients' deposits | 883,950,534 | 1,160,366,551 |
| Savings deposits | 111,445,353 | 139,836,982 |
| Term deposits | 100,832,482 | 165,124,501 |
| Sight deposits | 671,672,699 | 855,405,068 |
| 31.12.2018 | 30.09.2019 | |
The above-mentioned amounts relate to Banco CTT clients' deposits. As at 31 December 2018 and 30 September 2019, the residual maturity of banking clients' deposits and other loans, is detailed as follows:
| 31.12.2018 | ||||||
|---|---|---|---|---|---|---|
| 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 | 671,672,699 | - | - | - | - 671,672,699 |
|
| Term deposits | - | 47,462,967 | 53,369,515 | - | - 100,832,482 |
|
| Savings deposits | 111,445,353 | - | - | - | - 111,445,353 |
|
| 783,118,052 | 47,462,967 | 53,369,515 | - | - 883,950,534 |
| 30.09.2019 | |||||||
|---|---|---|---|---|---|---|---|
| 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 | 855,405,068 | - | - | - | - | 855,405,068 | |
| Term deposits | - | 36,900,935 | 128,223,566 | - | - | 165,124,501 | |
| Savings deposits | 139,836,982 | - | - | - | - | 139,836,982 | |
| Banking clients' deposits | 995,242,050 | 36,900,935 | 128,223,566 | - | - | 1,160,366,551 | |
| Other credit institutions' deposits | - | 67,683,244 | - | - | - | 67,683,244 | |
| Other credit institutions' deposits | - | 67,683,244 | - | - | - | 67,683,244 | |
| 995,242,050 | 36,900,935 | 128,223,566 | - | - | 1,228,049,795 |
As at 30 September 2019 the caption reflects the difference between the estimated income tax regarding the nine-month period ended 30 September 2019 and the amounts already paid regarding payments on account and additional payments on account.
During the nine-month periods ended 30 September 2018 and 30 September 2019, the composition of the heading Staff Costs was as follows:
| 30.09.2018 | 30.09.2019 | |
|---|---|---|
| Remuneration | 195,024,529 | 197,429,060 |
| Employee benefits | 3,189,100 | 2,392,805 |
| Indemnities | 16,447,768 | 9,678,075 |
| Social Security charges | 43,245,426 | 43,695,734 |
| Occupational accident and health insurance | 3,315,943 | 3,348,841 |
| Social welfare costs | 4,808,535 | 5,557,609 |
| Other staff costs | 70,445 | 33,930 |
| 266,101,746 | 262,136,055 |
In the nine-month periods ended 30 September 2018 and 30 September 2019, the fixed and variable remunerations attributed to the members of the statutory bodies of CTT, S.A. were as follows:
| 30.09.2018 | ||||||
|---|---|---|---|---|---|---|
| Board of Directors | Audit Comittee | Remuneration Board |
General Meeting of Shareholders |
Total | ||
| Short-term remuneration | ||||||
| Fixed remuneration | 1,727,953 | 127,500 | 41,850 | 14,000 | 1,911,303 | |
| Annual variable remuneration | - | - | - | - | - | |
| 1,727,953 | 127,500 | 41,850 | 14,000 | 1,911,303 | ||
| Long-term remuneration | ||||||
| Defined contribution plan RSP | 137,662 | - | - | - | 137,662 | |
| Long-term variable remuneration | 30,105 | - | - | - | 30,105 | |
| 167,767 | - | - | - | 167,767 | ||
| 1,895,720 | 127,500 | 41,850 | 14,000 | 2,079,070 |
| 30.09.2019 | ||||||
|---|---|---|---|---|---|---|
| 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 |
Following the revision of the Remuneration Regulation for Members of the Statutory Bodies for the term of office 2017-2019, the terms of the Long-term Variable Remuneration were revised, with the payment being now made in cash, not in shares as in the previous plan. The plan is now considered as "cash settlement" which, according to IFRS2, implies that the liability should be annually updated and any changes resulting from the assessment should be recorded in the income statement.
The attribution and calculation of the Long-term Variable Remuneration are based on the results of the performance evaluation during the term of office (1 January 2017 to 31 December 2019), which consists of (i) a comparison of the recorded performance of the Total Shareholder Return (TSR) of CTT shares and the TSR of a weighted peer group, composed of national and international companies (ii) the sum of the overall annual qualitative AVR assessments of the executive Directors and (iii) the investment in CTT shares of a minimum of 25% of the AVR amount received by each Director.
The long-term variable remuneration attributed to the executive members of the Board of Directors will be paid at the end of the 2017-2019 term of office, and the amount of 38,160 Euros corresponds to the cost to be assumed in the period between 1 January 2019 and 30 September 2019 and was set by an independent entity.
The variation registered under Employee benefits mainly reflects the curtailment recognised in the benefit "Telephone subscription fee".
During the nine-month period ended 30 September 2019, this caption includes the amount of 7,771,202 Euros related to compensation paid to employees and directors for termination of employment contracts by mutual agreement, as well as the amount of 1,500,000 Euros related to a provision recorded within the scope of the HR optimisation programme.
Social welfare costs relate almost entirely to health costs incurred by the Group with active workers, as well as expenses related to Health and Safety at Work.
During the nine-month periods ended 30 September 2018 and 30 September 2019, the heading Staff costs includes the amounts of 543,015 Euros and 600,754 Euros, respectively, related to expenses with workers' representative bodies.
For the nine-month periods ended 30 September 2018 and 30 September 2019, the average number of staff of the Group was 12,440 and 12,386, respectively.
For the nine-month periods ended 30 September 2018 and 30 September 2019, the heading Interest Expenses of the Group had the following detail:
| Restated* | |||
|---|---|---|---|
| 30.09.2018 | 30.09.2019 | ||
| Interest expenses | |||
| Bank loans | 66,429 | 35,031 | |
| Lease liabilities | 3,184,114 | 2,785,371 | |
| Other interest | 109,752 | 635,832 | |
| Interest costs from employee benefits | 3,953,597 | 4,021,073 | |
| Other interest costs | 1,398 | 22,873 | |
| 7,315,290 | 7,500,181 |
* Restated values: see note 3
During the nine-month periods ended 30 September 2018 and 30 September 2019, the heading Interest income was detailed as follows:
| 30.09.2018 | 30.09.2019 | |
|---|---|---|
| Interest income | ||
| Deposits in credit institutions | 34,139 | 33,390 |
| Other supplementary income | 2,310 | 163,479 |
| 36,449 | 196,869 |
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 between 1,500,000 Euros and 7,500,000 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. Tourline 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 the Group 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.
In the nine-month periods ended 30 September 2018 and 30 September 2019, the reconciliation between the nominal rate and the effective income tax rate was as follows:
| Restated* | ||
|---|---|---|
| 30.09.2018 | 30.09.2019 | |
| Earnings before taxes (a) | 19,415,633 | 26,325,796 |
| Nominal tax rate | 21.0% | 21.0% |
| 4,077,283 | 5,528,417 | |
| Tax Benefits | (307,967) | (341,585) |
| Accounting capital gains/(losses) | (48,516) | (89,014) |
| Tax capital gains/(losses) | 5,607 | 733 |
| Equity method | - | 128,468 |
| Provisions not considered in the calculation of deferred taxes | 25 | 17,059 |
| Impairment losses and reversals | 218,832 | 99,450 |
| Other situations, net | 724,070 | 1,133,333 |
| Adjustments related with - autonomous taxation | 398,933 | 468,811 |
| Tax losses without deferred tax | 1,224,306 | 1,867,956 |
| Insuficiency / (Excess) estimated income tax | 195,700 | (7,681,188) |
| Subtotal (b) | 6,488,272 | 1,132,440 |
| (b)/(a) | 33.42% | 4.30% |
| Adjustments related with - Municipal Surcharge | 417,647 | 655,381 |
| Adjustments related with - State Surcharge | 1,036,473 | 1,656,575 |
| Income taxes for the period | 7,942,392 | 3,444,396 |
| Effective tax rate | 40.91% | 13.08% |
| Income taxes for the period | ||
| Current tax | 4,215,788 | 6,263,396 |
| Deferred tax | 3,530,904 | 4,862,188 |
| Insuficiency / (Excess) estimated income tax | 195,700 | (7,681,188) |
| 7,942,392 | 3,444,396 |
* Restated values: see note 3
In the nine-month period ended 30 September 2019, the heading "Insuficiency / (Excess) estimated income tax" refers essentially to the tax credit related to SIFIDE for the year 2017 in the amount of 650,384 Euros, as well as to the excess / insufficiency of the IRC estimate for the years 2016, 2017 and 2018, in the net amount of 7,030,805 Euros. The excess of the IRC estimate for the year 2016 relates to an IRC refund in the amount of 6.8m€ following Tax Authority's favourable decision regarding the deduction of the tax loss on CTT Expresso's sale of Tourline in the 2016 financial year.
As at 31 December 2018 and 30 September 2019, the balance of deferred tax assets and liabilities was composed as follows:
| Restated* | ||
|---|---|---|
| 31.12.2018 | 30.09.2019 | |
| Deferred tax assets | ||
| Employee benefits - healthcare | 70,503,582 | 69,797,445 |
| Employee benefits - pension plan | 77,479 | 79,773 |
| Employee benefits - other long-term benefits | 2,645,244 | 2,104,736 |
| Impairment losses and provisions | 3,561,740 | 3,868,830 |
| Tax losses carried forward | 1,292,888 | 1,289,985 |
| Impairment losses in tangible fixed assets | 283,474 | 248,946 |
| Long-term variable remuneration (Board of diretors) | 25,486 | 36,171 |
| Land and buildings | 452,012 | 357,774 |
| Tangible assets' tax revaluation regime | 2,245,007 | 2,004,470 |
| Other | 647,203 | 666,491 |
| 81,734,114 | 80,454,621 | |
| Deferred tax liabilities | ||
| Revaluation of tangible fixed assets before IFRS | 2,337,888 | 2,158,255 |
| Suspended capital gains | 745,377 | 725,533 |
| Other | 25,397 | 25,397 |
| 3,108,662 | 2,909,185 |
* Restated values: see note 3
As at 30 September 2019, the expected amount of deferred tax assets and liabilities to be settled within 12 months is 2.5 million Euros and 0.3 million Euros, respectively.
During the year ended 31 December 2018 and nine-month period ended 30 September 2019, the movements which occurred under the deferred tax headings were as follows:
| Restated* | ||
|---|---|---|
| 31.12.2018 | 30.09.2019 | |
| Deferred tax assets | ||
| Opening balances | 91,954,991 | 81,734,114 |
| Effect on net profit | ||
| Employee benefits - healthcare | (497,200) | (706,137) |
| Employee benefits - pension plan | (2,565) | 2,294 |
| Employee benefits - other long-term benefits | (1,763,943) | (540,508) |
| Impairment losses and provisions | (3,351,649) | 307,091 |
| Tax losses carried forward | 604,499 | (2,904) |
| Impairment losses in tangible fixed assets | 25,860 | (34,528) |
| Long-term variable remuneration (Board of diretors) | 14,178 | 10,685 |
| Share plan | - | - |
| Land and buildings | (42,793) | (94,238) |
| Tangible assets' tax revaluation regime | (336,293) | (240,537) |
| Other | (4,869,443) | 19,289 |
| Effect on equity | ||
| Employee benefits - healthcare | (540,146) | - |
| Outros | 538,618 | - |
| Closing balance | 81,734,114 | 80,454,621 |
* Restated values: see note 3
| 31.12.2018 | 30.09.2019 | ||
|---|---|---|---|
| Deferred tax liabilities | |||
| Opening balances | 3,399,121 | 3,108,662 | |
| Effect on net profit | |||
| Revaluation of tangible fixed assets before IFRS adoption | (253,705) | (179,633) | |
| Suspended capital gains | (31,145) | (19,844) | |
| Other | (5,610) | - | |
| Closing balance | 3,108,661 | 2,909,185 | |
The tax losses carried forward are related to the losses of the subsidiaries Tourline and CTT Expresso/Transporta, and are detailed as follows:
| Company | Tax losses | Deferred tax assets | |
|---|---|---|---|
| Tourline | 56,510,847 | - | |
| CTT Expresso/Transporta | 6,142,786 | 1,289,985 | |
| Total | 62,653,632 | 1,289,985 |
Regarding 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 to 2019 have no time limit for deduction. Regarding CTT Expresso, the tax loss refers to the years 2017 and 2018 of Transporta, since in 2019 the company was incorporated in CTT Expresso, the tax losses 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 2.3 million Euros.
The Group policy for recognition of fiscal credits regarding SIFIDE is to recognise the credit at the moment of the effective receipt of the commission certification statement, certifying the eligibility of expenses presented in the applications for tax benefits.
For the year ended 31 December 2017, regarding the expenses incurred with R&D of 1,432,825 Euros, the Group will have the possibility of benefiting from a tax deduction in corporate income tax of 650,383 Euros already approved by the Certification Commission.
For the year ended 31 December 2018, regarding 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.
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 2016 and onwards may still be reviewed and corrected, since the income tax returns prior to this date have already been inspected, even though the deadlines for the year 2015 have not yet expired.
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 interim condensed consolidated financial statements as at 30 September 2019.
The Regulation on Assessment and Control of Transactions with CTT's Related Parties defines related party as a qualified shareholder, officer, or even a third party related by any commercial or relevant personal interest and subsidiaries or associates or jointly controlled entities (joint ventures).
According to the Regulation, the significant transactions with related parties must be previously approved by the Audit Committee of CTT as well as transactions that members of the Board of Directors of CTT and/or its subsidiaries conduct with CTT and/or its subsidiaries.
The other transactions with related parties are communicated to the Audit Committee for the purpose of subsequent examination.
During the nine-month periods ended 30 September 2018 and 30 September 2019, the following transactions took place and the following balances existed with related parties:
| 30.09.2018 | ||||||
|---|---|---|---|---|---|---|
| Accounts receivable | Accounts payable | Revenues | Costs | Dividends | ||
| Shareholders | - | - | - | - | 57,000,000 | |
| Group companies | ||||||
| Associated companies | 2,456 | 7,645 | 8,776 | 59,472 | - | |
| Jointly controlled | 106,725 | - | 275,633 | - | - | |
| Members of the | (Note 23) | |||||
| Board of Directors | - | - | - | 1,727,953 | - | |
| Audit Committee | - | - | - | 127,500 | - | |
| Remuneration Committee | - | - | - | 41,850 | - | |
| General Meeting | - | - | - | 14,000 | - | |
| 109,181 | 7,645 | 284,409 | 1,970,775 | 57,000,000 |
| 30.09.2019 | ||||||
|---|---|---|---|---|---|---|
| Accounts receivable | Accounts payable | 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 | - | |
| 321,751 | 12,854 | 347,579 | 2,169,874 | 15,000,000 |
The transactions and balances between subsidiaries are eliminated in the consolidation process and are not disclosed in this note.
Only two of the precautionary measures filed by Intermunicipal Communities or by Municipalities following the process of transformation of Post Offices into Postal Agencies, covering situations where only a single post office exists in a county seat, are at the appeal stage before the Central Administrative Court. All the remaining ones were dismissed, or it was considered that there was no need to adjudicate.
The arbitral action brought against the Portuguese State, as grantor, requesting the declaration of invalidity of the Decision regarding the parameters of quality of service and performance objectives applicable to the provision of the universal postal service, issued in July 2018, is in progress pending the presentation of means of proof. The administrative action had no further development.
The process related to the proposal of the application of 11 contractual fines within the Universal Postal Service Concession Agreement, based on alleged breaches of obligations resulting from the contract which occurred during 2015, 2016 and 2017, is pending a decision following the submission of evidence.
On 01.07.2019, the new procedures stipulated by ANACOM in its decision of 28 December 2018 based on the results of the audit to the quality of the universal postal service indicators of 2016 and 2017. This decision of ANACOM stipulated changes to the Quality of Service Indicators (QSI) measurement system involving additional costs to be borne by CTT with the contracting of external supplier responsible for the measurement. Having disagreed with the rationale and scope of ANACOM's stipulations, CTT challenged the decision before the administrative courts on 28.03.2019, and the proceedings are running in court.
Following the audit of the 2016 results of the cost accounting system of CTT, on 18.06.2019 ANACOM approved the decision on the results regarding that financial year, under which that entity considers that new criteria for the allocation of costs between the postal activity and the banking activity of the Company should be identified, and specified that the cost accounting system for the 2016 and 2017 financial years in this regard should be restated, and also that the results of the 2018 cost accounting system should be delivered in accordance with the new criteria. The results of the three financial years were submitted to ANACOM on 20.08.2019, 17.09.2019 and 02.09.2019, respectively.
On 26.08.2019, ANACOM issued its final decision on the process it had started on 10.01.2019 when it instructed CTT to submit a proposal to complement the density targets of the postal network and minimum service offer in force until then. This decision, made after a public consultation, confirmed the draft decision of 11.07.2019 and accepted CTT's proposal, to be implemented within 60 days. During this period CTT will have to improve the procedures and corresponding documents on the training and management of postal agencies located in more densely populated areas.
In the administrative proceedings filed by ANACOM against CTT charging the Company with the alleged violation of the obligation to have a hard copy of the complaints book in the establishments operating on behalf of CTT and the alleged breach of the obligation to immediately provide at no cost the complaints book to the users who requested it, CTT presented its defense and the examination of witnesses stage has taken place in the meantime.
After the end of the year and up to the present date, no relevant or material fact has occurred in the Group's activity that has not been disclosed in the notes to the financial statements.
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