Earnings Release • Oct 30, 2018
Earnings Release
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January-September 2018
HIGHLIGHTS
| the Mail (+€5.1m) and E&P (+€2.0m) business units. 3 | |||
|---|---|---|---|
| Consolidated results | |||
| € million | |||
| 9M 18 | 9M 17 | ∆% | |
| Reported revenues | 524.9 | 518.0 | 1.3% |
| Recurring revenues | 524.8 | 518.0 | 1.3% |
| 396.8 | 393.4 | 0.9% | |
| Express & Parcels | 110.4 | 96.2 | 14.7% |
| Financial Services2 | 30.7 | 43.3 | -29.0% |
| Banco CTT2 | 17.0 | 13.4 | 26.6% |
| CTT Central Structure | 71.2 | 77.8 | -8.5% |
| Intragroup eliminations | -101.3 | -106.2 | -4.6% |
| Reported operating costs | 479.2 | 458.7 | 4.5% |
| Recurring operating costs | 459.8 | 449.8 | 2.2% |
| 3 Of which Transporta |
11.8 | 6.4 | 85.2% |
| Recurring EBITDA | 65.0 | 68.1 | -4.6% |
| Reported EBITDA | 45.8 | 59.3 | -22.7% |
| Amortisation, depreciation, provisions and impairments | 24.6 | 22.9 | 7.3% |
| EBIT | 21.2 | 36.3 | -41.7% |
| Financial income, net | -4.1 | -3.7 | -10.1% |
| Gains / (losses) in associated companies | 0.1 | 0.0 | - |
| Earnings before taxes (EBT) | 17.2 | 32.6 | -47.4% |
| Income tax for the period | 7.2 | 13.2 | -45.2% |
| Non-controlling interests | 0.0 | -0.1 | 119.9% |
| Net profit attributable to equity holders | 9.9 | 19.5 | -49.3% |
1 Includes Transporta.
2 Includes the incorporation of Payshop in Banco CTT in the 9 months of 2018 and in the same period of the previous year (proforma); similarly, it is excluded from Financial Services.
3 Contribution of Transporta to the recurring operating costs.
| REVENUES | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| The recurring revenues totalled €524.8m in the 9 months of 2018, corresponding to a 1.3% increase vis-à-vis the same period of 2017 as a result of the revenues growth in the Express & Parcels (+14.7%) and Banco CTT (+26.6%) business units which offset the decline in the Financial Services revenues (-29.0%). |
||||||||||
| Revenues | € million | |||||||||
| Reported | Recurring | Weight % | ||||||||
| 9M 18 | 9M 17 | ∆ | ∆% | 9M 18 | 9M 17 | ∆ | ∆% | 9M 18 | 9M 17 | |
| Revenues | 524.9 | 518.0 | 7.0 | 1.3% | 524.8 | 518.0 | 6.8 | 1.3% | ||
| 396.8 | 393.4 | 3.4 | 0.9% | 396.8 | 393.4 | 3.4 | 0.9% | 76% | 76% | |
| Express & Parcels | 110.4 | 96.2 | 14.2 | 14.7% | 110.4 | 96.2 | 14.2 | 14.7% | 21% | 19% |
| Financial Services (1) | 30.7 | 43.3 | -12.6 | -29.0% | 30.7 | 43.3 | -12.6 | -29.0% | 6% | 8% |
| Banco CTT (1) | 17.0 | 13.4 | 3.6 | 26.6% | 17.0 | 13.4 | 3.6 | 26.6% | 3% | 3% |
| CTT Central Structure | 79.1 | 80.7 | -1.6 | -2.0% | 71.2 | 77.8 | -6.6 | -8.5% | 15% | 16% |
| -109.0 | -0.1 | -0.1% | -101.3 | -106.2 | 4.8 | 4.6% | -21% | -21% |
| Despite the decline of addressed mail volumes (-7.1%), this growth was the result of the product mix positive evolution (22.9% growth of international inbound mail and 5.8% of registered mail volumes in 3Q18), and the effective average price increase (+3.9%). |
|||||||||
|---|---|---|---|---|---|---|---|---|---|
| Mail volumes | Million items | ||||||||
| 3Q 18 | 3Q 17 | ∆% | 9M 18 | 9M 17 | ∆% | daily average 9M 18 |
daily average 9M 17 |
∆% | |
| Transactional Mail | 137.6 | 144.3 | -4.6% | 445.2 | 475.3 | -6.3% | 2.4 | 2.5 | -5.8% |
| Advertising Mail | 12.5 | 13.9 | -10.5% | 43.1 | 49.4 | -12.8% | 0.2 | 0.3 | -12.3% |
| Editorial Mail | 8.4 | 9.1 | -8.1% | 27.5 | 30.7 | -10.5% | 0.1 | 0.2 | -10.1% |
| Addressed Mail | 158.4 | 167.4 | -5.3% | 515.7 | 555.4 | -7.1% | 2.7 | 2.9 | -6.6% |
| Unaddressed Mail | 105.6 | 133.3 | -20.8% | 316.8 | 368.2 | -14.0% | 1.7 | 1.9 | -13.5% |
In the 9 months of 2018 addressed mail volumes saw a decline worse than the maximum expected range [-5% to -6%]. This evolution was to some extent negatively influenced by the existence of 1 less working day than in the 9 months of 2017. The year will end with 2 more working days (3 more in the 4th quarter of 2018).
The addressed mail volumes decline in the 9 months of 2018 was mainly a result of the decline in transactional mail volumes (-6.3%). This decline was due in large part to the decrease of ordinary mail (-8.1%) which accounts for circa 77% of the transactional mail volumes.
On the other hand, the Company benefited from the positive performances of: (i) international inbound mail volumes, which grew by 12,2% in the 9 months of 2018, corresponding to revenues increase of €9.6m, due to the high growth trend of volumes originated in Asian countries; (ii) registered mail volumes, which increased by 1.5%, representing a revenues growth of €3.4m, particularly as a result of mailings from government entities and the Banking and Insurance sectors related to the new regulation on the data protection, and the contribution of private customers; and (iii) the lottery business (partially suspended in the 1st half of 2017), which posted a yearon-year growth of €1.6m.
The revenuesof the Express & Parcels business unit reached €110.4m in the 9 months of 2018, a 14.7% growth over the same period of the previous year. This business unit is operated by CTT Expresso and Transporta in Portugal, by Tourline in Spain, and by CORRE in Mozambique.
In the 9 months of 2018, businesses in all geographies grew when compared to the same period of the previous year, particularly:
Revenues from this business in Portugal (excluding internal customers of the Group) grew by 16.8% (+€9.5m) and stood at €66.1m in the 9 months of 2018. In this period, Transporta contributed €10.6m (+€4.9m) to the consolidated accounts. Nevertheless, as CTT has bought its total share capital in May 2017, the comparable period of the previous year is 5 months. Excluding the effect of Transporta, this business in Portugal would have grown by 9.2%
Volumes in Portugal totalled 14.4 million items in the 9 months of 2018, a 14.6% growth over the same period of 2017 (+10.1%, excluding approximately 1.9 million items from Transporta). This evolution is essentially the result of the growth of the CEP business, with the activity growth in the B2B and the B2C segments and ecommerce. The banking business reversed the downward trend seen in recent years, following the addition of two large customers of the sector in the last quarter of 2017.
In Spain, revenues (excluding internal customers of the Group) stood at €40.4m, +11.6% over the same period of the previous year mainly due to the 16.4% increase in volumes, greatly influenced by the e-commerce business.
It should be noted that in September Tourline launched its new Madrid hub which significantly increases the handling capacity, essential for pursuing the company's growth strategy, and will allow the achievement of relevant efficiencies in the handling processes.
Mozambique revenues in euros reached €1.4m, +16.2% compared to the 9 months of 2017.
In line with the 1st half and in contrast with the Mozambican economy, CORRE maintained a good performance. The results are supported in new businesses, based on the collection, transportation and distribution of clinical samples in the health sector, and on the growth of the banking business.
This Financial Services revenues reached €30.7m in the 9 months of 2018, recording a decrease of €12.6m (-29.0%) compared to the same period of 2017.
The provision of these services was impacted by the decrease in the placement of one of the Public Debt products, which was replaced, in October 2017, by another with a lower yield4 , with the result that the amounts traded in the placement of Public Debt Certificates fell by 47.7% (-€1,541m), representing a decrease in commissions of €12.2m (-52.3%).
In the 9 months of 2018, the following should be noted: (i) the placement of €1,687.2m in Public Debt, including €616.3m in the 3rd quarter corresponding to a significant recovery in this line of business as it is 3.1% above the 2 nd quarter of 2018; (ii) in the money orders and transfers segment, 11.6 million transactions were carried out, which translated into €6.2m in revenues (-€0.9m; -12.7% vs 9M17); and (iii) in the payments business 21.0 million transactions were carried out, corresponding to revenues of €10.0m (-€0.7m; -6.8% vs 9M17).
The revenues of BANCO CTT business unit reached €17.0m in the 9 months of 2018, a 26.6% growth (+€3.6m) over the same period of the previous year driven mostly by the net interest margin growth (+€3.4m).
The operating performance of the bank in this quarter is to be noted: new records were hit in mortgage loans production with €54.6m and in consumer credit with €11.6m, and this one was the best performing quarter of 2018 in terms of opening of new accounts.
The incorporation of Payshop in this segment contributed €5.1m of external revenues in payment solutions, corresponding to +€0.2m (+3.8%) vs the 9 months of 2017.
On 24 July 2018, Banco CTT consolidated its strategy by acquiring 321 Crédito, a benchmark company specialised in financing the purchase of used cars in Portugal. The acquisition of 321 Crédito will allow for the diversification of the product portfolio of Banco CTT with a consumer credit business, as well as the optimisation of Banco CTT balance sheet by improving its loan-to-deposits ratio from 20% to over 60%. The completion of the transaction is expected to take place in the 1st quarter of 2019 and is pending approval of the Bank of Portugal/European Central Bank. On 11 October, the Competition Authority made the decision not to oppose this transaction.
Recurring operating costs totalled €459.8m, +€9.9m (+2.2%) year-on-year. This evolution is the result of the cost reduction following the implementation of the Operational Transformation Plan, and the increase in variable costs associated with the Express & Parcels volumes growth in Portugal and Spain, which contributed to the growth of direct costs (+€12.0m; +13.8%). To be noted is the increase of the fleet costs (+€1.1m; +7.1%) due to the increase in activity and the rise in fuel prices, which resulted from a 7.6% increase in fuel costs (+€0.4m), as well as from an increase of 60.1% (+€1.3m) in fleet maintenance due to the renewal of the operational fleet.
Operating costs are impacted by the inorganic effect of Transporta (+€5.4m), although costs are not fully comparable as the integration of Transporta occurred as from May 2017.
4 2.25% vs. 1.38% - annual average interest rates for 5-year Treasury Certificates Poupança Mais (CTPM) and 7-year Treasury Certificates Poupança Crescimento (CTPC), respectively.
5 Excluding depreciation / amortisation, impairments and provisions.
| $\epsilon$ million | ||||||
|---|---|---|---|---|---|---|
| Reported | Recurring | |||||
| 9M 18 | 9M 17 | Δ% | 9M 18 | 9M 17 | Δ% | |
| Operating costs (1) | 479.2 | 458.7 | 4.5% | 459.8 | 449.8 | 2.2% |
| External supplies & services | 193.3 | 182.2 | 6.1% | 190.5 | 1768 | 7.8% |
| Staff costs | 266.1 | 257.5 | 3.3% | 250.1 | 2545 | $-1.7%$ |
| Other operating costs | 19.7 | 19.1 | 3.5% | 19.2 | 18.6 | 2.9% |
IT costs and buildings costs were reduced by €1.8m (-8.9%) and by €0.7m (-2.0%), respectively.
The recurring staff costs decreased by €4.3m (-1.7%) year-on-year as a result of the reinforcement of the human resources optimisation programme that started the previous year, and the salary revision agreed with the organisations representing the workers with effect as of January 2018 which as at 30 September 2018 represented an increase of circa €2.0m in staff costs.
As at 30 September 2018, the CTT headcount (permanent and fixed-term staff) consisted of 12,590 employees, 253 less (-2.0%) than as at the same date of 2017.
There was a decrease of 441 in the number of permanent staff and an increase of 188 in the number of staff with fixed-term contracts. The reduction of staff in CTT, S.A. (-412) had a notable impact on this evolution.
| As at 30 September 2018, the CTT headcount (permanent and fixed-term staff) consisted of 12,590 employees, | ||||
|---|---|---|---|---|
| There was a decrease of 441 in the number of permanent staff and an increase of 188 in the number of staff with fixed-term contracts. The reduction of staff in CTT, S.A. (-412) had a notable impact on this evolution. |
Headcount | |||
| 30.09.2018 | 30.09.2017 | Δ 2018/2017 | ||
| Mail & Other | 11,148 | 11,409 | -261 | -2.3% |
| Express & Parcels | 1,148 | 1,156 | -8 | -0.7% |
| Financial Services (1) | 58 | 60 | -2 | -3.3% |
| Banco CTT (1) | 236 | 218 | 18 | 8.3% |
| Total, of which: | 12,590 | 12,843 | -253 | -2.0% |
| Permanent | 10,875 | 11,316 | -441 | -3.9% |
| 1,715 | 1,527 | 188 | 12.3% | |
| Fixed-term contracts | 12,413 | -280 | -2.3% |
For their importance, two major areas are to be highlighted: Operations and Distribution (with 7,030 employees, with special emphasis on the importance of the delivery postmen who total 4,504 employees) and the Retail Network (with 2,809 employees). Together, these areas represent circa 89% of CTT S.A. headcount.
It should be noted that the figures already reflect 199 exits in 2018, which occurred until the end of the 3rd quarter of 2018, and 161 exits in 2017 in the context of the human resources optimisation programme related to the Operational Transformation Plan underway.
The operating activity generated a recurring EBITDA6 of €65.0m, 4.6% (-€3.1m) lower than that of the 9 months of 2017, with a margin of 12.4%.
The recurring EBITDA was affected by the decline in Financial Services (-€8.3m) and BCTT (-€1.8m), which was not fully offset by the increase in Mail and E&P revenues (€5.1m and €2.0m, respectively).
| of €65.0m, 4.6% (-€3.1m) lower than that of the 9 months | ||||||
|---|---|---|---|---|---|---|
| The recurring EBITDA was affected by the decline in Financial Services (-€8.3m) and BCTT (-€1.8m), which was not fully offset by the increase in Mail and E&P revenues (€5.1m and €2.0m, respectively). |
EBITDA by business unit | |||||
| € million | ||||||
| Reported | Recurring | |||||
| 9M 18 | 9M 17 | ∆% | 9M 18 | 9M 17 | ∆% | |
| EBITDA | 45.8 | 59.3 | -22.7% | 65.0 | 68.1 | -4.6% |
| 46.6 | 54.3 | -14.3% | 63.7 | 58.7 | 8.6% | |
| Express & Parcels | 1.2 | - 1.5 | 182.5% | 2.2 | 0.2 | >> |
| Financial Services(1) | 11.1 | 19.8 | -43.8% | 11.5 | 19.8 | -41.9% |
Reported EBIT stood at €21.2m, corresponding to -€15.2m (-41.7%) vis-à-vis the same period of 2017. The EBIT margin was 4.0%.
The consolidated net financial result totalled -€4.0m, which represents a year-on-year decrease of -€0.3m (-7.4%). Interest and other financial income decreased by 88.0% (-€0.3m), due to the reduced rates of return on term deposits, to lower liquidity levels, and CTT's continued conservative investment policy. Financial costs incurred amounted to €4.1m, mainly incorporating financial costs with post-employment and long-term employee benefits for an amount of €4.0m, as well as, but with lesser impact, the interest associated with finance leases and bank loans (€0.2m).
In the 9 months of 2018, CTT obtained a consolidated net profit attributable to shareholders of €9.9m, which is 49.3% below that obtained in the same period of 2017, and a 1.9% net profit margin (3.8% in the 9 months of 2017). The net profit achieved was strongly influenced by the non-recurring costs in the amount of €16.3m associated with the Operational Transformation Programme.
In the 9 months of 2018, CTT recorded non-recurring costs net of income from disposals of €20.5m, of which €19.3m affected EBITDA and €1.2m refer to depreciation / amortisation, impairments and provisions, net.
6 Earnings before interest, tax, depreciation and amortisation, impairments, provisions and non-recurring results.
| Non-recurring results | ||
|---|---|---|
| € million | ||
| 9M 18 | 9M 17 | |
| Total | -20.5 | -10.2 |
| affecting EBITDA | -19.3 | -8.9 |
| . Staff costs | -16.0 | -3.0 |
| . External supplies & services and other costs | -3.4 | -5.9 |
| . Other operating income | 0.1 | 0.0 |
| affecting only EBIT | -1.2 | -1.3 |
| . Provisions (reinforcements / reductions) | -1.1 | 0.3 |
| . Impairments, depreciations and | ||
| -0.1 | -1.5 |
Staff costs are mainly those in connection with the human resources optimisation programme, while ES&S and other costs relate to consulting for strategic projects, both included in the Operational Transformation Plan, and to business excellence and new acquisitions. Provisions include an amount relative to the set-up of a provision at Tourline (€1.4m) for the notification issued by the Comisión Nacional de los Mercados y la Competencia (National Commission on Markets and Competition).
Capex of the Group stood at €11.6m, which is +12.2% (+€1.3m) above that of the 9 months of 2017.
Special mention to the investment of €8.5m in IT systems: in core IT systems and business support systems for Banco CTT (€4.0m), and in IT strategic projects (€1.2m), especially the new SAP platform. Investment in building refurbishment works and security totalled €2.4m.
In the 9 months of 2018, the adjusted change in cash was -€76.7m due to the payment of -€57.0m in dividends, investment of -€22.1m, the adjusted operating cash flow amounting to -€13.5m, and -€6.1m for short-term debt amortisation. This includes non-recurring items, particularly the payment of compensation for termination of employment contracts by mutual agreement amounting to €25.3m, of which €11.5m associated with provisions recorded in 2017 and paid in 2018.
In the 3rd quarter 2018, the operating cash flow was -€66.5m; excluding Financial Services and Banco CTT customer flows, it was +€0.9m.
| € million Reported Adjusted (*) ∆ ABS 9M 18 9M 17 9M 18 9M 17 18/17 Cash flow from operating activities 89.7 289.8 -200.1 6.7 35.5 Cash flow excluding FS & Banco CTT - - - 13.8 49.0 Banco CTT cash flow - - - -7.1 -13.5 Cash flow from investing activities -202.6 -212.7 10.1 -20.2 -23.0 Capex payments -22.1 -27.3 5.3 -22.1 -27.3 Capex payments excluding Banco CTT -17.5 -22.3 4.8 -17.5 -22.3 Banco CTT capex payments -4.6 -5.1 0.4 -4.6 -5.1 |
∆ ABS 18/17 -28.7 -35.1 6.4 2.8 |
|---|---|
| 5.3 | |
| 4.8 | |
| 0.4 | |
| Banco CTT financial assets (**) -182.4 -189.7 7.3 |
|
| Other 1.9 4.3 -2.5 1.9 4.3 |
-2.5 |
| Operating free cash flow -112.9 77.1 -190.0 -13.5 12.5 |
-25.9 |
| Cash flow from financing activities -63.3 -74.2 10.9 -63.3 -74.2 |
10.9 |
| of which Dividends -57.0 -72.0 15.0 -57.0 -72.0 |
15.0 |
| Other (***) -24.8 43.6 -68.4 0.0 0.1 |
-0.1 |
| Net change in cash -201.0 46.5 -247.5 -76.7 -61.6 |
-15.1 |
The reported change in cash amounted to -€201.0m, explained mainly by the Banco CTT's liquidity application in financial assets (-€182.4m). Cash flow from operating activities reached €89.7m, including the following amounts underlying the table above:
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:
| The CTT Group consolidated balance sheet excluding Banco CTT from the full consolidation perimeter and | ||||
|---|---|---|---|---|
| Consolidated balance sheet excluding Banco CTT | ||||
| € million | ||||
| 30.09.2018 | 31.12.2017 proforma |
∆% | ||
| Non-current Assets | 405.5 | 413.4 | -1.9% | |
| Current Assets | 516.1 | 557.3 | -7.4% | |
| Assets | 921.6 | 970.7 | -5.1% | |
| Equity | 135.4 | 184.0 | -26.4% | |
| Total Liabilities | 786.2 | 786.8 | -0.1% | |
| Non-current Liabilities | 271.2 | 282.7 | -4.1% | |
| Current Liabilities | 515.0 | 504.1 | 2.2% | |
| Total Equity and Liabilities | 921.6 | 970.7 | -5.1% |
In the 9 months of 2018, current assets decreased by €41.3m due to the payment of €57.0m in dividends; mention should also be made to +€1.7m recorded as non-current assets held for sale related to the net book value of the real estate property of the Company located at Rua da Palma, in Lisbon.
Equity decreased by €48.6m as a result of: (i) the payment of dividends for the 2017 financial year (€57.0m) that took place in May 2018; (ii) the reduction of €1.5m of equity due to the adoption of IFRS 9 and IFRS 15; and (iii) the net profit for the period.
| Equity decreased by €48.6m as a result of: (i) the payment of dividends for the 2017 financial year (€57.0m) that took place in May 2018; (ii) the reduction of €1.5m of equity due to the adoption of IFRS 9 and IFRS 15; and (iii) the |
||||
|---|---|---|---|---|
| Consolidated balance sheet | ||||
| € million | ||||
| 30.09.2018 | 31.12.2017 | ∆% | ||
| Non-current Assets | 961.6 | 678.5 | 41.7% | |
| Current Assets | 780.4 | 930.3 | -16.1% | |
| Assets | 1,742.0 | 1,608.8 | 8.3% | |
| Equity | 135.4 | 184.0 | -26.4% | |
| Total Liabilities | 1,606.6 | 1,424.8 | 12.8% | |
| Non-current Liabilities | 271.2 | 282.7 | -4.1% | |
| Current Liabilities | 1,335.4 | 1,142.0 | 16.9% | |
| Total Equity and Liabilities | 1,742.0 | 1,608.8 | 8.3% |
The key aspects of the comparison between the balance sheet as at 30 September 2018 and that at the end of the 2017 financial year are:
Total assets amounted to €1,742.0m, representing an increase of €133.2m, of which €771.5m relative to financial investments, financial assets and credit held by Banco CTT, broken down as follows: (i) €449.4m of investments in securities, (ii) €120.4m of other banking financial assets, mostly investments in credit institutions and in the interbank market; and (iii) €201.8m of credit to banking clients, especially mortgage loans and other credit.
Total liabilities increased by €181.8m (+12.8%), with emphasis on the increase in Banco CTT clients' deposits (+€170.4m, +27.5%) and in Financial Services payables (+€28.9, +10.7%).
As at 30 September 2018, the liabilities related to employee benefits (post-employment and long-term benefits) amounted to €267.4m, €2.7m less than in December 2017, as specified in the table below:
| Total liabilities increased by €181.8m (+12.8%), with emphasis on the increase in Banco CTT clients' deposits (+€170.4m, +27.5%) and in Financial Services payables (+€28.9, +10.7%). |
|||||||||
|---|---|---|---|---|---|---|---|---|---|
| As at 30 September 2018, the liabilities related to employee benefits (post-employment and long-term benefits) amounted to €267.4m, €2.7m less than in December 2017, as specified in the table below: |
|||||||||
| Liabilities related to long-term employee benefits | € million | ||||||||
| 30.09.2018 | 31.12.2017 | ∆% | |||||||
| Total liabilities | 267.4 | 270.0 | -1.0% | ||||||
| -0.3% | |||||||||
| Healthcare | 253.1 | 254.0 | |||||||
| Staff (suspension agreements) | 1.8 | 3.3 | -47.0% | ||||||
| Other long-term employee benefits | 12.1 | 12.3 | -2.2% | ||||||
| Transporta pension plans | 0.3 | 0.4 | -4.8% |
From January to September 2018, the perception of the customers on the quality of service was favourable, as 79.1% of the customers who responded to the customer satisfaction survey considered the overall quality of service of CTT as good or very good.
In the period under analysis, the OQSI - Overall Quality of Service Index stood at 139.0 points, compared to a target of 100 points.
Following the Draft Decision approved on 11 January 2018, on 18 July 2018, ANACOM communicated the final decision on the quality of service criteria applicable to the provision of the universal postal service for 2019 and 2020. Compared to the Draft decision, the 24 quality of service indicators are maintained, but the reliability targets for the routeing times of ordinary mail, bulk mail, ordinary parcels, and newspapers and periodicals released at greater than weekly intervals were revised downwards and set at 99.7%, instead of the 99.9% laid down in the Draft Decision. Contrary to what was proposed in the Draft Decision, the new indicators shall not apply from 1 July 2018, but rather from 1 January 2019 onwards.
The new set of indicators, which compare with the previous 11 indicators, as well as the set-up of much more demanding objectives for some of them, shows that they go well beyond the current European practices and trends in this field.
On 18 July 2018, ANACOM has also communicated the decision on the price formulation criteria for the postal services comprising the Universal Postal Service for the 2018-2020 three-year period, following the Draft Decision approved on 11 January 2018. In the 2018 the rules in force apply, as defined by ANACOM in 2014.
The new rules shall be applicable to the prices in force in 2019 and 2020 and set a maximum annual price change of the basket of letter mail, editorial mail and parcels services (non-reserved services), linked to the inflation rate ("CPI") including inflation adjustment factors ("CPIAF") and volume adjustment factors ("VAF") which shall take into account the differences that may occur between the actual and the values forecast for those variables. Volume forecasts for the 2018 - 2020 period were subject to a new consultation following a Draft Decision also published on 18 July 2018. The final Decision on this issue has not been published so far.
On 18 October 2018, by means of arbitration and administrative procedures, CTT applied for a declaration of invalidity of the decision of ANACOM regarding the parameters of quality of service and performance targets associated with the provision of the universal postal service ("USO") communicated on 18 July 2018, on the grounds of its disproportionate and inadequate nature, as detailed in the CTT communication to the market of that date, which is available at http://web3.cmvm.pt/sdi/emitentes/docs/fr69943.pdf.
This press release is based on CTT – Correios de Portugal, S.A. interim condensed consolidated financial statements for the 9 months of 2018 with limited revision by an auditor registered with the Portuguese Securities Commission (CMVM).
Lisbon, 30 October 2018
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
Contacts:
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 2018 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
| CTT-CORREIOS DE PORTUGAL, S.A. | |||
|---|---|---|---|
| CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 SETEMBRO 2018 AND 31 DECEMBER 2017 Euros |
|||
| Unaudited | |||
| NOTES | 30.09.2018 | 31.12.2017 | |
| ASSETS Non-current assets |
|||
| Tangible fixed assets | 5 | 185,051,939 | 199,855,908 |
| Investment properties | 7 | 6,652,520 | 6,164,849 |
| Intangible assets Goodwill |
6 | 47,072,124 9,523,180 |
47,501,684 9,523,180 |
| Investments in associated companies | 346,260 | 296,260 | |
| Other investments | 1,379,137 | 1,503,572 | |
| Investment securities | 9 | 427,325,289 | - |
| Investments held to maturity | - | 245,827,759 | |
| Other non-current assets Credit to banking clients |
11 | 1,596,80 3 178,946,179 |
1,375,223 64,263,948 |
| Financial assets available for sale | 9 | - | 3,175,180 |
| Other banking financial assets | 10 | 19,699,324 | 11,831,122 |
| Deferred tax assets | 83,993,938 | 87,155,739 | |
| Total non-current assets | 961,586,693 | 678,474,423 | |
| Current assets | |||
| Inventories | 5,794,559 | 5,696,996 | |
| Accounts receivable | 137,881,715 | 132,480,130 | |
| Credit to banking clients Income taxes receivable |
11 21 |
22,826,617 4,404,804 |
15,083,442 1,552,005 |
| Deferrals | 12 | 9,653,382 | 6,600,115 |
| Investment securities | 9 | 22,029,456 | - |
| Investments held to maturity | 9 | - | 15,721,373 |
| Other current assets Financial assets available for sale |
9 | 49,583,668 - |
32,338,234 2,576,194 |
| Other banking financial assets | 10 | 100,672,246 | 91,417,084 |
| Cash and cash equivalents | 425,819,877 | 626,825,397 | |
| 778,666,324 | 930,290,969 | ||
| Non-current assets held for sale | 1,741,045 | - | |
| Total current assets Total assets |
780,407,369 1,741,994,062 |
930,290,969 1,608,765,392 |
|
| EQUITY AND LIABILITIES | |||
| Equity Share capital |
14 | 75,000,00 0 |
75,000,000 |
| Own shares | 15 | (8) | (8) |
| Reserves | 15 | 65,845,778 | 79,947,883 |
| Retained earnings | 15 | 17,151,025 | 34,268,089 |
| Other changes in equity | 15 | (32,634,996) | (32,634,996) |
| Net profit Equity attributable to equity holders |
9,892,497 135,254,296 |
27,263,244 183,844,211 |
|
| Non-controlling interests | 172,061 | 146,738 | |
| Total equity | 135,426,357 | 183,990,949 | |
| Liabilities Non-current liabilities |
|||
| Medium and long term debt | 51,876 | 73,689 | |
| Employee benefits | 250,760,352 | 252,919,533 | |
| Provisions | 18 | 16,832,402 | 26,028,332 |
| Deferrals Deferred tax liabilities |
12 24 |
308,492 3,227,875 |
316,892 3,399,121 |
| Total non-current liabilities | 271,180,997 | 282,737,567 | |
| Current liabilities | |||
| Accounts payable Banking clients' deposits and other loans |
19 20 |
400,564,335 789,631,293 |
384,533,294 619,229,680 |
| 16,604,109 | 17,100,808 | ||
| 4,176,021 | 10,304,390 | ||
| Employee benefits Short term debt |
2,045,735 | 1,432,696 | |
| Deferrals | 12 | ||
| Other current liabilities | 97,521,182 | 91,553,848 | |
| Other banking financial liabilities | 10 | 24,844,033 | 17,882,160 |
| Total current liabilities Total liabilities |
1,335,386,708 1,606,567,705 |
1,142,036,875 1,424,774,442 |
| CTT-CORREIOS DE PORTUGAL, S.A. | |||||
|---|---|---|---|---|---|
| CONSOLIDATED INCOME STATEMENT FOR THE NINE MONTH PERIODS ENDED 30 SEPTEMBER 2018 AND 30 SEPTEMBER 2017 | |||||
| Euros | |||||
| Nine months ended | Three months ended | ||||
| Unaudited | Unaudited | Unaudited | Unaudited | ||
| NOTES | 30.09.2018 | 30.09.2017 | 30.09.2018 | 30.09.2017 | |
| Revenues | 524,939,469 | 517,980,942 | 169,804,531 | 165,867,350 | |
| Sales and services rendered | 4 | 508,140,647 | 501,269,188 | 164,481,451 | 160,803,046 |
| Financial margin | 5,497,113 | 2,102,591 | 2,182,186 | 941,412 | |
| Other operating income | 22 | 11,301,709 | 14,609,163 | 3,140,894 | 4,122,892 |
| Operating costs | (503,780,929) | (481,660,395) | (162,980,625) | (160,101,603) | |
| Cost of sales | (9,673,293) | (8,248,399) | (3,281,608) | (3,279,896) | |
| External supplies and services | (193,329,526) | (182,159,109) | (64,792,425) | (62,123,115) | |
| Staff costs | 23 | (266,101,746) | (257,500,142) | (82,950,002) | (83,278,694) |
| Impairment of accounts receivable, net | (284,593) | (933,817) | 7,660 | (628,808) | |
| Impairment of other financial banking assets | 27,121 | - | (114,566) | - | |
| Provisions, net | 18 | (978,207) | 758,906 | 235,558 | 745,832 |
| Depreciation/amortisation and impairment of investments, net | (23,377,369) | (22,755,062) | (8,058,649) | (7,854,632) | |
| Other operating costs | (10,063,315) | (10,822,772) | (4,026,593) | (3,682,290) | |
| Earnings before financial income and taxes | 21,158,541 | 36,320,547 | 6,823,905 | 5,765,747 | |
| Financial results | (3,997,662) | (3,723,850) | (1,336,662) | (1,324,010) | |
| Interest expenses | (4,131,704) | (4,026,908) | (1,348,150) | (1,342,000) | |
| Interest income | 36,449 | 303,058 | 11,488 | 17,990 | |
| Gains/losses in associated companies | 97,593 | - | - | - | |
| Earnings before taxes | 17,160,879 | 32,596,697 | 5,487,243 | 4,441,737 | |
| Income tax for the period | 24 | (7,241,053) | (13,224,676) | (1,845,077) | (2,764,861) |
| Net profit for the period | 9,919,826 | 19,372,021 | 3,642,166 | 1,676,876 | |
| Net profit for the period attributable to: | |||||
| Equity holders | 9,892,497 | 19,509,567 | 3,642,208 | 1,764,468 | |
| 27,328 | (137,546) | (42) | (87,592) 0.01 |
||
| Non-controlling interests Earnings per share: |
17 | 0.07 | 0.13 | 0.02 |
| The attached notes are an integral part of these financial statements. | |||||
|---|---|---|---|---|---|
| CTT-CORREIOS DE PORTUGAL, S.A. | |||||
| CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE NINE MONTH PERIODS ENDED 30 SEPTEMBER 2018 AND 30 SEPTEMBER 2017 | |||||
| Euros | |||||
| Nine months ended | Three months ended | ||||
| Unaudited | Unaudited | Unaudited | Unaudited | ||
| NOTES | 30.09.2018 | 30.09.2017 | 30.09.2018 | 30.09.2017 | |
| Net profit for the period | 9,919,826 | 19,372,022 | 3,642,166 | 1,676,876 | |
| Adjustments from application of the equity method (non re-classifiable adjustment to profit and | |||||
| loss) | 15 | (2,005) | 16,174 | 1,159 | 20,819 |
| Changes to fair value reserves | 15 | (12,744) | 39,307 | (1,309) | 10,256 |
| Other changes in equity | (2,005) | 5,278 | 1,160 | 9,923 | |
| Other comprehensive income for the period after taxes | (16,753) | 60,760 | 1,010 | 40,997 | |
| Comprehensive income for the period | 9,903,072 | 19,432,781 | 3,643,176 | 1,717,873 | |
| Attributable to non-controlling interests | 25,323 | (132,267) | 1,117 | (77,668) | |
| Attributable to shareholders of CTT | 9,877,749 | 19,565,049 | 3,642,059 | 1,795,542 | |
| The attached notes are an integral part of these financial statements. | |||||
| NOTES | Share capital | Own Shares | Reserves | Other changes in equity |
Retained earnings | Net profit for the year | Non-controlling interests |
Total |
|---|---|---|---|---|---|---|---|---|
| 75,000,000 | (5,097,536) | 34,891,671 | (27,137,824) | 93,589,211 | 62,160,395 | (79,135) | 233,326,782 | |
| Balance on 1 January 2017 Share capital increase |
49,500,000 | - | - | - | (49,500,000) | - | 367,020 | 367,020 |
| Appropriation of net profit for the year of 2016 Share capital decrease |
(49,500,000) - |
- - |
49,500,000 - |
- - |
62,160,395 - |
(62,160,395) - |
- - |
- - |
| Attribution of own shares Dividends |
- - |
5,097,527 - |
- (4,480,638) |
- - |
(72,000,000) - |
- - |
- - |
(72,000,000) 616,890 |
| - | 5,097,527 | 45,019,362 | - | (59,339,605) | (62,160,395) | 367,020 | (71,016,090) | |
| Other movements | - | - | - | - | - | - | 6,775 | 6,775 |
| Actuarial gains/losses - Health Care, net from deferred taxes Changes to fair value reserves |
- - |
- - |
- 36,849 |
(5,497,172) - |
- - |
- - |
- - |
(5,497,172) 36,849 |
| Adjustments from the application of the equity method | - | - | - | - | 18,482 | - | - | 18,482 |
| Comprehensive income for the period Net profit for the period |
- - |
- - |
- 36,849 |
(5,497,172) - |
- 18,482 |
27,263,244 27,263,244 |
(147,921) (141,146) |
27,115,323 21,680,257 |
| Balance on 31 December 2017 | 75,000,000 | (8) | 79,947,883 | (32,634,996) | 34,268,089 | 27,263,244 | 146,738 | 183,990,949 |
| 3 3 Adjustment on initial application of IFRS 15 (net of tax) Adjustment on initial application of IFRS 9 (net of tax) |
- - |
- - |
- - |
- - |
(185,718) (1,281,946) |
- - |
- - |
(185,718) (1,281,946) |
| Adjusted balance on 1 January 2018 | 75,000,000 | (8) | 79,947,883 | (32,634,996) | 32,800,424 | 27,263,244 | 146,738 | 182,523,284 |
| Appropriation of net profit for the year of 2017 Dividends |
- | - | - (15,372,222) |
- | 27,263,244 (41,627,778) |
(27,263,244) | - | - (57,000,000) |
| - - |
- - |
(15,372,222) | - - |
(14,364,534) | - (27,263,244) |
- - |
(57,000,000) | |
| Other movements | - | - | 1,282,861 | - | (1,282,861) | - | (2,005) | (2,005) |
| Changes to fair value reserves | - | - | (12,744) | - | - | - | - | (12,744) |
| Adjustments from the application of the equity method | - | - | - | - | (2,005) | - | - | (2,005) |
| Comprehensive income for the period Net profit for the period |
- - |
- - |
- 1,270,117 |
- - |
- (1,284,866) |
9,892,497 9,892,497 |
27,328 25,323 |
9,919,826 9,903,072 |
| Balance on 30 September 2018 (Unaudited) | 75,000,000 | (8) | 65,845,778 | (32,634,996) | 17,151,025 | 9,892,497 | 172,061 | 135,426,357 |
| CTT-CORREIOS DE PORTUGAL, S.A. CONSOLIDATED CASH FLOW STATEMENT FOR THE NINE MONTH PERIODS ENDED 30 SEPTEMBER 2018 AND 30 SEPTEMBER 2017 Euro |
||||
|---|---|---|---|---|
| NOTES | Unaudited 30.09.2018 |
Unaudited 30.09.2017 |
||
| Cash flow from operating activities | ||||
| Collections from customers | 503,569,359 | 485,514,557 | ||
| Payments to suppliers Payments to employees |
(211,423,003) (253,052,054) |
(183,258,879) (235,591,422) |
||
| Banking customer deposits and other loans | 170,470,832 | 286,561,588 | ||
| Credit to banking clients | (122,091,986) | (35,250,182) | ||
| Cash flow generated by operations | 87,473,148 | 317,975,663 | ||
| Payments/receivables of income taxes Other receivables/payments |
(6,553,799) 8,740,053 |
(8,188,522) (19,982,643) |
||
| Cash flow from operating activities (1) | 89,659,403 | 289,804,498 | ||
| Cash flow from investing activities Receivables resulting from: |
||||
| Tangible fixed assets | 179,199 | 2,453,103 | ||
| Investment properties | 1,368,204 | 3,172,600 | ||
| Financial investments Investment securities |
222,028 39,185,531 |
- - |
||
| Financial assets available for sale | - | 11,900,000 | ||
| Investments held to maturity | - | 2,995,779 | ||
| Demand deposits at Bank of Portugal Other banking financial assets |
26,215,172 91,295,000 |
- 101,615,000 |
||
| Interest income | 170,304 | 443,241 | ||
| Payments resulting from: | ||||
| Tangible fixed assets Intangible assets |
(9,760,817) (12,313,741) |
(18,755,283) (8,585,208) |
||
| Financial investments | (50,000) | (1,728,091) | ||
| Investment securities Financial assets available for sale |
(230,956,899) - |
- (19,533,418) |
||
| Investments held to maturity | - | (121,164,027) | ||
| Demand deposits at Bank of Portugal | - | (42,344,406) | ||
| Other banking financial assets | Cash flow from investing activities (2) | (108,110,000) | (123,135,000) | |
| (202,556,019) | (212,665,709) | |||
| Cash flow from financing activities Receivables resulting from: |
||||
| Loans obtained | 13,702,654 | 6,838,204 | ||
| Payments resulting from: | ||||
| Loans repaid Interest expenses |
(19,825,198) (142,198) |
(7,646,409) (438,596) |
||
| Finance leases | (25,717) | (977,908) | ||
| Dividends | (57,000,000) | (72,000,000) | ||
| Cash flow from financing activities (3) | (63,290,459) | (74,224,708) | ||
| Net change in cash and cash equivalents (1+2+3) Changes in the consolidation perimeter |
(176,187,076) - |
2,914,081 134,862 |
||
| Cash and equivalents at the beginning of the period | 592,677,415 | 613,845,248 | ||
| Cash and cash equivalents at the end of the period | 416,490,340 | 616,894,191 | ||
| Cash and cash equivalents at the end of the period | 416,490,340 | 616,894,191 | ||
| Sight deposits at Bank of Portugal Outstanding checks of Banco CTT / Checks clearing of Banco CTT |
6,540,809 2,835,452 |
46,136,739 2,314,867 |
||
| Impairment of slight and term deposits | (46,723) | - | ||
| 665,345,797 |
| TABLE OF CONTENTS | ||
|---|---|---|
| 1. | INTRODUCTION 24 | |
| 2. | SIGNIFICANT ACCOUNTING POLICIES 24 | |
| 2.1 | BASIS OF PRESENTATION 24 | |
| 3. | CHANGES TO ACCOUNTING POLICIES, ERRORS AND ESTIMATES 24 | |
| 4. | SEGMENT REPORTING 27 | |
| 5. | TANGIBLE FIXED ASSETS 31 | |
| 6. | INTANGIBLE ASSETS 33 | |
| 7. | INVESTMENT PROPERTIES 35 | |
| 8. | COMPANIES INCLUDED IN THE CONSOLIDATION 37 | |
| 9. | INVESTMENT SECURITIES, INVESTMENTS HELD TO MATURITY AND FINANCIAL ASSETS AVAILABLE | |
| FOR SALE 38 | ||
| 10. | OTHER BANKING FINANCIAL ASSETS AND LIABILITIES 42 | |
| 11. | CREDIT TO BANKING CLIENTS 43 | |
| 12. | DEFERRALS 44 | |
| 13. | ACCUMULATED IMPAIRMENT LOSSES 44 | |
| 14. | EQUITY 45 | |
| 15. | RESERVES, OTHER CHANGES IN EQUITY AND RETAINED EARNINGS 48 | |
| 16. | DIVIDENDS 49 | |
| 17. | EARNINGS PER SHARE 49 | |
| 18. | PROVISIONS, GUARANTEES PROVIDED, CONTINGENT LIABILITIES AND COMMITMENTS 50 | |
| 19. | ACCOUNTS PAYABLE 53 | |
| 20. | BANKING CLIENTS' DEPOSITS AND OTHER LOANS 54 | |
| 21. | INCOME TAXES RECEIVABLE /PAYABLE 54 | |
| 22. | OTHER OPERATING INCOME 54 | |
| 23. | STAFF COSTS 55 | |
| 24. | INCOME TAX FOR THE PERIOD 56 | |
| 25. | RELATED PARTIES 59 | |
| 26. | OTHER INFORMATION 60 | |
| 27. | SUBSEQUENT EVENTS 61 |
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 reorganisations carried out by the Portuguese state business sector in the communications area.
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 2018.
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 2017, 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 2018, and in accordance with IAS 34 - Interim Financial Reporting.
The Group has adopted IFRS 15 Revenue from Contracts with Customers and IFRS 9 Financial Instruments as at 1 January 2018.
IFRS 9 sets out requirements for recognising and measuring financial assets, financial liabilities and some contracts to buy or sell non-financial items. This standard replaces IAS 39 Financial Instruments: Recognition and Measurement.
IFRS 9 established a new impairment model. In this way, loss event will no longer need to occur before an impairment loss is recognised.
As soon as the loss event occur (what is currently defined as "objective evidence of impairment"), the accumulated impairment is allocated directly to the financial asset affected, thus providing, from that point on, a similar treatment the IAS 39, including the treatment of interest revenue.
One of the main amendments resulting from the adoption of this standard is the recognition of the impairment recognition of impairment on the exposure to securities, bank deposits and other financial applications, which was not required under IAS 39, except if there was objective evidence of impairment.
| not required under IAS 39, except if there was objective evidence of impairment. | |||
|---|---|---|---|
| Impact at the time of transition and in the period | |||
| The impacts of the adoption of IFRS 9 are detailed as follows: | |||
| IFRS 9 - Impact at the time of transition and in the period | |||
| Impact of adopting IFRS 9 at 1 January 2018 |
Impact in the period | Impact of adopting IFRS 9 at 30 September 2018 |
|
| Banco CTT - Investments held to maturity, Financial assets available for sale, Cash and Other financial applications |
(882,083) | 245,254 | (636,829) |
| Banco CTT - Account Receivables | 2,713 | (1) | (1) |
| Other Companies - Cash and Equivalents and Fin. Investments | (405,982) | 359,803 | (46,179) |
| Other Companies - Account Receivables | 883,882 | 524,203 | 1,408,085 |
| Related Tax | 215,752 | (265,041) | (49,289) |
| Impact | (185,718) | 864,219 | 675,788 |
| (1) Taking into account that the amount is residual, the impairment was not calculated in accordance with IAS 39 on 30.09.2018 | ||||
|---|---|---|---|---|
| The change in the accounting policy resulting from the adoption of IFRS 9 was applied retrospectively, except for | ||||
| the option not to restate comparative information for prior periods in relation to classification and measurement | ||||
| requirements (including impairment). The differences in the accounting amount of financial assets and liabilities | ||||
| resulting from the adoption of IFRS 9 were recognised in retained earnings with reference to 1 January 2018. | ||||
| Classification and measurement | ||||
| Comparing with the previous standard, there was the need to reclassify and remeasure the financial assets and | ||||
| liabilities in accordance with IFRS 9, therefore the new classification and measurement was applied to the | ||||
| amounts as at 1 January 2018, as shown below: | ||||
| 01.01.2018 | ||||
| Original classification under IAS 39 | New classification under IFRS 9 | Original carrying amount | New carrying amount under IFRS 9 | |
| under IAS 39 | ||||
| Assets | ||||
| Other Investments | Available-for-sale financial | Fair Value through Other | ||
| Investments held to maturity | assets Investments held to maturity |
Comprehensive Income Amortised Cost |
1,503,572 261,549,132 |
1,503,572 261,302,060 |
| Other assets | Loans and receivables | Amortised Cost | 33,713,457 | 33,713,457 |
| Available-for-sale financial | Fair Value through Other | |||
| Financial assets available for sale | assets | Comprehensive Income | 5,751,374 | 5,740,688 |
| Credit to bank clients | Loans and receivables | Amortised Cost | 79,347,390 | 79,350,103 |
| Other banking financial assets | Loans and receivables | Amortised Cost | 103,248,206 | 102,624,809 |
| Accounts receivable | Loans and receivables | Amortised Cost | 132,480,130 | 133,364,012 |
| Cash and cash equivalents | Loans and receivables | Amortised Cost | 626,825,397 | 626,418,487 |
The adoption of IFRS 9 represents a significant change to the methodology and calculation of impairments in banks.
Due to the absence of past records, Banco CTT based the calculation on benchmarking of parameters making the needed adjustments in order to migrate from the vision of loss incurred to the vision of expected credit loss (ECL).
The analysis framework of credit risk is based on a model of collective and individual analysis. In the collective analysis, basically, Banco CTT considers that the Probability of Default (PD) is constant over the instruments' life time and applies in stage 2 a methodology of survival rate to calculate the PD of each period of the instrument's life time that it is multiplied by the Loss Given Default (LGD), which, in turn, is a function of expected exposure in each period and the existing collateral in the operation. Finally, Banco CTT updates the expected value of the all the periods considered (12 months in stage 1, life time in stages 2 and 3).
In the individual analysis, Banco CTT begins by evaluating the existence of objective evidence of impairment. If it does not exist, the credit losses are treated as stage 1. If there is objective evidence of impairment, the impairment losses are calculated by comparing the present value of expected future cash flows discounted at the original effective interest rate of each contract and the accounting value for each credit. The losses are recorded against profit or loss.
In the portfolio of securities and cash and cash equivalents and financial investments, the impairments are calculated by assigning i) a probability of default that derives from the rating of the issuer or counterparty, respectively, and ii) a Loss Given Default (LGD) that results from market parameters.
In the portfolio of securities and cash equivalents and financial investments, the impairments are calculated by assigning i) a probability of default that derives from the rating of the issuer or counterparty, respectively and ii) a Loss Given Default (LGD) that results from market parameters.
Regarding the remaining companies, the Group applies the simplified method and registers expected credit losses until maturity for all accounts receivables. The expected credit losses were calculated based on past records of credit losses throughout the period considered statistically relevant, estimating the rate of expected losses by companies and customer typology.
The revenue recognition model according to IFRS 15 is based on five steps in order to determine when the revenue should be recognised and the amount:
| satisfied over the period or, on the contrary, the control of the goods or services is transferred to the customer at a given point in time. The revenue should be recognised for the amount that the company expects to receive. |
According to the new model, the revenue recognition depends on whether the "performance obligations" are | ||
|---|---|---|---|
| The impacts of the adoption of IFRS 15 are detailed as follows: | |||
| IFRS 15 - Impact at the time of transition and in the period | |||
| Impact of adopting IFRS 15 | Impact of adopting IFRS 15 | ||
| at 1 January 2018 | Impact in the period | at 30 September 2018 | |
| Sales of philatelic and pre-paid products | (782,046) | 134,501 | (647,545) |
| Rendering of Express Services | (822,765) | 169,883 | (652,881) |
| Related Tax | 322,865 | (50,892) | 271,972 |
The Group decided to adopt IFRS 15 using the cumulative effect method ("modified retrospective approach"), with the effect of the initial application of this standard recognised at the date of initial application (i.e. 1 January 2018). As a result, the Group will not apply the requirements of IFRS 15 to the comparative period presented.
According to the analysis performed, in the CTT Group, the adoption of IFRS 15 had the following impacts:
a) Sales of philatelic and pre-paid products
Before the adoption of this new standard, the revenue was recognised when the philatelic and pre-paid products were sold.
Under IFRS 15, the revenue is recognised only when the performance obligation is satisfied, i.e., only at the moment of the effective utilisation of the products for mail delivery purposes. However, as some of these products have never been used by the clients, for example the philatelic products for stamps collection, CTT performed a customer survey in order to obtain information regarding the use pattern of these products and, in this way, assess the percentage of the products that are not expected to be used. In these situations, the revenue should be recognised at the time of the sale. In the remaining situations, the adoption of the IFRS 15 implies the deferral of the revenue given the current policy.
b) Rendering of Express Services
Before the adoption of this new standard, the revenue from the rendering of express services (parcels) was recognised when the customer requested the service in our retail network.
According to IFRS 15, the revenue is recognised only when the performance obligation is satisfied, i.e., only when the mail or parcel is delivered to the final customer. The adoption of the IFRS 15 implies the deferral of the revenue given the current policy.
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 2018, Payshop became a subsidiary of Banco CTT, through a capital increase operation in which all the shares representing the share capital of Payshop (Portugal), S.A. were transferred to Banco CTT. This operation is aligned with the strategy of concentrating the Group's business lines related to the financial sector at Banco CTT as well as with the project submitted to Banco de Portugal at the time of the creation of Banco CTT.
The comparable information for 2017 has been restated, and Payshop has been included in Banco CTT segment.
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 financial statements of the companies and related business units, adjusted by the elimination of transactions between companies of the same segment.
However, as CTT, S.A. has activity 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 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 among the Mail and Financial Services segments according to the average number of CTT, S.A. employees affected to each of these segments.
With the allocation of all costs, the Earnings before depreciation, provisions, impairments, financial results and taxes by segment in the nine-month period ended 30 September 2018 and 2017 are as follows:
| 30.09.2018 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Financial | Intragroup | |||||||
| Euros | Express & Parcels | Services | Banco CTT (includes Payshop) | CTT Central Structure | eliminations | Others non allocated | Total | |
| Revenues | 396,839,896 | 110,370,590 | 30,728,287 | 17,016,337 | 79,100,153 | (109,115,794) | - | 524,939,469 |
| Sales and services rendered | 367,325,624 | 108,927,457 | 29,283,274 | 8,007,210 | - | (5,402,918) | - | 508,140,647 |
| Sales | 13,513,827 | 589,549 | - | - | - | (242) | - | 14,103,134 |
| Services rendered | 353,811,797 | 108,337,908 | 29,283,274 | 8,007,210 | - | (5,402,676) | - | 494,037,513 |
| Financial Margin | - | - | - | 5,497,113 | - | - | - | 5,497,113 |
| Operating revenues external customers | 18,994,881 | 1,443,133 | 1,385,091 | 3,512,014 | 7,495,894 | (21,529,304) | - | 11,301,709 |
| Internal services rendered | 10,519,391 | - | 59,922 | - | 30,072,839 | (40,652,152) | - | - |
| Allocation to CTT central structure | - | - | - | - | 41,531,420 | (41,531,420) | - | - |
| Operating costs | (350,289,484) | (109,174,536) | (19,596,307) | (30,123,194) | (79,100,153) | 109,115,794 | - | (479,167,880) |
| External supplies and services | (77,328,340) | (89,805,911) | (6,218,964) | (17,901,104) | (29,007,289) | 26,932,082 | - | (193,329,526) |
| Staff costs | (191,188,060) | (17,335,095) | (1,500,906) | (10,329,158) | (45,748,527) | - | - | (266,101,746) |
| Other costs | (11,063,068) | (2,033,530) | (1,167,752) | (1,892,932) | (3,579,466) | 140 | - | (19,736,608) |
| Internal services rendered | (29,359,094) | - | (10,528,187) | - | (764,871) | 40,652,152 | - | - |
| Allocation to CTT central structure EBITDA(1) |
(41,350,922) | - | (180,498) | - | - | 41,531,420 | - | - |
| Depreciation/amortisation and impairment of | 46,550,412 | 1,196,054 | 11,131,980 | (13,106,857) | - | - | - 45,771,589 |
|
| investments, net | (11,974,282) | (2,577,342) | (328,245) | (2,444,463) | (5,871,316) | - | (181,720) | (23,377,369) |
| Impairment of accounts receivable, net | - | - | - | - | - | - | - | (284,593) |
| Impairment of other financial banking assets | - | - | - | - | - | - | - | 27,121 |
| Provisions, net | - | - | - | - | - | - | - | (978,207) |
| Interest expenses | - | - | - | - | - | - | - | (4,131,704) |
| Interest income | - | - | - | - | - | - | - | 36,449 |
| Gains/losses in associated companies | - | - | - | - | - | - | - | 97,593 |
| Earnings before taxes | - | - | - | - | - | - | - | 17,160,879 |
| Income tax for the period | - | - | - | - | - | - | - | (7,241,053) |
| Net profit for the period | - | - | - | - | - | - | - | 9,919,826 |
| - | - | - | - | - | - | - | 27,328 | |
| Non-controlling interests Equity holders of parent company |
- | - | - | - | - | - | - | 9,892,497 |
| (1) Operating results + depreciation/amortisation + provisions and impairment losses, net. | 30.09.2017 Restated | |||||||
|---|---|---|---|---|---|---|---|---|
| Euros | Express & Parcels | Financial Services |
Banco CTT (includes Payshop) | CTT Central Structure | Intragroup eliminations |
Others non allocated | Total | |
| Revenues | 393,421,717 | 96,185,271 | 43,296,188 | 13,439,267 | 80,680,650 | (109,042,151) | - | 517,980,942 |
| Sales and services rendered | 361,428,312 | 94,724,699 | 42,494,182 | 8,042,806 | - | (5,420,811) | - | 501,269,188 |
| Sales | 12,193,815 | 605,761 | - | - | - | (305) | - | 12,799,271 |
| Services rendered | 349,234,497 | 94,118,939 | 42,494,182 | 8,042,806 | - | (5,420,506) | - | 488,469,917 |
| Financial Margin | - | - | - | 2,102,591 | - | - | - | 2,102,591 |
| Operating revenues external customers | 20,149,302 | 1,460,572 | 739,069 | 3,293,870 | 10,675,501 | (21,709,151) | - | 14,609,163 |
| Internal services rendered | 11,844,103 | - | 62,937 | - | 29,842,295 | (41,749,336) | - | - |
| Allocation to CTT central structure | - | - | - | - | 40,162,853 | (40,162,853) | - | - |
| Operating costs | (339,102,603) | (97,635,734) | (23,476,360) | (26,877,227) | (80,680,649) | 109,042,152 | - | (458,730,422) |
| External supplies and services | (75,595,019) | (78,529,601) | (7,175,194) | (16,149,165) | (31,746,027) | 27,035,897 | - | (182,159,109) |
| Staff costs | (183,470,624) | (17,391,072) | (2,512,852) | (9,953,144) | (44,264,823) | 92,373 | - | (257,500,142) |
| Other costs | (11,452,211) | (1,715,061) | (1,160,734) | (774,918) | (3,969,939) | 1,693 | - | (19,071,171) |
| Internal services rendered | (28,683,983) | - | (12,365,493) | - | (699,860) | 41,749,336 | - | - |
| Allocation to CTT central structure | (39,900,766) | - | (262,087) | - | - | 40,162,853 | - | - |
| EBITDA(1) | 54,319,114 | (1,450,463) | 19,819,828 | (13,437,960) | - | - | - 59,250,520 |
|
| Depreciation/amortisation and impairment of | ||||||||
| (11,891,977) | (2,916,467) | (163,417) | (2,142,634) | (5,528,607) | - | (111,960) | (22,755,062) | |
| - | - | - | - | - | - | (933,817) | ||
| - | - | - | - | - | - | 758,906 | ||
| - | (4,026,908) | |||||||
| - | - | |||||||
| - | - | - | - | - | - | |||
| - | - | - | - | - | - | - | 303,059 | |
| - | - | - | - | - | - | - | 32,596,697 | |
| - | - | - | - | - | - | - | (13,224,676) | |
| investments, net Impairment of accounts receivable, net Provisions, net Interest expenses Interest income Earnings before taxes Income tax for the period Net profit for the period Non-controlling interests |
- - |
- - |
- - |
- - |
- - |
- - |
- - |
19,372,021 (137,546) |
| 30.09.2017 | ||
|---|---|---|
| Thousand Euros | 30.09.2018 | Restated |
| Mail Transactional mail |
396,840 308,664 |
393,422 301,151 |
| Editorial mail | 10,972 | 11,716 |
| Parcels (USO) | 4,934 | 5,414 |
| Advertising mail | 17,988 | 20,861 |
| Retail | 9,210 | 7,764 |
| Philately | 6,094 | 6,091 |
| Business Solutions | 7,144 | 6,375 |
| Other | 31,833 | 34,050 |
| Express & Parcels | 110,371 | 96,185 |
| Financial Services | 30,728 | 43,296 |
| Banco CTT | 17,016 | 13,439 |
| Banco CTT | 8,985 | 5,319 |
| Payshop | 8,031 | 8,120 |
| CTT Central Structure | 79,100 | 80,681 |
| Intragroup eliminations | (109,116) | (109,042) |
| 524,939 | 517,981 | |
| The assets by segment are detailed as follows: | |||||||
|---|---|---|---|---|---|---|---|
| 30.09.2018 | |||||||
| Assets (Euros) | Express & Parcels | Financial Services |
Banco CTT (includes Payshop) | CTT Central Structure | Non allocated assets | Total | |
| Intagible assets | 3,325,358 | 4,307,123 | 361,961 | 23,210,197 | 8,354,370 | 7,513,116 | 47,072,124 |
| Tangible fixed assets | 158,304,268 | 13,571,004 | 2,730 | 674,693 | 11,175,132 | 1,324,112 | 185,051,939 |
| Investment properties | - | - | - | - | - | 6,652,520 | 6,652,520 |
| Goodwill | 6,161,326 | 2,955,753 | - | 406,101 | - | - | 9,523,180 |
| Deferred tax assets | - | - | - | - | - | 83,993,938 | 83,993,938 |
| Accounts receivable | - | - | - | - | - | 137,881,715 | 137,881,715 |
| Credit to bank clients | - | - | - | 201,772,796 | - | - | 201,772,796 |
| Investment securities | - | - | - | 449,354,745 | - | - | 449,354,745 |
| Other banking financial assets | - | - | - | 120,371,570 | - | - | 120,371,570 |
| Other assets | - | - | - | - | - | 72,758,613 | 72,758,613 |
| Cash and cash equivalents | - | 7,989,839 | - | 110,002,522 | - | 307,827,516 | 425,819,877 |
| Non-current assets held for sale | - | - | - | - | - | 1,741,045 | 1,741,045 |
| 167,790,952 | 28,823,719 | 364,691 | 905,792,624 | 19,529,502 | 619,692,576 | 1,741,994,063 | |
| 31.12.2017 Restated | |||||||
| Assets (Euros) | Express & Parcels | Financial Services |
Banco CTT | CTT Central Structure | Non allocated assets | Total | |
| Intagible assets | 3,119,896 | 5,005,423 | 404,038 | 21,211,707 | 7,631,667 | 10,128,953 | 47,501,684 |
| Tangible fixed assets | 167,562,232 | 14,477,996 | 2,231 | 815,209 | 15,141,231 | 1,857,009 | 199,855,908 |
| 31.12.2017 Restated | |||||||
|---|---|---|---|---|---|---|---|
| Assets (Euros) | Express & Parcels | Financial Services |
Banco CTT | CTT Central Structure | Non allocated assets | Total | |
| Intagible assets | 3,119,896 | 5,005,423 | 404,038 | 21,211,707 | 7,631,667 | 10,128,953 | 47,501,684 |
| Tangible fixed assets | 167,562,232 | 14,477,996 | 2,231 | 815,209 | 15,141,231 | 1,857,009 | 199,855,908 |
| Investment properties | - | - | - | - | - | 6,164,849 | 6,164,849 |
| Goodwill | 6,161,326 | 2,955,753 | - | 406,101 | - | - | 9,523,180 |
| Deferred tax assets | - | - | - | - | - | 87,155,739 | 87,155,739 |
| Accounts receivable | - | - | - | - | - | 132,480,130 | 132,480,130 |
| 79,347,390 | |||||||
| Credit to bank clients | - | - | - | 79,347,390 | - | - | |
| Investments held to maturity | - | - | - | 261,549,132 | - | - | 261,549,132 |
| Financial assets available for sale | - | - | - | 5,751,374 | - | - | 5,751,374 |
| Other banking financial assets | - | - | - | 103,248,206 | - | - | 103,248,206 |
| Other assets | - | - | - | - | - | 49,362,404 | 49,362,404 |
| Cash and cash equivalents | - | 5,207,337 | - | 242,844,990 | - | 378,773,070 | 626,825,397 |
| Non-current assets held for sale | - | - | - | - | - | - | - |
| Debt by segment is detailed as follows: | ||||||
|---|---|---|---|---|---|---|
| 30.09.2018 | ||||||
| Other information (Euros) | Express & Parcels | Financial Services | Banco CTT | CTT Central Struture | Total | |
| Medium and long-term debt | - | 51,876 | - - |
- | 51,876 | |
| Bank loans | - | 42,535 | - | - | - | 42,535 |
| Leasings | - | 9,341 | - | - | - | 9,341 |
| Short-term debt | - | 4,176,021 | - - |
- | 4,176,021 | |
| Bank loans | - | 4,156,804 | - | - | - | 4,156,804 |
| Leasings | - | 19,217 | - | - | - | 19,217 |
| - | 4,227,897 | - - |
- | 4,227,897 | ||
| 31.12.2017 | ||||||
| Other information (Euros) | Express & Parcels | Financial Services | Banco CTT | CTT Central Struture | Total | |
| Medium and long-term debt | - | 73,689 | - - |
- | 73,689 | |
| Bank loans | - | 49,596 | - | - | - | 49,596 |
| Short-term debt | - | 4,176,021 | - - |
- | 4,176,021 | |
|---|---|---|---|---|---|---|
| - | 4,227,897 | - - |
- | 4,227,897 | ||
| 31.12.2017 | ||||||
| Other information (Euros) | Express & Parcels | Financial Services | Banco CTT | CTT Central Struture | Total | |
| Medium and long-term debt | - | 73,689 | - - |
- | 73,689 | |
| Bank loans | - | 49,596 | - | - | - | 49,596 |
| Leasings | - | 24,093 | - | - | - | 24,093 |
| Short-term debt | - | 10,304,390 | - - |
- | 10,304,390 | |
| Bank loans | - | 10,272,258 | - | - | - | 10,272,258 |
| Leasings | - | 32,132 | - | - | - | 32,132 |
| - | 10,378,079 | - - |
- | 10,378,079 | ||
| The CTT Group is headquartered in Portugal. The result of its Sales and services rendered by geographical areas is disclosed below: |
Thousand Euros | 30.09.2018 | 30.09.201 7 | |||
| Revenue - Portugal | 430,599 | 438,089 | ||||
| Revenue - other countries | 77,542 | 63,181 | ||||
| 508,141 | 501,269 |
| Thousand Euros | 30.09.2018 | 30.09.2017 |
|---|---|---|
| Revenue - Portugal | 430.599 | 438.089 |
| Revenue - other countries | 77.542 | 63.181 |
| 508,141 | 501269 | |
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, leading to its increase / decrease from one period to another.
| TANGIBLE FIXED ASSETS | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| During the nine-month period ended 30 September 2018 and the year ended 31 December 2017, the | |||||||||
| movements occurred in Tangible fixed assets, as well as in the respective accumulated depreciation, were as | |||||||||
| follows: | |||||||||
| Land and natural resources | Buildings and other constructions | Basic equipment | Transport equipment | 30.09.2018 Office equipment |
Other tangible fixed assets | Tangible fixed assets in progress | Advance payments to suppliers | Total | |
| Tangible fixed assets | |||||||||
| Opening balance Acquisitions Disposals |
37,102,139 - - |
342,655,745 273,957 - |
146,667,392 851,216 (1,730,186) |
3,381,283 8,413 (15,095) |
62,174,555 515,013 - |
26,040,114 272,218 - |
1,500,567 1,895,656 - |
391,109 68,468 - |
619,912,904 3,884,940 (1,745,281) |
| Transfers and write-offs Adjustments |
(722,865) - |
(4,682,728) (46,551) |
(4,036,169) (47,623) |
- (10) |
- (28,138) |
(962) (2,105) |
(2,279,400) - |
(179,594) (47,608) |
(11,901,718) (172,036) |
| Closing balance | 36,379,274 | 338,200,423 | 141,704,629 | 3,374,591 | 62,661,429 | 26,309,265 | 1,116,823 | 232,375 | 609,978,809 |
| Accumulated depreciation Opening balance |
3,851,494 | 207,661,484 | 128,294,129 | 3,271,073 | 55,716,402 | 21,213,074 | - | - | 420,007,656 |
| Depreciation for the period Disposals |
- - |
7,505,468 - |
4,432,689 (1,632,681) |
22,164 (15,095) |
2,118,758 - |
809,122 (962) |
- - |
- - |
14,888,200 (1,648,738) |
| Transfers and write-offs Adjustments Closing balance |
(73,942) - 3,777,553 |
(4,080,612) 23 211,086,363 |
(4,214,804) (375) 126,878,957 |
- 33 3,278,175 |
44 57,835,204 |
- 44 22,021,278 |
- - - |
- - - |
- (8,369,358) (231) 424,877,529 |
| Accumulated impairment | |||||||||
| Opening balance Other variations |
- - |
- - |
- - |
- - |
- - |
49,340 - |
- - |
- - |
49,340 - |
| Closing balance | - | - | - | - | - | 49,340 | - | - | 49,340 |
| Net Tangible fixed assets | 32,601,721 | 127,114,060 | 14,825,671 | 96,416 | 4,826,225 | 4,238,647 | 1,116,823 | 232,375 | 185,051,939 |
| 31.12.2017 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 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 | Total | |
| Tangible fixed assets Opening balance Acquisitions Disposals Transfers and write-offs Adjustments Changes in the consolidation perimeter Closing balance |
36,903,717 - - 1,396 - 197,025 37,102,139 |
334,909,767 300,889 (8,315) 6,396,121 (44,923) 1,102,206 342,655,745 |
140,435,199 5,013,385 (1,125,067) 1,673,849 (61,259) 731,285 146,667,392 |
3,269,073 81,568 - - (247) 30,889 3,381,283 |
59,021,936 2,087,373 (40,687) 750,365 (61,727) 417,295 62,174,555 |
25,037,425 741,212 (137) (867,944) (21,887) 1,151,444 26,040,114 |
5,016,467 2,277,480 - (5,793,379) - - 1,500,567 |
3,351,405 475,458 - (3,425,208) (10,547) - 391,109 |
607,944,990 10,977,364 (1,174,206) (1,264,800) (200,588) 3,630,144 619,912,904 |
| Accumulated depreciation Opening balance Depreciation for the period Disposals Transfers and write-offs Adjustments Changes in the consolidation perimeter Closing balance |
3,851,494 - - - - 3,851,494 |
197,359,750 9,924,796 (7,026) - (39,113) 274 422,804 207,661,484 |
121,934,623 7,139,729 (1,096,952) (158,051) 15,044 459,736 128,294,129 |
3,208,997 34,044 - - (404) 28,437 3,271,073 |
52,255,805 3,426,663 (40,236) (145,697) 1,082 218,784 55,716,402 |
20,239,484 1,113,660 (137) (712,315) (6) 572,388 21,213,074 |
- - - - - - - |
- - - - - - |
398,850,154 21,638,891 (1,144,351) - (1,055,176) 15,989 1,702,149 420,007,656 |
| Accumulated impairment | - - |
- - - |
- - - |
- - - |
- - - |
173,055 (123,714) 49,340 |
- - - |
- - - |
173,055 (123,714) 49,340 |
During the nine-month period ended 30 September 2018, Land and natural resources and Buildings and other constructions include 599,270 Euros (625,996 Euros as at 31 December 2017), related to land and property in co-ownership with MEO – Serviços de Comunicações e Multimédia, S.A..
In the year ended 31 December 2017, the caption Changes in the consolidation perimeter relates to the balances of the company Transporta – Transportes Porta a Porta, S.A. acquired in May 2017.
During the nine-month period ended 30 September 2018, 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 caption Transfers and Write-offs includes the amount of 3,143,118 Euros related to the transfer to Investment Properties, as well as the respective accumulated depreciations of 1,530,107 Euros, regarding a group of properties which are no longer allocated to the operational activity of the Group.
This heading also includes the transfer to the caption Non-current assets held for sale of the building located in Rua da Palma by CTT, following the conclusion of the promissory agreement for the sale of this property.
The amount of acquisitions mainly relates to the purchase of ATM's in the amount of 32 thousand Euros, bar code readers in the amount of 29 thousand Euros, scales in the amount of 50 thousand Euros and pallets for about 184 thousand Euros by CTT. CTT Contacto acquired a parcel sorting machine in the amount of 148 thousand Euros and Tourline acquired IT equipment worth approximately 231 thousand Euros and PDA devices worth approximately 5 thousand Euros.
The amounts recorded under write-offs, are mainly due to the write-offs of CTT assets that were fully depreciated and considerably old.
The amount of acquisitions relates essentially to the purchase of several pieces of administrative equipment, namely safes and security doors totalling 21 thousand Euros, office furniture worth about 66 thousand Euros and the acquisition of personal computers for approximately 199 thousand Euros by CTT.
The amount of acquisitions mainly relates to prevention and safety equipment for approximately 201 thousand Euros by CTT.
The amounts under this heading are related to the recognition of improvements in own and third-party properties. The movements associated to transfers relate to the capitalisation of the assets in progress.
The depreciation recorded in the amount of 14,888,200 Euros (16,079,570 Euros on 30 September 2017) is booked under the heading Depreciation/amortisation and impairment of investments, net.
Contractual commitments related to Tangible fixed assets are as follows:
| 30.09.2018 | ||
|---|---|---|
| Hardware firewall networks | 280,353 | |
| Upgrades to mail sorting machines | 128,674 | |
| Containers | 108,929 | |
| CCTV, safes and security doors | 70,238 | |
| Optical readers | 29,459 | |
| Scales | 25,646 | |
| Tractor Pneumatic System | 9,471 | |
| Batteries | 5,307 | |
| UPS | 4,869 | |
| Reading devices for tachographs | 4,760 | |
| 667,704 | ||
| During the nine-month period ended 30 September 2018 and the year ended 31 December 2017, the movements which occurred in the main categories of Intangible assets, as well as the respective accumulated |
||||||
|---|---|---|---|---|---|---|
| amortisation, were as follows: | ||||||
| 30.09.2018 | ||||||
| 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 | - | 2,015,795 | 13,145 | - | 5,849,286 | 7,878,226 |
| Transfers and write-offs Adjustments |
- - |
8,983,126 - |
- 40 |
- - |
(8,983,126) - |
- 40 |
| Closing balance | 4,380,552 | 91,234,884 | 13,310,336 | 444,739 | 10,120,616 | 119,491,127 |
| Accumulated amortisation | ||||||
| Opening balance | 4,371,234 | 50,542,647 | 8,752,556 | 444,739 | - | 64,111,177 |
| Amortisation for the period | 4,170 | 7,812,146 | 491,133 | - | - | 8,307,449 |
| Adjustments | - | - | 377 | - | - | 377 |
| Closing balance | 4,375,404 | 58,354,794 | 9,244,066 | 444,739 | - | 72,419,003 |
| Net intangible assets | 5,148 | 32,880,091 | 4,066,270 | - | 10,120,616 | 47,072,124 |
| 31.12.2017 | ||||||
|---|---|---|---|---|---|---|
| Development | Computer Software | Industrial property | Other intangible assets | Intangible assets in progress | Total | |
| projects | ||||||
| Intangible assets | ||||||
| Opening balance | 4,372,923 | 69,732,469 | 11,722,559 | 444,739 | 8,870,277 | 95,142,968 |
| Acquisitions | - | 2,776,195 | 1,569,908 | - | 13,167,265 | 17,513,369 |
| Transfers and write-offs | - | 7,727,299 | (16,833) | - | (8,802,367) | (1,091,901) |
| Adjustments | - | - | 21,516 | - | - | 21,516 |
| Changes in the consolidation perimeter | 7,629 | - | - | - | 19,281 | 26,910 |
| Closing balance | 4,380,552 | 80,235,963 | 13,297,151 | 444,739 | 13,254,456 | 111,612,861 |
| Accumulated amortisation | ||||||
| Opening balance | 4,360,060 | 43,021,166 | 8,400,280 | 444,739 | - | 56,226,245 |
| Amortisation for the period | 10,495 | 8,740,207 | 361,397 | - | - | 9,112,100 |
| Transfers and write-offs | - | (1,218,272) | (16,834) | - | - | (1,235,106) |
| Adjustments | - | (454) | 7,713 | - | - | 7,259 |
| Changes in the consolidation perimeter | 679 | - | - | - | - | 679 |
| Closing balance | 4,371,234 | 50,542,647 | 8,752,556 | 444,739 | - | 64,111,177 |
| Net intangible assets | 9,318 | 29,693,316 | 4,544,595 | - | 13,254,456 | 47,501,684 |
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 to Computer software occurred in the nine-month period ended 30 September 2018 in Intangible assets in progress to refer to IT projects which were completed during the period.
The amounts of 710,560 Euros and 568,161 Euros that were capitalised in Computer software or in Intangible assets in progress as at 30 September 2018 and 30 September 2017, respectively, relate to the staff costs incurred in the development of IT projects. 30.09.2018 31.12.2017 SAP Hana & Hybris Billing 1,795,178 2,846,202
As at 30 September 2018 and 31 December 2017, Intangible assets in progress relate to IT projects which are under development, of which the most relevant are:
| 30.09.2018 | 31.12.2017 | ||
|---|---|---|---|
| SAP Hana & Hybris Billing | 1,795,178 | 2,846,202 | |
| Management information - software | 1,034,829 | 901,204 | |
| NAVE evolution | 854,776 | 736,189 | |
| SAP developments | 343,806 | 144,997 | |
| Aplica Legacy adaptations | 318,696 | 617,767 | |
| Data Warehouse | 276,359 | - | |
| CRM - Sales software | 262,377 | 287,602 | |
| SIGPOSTAL - software | 196,119 | - | |
| International Accounts - software | 189,395 | - | |
| Credit Liabilities - software | 180,739 | - | |
| SADIP - Dynamics Change Plans | 163,977 | 141,983 | |
| Transactional Broker | 159,006 | - | |
| INTRANET CTT | 156,458 | - | |
| Mortgage loans - software | 148,884 | 491,317 | |
| Lease Management - software | 148,221 | - | |
| APARTADOS - software | 138,842 | 136,220 | |
| DOL - Treatment and generation of schedules | 113,013 | 98,836 | |
| Customs Portal | 110,827 | - | |
| E-Fullfilment | 106,525 | - | |
| BD SQL Server consolidation | - | 622,975 | |
| Mail products evolution | - | 586,899 | |
| RAID - software | - | 453,856 | |
| X86 - Servers, storage and backup | - | 342,239 | |
| Business Excellence - software | - | 292,317 | |
| Security Identity Governance and Intelligence | - | 230,791 | |
| FATCA/CRS | - | 170,291 | |
| 6,698,026 | 9,101,687 |
The amortisation for the period, of 8,307,449 Euros (6,563,531 Euros as at 30 September 2017), 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.
Contractual commitments relative to Intangible assets are as follows:
| 30.09.2018 | ||
|---|---|---|
| SAP S/4 Hana e SAP Hybris | 1,549,807 | |
| CBS - Core Banking System | 479,653 | |
| SIG Postal | 359,643 | |
| Software servers | 123,246 | |
| Setup Infrastructure | 95,624 | |
| Mailmanager | 52,275 | |
| Data Protection Regulation (RGPD) | 51,733 | |
| App Receipts Online | 22,140 | |
| APP Mobility Android | 20,295 | |
| Worflow Solution | 17,188 | |
| Online Account Opening | 17,042 | |
| Iberian operator | 7,310 | |
| Hybrid Mail | 6,642 | |
| 2,802,597 | ||
As at 30 September 2018 and 31 December 2017, the Group has the following assets classified as investment properties:
| 30.09.2018 | ||||
|---|---|---|---|---|
| Land and natural resources |
Buildings and other constructions |
Investment properties in progress |
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 | 476,424 | 2,666,694 | - | 3,143,118 |
| Adjustments | 6,503 | 19,508 | - | 26,010 |
| Closing balance | 3,266,530 | 13,697,976 | - | 16,964,505 |
| Accumulated depreciation | ||||
| Opening balance | 166,541 | 7,282,857 | - | 7,449,397 |
| Depreciation for the period | - | 181,720 | - | 181,720 |
| Disposals | (10,982) | (528,516) | - | (539,498) |
| Transfers and write-offs | 54,612 | 1,475,495 | - | 1,530,107 |
| Closing balance | 210,171 | 8,411,556 | - | 8,621,727 |
| Accumulated impairment | ||||
| Opening balance | - | 1,092,556 | - | 1,092,556 |
| Transfers/Adjustments | - | 597,703 | - | 597,703 |
| Closing balance | - | 1,690,259 | - | 1,690,259 |
| Net Investment properties | 3,056,359 | 3,596,161 | - | 6,652,520 |
| 31.12.2017 | ||||
|---|---|---|---|---|
| Land and natural resources |
Buildings and other constructions |
Investment properties in progress |
Total | |
| Investment properties | ||||
| Opening balance | 3,921,049 | 18,372,780 | - | 22,293,828 |
| Additions | - | - | 43,152 | 43,152 |
| Disposals | (1,038,572) | (6,591,606) | - | (7,630,178) |
| Transfers and write-offs | - | 43,152 | (43,152) | - |
| Closing balance | 2,882,477 | 11,824,326 | - | 14,706,803 |
| Accumulated depreciation | ||||
| Opening balance | 210,097 | 11,500,249 | - | 11,710,347 |
| Depreciation for the period | - | 242,117 | - | 242,117 |
| Disposals | (43,557) | (4,459,510) | - | (4,503,066) |
| Closing balance | 166,541 | 7,282,857 | - | 7,449,397 |
| Accumulated impairment | ||||
| Opening balance | - | 1,291,498 | - | 1,291,498 |
| Transfers/Adjustments | - | (198,942) | - | (198,942) |
| Closing balance | - | 1,092,556 | - | 1,092,556 |
| Net Investment properties | 2,715,936 | 3,448,913 | - | 6,164,849 |
These assets are not allocated to the Group's operating activities, nor have a specific future use.
During the nine-month period ended 30 September 2018, the amount of disposals relates to the sale of one property, having the corresponding gains, of 138 thousand Euros, been recorded in the caption Other operating income.
During the year ended 31 December 2017, the amount of disposals relates to the sale of ten properties, having the corresponding gains, of 1.1 million Euros, been recorded in the caption Other operating income.
Depreciation for the period, of 181,720 Euros (211,508 Euros as at 30 September 2017), was recorded in the caption Depreciation / amortisation and impairment of investments, net.
| COMPANIES INCLUDED IN THE CONSOLIDATION | ||||||||
|---|---|---|---|---|---|---|---|---|
| Subsidiary companies | ||||||||
| As at 30 September 2018 and 31 December 2017, the parent company, CTT - Correios de Portugal, S.A. and the | ||||||||
| following subsidiaries in which it holds control were included in the consolidation: | ||||||||
| 30.09.2018 | 31.12.2017 | |||||||
| Percentage of ownership | Percentage of ownership | |||||||
| Company name Parent company: |
Place of business | Head office | Direct | Indirect | Total | Direct | Indirect | Total |
| CTT - Correios de Portugal, S.A. | Portugal | Av. D. João II N.º 13 1999-001 Lisboa |
- | - | - | - | - | - |
| Subsidiaries: | ||||||||
| CTT Expresso - Serviços Postais e Logística, S.A. ("CTT Expresso") |
Portugal | Av. D. João II N.º 13 1999-001 Lisboa |
100 | - | 100 | 100 | - | 100 |
| Payshop Portugal, S.A. | Portugal | Av. D. João II N.º 13 | ||||||
| ("Payshop") | 1999-001 Lisboa | - | 100 | 100 | 100 | - | 100 | |
| CTT Contacto, S.A. | Portugal | Av. D. João II N.º 13 | ||||||
| ("CTT Con") | 1999-001 Lisboa | 100 | - | 100 | 100 | - | 100 | |
| Mailtec Comunicação , S.A. | Portugal | Av. D. João II N.º 13 | ||||||
| ("Mailtec TI") | 1999-001 Lisboa | 100 | - | 100 | 100 | - | 100 | |
| Tourline Express Mensajería, SLU. | Spain | Calle Alcarria, numero 8, | ||||||
| ("TourLine") | 28823 Coslada, Madrid | 100 | - | 100 | 100 | - | 100 | |
| Correio Expresso de Moçambique, S.A. ("CORRE") |
Mozambique | Av. Zedequias Manganhela, 309 Maputo - Mozambique |
50 | - | 50 | 50 | - | 50 |
| Escrita Inteligente , S.A. ("RONL") |
Portugal | Av. D. João II N.º 13 1999-001 Lisboa |
100 | - | 100 | 100 | - | 100 |
| Banco CTT, S.A. ("BancoCTT") |
Portugal | Av. D. João II N.º 11 1999-001 Lisboa |
100 | - | 100 | 100 | - | 100 |
| Transporta - Transportes Porta a Porta, S.A. | ||||||||
| Portugal | Estrada de São Marcos N.º 15 2735-521 Cacém |
100 | - | 100 | 100 | - | 100 |
On 4 January 2018, the share capital of Banco CTT was increased by 6,400,000 Euros through the transfer to Banco CTT of all the shares representing the share capital of Payshop (Portugal), S.A.. This transaction had no impact on the consolidated statements.
On 7 March 2018, a new share capital increase was made in Banco CTT in the amount of 25,000,000 Euros through the issue of new shares without nominal value and with the issuance value of 1 Euro each, currently totalling the amount of 156,400,000 Euros.
In June 2018, the subsidiaries Escrita Inteligente, S.A. and Transporta - Transportes Porta a Porta, S.A., underwent a share capital reduction operation, and the amounts of the reduction were transferred to retained earnings. The share capital of these companies, after the mentioned operation, is 37,374 Euros and 250,000 Euros, respectively.
There were also capital increase operations, recognised under the caption "Other Equity Instruments", in the subsidiaries Escrita Inteligente, S.A., Transporta - Transportes Porta a Porta, S.A. and Tourline Express Mensajería, SLU, for the amounts of 285,000 Euros, 3,000,000 Euros and 7,100,000 Euros, respectively.
On 4 May 2017, CTT – Correios de Portugal, S.A., acquired 100% of the share capital of the company Transporta – Transportes Porta a Porta, S.A. for the amount of 1,728,091 Euros.
As at 30 September 2018 and 31 December 2017, the Group held the following interests in joint ventures, accounted for by the equity method:
| 30.09.2018 Percentage of ownership |
31.12.2017 Percentage of ownership |
|||||||
|---|---|---|---|---|---|---|---|---|
| Company name | Place of business | Head office | Direct | Indirect | Total | Direct | Indirect | Total |
| Portugal | Av. Fontes Pereira de Melo, 40 Lisboa |
49 | - | 49 | 49 | - | 49 | |
| NewPost, ACE PTP & F, ACE |
Portugal | Estrada Casal do Canas Amadora |
- | 51 | 51 | - | 51 | 51 |
| On 8 August 2018, Mktplace - Comércio Eletrónico, S.A., a partnership with Sonae - SGPS, S.A., was formed. Each shareholder, CTT and Sonae, owns 50% of the share capital of the referred entity. Associated companies As at 30 September 2018 and 31 December 2017, the Group held the following interests in associated |
|---|
| companies accounted for by the equity method: 30.09.2018 31.12.2017 |
| Percentage of ownership Percentage of ownership |
| Company name Place of business Head office Direct Indirect Total Direct Indirect Total |
| Multicert - Serviços de Certificação Electrónica, S.A. Lagoas Parque, Edifício 3, Piso 3 20 - 20 20 - 20 Portugal ("Multicert") Oeiras |
| Mafelosa, SL (a) Spain Castellon - Spain - 25 25 - 25 25 |
| Urpacksur, SL (a) Spain Málaga - Spain - 30 30 - 30 30 |
Changes in the consolidation perimeter
During the nine-month period ended 30 September 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 year ended 31 December 2017, the consolidation perimeter was changed following the acquisition of the company Transporta – Transportes Porta a Porta, S.A. on 4 May 2017.
As at 30 September 2018, the caption Investment securities showed the following composition:
| 30.09.2018 | 31.12.2017 | |
|---|---|---|
| Non-current | ||
| Investment securities measured at Fair Value through Other Comprehensive Income (1) | ||
| Debt securities and other fixed-income securities | ||
| Public issuers | 550,470 | - |
| Other issuers | 581,699 | - |
| 1,132,169 | - | |
| Investment securities measured at amortised cost | ||
| Debt securities and other fixed-income securities | ||
| Public issuers | 398,715,352 | - |
| Other issuers | 27,642,879 | - |
| Impairment | (165,110) | - |
| 426,193,120 | - | |
| 427,325,289 | - | |
| Current | ||
| Investment securities measured at Fair Value through Other Comprehensive Income (1) | ||
| Debt securities and other fixed-income securities | ||
| Public issuers | 8,913 | - |
| Other issuers | 525,603 | - |
| 534,516 | - | |
| Investment securities measured at amortised cost | ||
| Debt securities and other fixed-income securities | ||
| Public issuers | 15,906,886 | - |
| Other issuers | 5,593,472 | - |
| Impairment | (5,418) | - |
| 21,494,940 | - | |
| 22,029,456 | - | |
It should be noted that the Group adopted IFRS 9 in accordance with the modified retrospective approach, and therefore the amounts of the comparative period are not restated. Accordingly, the amounts currently shown in the caption Investment securities are shown under the headings Investments held to maturity and Financial assets available for sale.
As at 31 December 2017, the composition of the headings Investments held to maturity and Financial assets available for sale is as follows:
| 30.06.2018 | 31.12.2017 | ||
|---|---|---|---|
| Non-current | |||
| Financial assets available for sale | |||
| Debt securities and other fixed-income securities | |||
| Public issuers | - | 562,115 | |
| Other issuers | - | 2,613,065 | |
| - | 3,175,180 | ||
| Investments held to maturity | |||
| Debt securities and other fixed-income securities | |||
| Public issuers | - | 228,806,240 | |
| Other issuers | - | 17,021,519 | |
| - | 245,827,759 | ||
| Current Financial assets available for sale |
|||
| Debt securities and other fixed-income securities | |||
| Public issuers | - | 13,765 | |
| Other issuers | - | 2,562,429 | |
| - | 2,576,194 | ||
| Investments held to maturity | |||
| Debt securities and other fixed-income securities | |||
| Public issuers | - | 8,729,378 | |
| Other issuers | - | 6,991,995 | |
| - | 15,721,373 | ||
| Financial assets available for sale | - | 5,751,374 | |
| Investments held to maturity | - 261,549,132 |
||
| - | 267,300,506 |
| The analysis of the Investment securities measured at Fair Value through Other Comprehensive Income and the | |||||||
|---|---|---|---|---|---|---|---|
| residual maturity of the investment securities as at 30 September 2018 is detailed as follows: | |||||||
| 30.09.2018 | |||||||
| Amortised cost | Fair value reserve | Total | |||||
| Debt securities and other fixed-income securities | |||||||
| Public-debt securities | |||||||
| National | 533,391 | 25,992 | 559,383 | ||||
| Foreign | - | - | - | ||||
| Other issuers | |||||||
| National Foreign |
- 1,095,715 |
11,587 | - | - 1,107,302 |
|||
| 1,629,106 | 37,579 | 1,666,685 | |||||
| Current | 30.09.2018 | 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 | |||||||
| Debt securities and other fixed-income securities | |||||||
|---|---|---|---|---|---|---|---|
| Public-debt securities | |||||||
| National | 8,913 | - | 8,913 | 550,470 | - | 550,470 | 559,383 |
| Foreign | - | - | - | - | - | - | - |
| Other issuers | |||||||
| National | - | - | - | - | - | - | - |
| 22,038 | 503,565 | 525,603 | 471,184 | 110,515 | 581,699 | 1,107,302 | |
| Foreign | 534,516 | 1,021,654 | 110,515 | 1,132,169 | 1,666,685 | ||
| 30,951 | 503,565 |
| 30.09.2018 | |||||||
|---|---|---|---|---|---|---|---|
| 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 amortised cost Debt securities and other fixed-income securities |
|||||||
| Public-debt securities | |||||||
| National | 6,030,349 | 6,60 8,565 |
12,638,914 | 18,157,786 | 262,327,731 | 280,485,517 | 293,124,431 |
| Foreign Other issuers |
714,132 | 2,553,840 | 3,267,972 | 40,507,861 | 77,721,974 | 118,229,835 | 121,497,807 |
| National | 5,029,370 | 564,103 | 5,593,472 | 19,914,315 | 7,728,564 | 27,642,879 | 33,236,351 |
| Foreign | - 11,773,850 |
- 9,726,508 |
- 21,500,358 |
- 78,579,961 |
- 347,778,269 |
- 426,358,230 |
- 447,858,589 |
| Regarding 31 December 2017, the analysis of the Financial assets available for sale and the corresponding residual maturity as well as the analysis of the residual maturity of the investments held to maturity are detailed as follows: |
31.12.2017 | ||||||
|---|---|---|---|---|---|---|---|
| Amortised cost | Fair value reserve | Total | |||||
| Debt securities and other fixed-income securities | |||||||
| Public-debt securities | |||||||
| National | 545,545 | 30,335 | 575,880 | ||||
| Foreign | - | - | - | ||||
| Other issuers | |||||||
| National | 250,002 | - | 250,002 | ||||
| Foreign | 4,905,504 | 19,988 | 4,925,492 | ||||
| 5,701,051 | 50,323 | 5,751,374 | |||||
| Current | 31.12.20 17 |
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 | |
| Financial assets available for sale Debt securities and other fixed-income securities |
|||||||
| Public-debt securities National |
13,765 | - | 13,765 | - | 562,115 | 562,115 | 575,880 |
| Foreign | - | - | - | - | - | - | - |
| Other issuers National |
250,0 02 |
- | 250 ,0 02 |
- | - | - | 250,002 |
| Foreign | 239,942 | 2,072,485 | 2,312,427 | 2,500 ,506 |
112,559 | 2,613,065 | 4,925,492 |
| 503,709 | 2,072,485 | 2,576,194 | 2,500,506 | 674,674 | 3,175,180 | 5,751,374 | |
| 31.12.20 17 |
|||||||
| 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 | |
| Investments held to maturity Debt securities and other fixed-income securities |
|||||||
| Public-debt securities National |
3,370,516 | 5,083,554 | 8,454,070 | 11,789,808 | 142,181,624 | 153,971,432 | 162,425,502 |
| Foreign | 275,308 | - | 275,308 | 20 ,888,425 |
53,946,383 | 74,834,808 | 75,110,116 |
| Other issuers | |||||||
| National Foreign |
1,683,085 - |
5,308,910 - |
6,991,995 - |
14,603,866 - |
2,417,653 - |
17,021,519 - |
24,013,514 - |
| 5,328,909 | 10,392,464 | 15,721,373 | 47,282,099 | 198,545,660 | 245,827,759 | 261,549,132 |
| Closing balance |
|---|
| 1,925 |
| 165,111 |
| 167,036 |
| 1,043 |
| 5,418 |
| 6,461 |
| 2,967 |
| 170,529 |
| 173,497 |
| As at 30 September 2018 and 31 December 2017, the headings Other banking financial assets and Other | |||||
|---|---|---|---|---|---|
| 30.09.2018 | 31.12.2017 | ||||
| Non-current assets | |||||
| Investments in credit institutions | 2,764,487 | - | |||
| Loans to credit institutions | 17,130,392 | 11,831,122 | |||
| Impairment | (195,554) | - | |||
| 19,699,324 | 11,831,122 | ||||
| Current assets | |||||
| Investments in credit institutions | 86,746,534 | 82,221,285 | |||
| Loans to credit institutions | 12,122,840 | 7,859,401 | |||
| Impairment | (267,235) | - | |||
| Other | 2,070,107 | 1,336,398 | |||
| 100,672,246 | 91,417,084 | ||||
| 120,371,570 | 103,248,206 | ||||
| Current liabilities | |||||
| Other | 24,844,033 | 17,882,160 | |||
| 24,844,033 | 17,882,160 | ||||
| Regarding the captions Investments in credit institutions and Loans to credit institutions, the scheduling by | |||||
| 30.09.2018 | 31.12.2017 | ||||
| Up to 3 months | 59,362,431 | 16,716,838 | |||
| From 3 to 6 months | 18,468,958 | 16,078,185 | |||
| From 6 to 12 months | 21,037,985 | 57,285,663 | |||
| From 1 to 3 years | 12,438,392 | 7,473,850 | |||
Regarding the captions Investments in credit institutions and Loans to credit institutions, the scheduling by maturity is as follows:
| 30.09.2018 | 31.12.2017 | ||
|---|---|---|---|
| 59,362,431 | 16,716,838 | ||
| Up to 3 months From 3 to 6 months |
18,468,958 | 16,078,185 | |
| 21,037,985 | 57,285,663 | ||
| From 6 to 12 months From 1 to 3 years Over 3 years |
12,438,392 7,456,487 |
7,473,850 4,357,272 |
The impairment losses, for the nine-month period ended 30 September 2018, are detailed as follows:
| 30.09.2018 | ||||||
|---|---|---|---|---|---|---|
| Opening balance | Increases | Reversals | Utilisations | Changes in the accounting standards |
Closing balance | |
| Non-current assets | ||||||
| Investments and loans in credit institutions | - | 415,689 | (336,429) | - | 116,293 | 195,554 |
| - | 415,689 | (336,429) | - | 116,293 | 195,554 | |
| Current assets | ||||||
| Investments and loans in credit institutions | - | - | (239,870) | - | 507,104 | 267,235 |
| - - |
- 415,689 |
(239,870) (576,298) |
- - |
507,104 623,397 |
267,235 462,788 |
|
| 11. CREDIT TO BANKING CLIENTS | ||||||
| As at 30 September 2018 and 31 December 2017, the caption Credit to banking clients was detailed as follows: | ||||||
| 30.09.2018 | 31.12.2017 | |||||
| Performing loans | 201,844,685 | 79,393,333 | ||||
| Mortgage Loans | 184,283,971 | 66,145,178 | ||||
| - | 415,689 (576,298) |
- | 623,397 | 462,788 |
|---|---|---|---|---|
| 30.09.2018 | 31.12.2017 | |||
| Performing loans | 201,844,685 | 79,393,333 | ||
| Mortgage Loans | 184,283,971 | 66,145,178 | ||
| Overdrafts | 567,818 | 299,170 | ||
| Other credits | 16,992,896 | 12,948,985 | ||
| Overdue loans | 261,182 | 71,708 | ||
| 202,105,867 | 79,465,041 | |||
| Credit risk impairment | (333,072) | (117,651) | ||
| 201,772,795 | 79,347,390 | |||
| 30.09.2018 | 31.12.2017 | |||
| Fixed rate | 829,000 | 370,878 | ||
| Floating rate | 201,276,867 | 79,094,163 | ||
The breakdown of this heading by type of rate is as follows:
| 30.09.2018 | 31.12.2017 | |
|---|---|---|
| Fixed rate | 829,000 | 370,878 |
| Floating rate | 201,276,867 | 79,094,163 |
| 202,105,867 | 79,465,041 | |
| Credit risk impairment | (333,072) | (117,651) |
| The maturity analysis of the Credit to banking clients as at 30 September 2018 and 31 December 2017 is detailed as follows: |
||||||||
|---|---|---|---|---|---|---|---|---|
| 30.09.2018 | ||||||||
| In cash | Current Due within 3 months |
Over 3 months and less than 1 | Total | Over 1 year and less than 3 years | Non-current Over 3 years |
Total | Total | |
| Mortgage loans Overdrafts |
- 829,000 |
1,340,083 - |
3,834,401 - |
5,174,484 829,000 |
10,389,836 - |
168,719,651 - |
179,109,487 - |
184,283,971 829,000 |
| Other credits | - 829,000 |
16,992,896 18,332,979 |
- 3,834,401 |
16,992,896 22,996,380 |
- 10,389,836 |
- 168,719,651 |
- 179,109,487 |
16,992,896 202,105,867 |
| Current | 31.12.2017 | Non-current | ||||||
| Total | ||||||||
| 30.09.2018 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Current | Non-current | |||||||
| Total | ||||||||
| 31.12.2017 | ||||||||
| Current | Non-current | |||||||
| In cash | Due within 3 months | Over 3 months and less than 1 | Total | Over 1 year and less than 3 years | Over 3 years | Total | Total | |
| Mortgage loans | - | 465,590 | 1,357,066 | 1,822,656 | 3,680,670 | 60,641,852 | 64,322,522 | 66,145,178 |
| Overdrafts | 370,878 | - | - | 370,878 | - | - | - | 370,878 |
| Other credits | - | 12,948,985 | - | 12,948,985 | - | - | - | 12,948,985 |
During the nine-month period ended 30 September 2018 and the year ended 31 December 2017, the movement in the Credit to banking client's impairment caption was as follows:
| 30.09.2018 | |||||||
|---|---|---|---|---|---|---|---|
| Opening balance | Increases | Reversals | Utilisations | Changes in the accounting standards |
Closing balance | ||
| Non-current assets | |||||||
| Credit to banking clients | 59,078 | 150,752 | (39,932) | - | (6,589) | 163,309 | |
| 59,078 | 150,752 | (39,932) | - | (6,589) | 163,309 | ||
| Current assets | |||||||
| Credit to banking clients | 58,573 58,573 |
107,314 107,314 |
- - |
- - |
3,876 3,876 |
169,763 169,763 |
|
| 117,651 | 258,066 | (39,932) | - | (2,713) | 333,072 | ||
| Opening balance | Increases | 31.12.2017 Reversals |
Utilisations | Closing balance | |||
| Non-current assets | |||||||
| Credit to banking clients | - | 62,628 | (3,550) | - | 59,078 | ||
| - | 62,628 | (3,550) | - | 59,078 | |||
| Current assets | |||||||
| Credit to banking clients | 417 | 70,950 | (12,794) | - | 58,573 | ||
| 417 | 70,950 | (12,794) | - | 58,573 | |||
| 417 | 133,578 | (16,344) | - | 117,651 |
| л п | 70,950 | 794. , , |
|---|---|---|
| 417 | 133,578 | (16, 344) $\sim$ $\sim$ $\sim$ |
As at 30 September 2018 and 31 December 2017, the Deferrals included in Current assets and Current and Noncurrent liabilities showed the following composition: 30.09.2018 31.12.2017
| Assets deferrals Current |
|||
|---|---|---|---|
| Rents payable | 1,337,485 | 1,375,076 | |
| Meal allowances | 1,560,807 | 1,615,852 | |
| Other | 6,755,090 | 3,609,187 | |
| 9,653,382 | 6,600,115 | ||
| Liabilities deferrals | |||
| Non-current | |||
| Investment subsidy | 308,492 | 316,892 | |
| 308,492 | 316,892 | ||
| Current | |||
| Phone-ix top ups | 118,292 | 143,203 | |
| Investment subsidy | 12,726 | 17,299 | |
| Contratual liabilities | 1,300,426 | - | |
| Other | 614,291 | 1,272,194 | |
| 2,045,735 | 1,432,696 | ||
| 2,354,227 | 1,749,588 |
The caption "Contratual 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 nine-month period ended 30 September 2018 and the year ended 31 December 2017, the following movements occurred in impairment losses:
| 30.09.2018 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Opening balance | Increases | Reversals | Utilisations | Transfers | Changes in the consolidation perimeter |
Changes in the accounting standards |
Closing balance | |
| Non-current assets Tangible fixed assets Investment properties |
49,341 1,092,556 |
- - |
- - |
- - |
- 597,703 |
- - - - |
49,341 1,690,259 |
|
| Investment securities Other non-current assets Credit to banking clients Other banking financial assets |
1,141,897 - 1,786,729 59,078 - 1,845,807 |
- 105,089 - 150,752 415,689 671,530 |
- (186,629) - (39,932) (336,428) (562,989) |
- - - - - - |
597,703 - 224,634 - - 224,634 |
- - - 248,575 - - - (6,589) - 116,293 - 358,279 |
1,739,600 167,036 2,011,363 163,309 195,554 2,537,262 |
|
| 2,987,704 | 671,530 | (562,989) | - | 822,337 | - 358,279 |
4,276,862 | ||
| Current assets Accounts receivable Credit to banking clients Investment securities Other current assets Other banking financial assets Slight and term deposits |
32,583,555 58,573 - 7,335,098 - - 39,977,226 |
856,911 107,314 2,355 327,981 - 13,571 1,308,132 |
(313,935) - (5,077) (226,563) (239,870) (373,758) (1,159,203) |
(290,567) - - (10,077) - - (300,644) |
- - - (224,634) - - (224,634) |
- (883,883) - 3,876 - 9,184 - - - 507,104 - 406,909 - 43,190 |
31,952,081 169,763 6,461 7,201,805 267,235 46,723 39,644,067 |
|
| Merchandise Raw, subsidiary and consumable |
1,719,745 658,137 2,377,882 42,355,108 45,342,812 |
260,657 18,046 278,703 1,586,835 2,258,365 |
- - - (1,159,203) (1,722,191) |
(39,390) - (39,390) (340,034) (340,034) |
- - - (224,634) 597,703 |
- - - - - - - 43,190 - 401,469 |
1,941,012 676,183 2,617,195 42,261,262 46,538,124 |
|
| Opening balance | Increases | Reversals | 31.12.2017 Utilisations |
Transfers | Changes in the consolidation perimeter |
Closing balance | ||
| Non-current assets Tangible fixed assets Investment properties |
173,055 1,291,498 1,464,553 |
- 49,208 49,208 |
(123,714) (248,150) (371,864) |
- - - |
- - - |
- - - |
49,341 1,0 92,556 1,141,897 |
|
| Credit to banking clients Other non-current assets |
- 1,748,286 |
62,628 233,311 |
(3,550) - |
- (194,868) |
- - |
- - |
59,078 1,786,729 |
| 31.12.2017 | Changes in the consolidation | ||||||
|---|---|---|---|---|---|---|---|
| Opening balance | Increases | Reversals | Utilisations | Transfers | perimeter | Closing balance | |
| Non-current assets | |||||||
| Tangible fixed assets | 173,055 | - | (123,714) | - | - | - | 49,341 |
| Investment properties | 1,291,498 | 49,208 | (248,150) | - | - | - | 1,0 92,556 |
| 1,464,553 | 49,208 | (371,864) | - | - | - | 1,141,897 | |
| Credit to banking clients | - | 62,628 | (3,550) | - | - | - | 59,078 |
| Other non-current assets | 1,748,286 | 233,311 | - | (194,868) | - | - | 1,786,729 |
| TA105019 - Imparidade | 1,748,286 | 295,939 | (3,550) | (194,868) | - | - | 1,845,807 |
| 3,212,839 | 345,147 | (375,414) | (194,868) | - | - | 2,987,704 | |
| Current assets Accounts receivable | 30,309,524 | 2,358,555 | (1,302,268) | (1,060,347) | - | 2,278,091 | 32,583,555 |
| Credit to banking clients | 417 | 70,950 | (12,794) | - | - | - | 58,573 |
| Other current assets | 8,173,677 | 254,470 | (445,833) | (974,0 12) |
- | 326,796 | 7,335,098 |
| 38,483,618 | 2,683,975 | (1,760,895) | (2,034,359) | - | 2,604,887 | 39,977,226 | |
| Merchandise | 1,565,187 | 236,253 | (455) | (81,240) | - | - | 1,719,745 |
| Raw, subsidiary and consumable | 579,327 | 78,810 | - | - | - | - | 658,137 |
| 2,144,514 | 315,0 63 |
(455) | (81,240) | - | - | 2,377,882 | |
| 40,628,132 | 2,999,038 | (1,761,350) | (2,115,599) | - | 2,604,887 | 42,355,108 | |
| 43,840,971 | 3,344,185 | (2,136,764) | (2,310,467) | - | 2,604,887 | 45,342,812 |
In the year ended 31 December 2017, the caption Changes in the consolidation perimeter refers to the balances of Transporta as at the acquisition date.
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 2018, 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 30 September 2018 and 31 December 2017 the Company's shareholders with greater than or equal to 2% shareholdings, according to the information reported, are as follows:
| 30.09.2018 | ||||
|---|---|---|---|---|
| Shareholder | No. of shares | % | Nominal value | |
| Gestmin SGPS, S.A. (1) | 18,589,534 | 12.393% | 9,294,767 | |
| Manuel Carlos de Melo Champalimaud | 284,885 | 0.190% | 142,443 | |
| Manuel Carlos de Melo Champalimaud (2) | Total | 18,874,419 | 12.583% | 9,437,210 |
| 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 |
| GreenWood Builders Fund I, LP (4) | Total | 7,500,502 | 5.000% | 3,750,251 |
| Norges Bank | Total | 6,399,190 | 4.266% | 3,199,595 |
| Credit Suisse Group AG (5) | Total | 4,965,530 | 3.310% | 2,482,765 |
| BlackRock, Inc.(6) | Total | 3,853,705 | 2.569% | 1,926,853 |
| BBVA BOLSA FI (7) | 1,139,308 | 0.760% | 569,654 | |
| BBVA BOLSA EURO FI (7) | 674,991 | 0.450% | 337,496 | |
| BBVA BOLSA EUROPA FI (7) | 1,335,028 | 0.890% | 667,514 | |
| BBVA BOLSA PLUS FI (7) | 346,172 | 0.231% | 173,086 | |
| BBVA Asset Management, SA SGIIC (7) | Total | 3,495,499 | 2.330% | 1,747,750 |
| Wellington Management Group LLP (8) | Total | 3,105,222 | 2.070% | 1,552,611 |
| CTT, S.A. (own shares) (9) | Total | 1 | 0.000% | 0.50 |
| Other shareholders | Total | 93,313,187 | 62.209% | 46,656,594 |
| Total | 150,000,000 | 100.000% | 75,000,000 |
d5dc44f2bd56/ficheiroPdf/BBVA%20Qualif%20Hold%2026Mar2018_EN.pdf?byInode=true.
(8) The full chain of controlled undertakings controlled by the Wellington Management Group LLP through which the voting rights are held is shown in point 8 of the qualifying holdings press release of 5 September 2017 available on CTT website at: http://www.ctt.pt/contentAsset/raw-data/19f0d587-5a8b-4e33-8afdba914e4d88cd/ficheiroPdf/Wellington%20Managt%20Gr%20Qualif%20Hold%205Sep2017_EN.pdf?byInode=true.
(9) On 31 January 2017 and in execution of the Remuneration Committee's approved remuneration policy for the 2014-2016 term of office and the Company's Executive Director Share Award Plan approved by the General Meeting held on 5 May 2015, a total of 600,530 own shares representing 0.400% of the share capital was awarded to the Company's Executive Directors, as long-term variable remuneration. At the present date, CTT holds thus 1 own share corresponding to 0.000% of the share capital and with the nominal value of €0.50; the rights inherent to this share remain suspended pursuant to article 324 of the Portuguese Companies Code.
| 31.12.2017 | ||||
|---|---|---|---|---|
| Shareholder | No. of shares | % | Nominal value | |
| Gestmin SGPS, S.A. (1) | 16,733,301 | 11.156% | 8,366,651 | |
| Manuel Carlos de Melo Champalimaud | 284,885 | 0.190% | 142,443 | |
| Manuel Carlos de Melo Champalimaud (2) | Total | 17,018,186 | 11.345% | 8,509,093 |
| 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 |
| Credit Suisse Group AG (4) | Total | 4,965,530 | 3.310% | 2,482,765 |
| Norges Bank | Total | 4,726,966 | 3.151% | 2,363,483 |
| BNP Paribas Asset Management, S.A. (5) | Total | 4,646,344 | 3.098% | 2,323,172 |
| Wellington Management Group LLP (6) | Total | 3,105,222 | 2.070% | 1,552,611 |
| Kairos Partners SGR SpA (7) | Total | 3,075,000 | 2.050% | 1,537,500 |
| CTT, S.A. (own shares) (8) | Total | 1 | 0.000% | 0.50 |
| Other shareholders | Total | 103,970,006 | 69.313% | 51,985,003 |
| Total | 150,000,000 | 100.000% | 75,000,000 |
| 15. RESERVES, OTHER CHANGES IN EQUITY AND RETAINED EARNINGS | |||||
|---|---|---|---|---|---|
| Reserves | |||||
| As at 30 September 2018 and 31 December 2017, the heading Reserves is detailed as follows: | |||||
| 30.09.2018 | |||||
| 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 | - | - | - | 1,282,861 | 1,282,861 |
| Assets fair value | - | - | (12,744) | - | (12,744) |
| Closing balance | 15,000,000 | 8 | 37,579 | 50,808,190 | 65,845,778 |
| 31.12.2017 | |||||
| Legal reserves | Own shares reserves | Fair Value reserves | Other reserves | Total | |
| Opening balance | 18,072,559 | 5,097,536 | 13,474 | 11,708,102 | 34,891,671 |
| Share capital decrease | - | - | - | 49,500,000 | 49,500,000 |
| Transfers | (3,072,559) | - | - | 3,072,559 | - |
| Own shares attribution | - | (5,097,527) | - | 5,097,527 | - |
| Assets fair value | - | - | 36,849 | - | 36,849 |
| Share Plan (attribution) | - | - | - | (4,480,638) | (4,480,638) |
| Closing balance | 15,000,000 | 8 | 50,323 | 64,897,551 | 79,947,883 |
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.
Following the attribution of own shares to executive members of the Board of Directors within the scope of the remuneration policy established by the Remuneration Committee for the 2014-2016 term of office, in January 2017, the correspondent reserve was reduced in the amount of 5,097,527 Euros.
As at 30 September 2018, 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 nine-month period ended 30 September 2018 and the year ended 31 December 2017, the following movements were made in the heading Retained earnings:
| During the nine-month period ended 30 September 2018 and the year ended 31 December 2017, the following | |||
|---|---|---|---|
| 30.09.2018 | 31.12.2017 | ||
| Opening balance | 34,268,089 | 93,589,211 | |
| Application of the net profit of the prior year | 27,263,244 | 62,160,395 | |
| Distribution of dividends (Note 16) | (41,627,778) | (72,000,000) | |
| Share capital increase Changes to accounting polices |
- (1,467,664) |
(49,500,000) - |
|
| Adjustments from the application of the equity method | (2,005) | 18,482 | |
| Other movements | (1,282,861) | - |
The amount of 1,467,664 Euros relates to the effect of the adoption of IFRS 9 and IFRS 15, which is disclosed in more detail in note 3.
The Actuarial gains/losses associated to post-employment benefits, as well as the corresponding deferred taxes, are recognised in this heading.
Thus, for the nine-month period ended 30 September 2018 and the year ended 31 December 2017, the movements occurred in this heading were as follows: 30.09.2018 31.12.2017
| The Actuarial gains/losses associated to post-employment benefits, as well as the corresponding deferred | |||
|---|---|---|---|
| Thus, for the nine-month period ended 30 September 2018 and the year ended 31 December 2017, the | |||
| 30.09.2018 | 31.12.2017 | ||
| (32,634,996) | (27,137,824) | ||
| Opening balance Actuarial gains/losses Tax effect |
- - |
(7,579,217) 2,082,045 |
According to the dividends distribution proposal included in the 2017 Annual Report, at the General Meeting of Shareholders, which was held on 18 April 2018, a dividend distribution of 57,000,000 Euros regarding the financial year ended 31 December 2017 was proposed and approved. The amount of41,627,778 Euros was withdrawn from retained earnings and 15,372,222 Euros from reserves. The dividend amount assigned to own shares was transferred to Retained earnings, totalling 0.38 Euros.
At the General Meeting of Shareholders, which was held on 20 April 2017, a dividend distribution of 72,000,000 Euros was also approved, corresponding to a dividend per share of 0.48 Euros, regarding the financial year ended 31 December 2016. The dividend was paid on 19 May 2017. The dividend amount assigned to own shares was transferred to Retained earnings, totalling 0.48 Euros. 30.09.2018 31.12.2017
During the nine-month periods ended 30 September 2018 and 30 September 2017, the earnings per share were calculated as follows:
| During the nine-month periods ended 30 September 2018 and 30 September 2017, the earnings per share were | ||
|---|---|---|
| 30.09.2018 | 31.12.2017 | |
| Net income for the period | 9,892,497 | 27,263,244 |
| Average number of ordinary shares Earnings per share |
149,999,999 | 149,950,640 |
| Basic | 0.07 | 0.18 |
| Diluted | 0.07 | 0.18 |
| 30.09.2018 | 31.12.2017 | |
| Shares issued at begining of the period Own shares effect |
150,000,000 1 |
150,000,000 49,360 |
| Average number of shares during the period | 149,999,999 | 149,950,640 |
The average number of shares is detailed as follows:
| 30.09.2018 | 31.12.2017 | |
|---|---|---|
| Shares issued at begining of the period | 150.000.000 | 150.000.000 |
| Own shares effect | 49.360 | |
| Average number of shares during the period | 149.999.999 | 149.950.640 |
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 2018, the number of own shares held by the Group is 1 and its average number for the period ended 30 September 2018 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.
| Provisions | |||||||
|---|---|---|---|---|---|---|---|
| For the nine-month period ended 30 September 2018 and the year ended 31 December 2017, in order to face | |||||||
| legal proceedings and other liabilities arising from past events, the Group recognised Provisions, which showed | |||||||
| the following movement: | |||||||
| 30.09.2018 | |||||||
| Opening balance | Increases | Reversals | Utilisations | Transfers | Changes in the consolidation perimeter |
Closing balance | |
| Non-current provisions | |||||||
| Litigations | 3,390,479 | 1,048,0 46 |
(1,042,581) | (216,854) | 77,418 | - | 3,256,508 |
| Restructuring Other provisions |
1,729,651 8,338,601 |
- 1,400,117 |
- (427,375) |
(91,033) (19,409) |
(597,70 3) (77,418) |
- - |
1,040,915 9,214,516 |
| Sub-total - caption "Provisions (increases)/reversals" | 13,458,730 | 2,448,163 | (1,469,956) | (327,296) | (597,703) | - | 13,511,938 |
| Restructuring | 11,903,172 | 11,889,638 | (134,866) | (21,320,712) | - | - | 2,337,232 |
| Other provisions | 666,430 | 316,802 | - | - | - | - | 983,232 |
| 26,028,332 | 14,654,603 | (1,604,822) | (21,648,008) | (597,703) | - | 16,832,402 | |
| 31.12.2017 | |||||||
| Opening balance | Increases | Reversals | Utilisations | Transfers | Changes in the consolidation perimeter |
Closing balance | |
| Non-current provisions | |||||||
| Litigations | 4,838,552 | 2,316,092 | (2,805,272) | (1,140,292) | 151,399 | 30,000 | 3,390 ,479 |
| Restructuring | - | 1,729,651 | - | - | - | - | 1,729,651 |
| Other provisions Sub-total - caption "Provisions (increases)/reversals" |
9,288,931 14,127,483 |
118,462 4,164,205 |
(333,053) (3,138,325) |
(584,340 ) (1,724,632) |
(151,399) - |
- 30,000 |
8,338,601 13,458,730 |
| Restructuring | - | 13,101,590 | (146,221) | (1,052,197) | - | - | 11,903,172 |
| Other provisions | - | 666,430 | - | - | - | - | 666,430 |
| Provisões | 14,127,483 | 17,932,225 | (3,284,546) | (2,776,829) | - | 30,000 | 26,028,332 |
In the year ended 31 December 2017 the caption Changes in the consolidation perimeter refers to the balances of Transporta as at the acquisition date.
The net amount between increases and reversals of provisions was recorded in the consolidated income statement under the caption Provisions, net and amounted to (978,207) Euros as at 30 September 2018 (758,906 Euros as at 30 September 2017).
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, reinforcing the HR optimisation programme and reengineering the distribution network. As a result of this Transformation Plan, a provision for restructuring in the total amount of 13,571,359 Euros was recorded in the Company in the year ended 31 December 2017, having 11,841,708 Euros been recorded against the caption Staff costs and the amount of 1,729,651 Euros was recognised under the heading Provisions, net in the income statement.
Following the continuation of the HR optimisation programme in 2018, reinforcements of this provision in the amount of 11,889,638 Euros were recorded in the Group against the caption Staff costs in the income statement. As at 30 September 2018 the provision amounts to 2,337,332 Euros.
The utilisations recorded in the same period regard mainly the payment of indemnities foreseen when the provision was booked as well as the costs incurred with the closing of post offices.
For the nine-month period ended 30 September 2018, 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 7,421,629 Euros (7,882,083 Euros as at 31 December 2017).
On 30 September 2018, a provision is recognised in Tourline to face the notification issued by the Spanish National Commission on Markets and Competition, which has now been the subject of an appeal to the Spanish Audiencia Nacional (National High Court). The amount provisioned, of 1,400,000 Euros, is the result of the evaluation carried out by its legal advisors.
As at 30 September 2018, in addition to the previously mentioned situations, this heading also includes:
As at 30 September 2018 and 31 December 2017, the Group had provided bank guarantees to third parties as follows:
| Description | 30.09.2018 | 31.12.2017 |
|---|---|---|
| Autoridade Tributária e Aduaneira (Portuguese Tax and Customs Authority) | 10,987,388 | 4,844,868 |
| Contencioso Administrativo da Audiência Nacional (National Audience | ||
| Administrative Litigation)and CNMC - Comission Nacional de los Mercados y | ||
| la Competencia - Espanha (National Commission on Markets and Competition | 3,148,845 | - |
| - Spain) | ||
| FUNDO DE PENSÕES DO BANCO SANTANDER TOTTA (Pension Fund) | 3,030,174 | 3,030,174 |
| 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 |
| NOVIMOVESTE - Fundo de Investimento Imobiliário (Property fund) | 1,523,201 | 1,523,201 |
| LUSIMOVESTE - Fundo de Investimento Imobiliário (Property fund) | 1,274,355 | 1,274,355 |
| TIP - Transportes Intermodais do Porto, ACE (Oporto intermodal transport) | 150,000 | 150,000 |
| Courts | 112,888 | 126,204 |
| Municipalities | 96,665 | 188,491 |
| Solred (Repsol's fuel cards) | 80,000 | 80,000 |
| EPAL - Empresa Portuguesa de Águas Livres (Multi-municipal System of Water Supply and Sanitation of the Lisbon Area) | 68,895 | 21,433 |
| INCM - Imprensa Nacional da Casa da Moeda (Portuguese Mint and Official Printing Office) Fonavi, Nave Hospitalet |
46,167 40,477 |
46,167 40,477 |
| ANA - Aeroportos de Portugal (Airports of Portugal) | 34,000 | 68,000 |
| EMEL, S.A. (Municipal company managing parking in Lisbon) | 26,984 | 26,984 |
| 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 Odivelas Areas) | 17,000 | 17,000 |
| 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 |
| Other entities | 14,103 | 14,103 |
| Administração Regional de Saúde - Lisboa e Vale do Tejo ( Regional Health Authority of the Lisbon Area) |
13,086 | 13,086 |
| ACT Autoridade Condições Trabalho (Authority for Working Conditions) |
12,460 | 12,460 |
| Águas do Porto, E.M (Services of Water Supply and Sanitation of the city of Porto) | 10,720 | 10,720 |
| SMAS Torres Vedras (Services of Water Supply and Sanitation of the city of Torres Vedras) | 9,909 | 9,909 |
| 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 | 3,718 | 3,718 |
| Secretaria-Geral do Ministério da Administração Interna(General Secretariat | ||
| of the Ministry of Internal Administration) | 3,644 | - |
| Casa Pia de Lisboa, I.P. (public institute for the promotion and protection of the children and youngsters' rights) IFADAP (National Support Institute for Farming and Fishing) |
1,863 1,746 |
1,863 1,746 |
| Águas de Coimbra (Services of Water Supply and Sanitation of the city of Coimbra) | 870 | 870 |
| SPMS - Serviços Partilhados do Ministério da Saúde (Shared services of the Ministry of Health) | - | 30,180 |
| TNT Express Worldwide | - | 6,010 |
| 24,675,288 | 15,508,150 |
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 9,654,198 Euros as at 30 September 2018 and 31 December 2017.
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 the fiscal years 2013, 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, S.L.U. 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 2018, the Group had subscribed promissory notes amounting to approximately 42.5 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 and regarding the subsidiary CORRE in the amount of 92,159 Euros, which are still active as at 30 September 2018.
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, respectively. 30.09.2018 31.12.2017
As at 30 September 2018 and 31 December 2017, the heading Accounts payable showed the following composition:
| As at 30 September 2018 and 31 December 2017, the heading Accounts payable showed the following | |||
|---|---|---|---|
| 30.09.2018 | 31.12.2017 | ||
| Current | |||
| Advances from customers | 2,922,844 | 2,989,508 | |
| CNP money orders | 168,314,384 | 192,760,943 | |
| Suppliers | 66,111,870 | 67,167,246 | |
| Invoices pending confirmation | 9,955,253 | 10,783,684 | |
| Fixed assets suppliers | 2,442,543 | 8,069,559 | |
| Invoices pending confirmation (fixed assets) | 1,770,902 | 8,934,307 | |
| Values collected on behalf of third parties | 11,080,499 | 10,307,613 | |
| Postal financial services | 130,897,784 | 77,584,441 | |
| Advances regarding disposals | 1,055,512 | 9,947 | |
| Other accounts payable | 6,012,744 | 5,926,046 | |
The value 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.
This heading records mainly the amounts collected related to taxes, insurance, savings certificates and other money orders.
The increase of this heading mainly regards the deposit stipulated in the agreement for the sale of the building located at Rua da Palma.
As at 30 September 2018 and 31 December 2017, the composition of the heading Banking clients' deposits and other loans is as follows: 30.09.2018 31.12.2017
| 30.09.2018 | 31.12.2017 | ||
|---|---|---|---|
| Sight deposits Term deposits |
576,203,950 109,719,017 |
408,639,274 129,945,220 |
|
| Savings deposits | 103,708,325 | 80,645,186 |
| The above-mentioned amounts relate to Banco CTT clients' deposits. As at 30 September 2018 and 31 | ||||||
|---|---|---|---|---|---|---|
| December 2017, the residual maturity of banking clients' deposits and other loans is detailed as follows: | ||||||
| 30.09.2018 | ||||||
| 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 | 576,203,950 | - | - | - | - | 576,203,950 |
| - | 51,217,833 | 58,501,184 | - | - | 109,719,017 | |
| Term deposits | ||||||
| Savings deposits | 103,708,325 | - | - | - | - | 103,708,325 |
| 679,912,275 | 51,217,833 | 58,501,184 | - | - | 789,631,293 | |
| 31.12.2017 | ||||||
| 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 | 408,639,274 | - | - | - | - | 408,639,274 |
| Term deposits Savings deposits |
- 80,645,186 |
63,510,961 - |
66,434,259 - |
- - |
- - |
129,945,220 80,645,186 |
| No defined maturity | Due within 3 months | Over 3 months and less than 1 year |
Over 1 year and less | |||
|---|---|---|---|---|---|---|
| No defined maturity | Due within 3 months | Over 3 months and less than 1 year |
31.12.2017 Over 1 year and |
|||
| Sight deposits Term deposits |
408,639,274 - |
- 63,510,961 |
- 66,434,259 |
- - |
- - |
408,639,274 129,945,220 |
| Savings deposits | 80,645,186 | - | - | - | - | 80,645,186 |
As at 30 September 2018 the caption reflects the difference between the estimated income tax regarding the nine-month period ended 30 September 2018 and the amounts already paid regarding payments on account and additional payments on account. 30.09.2018 30.09.2017
During the nine-month periods ended 30 September 2018 and 30 September 2017, the composition of the heading Other operating income was as follows:
| During the nine-month periods ended 30 September 2018 and 30 September 2017, the composition of the | ||
|---|---|---|
| 30.09.2018 | 30.09.2017 | |
| Supplementary revenues | 3,294,508 | 3,371,433 |
| Early settlement discounts received | 49,053 | 48,161 |
| Gains inventories | 7,822 | - |
| Favourable exchange rate differences of assets and liabilities other than financing |
696,028 | 2,595,044 |
| Income from financial investments | 399,208 | 487,062 |
| Income from non-financial investments | 284,364 | 2,544,724 |
| Income from services and commissions | 3,483,412 | 3,131,897 |
| Interest income and expenses - financial services | 68,949 | 147,372 |
| VAT adjustments | 2,083,422 | 1,888,084 |
| 934,943 | 395,386 | |
| Other |
The interest related to the Financial Services segment is recognised under this caption.
During the nine-month periods ended 30 September 2018 and 30 September 2017, the composition of the heading Staff Costs was as follows:
| During the nine-month periods ended 30 September 2018 and 30 September 2017, the composition of the | ||
|---|---|---|
| 30.09.2018 | 30.09.2017 | |
| Remuneration Employee benefits |
195,024,529 3,189,100 |
199,825,148 3,316,737 |
| Indemnities | 16,447,768 | 3,079,821 |
| Social Security charges | 43,245,426 | 43,588,369 |
| Occupational accident and health insurance | 3,315,943 | 2,538,400 |
| Social welfare costs | 4,808,535 | 5,030,242 |
| Other staff costs | 70,445 | 121,425 |
| Remuneration of the statutory bodies of CTT, S.A. | |||||
|---|---|---|---|---|---|
| In the nine-month periods ended 30 September 2018 and 30 September 2017, 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 - Share Plan | 30,105 | - | - | - | 30,105 |
| 167,767 | - | - | - | 167,767 | |
| 1,895,720 | 127,500 | 41,850 | 14,000 | 2,079,070 | |
| 30.09.2017 | |||||
| Board of Directors | Audit Comittee | Remuneration Board | General Meeting of Shareholders |
Total | |
| Short-term remuneration | |||||
| Fixed remuneration | 1,927,997 | 156,357 | 36,291 | 4,500 | 2,125,145 |
| Annual variable remuneration | 672,272 | - | - | - | 672,272 |
| 30.09.2017 | ||||
|---|---|---|---|---|
| Board of Directors | Audit Comittee | General Meeting of | Total | |
| 2,125,145 | ||||
| 672,272 | ||||
| 2,797,416 | ||||
| 158,947 | ||||
| 616,890 | - | - | - | 616,890 |
| - | - | 775,837 | ||
| 775,837 | - | |||
| 1,927,997 672,272 2,600,268 158,947 |
156,357 - 156,357 - |
Remuneration Board 36,291 - 36,291 - |
Shareholders 4,500 - 4,500 - |
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 a comparison of the recorded performance of the Total Shareholder Return (TSR) of CTT shares and the weighted TSR of a peer group composed of national and international companies.
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 30,105 Euros corresponds to the cost to be
assumed in the period between 1 January 2018 and 30 September 2018 based on the assessment performed by an independent entity as at 31.12.2017.
For the nine-month period ended 30 September 2018, and in accordance with the provisions of the Operational Transformation Plan, no estimate of Annual Variable Compensation was recorded for the members of the Statutory Bodies of CTT, S.A..
The change in the "Remuneration" caption arises essentially from the combined effect of the HR optimisation programme initiated in the previous year, the salary revision agreed with the workers' representative organisations, as well as the decision not to pay the variable remuneration related to 2017.
During the nine-month period ended 30 September 2018, this caption includes the amount of 15.8 million Euros related to compensations established for termination of employment contracts by mutual agreement, a process initiated in 2018 following the continuation 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 2017, the heading Staff costs includes the amounts of 543,015 Euros and 622,537 Euros, respectively, related to expenses with workers' representative bodies.
For the nine-month periods ended 30 September 2018 and 30 September 2017, the average number of staff of the Group was 12,440 and 12,579, respectively.
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 above 1,500,000 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., Mailtec Comunicação, S.A., Payshop Portugal, S.A, CTT Contacto, S.A., Banco CTT, S.A. and Escrita Inteligente, 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 2017, the reconciliation between the nominal rate and the effective income tax rate was as follows:
| 30.09.2018 | 30.09.2017 | |
|---|---|---|
| Earnings before taxes (a) | ||
| 17,160,879 | 32,596,697 | |
| Nominal tax rate | 21.0% 3,603,785 |
21.0% 6,845,306 |
| Tax Benefits | (307,967) | (272,766) |
| Accounting capital gains/(losses) | (48,516) | (270,842) |
| Tax capital gains/(losses) | 5,607 | (105,587) |
| Provisions not considered in the calculation of deferred taxes | 25 | 828 |
| Impairment losses and reversals | 218,832 | (106,771) |
| Adjustments related with - autonomous taxation | 398,933 | 918,559 |
| Other situations, net | 721,761 | 1,606,365 |
| Tax losses without deferred tax | 1,224,306 | 1,306,821 |
| Insuficiency / (Excess) estimated income tax | 195,700 | 767 |
| Subtotal (b) | 6,012,465 | 9,922,681 |
| (b)/(a) | 35.04% | 30.44% |
| Adjustments related with - Municipal Surcharge | 383,782 | 751,830 |
| Adjustments related with - State Surcharge | 844,806 | 2,550,165 |
| Income taxes for the period | 7,241,053 | 13,224,676 |
| Effective tax rate | 42.20% | 40.57% |
| Income taxes for the period | ||
| Current tax | 3,516,152 | 10,810,930 |
| Deferred tax | 3,529,201 | 2,412,979 |
| Insuficiency / (Excess) estimated income tax | 195,700 | 767 |
| 7,241,053 | 13,224,676 |
During the nine-month period ended 30 September 2018, the heading Insufficiency/(Excess) estimated income tax mainly relates to the insufficiency of the income tax estimate of previous years in the net amount of 648,522 Euros and to the tax credit related to SIFIDE of 2016 in the amount of 452,822 Euros. 30.09.2018 31.12.2017
The effective tax rate, not considering the effect of the "Tax losses without deferred tax" would be of 35.06% and 36.56%, in the nine-month periods ended 30 September 2018 and 30 September 2017, respectively.
As at 30 September 2018 and 31 December 2017, the balance of deferred tax assets and liabilities was composed as follows:
| As at 30 September 2018 and 31 December 2017, the balance of deferred tax assets and liabilities was | ||
|---|---|---|
| 30.09.2018 | 31.12.2017 | |
| Deferred tax assets | ||
| Employee benefits - healthcare | 71,306,234 | 71,544,019 |
| Employee benefits - pension plan | 76,164 | 80,044 |
| Employee benefits - other long-term benefits | 3,895,189 | 4,409,187 |
| Impairment losses and provisions | 3,792,562 | 6,753,261 |
| Tax losses carried forward | 1,074,957 | 688,388 |
| Impairment losses in tangible fixed assets | 420,038 | 257,614 |
| Share Plan | 19,789 | 11,308 |
| Land and buildings | 454,756 | 494,805 |
| Tangible assets' tax revaluation regime | 2,339,303 | 2,581,300 |
| Other | 614,946 | 335,813 |
| 83,993,938 | 87,155,739 | |
| Deferred tax liabilities | ||
| Revaluation of tangible fixed assets before IFRS | 2,440,311 | 2,591,593 |
| Suspended capital gains | 756,558 | 776,522 |
| Other | 31,006 | 31,006 |
| 3,227,875 | 3,399,121 |
As at 30 September 2018, the expected amount of deferred tax assets and liabilities to be settled within 12 months is 2.5 million Euros and 0.2 million Euros, respectively.
During the nine-month period ended 30 September 2018 and the year ended 31 December 2017, the movements which occurred under the deferred tax headings were as follows:
| 30.09.2018 | 31.12.2017 | |
|---|---|---|
| Deferred tax assets | ||
| Opening balances | 87,155,739 | 86,220,762 |
| Effect on net profit | ||
| Employee benefits - healthcare | (237,785) | (1,061,122) |
| Employee benefits - pension plan | (3,879) | 80,044 |
| Employee benefits - other long-term benefits | (513,998) | (892,139) |
| Deferred accounting gains | - | (606,790) |
| Impairment losses and provisions | (2,939,466) | 3,722,704 |
| Tax losses carried forward | 386,570 | 361,204 |
| Impairment losses in tangible fixed assets | 162,424 | (102,719) |
| Long-term variable remuneration | - | 11,364 |
| Share plan | 8,481 | (1,268,526) |
| Land and buildings | (40,049) | (1,365,661) |
| Tangible assets' tax revaluation regime | (241,997) | (86,657) |
| Other | (87,903) | 61,230 |
| Effect on equity | ||
| Employee benefits - healthcare | - | 2,082,045 |
| Other | 345,801 | - |
| Closing balance | 83,993,938 | 87,155,739 |
| 30.09.2018 | 31.12.2017 | |
| Deferred tax liabilities | ||
| Opening balances | 3,399,121 | 4,123,146 |
| Effect on net profit | ||
| Revaluation of tangible fixed assets before IFRS adoption | (151,282) | (560,116) |
| Suspended capital gains | (19,964) | (158,299) |
| Other | - | (5,610) |
| Closing balance | 3,227,875 | 3,399,121 |
The tax losses carried forward are related to the losses of the subsidiaries Tourline, Escrita Inteligente and Transporta, and are detailed as follows:
| Revaluation of tangible fixed assets before IFRS adoption | (151,282) | (560,116) | |
|---|---|---|---|
| Company | Tax losses | Deferred tax assets | |
| 48,074,560 | - | ||
| 77,155 | 13,591 | ||
| The tax losses carried forward are related to the losses of the subsidiaries Tourline, Escrita Inteligente and Tourline Escrita Inteligente Transporta |
5,054,127 | 1,061,367 |
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, 2016 and 2017 have no time limit for deduction. As far as Escrita Inteligente is concerned, the tax losses related to the years 2015 and 2016 may be carried forward in the next 12 years and the tax losses of 2017 may be reported in the next 5 years. Regarding Transporta, the tax loss refers to the years 2017 and 2018 and 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 2.4 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.
Regarding the year ended 31 December 2015, for the expenses incurred with R&D of 3,358,151 Euros, the Group will have the possibility of benefiting from a tax deduction in corporate income tax estimated at 2,556,380 Euros. According to the notification dated 6 April 2017 of the Certification Commission, a tax credit of 1,079,209 Euros was attributed to CTT.
For the year ended 31 December 2016, regarding the expenses incurred with R&D of 1,895,281 Euros, the Group will have the possibility of benefiting from a tax deduction in corporate income tax estimated at 1,006,271 Euros. According to the notification dated 22 March 2018 of the Certification Commission, a tax credit of 444,943 Euros was attributed to the Group.
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 estimated at 590,740 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 years 2014 and 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 2018.
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 2017, 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 | |
| Other shareholders of 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 | ||
| 30.09.2017 | ||||||
| Accounts receivable | Accounts payable | Revenues | Costs | Dividends | ||
| Shareholders | - | - | - | - | 72,000,000 | |
| Other shareholders of Group companies |
| Other shareholders of Group companies | ||||||
|---|---|---|---|---|---|---|
| Members of the | (Note 23) | |||||
| 30.09.2017 | ||||||
| Accounts receivable | Accounts payable | Revenues | Costs | Dividends | ||
| Shareholders | - | - | - | - | 72,000,000 | |
| Other shareholders of Group companies | ||||||
| Associated companies | 74,849 | 857 | 8,789 | 71,394 | - | |
| Jointly controlled | 173,649 | - | 376,247 | 1,994 | - | |
| Members of the | (Note 23) | |||||
| Board of Directors | - | - | - | 2,600,268 | - | |
| Audit Committee | - | - | - | 156,357 | - | |
| Remuneration Committee | - | - | - | 36,291 | - | |
| General Meeting | - | - | - | 4,500 | - | |
| 248,498 | 857 | 385,036 | 2,870,804 | 72,000,000 |
The transactions and balances between subsidiaries are eliminated in the consolidation process and are not disclosed in this note.
On 5 July 2018 the Portuguese Competition Authority (AdC) decided to close the case against CTT and accept the commitments undertaken by CTT in the framework of the access to the postal network under the terms and for the purposes laid down in article 23 of Law no. 19/2012, of 8 May, (Competition Law), including the extension of the scope of the offer of access to the postal network by competing postal operators, as follows:
These commitments shall be implemented within six months from the date of the notification.
The Spanish National Commission on Markets and Competition fined Tourline Express Mensajería, S.L.U. in the amount of 3,148,845 Euros (three million, one hundred and forty-eight thousand, eight hundred and forty-five euros), for alleged cartel practice with ICS - International Courier Solution SL, in the courier market in Spain, between October 2013 and April 2016. As it considered the decision completely unfounded, Tourline has appealed to the Spanish Audiencia Nacional (National High Court). In this context, Tourline recognised a provision as referred in Note 18.
The financing agreement between CTT and the banks BBVA and Bankinter entered into on 27 September 2017 was amended as follows effective as from 27 September 2018:
Following these amendments CTT incurs in a commission on the total amount financed in the amount of 75 thousand Euros. As at 30 September 2018, no amount had been used.
This Programme shall be implemented during the next 2 years and represents a strong commitment to the modernisation of the postal and logistics operations. With an investment of about 40 million Euros, CTT intends to intensify mail sorting automation, improve working conditions, strengthen quality and modernise the distribution network infrastructure, thus reacting to the mail volumes decline and the growth of Express & Parcels, which reflect the change in consumer behaviour as a result of the digitalisation of the economy and society.
On 18 October 2018, by means of arbitration and administrative procedures, CTT applied for a declaration of invalidity of the Decision of ANACOM regarding the parameters of quality of service and performance targets associated with the provision of the Universal Postal Service ("USO") known on 18 July 2018, on the grounds of its disproportionate and inadequate nature, as detailed in the communication to the market of that date, available at http://web3.cmvm.pt/sdi/emitentes/docs/FR69943.pdf.
THE DIRECTOR OF ACCOUNTING & TREASURY THE BOARD OF DIRECTORS
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