CTT-Correios de Portugal

Earnings Release • May 11, 2016

CTT – Correios de Portugal, S.A.

1Q16 Results Presentation

11 May 2016

DISCLAIMER

This document has been prepared by CTT – Correios de Portugal, S.A. (the "Company" or "CTT") exclusively for use during the presentation of the 1 st quarter 2016 results. As a consequence thereof, this document may not be disclosed or published, nor used by any other person or entity, for any other reason or purpose without the express and prior written consent of CTT. This document (i) may contain summarised information and be subject to amendments and supplements, and (ii) the information contained herein has not been verified, reviewed nor audited by any of the Company's advisors or auditors. Except as required by applicable law, CTT does not undertake any obligation to publicly update or revise any of the information contained in this document. Consequently, the Company does not assume liability for this document if it is used for a purpose other than the above. No express or implied representation, warranty or undertaking is made as to, and no reliance shall be placed on, the accuracy, completeness or correctness of the information or the opinions or statements expressed herein. Neither the Company nor its subsidiaries, affiliates, directors, employees or advisors assume liability of any kind, whether for negligence or any other reason, for any damage or loss arising from any use of this document or its contents. Neither this document nor any part of it constitutes a contract, nor may it be used for incorporation into or construction of any contract or agreement.

This document has an informative nature and does not constitute, nor must it be interpreted as, an offer to sell, issue, exchange or buy any financial instruments (namely any securities issued by CTT or by any of its subsidiaries or affiliates), nor a solicitation of any kind by CTT, its subsidiaries or affiliates. Distribution of this document in certain jurisdictions may be prohibited, and recipients into whose possession this document comes shall be solely responsible for informing themselves about, and observing any such restrictions. Moreover, the recipients of this document are invited and advised to consult the public information disclosed by CTT on its website (www.ctt.pt) as well as on the Portuguese Securities Exchange Commission's website (www.cmvm.pt). In particular, the contents of this presentation shall be read and understood in light of the financial information disclosed by CTT, through such means, which prevail in regard to any data presented in this document. By attending the meeting where this presentation is made and reading this document, you agree to be bound by the foregoing restrictions.

FORWARD-LOOKING STATEMENTS

This presentation contains forward-looking statements. All the statements herein which are not historical facts, including, but not limited to, statements expressing our current opinion or, as applicable, those of our directors regarding the financial performance, the business strategy, the management plans and objectives concerning future operations and investments are forward-looking statements. Statements that include the words "expects", "estimates", "foresees", "predicts", "intends", "plans", "believes", "anticipates", "will", "targets", "may", "would", "could", "continues" and similar statements of a future or forward-looking nature identify forward-looking statements.

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

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

Forward-looking statements (in particular, the objectives, estimates and projections as well as the corresponding assumptions) do neither represent a commitment regarding the models and plans to be implemented, nor are they guarantees of future performance, nor have they been reviewed by the auditors of CTT. You are cautioned not to place undue reliance on the forward-looking statements herein.

All forward-looking statements included herein speak only as at the date of this presentation. Except as required by applicable law, CTT does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

EFFECTS; FULL YEAR GUIDANCE CONFIRMED

Addressed mail volumes decline (-4.4%) normalises in 1Q16 within the guidance range (-3% / -5%), contrary to the much better than normal level in 1Q15 (-1.5%); FY15 decline was -3.2%

MAIL

Savings & insurance products placements

EXPRESS & PARCELS

Volumes and revenues impacted by:

• In Portugal, continuous negative pressure on the "Banking documents delivery network" ¹ and termination of service to a large low-margin client in 4Q15 whose volumes are being replaced by smaller but higher-margin clients
• In Spain, initial effects of the termination of service to large loss-making clients in recent turnaround initiative with positive impact on EBITDA

FINANCIAL SERVICES

• Extraordinarily strong level of placements of savings products in 1Q15 drives a negative comparison with 1Q16
• 1Q16 performance in fact a solid one: >€1bn of savings & insurance products inflows, exactly in line with the 2015 average quarterly placements
• Comparison effect in both revenues and EBITDA expected to normalise along the year

Several effects put downward pressure on the results when looking at just one quarter, normalisation expected to occur along the year

COSTS IN 1Q16 IMPACT THE QUARTERLY COMPARISON

Financial and operational performance

€ million, except when indicated otherwise

	Including Banco CTT			Excluding Banco CTT 4
Financial indicators:	1Q15	1Q16	Δ%	1Q16	Δ%
Recurring revenues 1	191.2	177.9	-7.0%	177.7	-7.1%
Recurring operating costs 2	149.5	142.7	-4.5%	139.4	-6.7%
Recurring EBITDA 1, 2	41.7	35.1	-15.8%	38.3	-8.5%
Recurring net profit 3	25.5	20.4	-19.9%	22.9	-10.7%
Reported net profit	22.3	20.7	-7.3%	24.4 5	+3.9%

Metric	Addressed mail (million items)	Unaddressed mail (million items)	Parcels (million items)	FS savings flows 6 (€ billion)	Banco CTT current accounts (thousand)
1Q16 volumes	211.2	103.4	6.6	1.3	3.2
1Q16 vs. 1Q15	-4.4%	-6.3%	-4.0%	-54.4%	N/A

¹ Excluding non-recurring other revenues of €1.7m recognised in 1Q16 as a result of an early termination of a vacant building lease contract.

² Excluding amortisation, depreciation, provisions, impairment losses and non-recurring costs affecting EBITDA of €2.3m in 1Q15 (€1.4m related to Banco CTT) and €2.7m in 1Q16 (€1.4m related to Banco CTT – €1.2m booked in Banco CTT business unit and €0.2m booked in Mail business unit).

³ Considers the nominal tax rate of CTT.

⁴ Excluding Banco CTT business unit revenues and costs booked in Banco CTT and Mail business units.

⁵ Considers the effective tax rate of the period of CTT and Banco CTT.

6 Includes savings & insurance products placements and redemptions.

PUBLIC AND THE EARLY TERMINATION OF A LEASE CONTRACT

Banco CTT initiated its activity with a simple and competitive offer and state-of-the-art digital solutions

Competitive offer

€0 maintenance fee

€0 annual debit card fee

€0 fee for national transfers via homebanking

Balance Sheet optimisation measures

Early termination of vacant building lease contract as real estate market recovers

• EBITDA impact: +€1.7m from recognised deferred gain (non-recurring)
• EBIT impact: +€2.9m from reversal of provision for onerous contracts (non-recurring)
• Future cash impacts:
• Early termination clause of €6.0m
• Future cash flow to benefit from lower rents payable (€1.5m p.a.)

KEY HIGHLIGHTS: STRONG 1Q15 AND DECLINE IN E&P VOLUMES IMPACT THE

REVENUES COMPARISON

• Financial Services revenues impacted by a challenging quarterly comparison in public debt certificates placements (subscriptions down -57.8%, revenues down -€8.1m due to an exceptional January 2015, as a result of the downward revision of the remuneration rate on treasury & savings certificates)
• Express & Parcels revenues affected by volumes decline in Portugal (-5.0%, due to the termination of service to a large low-margin client in 4Q15) and Spain (-3.9%, due to the termination of service to large loss-making clients in a recent turnaround initiative)
• Addressed mail volumes decline -4.4% (within -3% / -5% guidance), partially offset by 3.1% average price increase for the period

LIKE BASIS, EXCLUDING BANCO CTT

• Staff costs decrease as a result of: €2.3m reduction in remuneration, partly due to the Company Agreement and partly to the implemented remuneration policy that connects the variable component to the company results; and €1.5m reduction from the more balanced use of the Healthcare Plan and the telephone subscription fee employee benefit
• ES&S and other costs decline mainly due to the impact of reduced distribution outsourcing due to Mail and E&P networks integration (-€1.1m) and -€2.4m reduction resulting from international mail exchange rate differences, the latter impacting mainly 1Q15

¹ Excluding amortisation, depreciation, provisions, impairment losses and non-recurring costs affecting EBITDA of €2.3m in 1Q15 (€1.4m related to Banco CTT) and €2.7m in 1Q16 (€1.4m related to Banco CTT). ² Excluding Banco CTT recurring op. costs: €0.1m in 1Q15 (booked in FS business unit) and €3.3m in 1Q16 (€3.0m booked in Banco CTT business unit, €0.3m in Mail business unit).

³ Booked in Banco CTT business unit (€3.0m, of which €1.5m Staff costs and €1.5m ES&S and other costs) and in Mail business unit (€0.3m of ES&S costs).

KEY HIGHLIGHTS: RECURRING EBITDA PERFORMANCE IN 1Q16 SERVES TO CONFIRM

THE FULL YEAR GUIDANCE

Recurring EBITDA declines by 8.5% (-€3.5m) on a like-for-like basis, as €3.3m increase in Mail EBITDA partially offsets the €6.9m decline in FS EBITDA

¹Including €0.3m Banco CTT recurring operating costs booked in Mail business unit.

² Excluding -€2.9m Banco CTT business unit recurring EBITDA.

³ Excluding total non-recurring revenues of €1.7m in 1Q16 and non-recurring operating costs affecting EBITDA of €2.3m in 1Q15 (€1.4m related to Banco CTT) and €2.7m in 1Q16 (€1.4m related to Banco CTT).

⁴ Excluding Banco CTT recurring revenues: €0.1m in 1Q16.

⁵ Excluding Banco CTT recurring op. costs: €0.1m in 1Q15 (booked in FS business unit) and €3.3m in 1Q16 (€3.0m booked in Banco CTT business unit and €0.3m in Mail business unit).

⁶ Booked in Banco CTT business unit (€2.9m) and in Mail business unit (€0.3m).

01. Key highlights

02. Other financials

03. Business units performance

OTHER FINANCIALS: NON-RECURRING ITEMS WITH €2.0M POSITIVE IMPACT ON EBIT

Reported EBITDA 34.2 Recurring EBITDA 35.1 Ongoing transformation plan +0.2 2015 Company Agreement +0.9 Strategic studies & other +1.6 Non-recurring revenues -1.7 1Q16 non-recurring items impacting EBITDA & EBIT € million Compensation for termination of continuous working hours (partially offset by recurring Staff costs savings of €0.7m) Impacting EBITDA & EBIT Impacting only EBIT % change vs. prior year Recurring EBIT 29.0 Restructuring for network optimisation 0.3 Onerous contracts & labour contingencies -3.2 Items affecting EBITDA and EBIT 0.9 Reported EBIT 31.0 Net impairments and provisions resulting from the restructuring and optimisation of the Tourline franchisee network Following the early termination of a vacant building lease contract, a reversal of the provision for onerous contracts regarding this building was recorded (€2.9m) Early termination of a vacant building lease contract Initial publicity campaign for launch & back-office processes consulting for Banco CTT Compensations for terminations by mutual agreement -13.3% xx% -15.8% -6.1% -19.7% The sum of the items listed above

OTHER FINANCIALS: LAUNCH OF BANCO CTT SUPPORTED BY THE PARENT COMPANY'S STRONG CASH POSITION

Cash flow million, % change vs. 1Q15 1 €			Adjusted cash at the end of the period
			€ million
	Reported 1Q16 ∆ %	Adjusted 2 1Q16 ∆%	279.0 277.5 +0.7 -3.3 +6.2 -14.2 -2.5
From operating activities From investing activities	+88.3% -15.4 -37.9% -14.8	-48.2% 12.1 -23.4% -13.3	+20.7
Of which: Capex payments 3	-15.7 -35.9%	-14.2 -22.4%	-9.1
Operating free cash flow	-30.3 +78.8%	-1.2 -109.4%	 Transition to new
From financing activities	-0.3 -128.1%	-0.3 -128.1%	healthcare provider (€6.3m)
Net change in cash	-30.6 +78.4%	-1.5 -111.0%	 Banco CTT suppliers (€3.1m)
Cash at end of period	573.0 -5.1%	277.5 -0.5%
			31-Dec-15 1Q16 Δ 1Q16 1Q16 1Q16 Altice 1Q16 Other 31-Mar-16 Capex Payments Net profit Onerous revenues Depreciation Adjusted Adjusted payments2 to suppliers contract (non-cash) expense cash / cash / 1Q16 provision (debt) (debt) reversal and gain

Solid cash position preserved in a quarter of relevant investment in Banco CTT

¹Except Cash at the end of the period (% change vs. Dec-15);

² Cash at the end of the period excluding net Financial Services payables of €324.7m (Dec-15) and €291.6m (Mar-16) and €4.0m net Banco CTT liabilities (Mar-16). Cash flow from operating and investing activities excluding changes in net Financial Services payables of -€155.6m (1Q15) and -€33.1m (1Q16), respectively, and change in net Banco CTT liabilities of €4.0m (1Q16).

³ Cash capex presented in the table; capex was €4.7m in 1Q16 (€5.2m in 1Q15).

OTHER FINANCIALS: NET CASH STANDS AT €80M POST-EMPLOYMENT BENEFITS, NET

Equity €1,099m (-2%) Other current liabilities Liabilities & Equity Other non-current liabilities FS payables (€302m) and Banco CTT liabilities (€6m) Employee benefits Financial debt (€10m; +29%) €1,099m (-2%) Cash & cash equivalents Assets PP&E Other non-current assets ² Other current assets ¹ Employee benefits tax asset € million; % change vs. 31 December 2015 €573m (-5%) €175m (+9%) €74m (-1%) €70m (~0%) €207m (-2%) €308m (-7%) €257m (-1%) €38m (-25%) €271m (+7%) €215m (-1%) Own cash (-1%) Cash from Financial Services partners (-7%) Net financial debt (cash) + ST&LT debt: €10m + Net FS payables & Banco CTT: €296m - Cash and cash equivalents: €573m = €(267)m Net debt (cash) + Employee benefits: €257m + Share incentive plan: €3m - Employee benefits tax asset: €74m = €(80)m - Net financial cash: €267m Strong liquidity position = 136% Share incentive plan €3.4m FS receivables (€10m) and Banco CTT assets (€2m) Healthcare: €237m Healthcare: €67m

Balance sheet optimisation initiatives to continue

1 Including Financial Services receivables of €6.4m and €10.3m as at Dec-15 and Mar-16, respectively.

2 Including Banco CTT assets of €2.0m as at Mar-16.

Balance Sheet – 31 March 2016

1. Key highlights

2. Other financials

03. Business units performance

BUSINESS UNITS PERFORMANCE: MAIL MARGIN EXPANDS DUE TO COST

OPTIMISATION AND HIGHER UTILISATION OF ITS ASSETS BY OTHER BUSINESS UNITS

¹Including +€0.6m of revenues that result from the network integration with CTT Expresso, +€0.8m from the MoU with Altice terminating in Dec-16, +€1.3m from the improvements made in the VAT deduction methodology procedures and -€2.2m decline in revenues from international mail exchange rate differences.

² Excluding amortisation, depreciation, provisions, impairment losses & non-recurring costs. Including Banco CTT recurring operating costs booked in Mail business unit of €0.3m in 1Q16.

³ Million items.

⁴ USO, excluding international inbound mail.

BUSINESS UNITS PERFORMANCE: NETWORK INTEGRATION SAVINGS HELP OFFSET

THE IMPACT OF VOLUMES DECLINE IN E&P

1 Including internal and other revenues, and internal transactions with Spain and Mozambique. Including +€0.8m from the MoU with Altice terminating in Dec-16.

² Excluding amortisation, depreciation, provisions, impairment losses & non-recurring costs.

³ Million items.

BUSINESS UNITS PERFORMANCE: FINANCIAL SERVICES COMPARISON IMPACTED BY EXTRAORDINARY PLACEMENT OF PUBLIC DEBT CERTIFICATES IN JANUARY 2015

1 Including +€0.8m from the MoU with Altice terminating in Dec-16 and +€0.7m from the improvements made in the VAT deduction methodology procedures.

² Excluding amortisation, depreciation, provisions, impairment losses & non-recurring costs. Including Banco CTT recurring operating costs booked in FS business unit of €0.1m in 1Q15.

³Amount of savings & insurance products placements (€ billion).

⁴ Million operations.

⁵ € million, new credit production, including consumer credit & credit cards.

REACHED €7.9M; IT WILL RAMP-UP ALONG THE YEAR

CTT Investor Relations

Upcoming Events:

13 May – Frankfurt – Roadshow with Barclays 16 May – London – IR dinner with Jefferies 17 May – London – UBS Pan European Small & Midcap Conference 18 May – London – BAML Business Services, Leisure & Transport Conference 6 Jun. – Boston – Roadshow with Investec 7 Jun. – New York – Roadshow with J.P. Morgan 8 Jun. – New York – Euronext Pan European Days Conference with Haitong 16 Jun. – Milan – Roadshow with Caixa BI 27 Jun. – Switzerland – Roadshow with Haitong 28 Jun. – London – Goldman Sachs 12th Annual European Business Services Conference

Contacts: Phone: +351 210 471 857 E-mail: investors@ctt.pt

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