CTT-Correios de Portugal

Interim / Quarterly Report • Oct 31, 2017

Consolidated Results

January-September 2017

	9MONTHS 2017CONSOLIDATED RESULTS 4
	HIGHLIGHTS 4
1.	ECONOMIC AND FINANCIAL ANALYSIS 5
2.	OTHER HIGHLIGHTS 16
3.	FUTURE PERSPECTIVES 19
	INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 25

CTT–CORREIOS DE PORTUGAL,S.A.–PUBLIC COMPANY

9MONTHS 2017CONSOLIDATED RESULTS

• Recurring Revenues increase by 0.2% that reflects some substitution of revenues from Mail and Financial Services due to growth of the Express & Parcels and Banco CTT business units, which puts pressure on the cost structure. Excluding the revenues of the agreement with Altice recorded in the same period of the previous year (€7.5m), recurring revenues grew by 1.6%.
• Addressed mail volumes decrease by 6.1% (7.2% in the 3rd quarter) at a faster-than-anticipated pace and worse than the expected range, but mitigated in terms of revenues by the price increase and the positive evolution of the product mix (registered mail and international mail growth) that led to a 5.5% increase in average revenue.
• Express & Parcels volumes grow by 18.4% in Portugal and 24.6% in Spain with revenues growth of 10.2% and 17.4%, respectively, but with higher-than-expected incremental costs (limited use of the installed capacity).
• Banco CTT increased its focus on mortgage loans with a production of €24.3m in the 3rd quarter and keeps growing in terms of customers (more than 240 thousand), who by the end of September had opened more than 190 thousand current accounts. As of today more than 200 thousand accounts have been opened.
• Acquisition of Transporta has put pressure on results with an impact on EBITDA of circa -€2.0m (-€0.7m in recurring terms), given the restructuring and integration process underway.
• Recurring EBITDA and Net profit decrease by 25.1% (-€22.9m) and 35.9% (-€17.5m), respectively, as a consequence of the loss of revenues from Altice, the sharp drop of mail volumes in the last two quarters and the costs associated with the process of adjustment of the networks to the accelerated growth of Banco CTT and the Express & Parcels business.

€ Million
		Reported			Recurring (*)
	9M17	9M16	∆	9M17	9M16	∆
Revenues	518.0	518.8	-0.2%	518.0	517.1	0.2%
Sales and services rendered	501.3	497.3	0.8%	501.3	497.3	0.8%
Net interest income	2.1	-0.03	»	2.1	-0.03	»
Other operating income	14.6	21.6	-32.4%	14.6	19.9	-26.5%
Operating costs	458.7	436.0	5.2%	449.8	426.1	5.6%
EBITDA	59.3	82.9	-28.5%	68.1	91.0	-25.1%
Amortisation, depreciation, provisions and impairments	22.9	12.5	83.4%	21.6	19.5	10.9%
EBIT	36.3	70.4	-48.4%	46.5	71.4	-34.9%
Financial income, net	-3.7	-4.2	11.5%	-3.7	-4.2	11.5%
Gains / (losses) in associated companies	-	0.2	-	-	0.2	-
Earnings before taxes (EBT)	32.6	66.4	-50.9%	42.8	67.5	-36.6%
Income tax for the period	13.2	20.6	-35.8%	11.7	19.0	-38.3%
Gains/(losses) attributable to non-controlling interests	-0.1	-0.2	-42.3%	-0.1	-0.2	-42.3%
Net profit attributable to equity holders	19.5	46.0	-57.6%	31.2	48.7	-35.9%

Consolidated Results

(*) Recurring net profit excludes non-recurring revenues and costs and considers a nominal tax rate.

1. ECONOMIC AND FINANCIAL ANALYSIS

REVENUES

Recurring revenues totalled €518.0m, corresponding to a growth of €0.9m (+0.2%) over the same period of the previous year.

The weight of each business unit in total recurring revenues underwent slight changes from 2016 to 2017. There was an increase in the weight of the Express & Parcels and Banco CTT business units in total recurring revenues and a small percentage reduction in the Mail and the Financial Services business units.

€ Million
		Reported		Recurring		Weight %
	9M17	9M16	∆	9M17	9M16	∆	9M17	9M16
Revenues	518.0	518.8	-0.2%	518.0	517.1	0.2%	100%	100%
Business units	543.1	539.7	0.6%	543.1	539.7	0.6%
Mail	393.4	398.0	-1.1%	393.4	398.0	-1.1%	76%	77%
Express & Parcels	96.2	88.1	9.2%	96.2	88.1	9.2%	19%	17%
Financial Services	48.2	53.4	-9.7%	48.2	53.4	-9.7%	9%	10%
Banco CTT	5.3	0.3	»	5.3	0.3	»	1%	0.1%
Central Structure and intragroup eliminations	-25.2	-20.9	-20.4%	-25.2	-22.6	-11.3%	-5%	-4%

Revenues

MAIL

The recurring revenues of the MAIL business unit totalled €393.4m, corresponding to a year-on-year decrease of 1.1%. The drop in the revenues is associated mostly with the evolution of addressed mail volumes, which decreased by 6.1% in the first 9 months of 2017, above the trend in recent years with an acceleration in the second and third quarters of 2017.

Mail Volumes
Million items
	1H17	1H16	∆	3Q17	3Q16	∆	9M17	9M16	∆
Transactional Mail	331.0	349.9	-5.4%	144.3	155.0	-6.9%	475.3	504.9	-5.9%
Editorial Mail	21.6	22.6	-4.3%	9.1	9.3	-2.4%	30.7	31.9	-3.8%
Advertising Mail	35.4	38.6	-8.2%	14.0	16.0	-12.7%	49.4	54.6	-9.5%
Addressed Mail	388.0	411.1	-5.6%	167.4	180.3	-7.2%	555.4	591.4	-6.1%
Unaddressed Mail	234.8	234.7	0.0%	133.4	126.7	5.3%	368.2	361.4	1.9%

The reason for the change in addressed mail volumes was mainly the drop in transactional mail volumes (-5.9%), which fell by 6.9% in the 3rd quarter of 2017, maintaining the downward trend of the 2nd quarter of 2017 (-7.7%).

The decline of the transactional mail volumes was due, in particular, to the decrease of ordinary mail (-7.6%) and has a significant impact due to its weight in overall volumes (79% of the transactional mail in the first 9 months of

the year). This decline in volumes stems from the reduction in consumption by large business customers in the banking and insurance sectors (-11.2%), and utilities and telecommunications (-8.9%), which continue to substitute physical mail (especially for sending bank statements and invoices) for other forms of digital communication.

Registered mail volumes grew by 2.2% in the first 9 months of 2017, but there was a reversal of this trend in the 3 rd quarter compared to the 1st half of the year (-6.0% vs. + 6.1% respectively). The basis of this slowdown is the consumption contraction of the Tax Authority customer (-30% in the 3rd quarter of 2017 vs. +23% in the 1st half of 2017). Editorial mail volumes did not change significantly in relation to those reported in the 1st half of the year, with a decrease of 3.8% in the 9 months of 2017 which illustrates the effect of digital substitution by contractual customers.

The price update of the basket of letter mail, editorial mail and parcels services took effect from 4 April of this year. The average change in Universal Service prices in the 9 months of 2017 versus the same period of the previous year was 1.7%, thus mitigating the effect of the volumes decline on revenues.

Addressed advertising mail volumes dropped by 9.5% in the first 9 months of 2017 mostly due to the reduced number of campaigns by large customers of the retail, mail order catalogue and utilities industries, a trend that was particularly strong in the 3rd quarter. On the other hand, it is worth noting the 5.3% growth of unaddressed advertising mail volumes in the 3rd quarter which was due to the local election campaign and has contributed to an accumulated growth of 1.9% in the first 9 months of the year.

In the 1st quarter of 2017, the new cttads.pt solution was launched. This is an online channel of the CTT Ads – Advertising Solutions service, which is an integrated service aimed at the micro, small and medium-sized enterprises, allowing them in a self-service manner to design, produce and contract advertising campaigns. Until the 3rd quarter, it has not yet originated significant business growth (advertising mail, e-mail and sms), but the indicators show positive signs: more than 60 thousand accesses to the platform were registered, almost 4 thousand registrations were made for business clients and around 200 advertising campaigns were designed. CTT was distinguished with the Honourable Mention "Best Digital Platform" at the Portugal Digital Awards 2017 and with the PostEurop Innovation Award 2017 for its cttads.pt solution. This prize was awarded for the first time by PostEurop to distinguish the postal companies that stood out in the field of innovation throughout Europe.

The revenues from philately stood at € 6.1m in the period from January to September 2017, a year-on-year growth of 15.5%. This development was mainly due to the successful marketing of the "Fatima - 100 Years" philatelic project and the 2nd series of the "Benfica" stamp packs. Although the philatelic business represents a small share of the revenues of the Mail business unit, the unanimous international recognition that it has achieved, translated in the various awards of the industry it has been attributed internationally year after year, contributes favourably to the recognition and appreciation of the CTT brand.

To be highlighted is the suspension of the sale of lottery at CTT Retail Network that occurred in the 4th quarter of 2016 and only resumed in the 2nd quarter of 2017 with a new partner, due to its negative impact on the revenues of the Mail business unit in the first 9 months of the year (-€2.1m), as it exacerbated the effect of the loss of revenues related to the agreement with Altice (-€2.5m).

EXPRESS &PARCELS

The EXPRESS & PARCELS business unit posted recurring revenues of €96.2m, corresponding to a 9.2% growth compared to the same period of 2016 (+12.4% excluding the effect of the revenues from the agreement with Altice in 2016). This business unit covers the activities of CTT Expresso and Transporta in Portugal, of Tourline Express in Spain and CORRE in Mozambique.

In Portugal, the acquisition of the total share capital of "Transporta - Transportes Porta a Porta, S.A." was concluded on 4 May 2017. The integrated management of this company within Express & Parcels business unit of CTT has taken place since then, thus allowing to start restructuring with the objective of obtaining positive results already in 2018, as further explained in section 2 "Other Highlights".

Revenues from this business (excluding internal customers of the Group) in Portugal stood at €56.9m, a year-onyear growth of 10.2% that includes €5.6m (€5.0m from cargo and €0.6m from logistics) related to the revenues of Transporta of the months of May to September. Revenues in Portugal excluding Transporta, i.e. from CTT Expresso, slightly decreased compared to the same period of the previous year (-0.6%). This situation resulted from the 2.6% growth of the CEP business being negatively offset by the marked decrease of the banking network business (- 24.9%), which, nevertheless, currently has a lower weight (around 7%) in the revenues of this business unit in Portugal.

Total volumes in Portugal grew by 18.4% in the first 9 months of 2017 compared to the same period of 2016 (6.9%, excluding the approximately 1.2 million items contributed by Transporta). This performance is mainly the result of 3 different factors: (i) strong growth in the B2C/e-commerce segment and in the number of customers in the fashion and accessories industry, as well as new recruitments in the sporting goods segment and food industry (ii) growth in the B2B segment of customers in the retail, electronics and telecommunications industries acquired in 2016, as well as (iii) growth in the B2B segment due to new recruitments in 2017 in the auto parts and maintenance sector, and in the publishing and logistics industries. It should also be noted that micro and small enterprises managed through remote channels (telemarketing and web) recorded a marked increase in volumes (over 20%). The main industries are the small and medium industry and e-commerce. The evolution of volumes when compared to revenues shows a decline of average revenues per item (-3.7%) in CTT Expresso's domestic business.

The CTT e-segue offer (http://www.cttexpresso.pt/ctt-e-segue/index.html), by increasing the value proposition and the range of services directed to the e-buyers, and the focus on the growing SME segment should contribute to contain the decline of average revenues mentioned above. In order to adapt the response to the needs of one of the main growth drivers of the express business – e-commerce – the geographic coverage of the same-day deliveries was expanded to cover nights (07:00pm to 10:00pm) and weekends (Saturdays until 02:00pm). The reinforcement of these supply components has allowed for an extra level of convenience for deliveries to consumers. In September, the CTT e-segue App was launched which allows for parcel management directly on smartphones and tablets. With the CTT e-segue App, consumers can, in addition to tracking the course of their parcels, make changes to the delivery - address, date or time -, receive notifications at key moments and send parcels anytime, anywhere.

In the scope of e-commerce, mention should be made to the commercial partnerships established with two national e-commerce platforms, which aim to offer customers with online shops in these platforms an automatic integration with the systems of shipping and delivery of their parcels by CTT. During the first 9 months of 2017, e-commerce grew by 23.5% in terms of (last-mile) delivered volumes, including inbound cross-border flows.

In Spain, revenues of this business (revenues from external customers of the CTT Group) during the first 9 months of 2017 stood at €36.3m, +17.4% compared to the same period of the previous year, mainly due to the 24.6% growth in volumes.

Tourline captured 23 new franchisees in the 3rd quarter (34 in the first 9 months of 2017), allowing for a net growth of 14 franchisees by the end of September (vs. 6 in 2016), which illustrates the growing trust that the company enjoys. This increase will reduce the percentage of items distributed directly by Tourline in Spain by around 15% (by increasing the area covered by franchisees) and consequently also reduce unit distribution costs in the 4th quarter, as these are about 25% lower in franchisees than in own distribution.

The increase in franchisees and customers allowed for a significant acceleration of growth compared to 2016, which represented a 42% increase in volumes in the 3 rd quarter, compared to 17% in the 1st half of 2017. As far as revenues are concerned, the increase vis-à-vis 2016 was 31% in the 3rd quarter of 2017 vs. 11% in the 1st half of 2017. The growth in this quarter should be highlighted since 2017 had less one working day and it was achieved without any deterioration of the average price, although the cost increase to support such growth with good quality levels has also been relevant.

In Mozambique, CORRE recorded a 7.1% revenues growth in local currency (metical) vis-à-vis the same period of the previous year (+5.5 million metical), mainly due to the growth of the banking business (+3.8 million metical; +8.7%). The revenues of this business (excluding internal customers of the Group) in terms of euros, which were penalised by the negative exchange rate evolution, decreased by 3.6%. CORRE, in contrast with the economic performance of the country, has increased its turnover and consolidated its position as the largest Mozambican logistics operator in the services sector, seeking diversification of its client portfolio (as for instance in the recent case of the collection of clinical samples for several NGOs in the field of the AIDS combat) in order to ensure less dependence on its hegemonic position in the banking sector.

With regard to cost cutting, CORRE has just completed a plan to reduce its human resources structure (expatriates) with effect from the 4th quarter. A strategic plan is under implementation to reinforce the commitment and alignment of shareholders with a set of assumptions that will allow the consolidation of CORRE's accounts by reducing its exposure to currency fluctuation and to comply with the capital ratio.

FINANCIAL SERVICES

The FINANCIAL SERVICES business unit revenues reached €48.2m in the 9 months of 2017, corresponding to a decrease of 9.7% (-€5.2m) compared to the same period of 2016, mainly due to the loss in 2017 of the revenues from the agreement with Altice (-€2.5m) and to the decrease in payment income (-€1.7m) while some growth initiatives for this business are still under development.

The CTT Retail Network maintained an extensive marketing activity regarding non-banking financial products and services based on partnership agreements, involving the areas of Savings, Life and Non-Life Insurance, Money Transfers/Remittances, as well as the consumer credit business and credit cards at CTT Retail Network counters without Banco CTT.

Public debt products, which account for about 49% of the revenue structure of the business unit, had flows of 4.6 billion euros, of which 3.2 billion euros in new placements until September 2017, which translates into a growth of 14.8% over the same period of last year. This was due to their high competitiveness with regard to bank deposits and treasury bonds, both in terms of yield (high average return rate) and the fact that they are fully costfree, which is not the case of the variable-income Treasury Bonds, thus penalising the latter's profitability.

Within the area of money orders and transfers, which saw a decrease of 4.3% in revenues, the performance of the international component (Western Union and international money orders) should be noted, as it showed a growth of 2.0%. The business of consumer credit in post offices without banking activity credit granted reached €5.7m euros in the first 9 months of 2017. Special note in this 3rd quarter to the relaunch of the non-financial insurance business with the start of the sale of Multicare CTT healthcare offer (a partnership with the Fidelidade insurance company), preceded by a technical and behavioural training programme for commercial and motivation teams, involving more than 500 employees.

The payments business made more than 41 million transactions from January to September 2017 corresponding to more than €15.9m of generated revenues, a decrease of €1.7m compared to the same period of the previous year. This decrease resulted from the reduction in revenues from payment services for invoices and mobile phones, due to the tendency of customers to choose non-presence options which put pressure on prices as well. During the 3rd quarter, the projects included in the Payshop Transformation Programme¹ were continued, as well as others considered relevant, of which the following are the most noteworthy.

Payshop has made available in its network of agents a new service of physical and virtual prepaid cards and vouchers for purchases on the Internet. These prepaid products are an easy, fast and secure alternative when purchasing games and other content from internationally renowned brands such as Sony PlayStation, Sony Plus, Nintendo and X-box (new product added in the 3rd quarter).

After signing the contract with the Portuguese start-up OneBiller in the first semester of the year, the "Virtual Agent" project is under development. This project materialises in an innovative application, which intends to bring the Portuguese even closer to the single payment brand of CTT. It will be a web and mobile application that aims to consolidate and make available information on recurring expenses, helping users to manage and make all payments and expenses with just a click.

Based on one of the pillars of the Transformation Programme¹ of Payshop, the new mobility solutions aim to increase the number of customers in Public Transport ticketing and to provide solutions associated with parking. The payment service was added for companies that focus on the management and operation of concessions of parking spaces on the public highway, as well as the operation of all types of car parks, whether underground or surface. Also during the 3rd quarter, the PuDo - Pick-Up & Drop Off service was extended, as part of the partnership between Payshop and CTT Expresso, for delivery and collection of Expresso parcels at Payshop agents. This service is implemented in a total of 85 Payshop agents.

At the end of September 2017, the network of Payshop agents was made up of 4,372 agents.

BANCO CTT

The recurring revenues of the BANCO CTT business unit reached €5.3m in the first 9 months of2017, although the most relevant fact is the bank's high and continued capacity to attract customers. At the end of September, Banco CTT reached more than 190 thousand current accounts of which more than 43 thousand opened in the 3rd quarter of 2017. In September, Banco CTT completed 18 months of activity since its opening to the public in March 2016. It is present countrywide in more than 200 CTT post offices, having already earned the trust of over 240 thousand customers.

The relationship of trust and proximity that customers have been establishing with the bank has led to the growth of the institution, with emphasis on the raising above 540 million euros of deposits, of which about 341 million euros

¹ Transformation Programme: set of projects elected every year as fundamental to achieve CTT strategy.

in current accounts, the success of the Banco CTT Credit Cards, with more than 43 thousand cards placed, and the placement of Consumer Credit in partnership with Cetelem BNP Paribas, available both in the post offices and on the bank's website, with a credit volume of over €25m throughout the 9 months of 2017.

In the 3rd quarter of 2017, Banco CTT strengthened the focus on mortgage loans, a product launched in the 2 nd quarter to the general public. On 23 September a new advertising campaign was launched in the various media, namely in television, radio, outdoor, online and in-store communication, under the motto "Crédito Habitação sem Ais nem Uis" ("Mortgage loans as simple as it gets!"). The campaign highlights the simplicity of access conditions, no hidden costs (no obligation to subscribe extra products, no increased commissions) while underscoring the competitive spread offered. At the end of September, the volume of credit to customers amounted to approximately 42 million euros, of which 29.2 million in mortgage loans after a placement of almost 25 million in the 3rd quarter only.

Focus on the customer and facilitation of their day-to-day demands from Banco CTT a continuous and growing concern about offering affordable, convenient, reliable and innovative services. Therefore, in the 4th and last quarter of the year, Banco CTT will continue the strategy of simplicity, transparency and competitiveness of all its offer, so as to grow in customers, resources and credit granted, thus consolidating its presence and boosting its growth in the Portuguese banking sector.

The decision not to extend the presence of Banco CTT to more CTT post offices, together with the strong growth in the placement of credit products while maintaining a level of customer capture above the initial expectations, proves the strong acceptance of Banco CTT within the population while it also led to a higher-than-expected increase of the capacity to cope of post offices with Banco CTT counter so as to respond to the demand, by consequently bringing forward and preventing cost optimisation in the Retail Network as reflected in the costs of the Mail business unit throughout 2017.

OPERATING COSTS²

Recurring operating costs totalled €449.8m, +€23.7m (+5.6%) over in the same period of the previous year, including +€5.3m from Banco CTT and +€6.4m from Transporta. Excluding these effects, costs increased by €11.9m with a relevant share related to the strong growth of the Express & Parcels activity in Spain where the use of the installed capacity is limited and grew €4.5m vis-à-vis 2016.

€ Million
	Reported			Recurring
	9M17	9M16	∆	9M17	9M16	∆
Operating costs (*)	458.7	436.0	5.2%	449.8	426.1	5.6%
External supplies & services	182.2	170.1	7.1%	176.8	163.7	8.0%
Staff costs	257.5	247.4	4.1%	254.5	244.2	4.2%
Other operating costs	19.1	18.5	2.9%	18.6	18.2	2.1%

Operating costs

(*) Excluding depreciation / amortisation, impairments and provisions.

Recurring external supplies & services (ES&S) costs increased by 8.0% (+€13.0m) year-on-year. The cost reductions resulting from the optimisation and rationalisation of the operations and the distribution networks

² Excluding depreciation / amortisation, impairments, provisions and non-recurring costs.

integration initiatives did not offset the increase in costs, of which the following should be mentioned (i) +€4.7m from Transporta since May 2017, (ii) +€3.5m relating to Tourline transport and distribution costs resulting from volumes growth as well as the creation and reinforcement of new domestic routes, and +€1.0m related to temporary work and travel expenses, (iii) +€2.8m from Banco CTT costs, and (iv) +€1.6m from energy and fuel costs (mostly due to price increases).

As far as staff costs are concerned, the €10.3m (+4.2%) growth in the recurring costs derives mainly from the following increased costs: (i) +€2.0m in staff costs of Banco CTT, (ii) +€2.0m in fixed-term contracted staff, (iii) +€1.7m resulting from the increase of the salary review agreed with the workers' representative organisations of and with effect as of January 2017, (iv) +€1.6m of staff costs in Transporta, and (v) +€1.4m related to the lower cost cut in the "telephone subscription fee" benefit.

STAFF

As at 30 September 2017, the CTT headcount consisted of 12,843 employees, 69 more (+0.5%) than as at 30 September 2016. This increase includes the integration of 186 employees of Transporta following the acquisition in May 2017. There was a decrease of 14 permanent employees and an increase of 83 under fixed-term contracts. With special impact on this change is the increase in the staff of Banco CTT and the Express & Parcels business unit, as a consequence of the integration of the Transporta staff.

	Headcount
	30.09.2017	30.09.2016	Δ 2017/2016
Mail	10,361	10,323	38	0.4%
Express & Parcels	1,156	1,058	98	9.3%
Financial Services	90	96	-6	-6.3%
Banco CTT	182	162	20	12.3%
Other	1,054	1,135	-81	-7.1%
Total, of which:	12,843	12,774	69	0.5%
Permanent	11,316	11,330	-14	-0.1%
Fixed-term contracts	1,527	1,444	83	5.7%
Total in Portugal	12,413	12,324	89	0.7%

Excluding the number of employees of Transporta, the total staff would be 12,657, which represents a reduction of 117 employees (-0.9%) compared to the same period of 2016 and if, additionally, the increase of 20 employees that joined Banco CTT were excluded, the reduction would be 137 employees. In terms of employee turnover from January to September 2017, and excluding the integration of Transporta, more employees left the company than joined it as explained below.

Due to their importance, special reference is made to two major units, Operations & Distribution (with 7,147 employees, with special emphasis on the importance of the functions of the delivery postmen who total 4,645) and Retail Network (with 2,815 employees). Together, these areas represent circa 88% of CTT headcount.

Thus, 180 employees left, due to termination of work contract and similar situations (114 employees in this situation, of whom 30 in Tourline Express and 5 in CORRE), to retirement (47) and death (19). On the other hand, 80 employees were hired, 60 in Portugal (3 for CTT Expresso, 20 for Banco CTT and 37 for CTT, SA) and 20 abroad (for Tourline Express). Staff recruitment aimed at obtaining inexistent but indispensable skills for accomplishing the company's strategic options (banking business, commercial activities and information systems, among others).

RECURRING EBITDA

The operating activity generated a recurring EBITDA (earnings before interest, tax, depreciation and amortisation, impairments, provisions and non-recurring results) of €68.1m, 25.1% (-€22.9m) below that of the same period of 2016, with an EBITDA margin of 13.2%.

The recurring EBITDA is predominantly affected by the loss of the Altice revenues (-€7.5m), by the acquisition of Transporta, of which the restructuring and integration in CTT are underway (-€0.7m), and the evolution of Banco CTT (-€0.3m). In addition, the lower achievement of cost optimisation benefits in 2017 compared to 2016 and the lower cost cut in the "telephone subscription fee" benefit also contributed to the negative performance of the recurring EBITDA. In terms of operating activity, the evolution of addressed mail volumes which worsened to levels close to -7.0%, the increases in wages, energy and fuel and in rents were the main factors impacting EBITDA.

€ Million
	Reported			Recurring			Weight %
	9M17	9M16	∆	9M17	9M16	∆	9M17	9M16
EBITDA	59.3	82.9	-28.5%	68.1	91.0	-25.1%	100%	100%
Mail	54.3	69.7	-22.1%	58.7	73.9	-20.5%	86%	81%
Express & Parcels	- 1.5	2.8	-151.6%	0.2	2.9	-93.2%	0%	3%
Financial Services	24.1	28.8	-16.4%	24.1	28.8	-16.3%	35%	32%
Banco CTT	- 17.7	- 18.5	4.4%	- 14.9	- 14.6	-1.8%	-22%	-16%

Consolidated EBITDA by Business Unit

RECURRING EBIT AND NET PROFIT

Recurring EBIT (earnings before interest, tax, and non-recurring results) stood at €46.5m, -€24.9m (-34.9%) than in the same period of 2016. The EBIT margin was 9.0%.

The consolidated net financial result reached -€3.7m, which represents growth of €0.3m (+6.4%) vis-à-vis the same period of 2016. Financial costs incurred amounted to €4.0m, mainly incorporating financial costs corresponding to the accounting effect in the amount of €3.9m associated with the discount rate of employee benefits. Interest and other financial income decreased by 48.9% (-€0.3m) compared to the figures of the same period of 2016 due to the reduced rates of return on time deposits, the reduction in the liquidity levels as a result of the investment in Banco CTT, and CTT's continued conservative policy of appropriation of funds.

CTT obtained a €19.5m consolidated net profit attributable to shareholders, which is 57.6% below that of the same period of 2016, corresponding to a result of €0.13 per share and to a 3.8% net profit margin on the revenues. Excluding the non-recurring effects in both periods, the net profit would have been €31.2m (-35.9%).

NON-RECURRING COSTS AND REVENUES

In the first 9 months of 2017, CTT recorded non-recurring income before taxes and non-controlling interests of -€10.2m.

€ Million
	9M17	9M16
Total	-10.2	-1.1
affecting EBITDA	-8.9	-8.1
. Other operating income	0.0	1.7
. External supplies & services and other costs	-5.9	-6.7
. Staff costs	-3.0	-3.2
affecting only EBIT	-1.3	7.0
. Provisions (reinforcements / reductions)	0.3	7.6
. Impairments, depreciations and amortisations (losses / reversions)	-1.5	-0.6

Non-recurring costs and revenues

ES&S costs include €5.4m of costs incurred with studies and consulting on strategic projects, especially those related to (i) Banco CTT (€2.9m), (ii) the commercial excellence programme and business expansion strategies (€0.8m), and (iii) the Talent Management plan and consulting on various issues (€1.7m).

Under staff costs is mainly included the negative impact of two factors (i) €1.2m associated with the termination of employment contracts by mutual agreement at CTT and (ii) €1.2m relative to the human resources optimisation process due to the gradual integration of the activity of Transporta in CTT.

The depreciation / amortisation, impairments, and net provisions posted a net reversal incremented by €1.3m broken down into: (i) €1.1m of depreciation / amortisation regarding Banco CTT, (ii) -€0.01m of reversal of impairments of investment property, (iii) €0.4m of increased costs relative to net impairments resulting from the optimisation of the Express & Parcels business unit, due to the restructuring of the Tourline network, and (iv) -€0.3m of net reversal of provisions relative to labour contingencies.

INVESTMENT

Capex of the Group stood at €10.4m, broken down mainly as follows: €4.6m in Banco CTT (€3.6m in IT systems), €4.3m in IT systems in other Group companies, and €1.0m in works in buildings and premises, and in security. This amount is 45.6% below that of the same period of last year (€19.1m), which was marked by the strong investment due to the launch of Banco CTT.

FREE CASH FLOW

The cash flow from operating activities (excluding the change in net financial services payables) increased €121.6m year-on-year to €293.3m. The adjusted operating free cash flow (excluding the change in net financial services payables) stood at €80.6m.

The change in cash amounted to €46.5m, which is a positive change of €57.4m versus the same period of 2016. Excluding the change in the financial services receivables/payables (-€3.5m), the change in cash would be €50.0m. The change in cash results mostly from: (i) +€241.2m in operating cash flows related to Banco CTT; (ii) +€52.1m of cash flow from the operating activities (excluding the financial services and Banco CTT's cash flows); (iii) -€3.5m regarding the change in the financial services receivables/payables; (iv) -€29.1m relative to payments regarding tangible and intangible fixed assets (-€27.3m) and in the acquisition of the company Transporta (-€1.7m); (v) -€189.7m of financial assets held by Banco CTT; and (vi) -€72.0m relative to dividend payment. The cash flow is negatively impacted by the high amount of payments made for the investments of 2016, partly related to the opening of Banco CTT branches and partly due to the acquisition of Transporta.

		Cash flow
€ Million
		Reported	Adjusted (*)
	9M17	9M16	∆	9M17	9M16	∆
Cash flow from operating activities	289.8	212.4	36.5%	293.3	171.7	70.8%
Cash flow without Fin. Services and Banco CTT	-	-	-	52.1	8.4	519.7%
Cash flow Banco CTT	-	-	-	241.2	163.3	47.7%
Cash flow from investment activities	-212.7	-153.5	-38.6%	-212.7	-153.5	-38.6%
Capex	-29.1	-25.1	-15.9%	-29.1	-25.1	-15.9%
Of which cash flow Banco CTT	-	-	-	-4.6	-9.1	48.8%
Financial assets Banco CTT (**)	-189.7	-134.3	-41.2%	-189.7	-134.3	-41.2%
Other	6.1	5.9	2.9%	6.1	5.9	2.9%
Operating free cash flow	77.1	58.9	31.0%	80.6	18.3	341.6%
Cash flow from financing activities	-74.2	-71.8	-3.3%	-74.2	-71.8	-3.3%
Of which Dividends	-72.0	-70.3	-2.5%	-72.0	-70.3	-2.5%
Other (***)	43.6	2.1	»	43.6	2.1	»
Net change in cash	46.5	-10.9	528.9%	50.0	-51.5	197.2%
	30.09.2017 31.12.2016		Δ		30.09.2017 31.12.2016	Δ
Cash and equivalents at the end of the period	665.3	618.8	7.5%	345.3	295.3	16.9%

(*) Cash flow excluding change in Net Financial Sevices payables (-€3.5m in 9M17 and +€40.6m in 9M16).

Cash and equivalents at the end of the period excluding Net Financial Services payables (€320.0m in September 2017 and €323.5m in December 2016).

(**) Includes financial assets available for sale, investments held to maturity and other banking financial assets of Banc o CTT.

(***) These figures were not considered under Cash and equivalents in the Cash-flow Statement.However, they are included in Cash and equivalents in the Balance Sheet

CONSOLIDATED BALANCE SHEET

The highlights of the comparison between the Balance Sheet as at 30.09.2017 and that at the end of the 2016 financial year are as follows:

Total assets reached €1,546.5m, an increase of €229.8m (+17.5%), of which €351.1m relative to investment, financial assets and credit held by Banco CTT, broken down as follows: (i) €227.7m of investments held to maturity and available-for-sale financial assets; (ii) €81.0m of other banking financial assets, mostly investments in credit institutions and in the interbank market; and (iii) €42.0m of credit to banking clients, especially mortgage loans and other credit. Within the total assets, mention should be made to the €46.5m increase in cash and equivalents (+7.5%).

Equity decreased €51.6m (-22.1%) as a result of the payment of dividends relative to the 2016 financial year (€72.0m) that took place in May 2017 and is above the accumulated net profit as at the end of September 2017. In addition, on 31 January 2017, a total of 600,530 own shares were granted to the Executive Directors of the Company as long-term variable remuneration, as the corresponding reserve was reduced by €5.1m and a nonrecurring cost of €0.6m was recognised.

Liabilities increased by €281.4m (+26.0%) of which the €286.5m increase of Banco CTT customer deposits stands out.

€ Million
	30.09.2017	31.12.2016	∆
Non-current Assets	587.1	452.6	29.7%
Current Assets	959.4	864.1	11.0%
Assets	1,546.5	1,316.7	17.5%
Equity	181.7	233.3	-22.1%
Total Liabilities	1,364.8	1,083.4	26.0%
Non-current Liabilities	264.7	269.5	-1.8%
Current Liabilities	1,100.0	813.8	35.2%
Total Equity and Liabilities	1,546.5	1,316.7	17.5%

Consolidated Balance Sheet

As at 30 September 2017, the liabilities related to employee benefits amounted to €264.7m, 2.8% below those registered in December 2016, broken down as shown in the table below.

Liabilities related to long-term employee benefits

€ Million
		30.09.2017 31.12.2016	∆
Total responsibilities	264.7	272.3	-2.8%
Healthcare	248.1	249.1	-0.4%
Staff (suspension agreements)	3.7	5.5	-32.2%
Other benefits to Corporate Bodies	-	4.5	-100.0%
Other long-term benefits	12.5	13.2	-5.3%
Transporta pension plans	0.4	-	-

2. OTHER HIGHLIGHTS

ACQUISITION OF TRANSPORTA

On 4 May 2017, the acquisition by CTT of the total share capital of "Transporta - Transportes Porta a Porta, S.A." was concluded. The agreement with Grupo Barraqueiro for the purchase had been announced on 15 December 2016 and CTT was notified of the Competition Authority's decision not to oppose it on 2 March 2017.

This acquisition falls within the scope of CTT's expansion and diversification strategy to capture growth opportunities in neighbouring markets with potential synergies with the express and parcels market to allow for a greater adhesion and share of wallet from the customers. On the one hand, the fact that Transporta offers integrated logistics and last-mile cargo solutions in Portugal allows CTT to expand and reinforce its presence in these markets. On the other, as it operates mostly in the market of delivery and transport of items above 30 kg, it will allow CTT to widen the range of services provided and offer even more integrated solutions to its customers.

Since May, the operational and commercial integration process of Transporta in CTT has been underway aiming at capturing synergies of various natures: synergies in the migration of items between networks (transferring items from the Transporta network to that of CTT and vice versa depending on the degree of competitiveness of each of the companies in the different types of flows), infrastructure synergies(integration of operational centres in the central and southern areas of the country), as well as fleet and support functions synergies (Accounting and Treasury, Human Resources, Customer Support, among others), and also optimisation of outsourcer networks, human resources and in External Supplies and Service (ES&S). In commercial terms, an integrated approach to the market has begun, with the preparation of joint proposals to achieve a more comprehensive offer to the customers.

In the 4th quarter of 2017, CTT will continue to focus on capturing synergies, on the optimisation of national infrastructures and networks and their extension to the Iberian operation of the various companies of the Group, as well as on commercial dynamism, fostering cross-selling and offering growingly integrated solutions to the customers.

TRANSFORMATION PROGRAMME¹

OPTIMISATION OF OPERATIONS AND INTEGRATION OF THE DISTRIBUTION NETWORKS

In the first 9 months of 2017, the restructuring of the operating cycle, as well as the expansion of the integration of the Mail and the Express & Parcels distribution networks proceeded with a view to increasing the productivity and improve the efficiency of the networks.

As result of the initiatives carried out in recent years to better profit from the mail distribution capacity for the delivery of EMS, in the 9 months of 2017, approximately 74% of all the EMS volumes were delivered by the mail distribution network (71% in the same period of 2016). Especially noteworthy is the implementation of the NARPEL (New Logistics Network Architecture), a project that involves changes to the mail and EMS items routing model and to the videocoding operating model, encompassing the intensification of the North and South Production and Logistics Centres activity, which entails the adjustment of resources, a new sorting model and new layouts in said centres. It should also be mentioned that very recently, on 25 October 2017, this project has been awarded the Excellence Logistics Award 2017 promoted by the Portuguese Logistics Association (APLOG) and by the magazine Logística Moderna (Modern Logistics). Since May, the abovementioned integration process of the Transporta network in CTT network has been underway.

¹ Transformation Programme: set of projects selected every year as fundamental for the implementation of the CTT strategy.

This more comprehensive integration project has led to a growth of incremental costs in the distribution network, especially with transportation, caused also by the strong growth of the parcels volumes in 2017. This performance led to a new round of analysis of the best operating structure and process of the integrated networks, now considering also the volume and typology of the flows arising from the integration of the Transporta business.

Regarding the GEO10 project (geo-referencing of the doors of each domicile and their classification), it is important to mention the address information, either due to the introduction of the place names as approved by the municipalities or to the integration of the surveys carried out in the framework of GEO10, totalling 4.8 million doors with identification and enabling coverage of 97% of the Portuguese population and 98% of the entire territory.

During the European Mobility Week 2017, CTT announced sustainable transport alternatives such as the Electric Vehicle of Urban Distribution (VEDUR), a commitment to vehicles adapted to the new challenges of postal delivery. A pilot with an innovative electric tricycle was conducted in partnership with the Portuguese start-up UOU mobility, to replace postmen's routes currently performed on scooters or on foot. The successful pilot will allow to extend the initiative and provide, until the end of the year, an additional set of delivery routes with this new equipment. The advantages of using VEDUR are unequivocal, such as the ability to customise with a local partner, the improved load capacity needed to cope with the growth of e-commerce and the increased sustainable mobility through electric vehicles.

Finally, a special note to the strong growth of the Customs activities which had a positive impact on the quality of service to the client and on the revenues and led to a strong growth of the revenues from international mail.

A new plan to optimise integrated operations is under analysis, which will profit from the experience acquired throughout the two last years of network integration, and from the overall vision of the mail, the express & parcels and the cargo business, as well as the perspectives for the future evolution of these business asreas.

INFORMATION SYSTEMS STRATEGIC PLAN

In 2016 CTT began the implementation of its applications and infrastructures transformation plan, defined as the IT Systems Strategic Plan and along with the current activity.

In the first 9 months of 2017, the most relevant initiatives in the field of transformation of applications are highlighted below:

• consolidation of the CTT Expresso offer with the new e-segue service, an innovative service based on the interaction with the final client and allowing him/her to schedule the delivery according to his/her convenience;
• mobile devices were given to all postmen which will enable acknowledgement of the delivery of parcels without using paper, thus increasing efficiency and allowing for future savings;
• new versions of the CTT App, Via CTT and CTT e-segue applications were made available in the marketplace which allow access to CTT to be increasingly "in the hands" of customers;
• start of the implementation of the support solution for the sale and assistance to the customer (after the organisational change of the commercial structure). The CRM of CTT will cover all companies in the group, enabling synergies that allow for a better service to customers;
• pilot tests were successfully conducted using Robotic Process Automation (RPA), a technology to be implemented in several projects of the support areas throughout the next year and training the internal teams to a continued development;
• integration of Transporta IT systems within CTT's IT.

In the area of transformation of infrastructures, the consolidation of the SQL Server database pool has started, which allows for significant savings of maintenance costs and strong performance improvements.

REGULATORY ISSUES

Complying with the pricing criteria for the 2015-2017 period as defined by a decision of ANACOM of 21.11.2014, the proposal on the prices of the universal service submitted by CTT on 31.01.2017, and subsequently adjusted, was approved by ANACOM in a deliberation of 28.03.2017. The prices foreseen in said proposal, which met the defined pricing principles and criteria, entered into force on 04.04.2017. This update corresponds to a 2.4% annual average change of the price of the letter mail, editorial mail and parcels basket of services, excluding the offer of the universal service to bulk mail senders, to whom the special pricing arrangement applies. The special pricing arrangement for postal services included in the universal service applicable to bulk mail senders, these were also updated on 04.04.2017, following a proposal submitted to the Regulator on 24.03.2017.

Framed within the Company's pricing policy for the year of 2017, said updates correspond to an average annual price change of 1.9% and also reflect the price update for reserved services (registered mail used in legal or administrative proceedings) and the special prices for bulk mail.

In the context of the access to the universal service provider (USP) network, on 16.06.2017, ANACOM published a draft decision which provides for access to the USP network in certain postal delivery offices for the distribution of non-priority non-letter items. CTT considers that the possible adoption of this measure significantly hampers the automation and centralising strategy that the Company has been following with a view to increase operational efficiency and rationalise costs in a context of declining postal volumes. In addition, this decision might endanger the efficiency of the operation and the future sustainability of the Universal Postal Service. This draft decision was submitted to public consultation until 03.08.2017, and the final decision of the Regulator is yet to be known.

As regards the quality of the universal postal service, following the new Postal Law, as from the beginning of the 4 th quarter of 2016 the quality of service levels started to be measured by an independent external entity and such measurement is carried out by an international company. As some deficiencies were detected in the measurement process, this entity is currently implementing a number of improvements to the operation and stability of the new quality of service measurement system. On 15.09.2017, CTT was notified of ANACOM's draft decision regarding the alleged non-compliance with one of the eleven quality of service indicators which had to be complied with in 2016. Within the deadline granted, CTT gave its opinion on this draft decision which is based on a difference of understanding between ANACOM and CTT on the methodology for calculating the value of said quality of service indicator. CTT challenged the conclusions of the draft decision, since the calculation formula presented by the Company for this indicator derived, essentially, from the entry into work of a new measurement system on 01.10.2016. This system was subject to some operational constraints inherent to the start-up phase of a new system, which in CTT's opinion, were not duly pondered by ANACOM. The final decision, following CTT's reply challenging ANACOM's understanding, has not yet taken place.

Under Base XV of the Concession of the Universal Postal Service, on 15.09.2017, ANACOM approved the final decision on the density targets of the postal network and minimum service offers that CTT should meet during the 2018/2020 triennium. The density targets defined for postal establishments and other points of access to the postal network, such as letter-boxes and mailboxes, do not alter the current ones, thus having no impact on the postal network, maintaining the guarantee of availability and accessibility of the provision of the universal service entrusted to CTT.

According to the legal framework, the quality of service standards and the performance targets associated with the provision of the universal service, as well as the criteria to be met by the formation of prices are set by the regulator. The position of the regulator on these matters for the next three years is expected to be presented to the market later this year, the last one of the regulatory period 2014/2017. CTT considers that such position should take into account the recent evolution of mail volumes and the changes in consumer needs due to the new reality brought about by new information and communication technologies. Declining volumes put a stronger pressure the mail on unit costs and on the economies of scale of the operation, constantly forcing the adoption of operating efficiency measures; however, the capacity to take that into consideration on the price or the type of service is key to the future sustainability of the Universal Postal Service.

COMPANY AGREEMENT

On 28 June 2017, with effect from January 2017, a Revised Agreement of the 2016 CTT Company Agreement was entered into with all eleven trade unions represented in the Company, under which a salary increase between 0.65% and 1% in monthly remunerations up to €2,772.3 was agreed. A similar increase was applied in the subsidiaries. In addition, it was agreed to set at €600.00 the minimum amount of the basic monthly salary to be paid in the various companies of the group, effective as from 1 July 2017. This revision of the fixed remuneration represented an important adjustment in the lower remuneration levels and had an impact on the cost increase in the Mail business unit.

This Agreement takes into account the promotion of a stable and peaceful social climate in the Company, which is the purpose of CTT and the signatory unions, while also valuing the work factor.

3. FUTURE PERSPECTIVES

The declines above 7% of addressed mail volumes in the 2nd and 3rd quarters of 2017, clearly above the 4% to 5% range estimated for the year 2017, puts a high pressure on the profitability of the Mail business unit, due to the low possibility of adjusting the installed capacity and the integrated distribution operations so as to absorb fixed costs. As a result of the integration of the Mail and Express & Parcels operations, the maximised use of the mail delivery network is facilitated but leads to an operational reengineering process in the short to medium term but not immediately. The strong growth of parcels volumes of the two last quarters did not allow for the full absorption by the mail delivery network due to the mail volumes decline and created the need to reanalyse the transport and distribution routes.

The development of Banco CTT based on the CTT Retail Network and working currently in more than 200 CTT post offices, has put significant pressure on the capacity to meet the demand for products and services, especially due to the strong and continued demand for Banco CTT clearly shown in the quick pace of opening of accounts. Despite the decision of opening Banco CTT branches only in around 200 post offices at this stage, the capture of customers is above initial expectation and led to the need of increasing human resources in some branches, thus generating incremental costs.

The turnaround process of the Express & Parcels operation in Spain continues to show positive developments, based on a strong growth strategy so as to obtain economies of scale and scope, consolidating and expanding the network of franchisees with impact on the reduction of the distribution costs. Despite the high growth needed to achieve it and the positive trajectory of EBITDA, breakeven has not yet been achieved; however, the objective to attain breakeven by the end of the year is maintained.

The addressed mail volumes decline above 7% in the last two quarters leads CTT to reduce its estimates for the next quarters, which will have an impact in the profitability of the Mail business unit until the operational areas are able to adjust their installed capacity or use it for the Express & Parcels business. This effect, as well as the incremental costs needed to support the growth of the Express & Parcels and Banco CTT businesses will put relevant pressure on the consolidated EBITDA of the CTT group in 2017. Measures adjusting the installed capacity to the actual operational needs are being prepared to enable a relevant cost reduction and will be presented before the end of the year.

The company now expects to achieve recurring EBITDA around 20% below the initial guidance for the full year 2017. Given this EBITDA evolution, the Board of Directors intends to propose a full-year 2017 dividend of circa €0.38 per share, payable in 2018.

CTT is confident that these optimisation measures of the installed capacity and the continued development of the revenues growth levers will allow for the success of the deep transformation process it is committed to.

FINAL NOTE

This press release is based on CTT – Correios de Portugal, S.A. interim condensed consolidated financial statements for the 9 months of 2017, which are attached hereafter.

Lisbon, 31 October 2017

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 and 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.

CTT – Correios de Portugal, S.A.

André Gorjão Costa

Market Relations Representative of CTT

Peter Tsvetkov

Director of Investor Relations of CTT

Contacts:

Email: investors@ctt.pt Fax: + 51 210 471 994 Phone: +351 210 471 087

Disclaimer

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 2017 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.

Forward-looking statements

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.

9 months report 2017

Interim condensed consolidated financial statements

INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CTT-CORREIOS DE PORTUGAL, S.A.

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 SEPTEMBER 2017 AND 31 DECEMBER 2016

Euros

		Unaudited
	NOTES	30.09.2017	31.12.2016
ASSETS
Non-current assets
Tangible fixed assets	4	197,922,491	208,921,781
Investment properties	6	6,881,261	9,291,983
Intangible assets Goodwill	5	39,526,316 7,703,455	38,916,723 7,700,739
Investments in associated companies		296,260	296,260
Other investments		1,503,572	1,503,572
Investments held to maturity	8	205,342,434	93,986,115
Other non-current assets		1,512,023	1,306,148
Credit to bank clients	11	29,193,616	-
Financial assets available for sale	9	5,277,696	4,473,614
Other banking financial assets	10	8,105,618	-
Deferred tax assets	24	83,866,894	86,220,762
Total non-current assets		587,131,636	452,617,698
Current assets
Inventories		5,915,440	5,407,685
Accounts receivable		126,881,430	122,113,270
Credit to bank clients	11	13,211,147	7,103,905
Income taxes receivable	21	-	3,587,614
Deferrals	12	8,734,728	6,128,931
Investments held to maturity	8	8,357,746	1,108,428
Other current assets Financial assets available for sale	9	40,610,332 8,701,837	30,033,571 1,973,711
Other banking financial assets	10	72,869,692	59,054,303
Cash and cash equivalents		665,345,797	618,811,099
		950,628,150	855,322,515
Non-current assets held for sale		8,756,999	8,756,999
Total current assets		959,385,149	864,079,515
Total assets		1,546,516,785	1,316,697,213
EQUITY AND LIABILITIES
Equity
Share capital	14	75,000,000	75,000,000
Own shares	15	(8)	(5,097,536)
Reserves Retained earnings	15 15	79,950,341 34,265,781	34,891,671 93,589,211
Other changes in equity	15	(27,137,824)	(27,137,824)
Net profit		19,509,567	62,160,395
Equity attributable to equity holders		181,587,857	233,405,918
Non-controlling interests		154,806	(79,135)
Total equity		181,742,663	233,326,782
Liabilities
Non-current liabilities
Accounts payable	19	386,099	375,379
Medium and long term debt		145,172	127,145
Employee benefits Provisions	18	247,645,843 12,290,328	250,445,608 14,127,483
Deferrals	12	321,217	334,191
Deferred tax liabilities	24	3,939,143	4,123,146
Total non-current liabilities		264,727,802	269,532,952
Current liabilities		-
Accounts payable	19	429,285,691	444,863,700
Banking clients' deposits and other loans	20	540,430,248	253,944,840
Employee benefits		17,092,540	17,390,573
Income taxes payable	21	167,805	-
Short term debt		7,886,357	9,679,829
Deferrals	12	1,224,918	4,177,609
Other current liabilities		94,694,605	82,562,725
Other banking financial liabilities	10	9,264,156	1,218,205
Total current liabilities		1,100,046,320	813,837,479
Total liabilities		1,364,774,122	1,083,370,431
Total equity and liabilities		1,546,516,785	1,316,697,213

CTT-CORREIOS DE PORTUGAL, S.A.

CONDENSED CONSOLIDATED INCOME STATEMENT FOR THE NINE MONTH PERIODS ENDED 30 SEPTEMBER 2017 AND 30 SEPTEMBER 2016

Euros

		Nine months ended		Three months ended
		Unaudited	Unaudited	Unaudited	Unaudited
	NOTES	30.09.2017	30.09.2016	30.09.2017	30.09.2016
Revenues		517,980,942	518,825,966	165,867,350	167,742,405
Sales and services rendered	3	501,269,188	497,261,477	160,803,046	161,074,171
Financial margin		2,102,591	(31,391)	941,412	(46,901)
Other operating income	22	14,609,163	21,595,881	4,122,892	6,715,136
Operating costs		(481,660,395)	(448,464,299)	(160,101,603)	(144,813,548)
Cost of sales		(8,248,399)	(10,262,066)	(3,279,896)	(3,480,296)
External supplies and services		(182,159,109)	(170,069,489)	(62,123,115)	(55,531,229)
Staff costs	23	(257,500,142)	(247,360,012)	(83,278,694)	(80,286,132)
Impairment of accounts receivable, net		(933,817)	(65,358)	(628,808)	194,309
Provisions, net	18	758,906	7,465,719	745,832	3,807,873
Depreciation/amortisation and impairment of investments, net		(22,755,062)	(19,905,863)	(7,854,632)	(6,919,585)
Other operating costs		(10,822,772)	(8,267,229)	(3,682,290)	(2,598,487)
Earnings before financial income and taxes		36,320,547	70,361,668	5,765,747	22,928,858
Financial results		(3,723,850)	(3,979,440)	(1,324,010)	(1,471,234)
Interest expenses		(4,026,908)	(4,802,433)	(1,342,000)	(1,600,992)
Interest income		303,058	592,653	17,990	129,758
Gains/losses in associated companies		-	230,340	-	-
Earnings before taxes		32,596,697	66,382,227	4,441,737	21,457,624
Income tax for the period	24	(13,224,676)	(20,585,820)	(2,764,861)	(7,211,067)
Net profit for the period		19,372,021	45,796,408	1,676,876	14,246,557
Net profit for the period attributable to:
Equity holders		19,509,567	46,034,675	1,764,468	14,358,139
Non-controlling interests		(137,546)	(238,268)	(87,592)	(111,583)
Earnings per share:	17	0.13	0.31	0.01	0.10

The attached notes are an integral part of these financial statements.

CTT-CORREIOS DE PORTUGAL, S.A.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE NINE MONTH PERIODS ENDED 30 SEPTEMBER 2017 AND 30 SEPTEMBER 2016 Euros

		Nine months ended		Three months ended
		Unaudited	Unaudited	Unaudited	Unaudited
	NOTES	30.09.2017	30.09.2016	30.09.2017	30.09.2016
Net profit for the period		19,372,022	45,796,408	1,676,876	14,246,556
Adjustments from application of the equity method (non re-classifiable adjustment to profit and loss)	15	16,174	-	20,819	-
Changes to fair value reserves Other changes in equity	15	39,307 5,278	10,194 74,515	10,256 9,923	3,672 6,939
Other comprehensive income for the period after taxes		60,760	84,709	40,997	10,611
Comprehensive income for the period		19,432,781	45,881,117	1,717,873	14,257,167
Attributable to non-controlling interests Attributable to shareholders of CTT		(132,267) 19,565,049	(226,938) 46,108,054	(77,668) 1,795,542	(108,113) 14,365,280

CTT-CORREIOS DE PORTUGAL, S.A. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AS AT 30 SEPTEMBER 2017 AND 31 DECEMBER 2016

Euros

	NOTES	Share capital	Own Shares	Reserves	Other changes in equity	Retained earnings	Net profit for the year	Non-controlling interests	Total
Balance on 1 January 2016		75,000,000	(1,873,125)	33,384,112	(18,644,832)	91,727,994	72,065,283	175,322	251,834,754
Appropriation of net profit for the year of 2015 Acquisition of own shares Dividends		- - -	- - (3,224,411)	- - -	- - -	- 72,065,283 (70,264,792)	- - (72,065,283)	- - -	- (70,264,792) (3,224,411)
Share plan		- -	- (3,224,411)	1,493,546 1,493,546	- -	- 1,800,491	- (72,065,283)	- -	1,493,546 (71,995,658)
Actuarial gains/losses - Health Care, net from deferred taxes Other movements		- -	- -	- -	- (8,492,992)	- 40,906	- -	- 8,871	49,777 (8,492,992)
Adjustments from the application of the equity method Changes to fair value reserves Net profit for the period		- - -	- -	- 14,014	- -	- 19,820	- - 62,160,395	- - (263,328)	61,897,067 14,014 19,820
Comprehensive income for the period Balance on 31 December 2016		75,000,000 -	- - (5,097,536)	- 34,891,671 14,014	- (8,492,992) (27,137,824)	93,589,211 60,726	62,160,395 62,160,395	(254,457) (79,135)	233,326,782 53,487,686
Balance on 1 January 2017		75,000,000	(5,097,536)	34,891,671	(27,137,824)	93,589,211	62,160,395	(79,135)	233,326,782
Share capital decrease Share capital increase		49,500,000 (49,500,000)	-	- 49,500,000	-	(49,500,000)	-	366,209	366,209
Appropriation of net profit for the year of 2016 Attribution of own shares Dividends		- - -	- - - 5,097,527	- - (4,480,638)	- - -	- 62,160,395 (72,000,000)	- - (62,160,395)	- - -	- - (72,000,000)
		-	5,097,527	45,019,362	- -	- (59,339,605)	- (62,160,395)	- 366,209	616,890 (71,016,901)
Changes to fair value reserves Other movements		- -	- -	- 39,307	- -	- -	- -	- 5,278	39,307 5,278
Adjustments from the application of the equity method Net profit for the period		- -	- -	- -	- -	- 16,174	- 19,509,567	- (137,546)	16,174 19,372,022
Balance on 30 September 2017 (unaudited) Comprehensive income for the period		75,000,000 -	- (8)	79,950,341 39,307	- (27,137,824)	34,265,781 16,174	19,509,567 19,509,567	154,806 (132,267)	19,432,781
									181,742,663

CTT-CORREIOS DE PORTUGAL, S.A.

CONDENSED CONSOLIDATED CASH FLOW STATEMENT FOR THE NINE MONTH PERIODS ENDED 30 SEPTEMBER 2017 AND 30 SEPTEMBER 2016 Euro

			Unaudited	Unaudited
		NOTES	30.09.2017	30.09.2016
Cash flow from operating activities
Collections from customers			485,514,557	465,425,489
Payments to suppliers			(183,258,879)	(194,850,435)
Payments to employees			(235,591,422)	(231,834,406)
Banking customer deposits and other loans			286,561,588	182,048,811
Credit to bank clients			(35,250,182)	(2,976,694)
	Cash flow generated by operations		317,975,663	217,812,765
Payments/receivables of income taxes			(8,188,522)	(22,530,191)
Other receivables/payments			(19,982,643)	17,088,893
	Cash flow from operating activities (1)		289,804,498	212,371,467
Cash flow from investing activities
Receivables resulting from:
Tangible fixed assets			2,453,103	225,264
Investment properties			3,172,600	4,919,750
Financial assets available for sale			11,900,000	12,517,040
Investments held to maturity			2,995,779	15,505,000
Other banking financial assets			101,615,000	68,805,000
Interest income			443,241	753,641
Payments resulting from:
Tangible fixed assets			(18,755,283)	(10,688,130)
Intangible assets			(8,585,208)	(14,387,366)
Financial investments			(1,728,091)	-
Financial assets available for sale			(19,533,418)	(33,884,026)
Investments held to maturity			(121,164,027)	(79,889,616)
Demand deposits at Bank of Portugal			(42,344,406)	(1,737,354)
Other banking financial assets			(123,135,000)	(115,605,000)
	Cash flow from investing activities (2)		(212,665,709)	(153,465,798)
Cash flow from financing activities
Receivables resulting from:
Loans obtained			6,838,204	6,443,271
Payments resulting from:
Loans repaid			(7,646,409)	(3,490,000)
Interest expenses			(438,596)	(557,864)
Finance leases			(977,908)	(740,328)
Acquisition of own shares			-	(3,224,411)
Dividends			(72,000,000)	(70,264,792)
	Cash flow from financing activities (3)		(74,224,708)	(71,834,125)
Net change in cash and cash equivalents (1+2+3)			2,914,081	(12,928,455)
Changes in the consolidation perimeter			134,862	-
Cash and equivalents at the beginning of the period			613,845,248	603,649,717
Cash and cash equivalents at the end of the period			616,894,191	590,721,262
Cash and cash equivalents at the end of the period			616,894,191	590,721,262
Sight deposits at Bank of Portugal			46,136,739	1,737,354
Outstanding checks of Banco CTT / Checks clearing of Banco CTT			2,314,867	341,049
Cash and cash equivalents (Balance sheet)			665,345,797	592,799,664

1.	INTRODUCTION 30
2.	SIGNIFICANT ACCOUNTING POLICIES 31
	2.1 Basis of presentation 31
3.	SEGMENT REPORTING 31
4.	TANGIBLE FIXED ASSETS 35
5.	INTANGIBLE ASSETS 37
6.	INVESTMENT PROPERTIES 39
7.	COMPANIES INCLUDED IN THE CONSOLIDATION 41
8.	INVESTMENTS HELD TO MATURITY 42
9.	FINANCIAL ASSETS AVAILABLE FOR SALE 43
10.	OTHER BANKING FINANCIAL ASSETS AND LIABILITIES 44
11.	CREDIT TO BANK CLIENTS 45
12.	DEFERRALS 46
13.	ACCUMULATED IMPAIRMENT LOSSES 47
14.	EQUITY 48
15.	OWN SHARES, RESERVES, OTHER CHANGES IN EQUITY AND RETAINED EARNINGS 50
16.	DIVIDENDS 53
17.	EARNINGS PER SHARE 53
18.	PROVISIONS, GUARANTEES PROVIDED, CONTINGENT LIABILITIES AND COMMITMENTS 54
19.	ACCOUNTS PAYABLE 57
20.	BANKING CLIENTS' DEPOSITS AND OTHER LOANS 58
21.	INCOME TAXES RECEIVABLE /PAYABLE 58
22.	OTHER OPERATING INCOME 59
23.	STAFF COSTS 59
24.	INCOME TAX FOR THE PERIOD 61
25.	RELATED PARTIES 65
26.	OTHER INFORMATION 66
27.	SUBSEQUENT EVENTS 66

1. INTRODUCTION

CTT – Correios de Portugal, S.A. – Sociedade Aberta ("CTT" or "Company"), with head office at Avenida D. João II, no. 13, 1999-001 in Lisbon, had its origin in the "Administração Geral dos Correios Telégrafos e Telefones" government department and its legal form is the result of successive re-organisations carried out by the Portuguese state business sector in the Communications area.

Decree-Law no. 49.368 of 10 November 1969 founded the state-owned company CTT - Correios e Telecomunicações de Portugal, E. P., which started operating on 1 January 1970. By Decree-Law no. 87/92, of 14 May, CTT – Correios e Telecomunicações de Portugal, E. P., was transformed into a legal entity governed by private law, with the status of a state-owned public limited company. Finally, with the foundation of the former Telecom Portugal, S.A. by spin-off from Correios e Telecomunicações de Portugal, S.A. under Decree-Law no. 277/92 of 15 December, the Company's name was changed to the current CTT – Correios de Portugal, S.A..

On 31 January 2013 the Portuguese State through the Order no. 2468/12 – SETF, of 28 December, determined the transfer of the investment owned by the Portuguese State in CTT to Parpública – Participações Públicas, SGPS, S.A..

At the General Meeting held on 30 October 2013, the registered capital of CTT was reduced to 75,000,000 Euros, being from that date onwards represented by 150,000,000 shares, as a result of a stock split which was accomplished through the reduction of the nominal value from 4.99 Euros to 0.50 Euros.

During 2013, CTT's capital was opened to the private sector. Supported by Decree-Law no. 129/2013 of 6 September and the Resolution of the Council of Ministers ("RCM") no. 62-A/2013, of 10 October, the RCM no. 62-B/2013, of 10 October and RCM no. 72-B/2013, of 14 November, the first phase of privatisation of the capital of CTT took place on 5 December 2013. From this date, 63.64% of the shares of CTT (95.5 million shares) were owned by the private sector, of which 14% (21 million shares) were sold in a Public Offering and 49.64% (74.5 million shares) by Institutional Direct Selling. On 31 December 2013 the Portuguese State, through Parpública - Participações Públicas, SGPS, S.A. held 36.36% of the shares of CTT, 30.00% by detention and 6.36% by allocation.

On 5 September 2014, the second phase of the privatisation of CTT took place. The shares held by Parpública - Participações Públicas, SGPS, S.A., which on that date represented 31.503% of CTT's capital, were subject to a private offering of Shares ("Equity Offering") via an accelerated bookbuilding process. The Equity Offering was addressed exclusively to institutional investors.

The shares of CTT are listed on Euronext Lisbon.

The interim condensed consolidated financial statements attached herewith are expressed in Euros, as this is the functional currency of the Group.

These interim condensed consolidated financial statements were approved by the Board of Directors and authorised for issue on 31 October 2017.

2. SIGNIFICANT ACCOUNTING POLICIES

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 2016.

2.1 Basis of presentation

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 2017, and in accordance with IAS 34 - Interim Financial Reporting.

3. SEGMENT REPORTING

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.

The business of CTT is organised in the following segments:

• Mail CTT, S.A. excluding financial services, but including retail network, sales department, corporate and support areas, CTT Contacto, Mailtec Comunicação and Escrita Inteligente, S.A.;
• Express & Parcels includes CTT Expresso, Tourline, CORRE and Transporta;
• Financial Services PayShop and CTT, S.A. Financial Services; and
• Banco CTT Banco CTT, S.A..

The segments cover the three CTT business areas, as follows:

• Postal Market, covered by the Mail segment;
• Express and Parcels Markets, covered by the Express & Parcels segment; and
• Financial Market, covered by the Financial Services and Banco CTT segments.

Besides the above-mentioned segments, there are two sales channels, which are common to all businesses and products, the Retail Network and Sales Departments. In this analysis, the Retail Network, which is connected to the obligations of the universal postal service concession, is incorporated in the Mail segment 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 in the amounts booked directly in the companies' financial statements and related business units, adjusted by the elimination of transactions between companies of the same segment.

However, as CTT, S.A. has assets in more than one segment it was necessary to split its income and costs by the various operating segments. The Internal Services Rendered refers to services provided across the different CTT, S.A. business areas, and the income is calculated according to standard activities valued through internally set transfer prices.

Initially, CTT, S.A. operating costs are attributed to the different segments by allocating 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 split by the segments Mail and Financial Services according to the average number of CTT, S.A. employees assigned 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 periods ended on 30 September 2017 and 2016 are analysed as follows:

			30.09.2017
Euros	Mail	Express & Parcels	Financial Services	Banco CTT	CTT Central Structure	Intragroup eliminations	Others non allocated	Total
Revenues	393,421,717	96,185,271	48,224,063	5,318,523	80,680,649	(105,849,282)		- 517,980,942
Sales and services rendered	361,428,312	94,724,699	47,344,118	-	-	(2,227,942)		- 501,269,188
Sales	12,193,815	605,761	-	-	-	(305)	-	12,799,271
Services rendered	349,234,497	94,118,939	47,344,118	-	-	(2,227,637)		- 488,469,917
Financial Margin	-	-	-	2,102,591	-	-	-	2,102,591
Operating revenues external customers	20,149,302	1,460,572	817,008	3,215,931	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	339,102,604	97,635,733	24,117,418	23,043,299	80,680,649	(105,849,282)		- 458,730,422
External supplies and services	75,595,019	78,529,601	6,861,214	13,270,275	31,746,027	(23,843,028)	-	182,159,109
Staff costs	183,470,624	17,391,072	3,446,552	9,019,444	44,264,823	(92,373)		- 257,500,142
Other costs	11,452,211	1,715,061	1,182,072	753,580	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		(1,450,462) 24,106,645	(17,724,776)	-	-	-	59,250,520
Depreciation/amortisation and impairment of
investments, net	(11,891,977)	(2,916,467)	(346,779)	(1,959,272)	(5,528,607)	-	(111,960)	(22,755,062)
Impairment of accounts receivable, net								(933,817)
Impairment of other financial banking assets								-
Provisions net								758,906
Interest expenses								(4,026,908)
Interest income								303,058
Gains/losses in associated companies								-
Earnings before taxes								32,596,697
Income tax for the period								(13,224,676)
Net profit for the period								19,372,021
Non-controlling interests								(137,546)
Equity holders of parent company								19,509,567

(1) Operating results + depreciation/amortisation + provisions and impairment losses, net.

			30.09.2016
Euros	Mail	Express & Parcels	Financial Services	Banco CTT	CTT Central Structure	Intragroup eliminations	Others non allocated	Total
Revenues	397,965,264	88,088,771	53,398,852	270,548	75,486,880	(96,384,350)		- 518,825,966
Sales and services rendered	365,568,967	84,481,567	49,425,288	-	-	(2,214,346)		- 497,261,477
Sales	13,857,113	570,429	-	-	-	(550)	-	14,426,992
Services rendered	351,711,855	83,911,138	49,425,288	-	-	(2,213,796)		- 482,834,484
Financial Margin	-	-	-	(31,391)	-	-	-	(31,391)
Operating revenues external customers	20,102,831	3,607,204	3,911,257	301,940	13,995,855	(20,323,206)	-	21,595,881
Internal services rendered	12,293,465	-	62,307	-	29,943,745	(42,299,517)	-	-
Allocation to CTT central structure	-	-	-	-	31,547,280	(31,547,280)	-	-
Operating costs	328,220,865	85,277,246	24,555,371	18,802,783	75,486,880	(96,384,350)		- 435,958,796
External supplies and services	75,509,115	67,395,028	7,326,951	11,592,836	30,761,894	(22,516,336)		- 170,069,489
Staff costs	180,972,093	16,042,382	3,467,712	6,993,976	39,883,850	-		- 247,360,012
Other costs	11,599,701	1,839,837	890,997	215,970	4,004,007	(21,216)	-	18,529,295
Internal services rendered	28,809,519	-	12,652,870	-	837,129	(42,299,517)	-	-
Allocation to CTT central structure	31,330,438	-	216,842	-	-	(31,547,280)	-	-
EBITDA(1)	69,744,399	2,811,525	28,843,481	(18,532,235)	-	-	-	82,867,170
Depreciation/amortisation and impairment of investments, net	(11,464,470)	(2,041,961)	(259,865)	(1,026,993)	(4,721,764)	-	(390,810)	(19,905,863)
Impairment of accounts receivable, net								(65,358)
Impairment of non-depreciable assets								-
Provisions net								7,465,719
Interest expenses								(4,802,433)
Interest income								592,653
Gains/losses in associated companies								230,340
Earnings before taxes								66,382,227
Income tax for the period								(20,585,820)
Net profit for the period								45,796,408
Non-controlling interests								(238,268)
Equity holders of parent company								46,034,675
(1) Operating results + depreciation/amortisation + provisions and impairment losses, net.

The revenues are detailed as follows:

Thousand Euros	30.09.2017	30.09.2016
Mail	393,422	397,965
Transactional mail	301,151	303,005
Editorial mail	11,716	11,687
Parcels (USO)	5,414	4,545
Advertising mail	20,861	21,607
Retail	7,764	13,085
Philately	6,091	5,276
Business Solutions	6,375	6,985
Other	34,050	31,776
Express & Parcels	96,185 -	88,089 -
Financial Services	48,224	53,399
Banco CTT	5,319	271
CTT Central Structure	80,681 -	75,487 -
Intragroup eliminations	(105,849)	(96,384)
	517,981	518,826

The assets by segment are detailed as follows:

				30.09.2017
Assets (Euros)	Mail	Express & Parcels	Financial Services	Banco CTT	CTT Central Structure	Non allocated assets	Total
Intagible assets	2,989,468	3,788,372	581,930	20,293,343	6,276,586	5,596,617	39,526,316
Tangible fixed assets	167,704,324 14,130,740		524,318		262,045 14,050,210	1,250,853	197,922,491
Investment properties						6,881,261	6,881,261
Goodwill	7,294,638	2,716	406,101				7,703,455
Deferred tax assets						83,866,894	83,866,894
Accounts receivable						126,881,430	126,881,430
Credit to bank clients				42,404,763			42,404,763
Investments held to maturity				213,700,180			213,700,180
Financial assets available for sale				13,979,533			13,979,533
Other banking financial assets				80,975,310			80,975,310
Other assets						58,572,355	58,572,355
Cash and cash equivalents						665,345,797	665,345,797
Non-current assets held for sale						8,756,999	8,756,999
				177,988,431 17,921,828 1,512,348 371,615,175 20,326,797			957,152,206 1,546,516,785

				31.12.2016
Assets (Euros)	Mail	Express & Parcels	Financial Services	Banco CTT	CTT Central Structure	Non allocated assets	Total
Intagible assets	2,688,799	3,989,255	383,266	18,455,823	7,853,454	5,546,126	38,916,723
Tangible fixed assets	172,040,917 13,822,493		711,568	59,727	14,920,468	7,366,608	208,921,781
Investment properties						9,291,983	9,291,983
Goodwill	7,294,638		406,101				7,700,739
Deferred tax assets						86,220,762	86,220,762
Accounts receivable						122,113,270	122,113,270
Credit to bank clients				7,103,905			7,103,905
Investments held to maturity				95,094,543			95,094,543
Financial assets available for sale				6,447,325			6,447,325
Other banking financial assets				59,054,303			59,054,303
Other assets						48,263,780	48,263,780
Cash and cash equivalents						618,811,099	618,811,099
Non-current assets held for sale						8,756,999	8,756,999
	182,024,355 17,811,748					1,500,934 186,215,627 22,773,922 906,370,627	1,316,697,213

Debt by segment is detailed as follows:

			30.09.2017
Other information (Euros)	Mail	Express & Parcels	Financial Services	Banco CTT	CTT Central Struture	Total
Medium and long-term debt	-	145,172	-	-	-	145,172
Bank loans	-	89,853	-	-	-	89,853
Leasings	-	55,319	-	-	-	55,319
Short-term debt	-	7,886,357	-	-	-	7,886,357
Bank loans	-	7,837,045	-	-	-	7,837,045
Leasings	-	49,312	-	-	-	49,312
	-	8,031,529	-	-	-	8,031,529

			31.12.2016
Other information (Euros)	Mail	Express & Parcels	Financial Services	Banco CTT	CTT Central Struture	Total
Medium and long-term debt	-	127,145	-	-	-	127,145
Bank loans	-	87,202	-	-	-	87,202
Leasings	-	39,943	-	-	-	39,943
Short-term debt	724,749	8,955,080	-	-	-	9,679,829
Bank loans	-	8,726,161	-	-	-	8,726,161
Leasings	724,749	228,919	-	-	-	953,668
	724,749	9,082,224	-	-	-	9,806,973

The Group CTT is domiciled in Portugal. The result of its Sales and services rendered by geographical segment is disclosed below:

Thousand Euros	30.09.2017	30.09.2016
Revenue - Portugal	438,089	441,260
Revenue - other countries	63,181	56,001
	501,269	497,261

The financial statements are subject to seasonality, however this does not affect comparability between identical periods in a given year. There are atypical / non-recurring factors that may affect comparability between equal periods of the several years such as the number of working days of the period (mobile holidays or weekend holidays), special events (elections, promotional campaigns for clients) which may impact the revenue to increase / decrease from one period to another.

4. TANGIBLE FIXED ASSETS

During the nine-month period ended 30 September 2017 and the year ended 31 December 2016, the movements occurred in Tangible fixed assets, as well as in the respective accumulated depreciation and accumulated impairment, were as follows:

					30.09.2017
	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	36,903,717	334,909,767	140,435,199	3,269,073	59,021,936	25,037,425	5,016,467	3,351,405	607,944,990
Acquisitions	-	273,168	837,609	432	632,735	250,086	1,088,057	127,286	3,209,372
Disposals	-	-	(160,225)	-	(40,687)	(137)	-	-	(201,049)
Transfers and write-offs	1,396	5,688,122	833,388	-	1,010,490	166,782	(4,980,274)	(3,261,708)	(541,804)
Adjustments	-	(45,303)	(9,413)	(642)	(38,645)	(21,428)	-	(10,570)	(126,001)
Changes in the consolidation perimeter	197,025	1,102,206	731,285	30,889	417,295	1,151,444	-	-	3,630,144
Closing balance	37,102,139	341,927,960	142,667,842	3,299,752	61,003,123	26,584,172	1,124,249	206,414	613,915,651
Accumulated depreciation
Opening balance	3,851,494	197,359,750	121,934,623	3,208,997	52,255,805	20,239,484	-	-	398,850,154
Depreciation for the period	-	7,404,356	5,273,308	26,544	2,570,323	805,040	-	-	16,079,570
Disposals	-	-	(154,288)	-	(40,236)	(137)	-	-	(194,660)
Transfers and write-offs	-	-	(302,199)	-	(28,678)	(201,302)	-	-	(532,178)
Adjustments	-	87	8,559	(666)	336	(459)	-	-	7,857
Changes in the consolidation perimeter	-	422,804	459,736	28,437	218,784	572,388	-	-	1,702,149
Closing balance	3,851,494	205,186,997	127,219,739	3,263,311	54,976,335	21,415,014	-	-	415,912,891
Accumulated impairment
Opening balance	-	-	-	-	-	173,055	-	-	173,055
Other variations	-	-	-	-	-	(92,786)	-	-	(92,786)
Closing balance	-	-	-	-	-	80,269	-	-	80,269
Net Tangible fixed assets	33,250,644	136,740,963	15,448,103	36,441	6,026,788	5,088,889	1,124,249	206,414	197,922,491

					31.12.2016
	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	37,306,577	337,982,013	138,002,341	3,273,327	54,961,400	23,252,352	1,971,616	1,398,408	598,148,034
Acquisitions	-	313,458	6,625,240	9,719	4,156,018	1,937,614	8,381,884	2,888,955	24,312,888
Disposals	(526,637)	(3,885,980)	(1,503,859)	-	(52,919)	-	-	-	(5,969,395)
Transfers and write-offs	123,778	675,516	(2,289,200)	(8,174)	51,751	(115,897)	(5,337,034)	(812,692)	(7,711,951)
Adjustments	-	(175,240)	(399,323)	(5,800)	(94,314)	(36,644)	-	(123,265)	(834,586)
Closing balance	36,903,717	334,909,766	140,435,200	3,269,073	59,021,936	25,037,425	5,016,467	3,351,405	607,944,989
Accumulated depreciation
Opening balance	3,888,322	192,743,987	118,629,681	3,154,422	50,187,217	19,306,751	-	-	387,910,380
Depreciation for the period	-	9,180,124	7,410,835	66,457	2,621,487	1,111,546	-	-	20,390,450
Disposals	(36,827)	(2,390,937)	(1,481,994)	-	(52,919)	-	-	-	(3,962,677)
Transfers and write-offs	-	(2,172,820)	(2,533,931)	(8,174)	(487,515)	(173,533)	-	-	(5,375,973)
Adjustments	-	(604)	(89,968)	(3,709)	(12,465)	(5,280)	-	-	(112,027)
Closing balance	3,851,494	197,359,750	121,934,624	3,208,996	52,255,806	20,239,484	-	-	398,850,154
Accumulated impairment
Opening balance	-	-	-	-	-	296,769	-	-	296,769
Other variations	-	-	-	-	-	(123,714)	-	-	(123,714)
Closing balance	-	-	-	-	-	173,055	-	-	173,055
Net Tangible fixed assets	33,052,223	137,550,016	18,500,576	60,077	6,766,130	4,624,886	5,016,467	3,351,405	208,921,781

During the nine-month period ended 30 September 2017, Land and natural resources and Buildings and other constructions include 634,903 Euros (650,717 Euros as at 31 December 2016), related to land and property in co-ownership with MEO – Serviços de Comunicações e Multimédia, S.A..

During 2016, an exchange of 4 properties in co-ownership was made with MEO – Serviços de Comunicações e Multimédia, S.A., resulting in gains in the amount of 485,134 Euros.

During the nine-month period ended 30 September 2017, the most significant movements in Tangible fixed assets were the following:

Buildings and other constructions:

The movements associated to acquisitions and transfers relate mostly to the capitalisation of repairs in own and third-party buildings of CTT, Banco CTT and Tourline.

Basic equipment:

The amount of acquisitions mainly relates to the purchase of ATMs in the amount of 51 thousand Euros, pallets for Rest Mail for about 40 thousand Euros and IT equipment worth approximately 234 thousand Euros by CTT. Tourline acquired pallets in the amount of 34 thousand Euros, IT equipment worth approximately 20 thousand Euros and PDAs amounting to 355 thousand Euros.

Office equipment:

The amount of acquisitions relates essentially to the purchase by CTT of various administrative equipment, namely safes and security doors totalling 68 thousand Euros, various office furniture worth about 50 thousand Euros, medium and large-size equipment for about 35 thousand Euros and the acquisition of several micro-computing equipment for approximately 27 thousand Euros. Banco CTT acquired several office and IT equipment in the amount of 286 thousand Euros. In addition, Tourline acquired office furniture worth 20 thousand Euros and several micro-computing equipment for approximately 12 thousand Euros.

Other tangible fixed assets:

The amount of acquisitions mainly relates to prevention and safety equipment for approximately 231 thousand Euros by CTT.

Tangible fixed assets in progress:

The amounts under this heading are related to the capitalisation of improvements in own and third-party properties.

In the nine-month period ended 30 September 2017, the amounts recorded under changes in the consolidation perimeter refer to the balances of Transporta at the acquisition date.

In the year ended 31 December 2016, the amounts recorded under write-offs, with particular emphasis on Basic equipment, are mainly due to the write-offs of CTT assets that were fully depreciated.

The depreciation recorded in the amount of 16,079,570 Euros (14,672,711 Euros on 30 September 2016), is booked under the heading Depreciation/amortisation and impairment of investments, net.

Contractual commitments related to Tangible fixed assets are as follows:

	30.09.2017
Motorcycles	354,040
Hardware firewall networks	280,353
Trucks	97,908
Monitors and scanners	88,021
Tractors	76,235
Safes and security doors	70,238
Upgrades to mail sorting machines	52,532
Trailers	48,046
Enveloping machine	30,135
Pallets	24,090
CCTV	12,293
	1,133,891

5. INTANGIBLE ASSETS

During the nine-month period ended 30 September 2017 and the year ended 31 December 2016, the movements which occurred in the main categories of Intangible assets, as well as the respective accumulated amortisation, were as follows:

	30.09.2017
	Development projects	Computer Software	Industrial property	Other intangible assets	Intangible assets in progress	Total
Intangible assets
Opening balance	4,372,923	69,732,469	11,722,559	444,739	8,870,277	95,142,968
Acquisitions	-	2,398,044	2,175	-	4,728,065	7,128,284
Disposals	-	-	-	-	-	-
Transfers and write-offs	-	5,212,863	(16,833)	-	(6,543,595)	(1,347,565)
Adjustments	-	-	11,631	-	996	12,627
Changes in the consolidation perimeter	7,629	-	-	-	19,281	26,910
Closing balance	4,380,552	77,343,376	11,719,533	444,739	7,075,024	100,963,225
Accumulated amortisation
Opening balance	4,360,060	43,021,166	8,400,280	444,739	-	56,226,245
Amortisation for the period	7,765	6,308,959	246,807	-	-	6,563,531
Disposals	-	-	-	-	-	-
Transfers and write-offs	-	(1,340,356)	(16,833)	-	-	(1,357,189)
Adjustments	-	(454)	4,096	-	-	3,642
Changes in the consolidation perimeter	679	-	-	-	-	679
Closing balance	4,368,504	47,989,315	8,634,350	444,739	-	61,436,908
Net intangible assets	12,048	29,354,061	3,085,183	-	7,075,024	39,526,316

	31.12.2016
	Development projects	Computer Software	Industrial property	Other intangible assets	Intangible assets in progress	Total
Intangible assets
Opening balance	4,372,923	48,455,024	12,004,296	444,739	12,175,413	77,452,395
Acquisitions	-	7,715,502	17,573	-	10,114,453	17,847,528
Disposals	-	(15,490)	-	-	-	(15,490)
Transfers and write-offs	-	13,235,156	1,893	-	(13,419,588)	(182,539)
Adjustments	-	(15,640)	(301,202)	-	-	(316,843)
Other movements	-	357,918	-	-	-	357,918
Closing balance	4,372,923	69,732,469	11,722,559	444,739	8,870,277	95,142,968
Accumulated amortisation
Opening balance	4,350,412	36,912,898	8,120,329	444,739	-	49,828,379
Amortisation for the period	9,647	6,277,006	336,578	-	-	6,623,231
Disposals	-	(15,490)	-	-	-	(15,490)
Transfers and write-offs	-	(150,959)	(454)	-	-	(151,413)
Adjustments	-	(2,289)	(56,173)	-	-	(58,463)
Closing balance	4,360,060	43,021,166	8,400,280	444,739	-	56,226,245
Net intangible assets	12,863	26,711,303	3,322,280	-	8,870,277	38,916,723

The caption Industrial property includes the license of the trademark "Payshop Internacional" of CTT Contacto, S.A., of 1,200,000 Euros. This license has an indefinite useful life, therefore it is not being amortised.

The transfers occurred in the nine-month period ended 30 September 2017 in Intangible assets in progress to Computer software refer to IT projects which were completed during the period.

The amounts of 568,161 Euros and 492,943 Euros that were capitalised in Computer software or in Intangible assets in progress as at 30 September 2017 and 30 September 2016, respectively, related to the staff costs incurred in the development of these projects.

In the nine-month period ended 30 September 2017, the amounts recorded under changes in the consolidation perimeter refer to the balances of Transporta at the acquisition date.

As at 30 September 2017, Intangible assets in progress relate to IT projects which are under development, of which the most relevant are:

	30.09.2017
International (E-CIP)	812,364
Management information - Software	777,162
NAVE evolution	579,065
Mail products evolution	517,468
SAP Hana & Hybris Billing	508,049
BD SQL Server consolidation	229,986
Mortgage loans - software	213,845
RAID - Software	211,612
Business Excellence - Software	206,927
FATCA/CRS	175,704
SAP developments	126,363
CTT Mobile	121,731
SADIP - Dynamics Change Plans	109,660
APARTADOS - Software	104,986
Aplica Legacy adaptations	100,358
DOL - Treatment and generation of schedules	98,266
OPICS - Treasury management	86,475
	4,980,022

The amortisation for the period, of 6,563,531 Euros (4,842,341 Euros as at 30 September 2016), was recorded under Depreciation / amortisation and impairment of investments, net.

There are no Intangible assets with restricted ownership or any carrying value relative to any Intangible Assets which have been given as a guarantee of liabilities.

Contractual commitments relative to Intangible assets are as follows:

	30.09.2017
CBS - Core Banking System SAP S/4 Hana e SAP Hybris	4,176,609 2,177,054
Access and Identity Management System	186,403
Worflow Solution	173,100
APP Mobile CTT 2.0	94,710
Riposte – NAVe	84,881
CRM - Microsoft Dynamics	45,030
APP Mobility Android	20,295
Insurance Integrator	19,660
	6,977,742

6. INVESTMENT PROPERTIES

As at 30 September 2017 and 31 December 2016, the Group has the following assets classified as investment properties:

		30.09.2017
	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	(846,692)	(4,994,149)	-	(5,840,842)
Transfers and write-offs	-	43,152	(43,152)	-
Closing balance	3,074,356	13,421,783	-	16,496,139
Accumulated depreciation
Opening balance	210,097	11,500,249	-	11,710,347
Depreciation for the period	-	211,508	-	211,508
Disposals	(19,988)	(3,571,725)	-	(3,591,713)
Closing balance	190,109	8,140,033	-	8,330,142
Accumulated impairment
Opening balance	-	1,291,498	-	1,291,498
Transfers/Adjustments	-	(6,762)	-	(6,762)
Closing balance	-	1,284,736	-	1,284,736
Net Investment properties	2,884,247	3,997,014	-	6,881,261
		31.12.2016
	Land and natural resources	Buildings and other constructions	Investment properties in progress	Total
Investment properties
Opening balance	7,079,433	40,895,219	-	47,974,653
Additions	-	-	-	-
Disposals	(890,140)	(8,088,615)	-	(8,978,754)
Transfers and write-offs	(2,268,245)	(14,433,825)
			-	(16,702,070)
Closing balance	3,921,049	18,372,780	-	22,293,828
Accumulated depreciation
Opening balance	239,427	26,669,509	-	26,908,936
Depreciation for the period	-	569,250	-	569,250
Disposals	(25,824)	(5,432,025)	-	(5,457,848)
Transfers and write-offs	(3,506)	(10,306,485)	-	(10,309,991)
Closing balance	210,097	11,500,249	-	11,710,347
Accumulated impairment
Opening balance	-	1,282,622	-	1,282,622
Transfers/Adjustments Closing balance	- -	8,876 1,291,498	- -	8,876 1,291,498
Net Investment properties	3,710,951	5,581,032	-	9,291,983

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 2017, the amount of disposals relates to the sale of six properties, having the corresponding gains, of 923 thousand Euros, been recorded in the caption Other operating income.

During the year ended 31 December 2016, the amount of disposals relates to the sale of six properties, having the corresponding gains, of 1.2 million Euros, been recorded in the caption Other operating income.

Depreciation for the period, of 211,508 Euros (487,211 Euros on 30 September 2016), was recorded in the caption Depreciation / amortisation and impairment of investments, net.

7. COMPANIES INCLUDED IN THE CONSOLIDATION

Subsidiary companies

As at 30 September 2017 and 31 December 2016, the parent company, CTT - Correios de Portugal, S.A. and the following subsidiaries in which it holds control were included in the consolidation:

			30.09.2017			31.12.2016
				Percentage of ownership			Percentage of ownership
Company name	Place of business	Head office	Direct	Indirect	Total	Direct	Indirect	Total
Parent company: CTT - Correios de Portugal, S.A.	Portugal	Av. D. João II N.º 13 1999-001 Lisboa	-	-	-	-	-	-
Subsidiaries: CTT Expresso - Serviços Postais e Logística, S.A. ("CTT Expresso")	Portugal	Lugar do Quintanilho 2664-500 São Julião do Tojal	100	-	100	100	-	100
Payshop Portugal, S.A. ("Payshop")	Portugal	Av. D. João II N.º 13 1999-001 Lisboa	100	-	100	100	-	100
CTT Contacto, S.A. ("CTT Con")	Portugal	Av. D. João II N.º 13 1999-001 Lisboa	100	-	100	100	-	100
Mailtec Comunicação , S.A. ("Mailtec TI")	Portugal	Av. D. João II N.º 13 1999-001 Lisboa	100	-	100	100	-	100
Tourline Express Mensajería, SLU. ("TourLine")	Spain	Calle Pedrosa C, 38-40 Hospitalet de Llobregat (08908)- Barcelona - Spain	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. ("Transporta")	Portugal	Estrada de São Marcos N.º 15 2735-521 Cacém	100	-	100	-	-	-

On 27 April 2017 the share capital of Banco CTT, S.A. was increased by 40,000,000 Euros, currently totaling 125,000,000 Euros.

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.

Joint ventures

As at 30 September 2017 and 31 December 2016, the Group held the following interests in joint ventures, accounted for by the equity method:

			30.09.2017 Percentage of ownership			31.12.2016 Percentage of ownership
Company name	Place of business	Head office	Direct	Indirect	Total	Direct	Indirect	Total
NewPost, ACE	Portugal	Av. Fontes Pereira de Melo, 40 Lisboa	49	-	49	49	-	49
PTP & F, ACE	Portugal	Estrada Casal do Canas Amadora	-	51	51	-	51	51

Associated companies

As at 30 September 2017 and 31 December 2016, the Group held the following interests in associated companies accounted for by the equity method:

			30.09.2017			31.12.2016
				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. ("Multicert")	Portugal	R. do Centro Cultural, 2 Lisboa	20	-	20	20	-	20
Payshop Moçambique, S.A. (a)	Mozambique	R. da Sé, 114-4º. Maputo - Mozambique	-	35	35	-	35	35
Mafelosa, SL (b)	Spain	Castellon - Spain	-	25	25	-	25	25
Urpacksur, SL (b)	Spain	Málaga - Spain	-	30	30	-	30	30
(a) Company held by Payshop Portugal, S.A., which is currently under liquidation.

(b) Company held by Tourline Mensajeria, SLU, which currently has no activity.

Changes in the consolidation perimeter

During the nine-month period ended 30 September 2017, the consolidation perimeter was changed following the acquisition of the company Transporta – Transportes Porta a Porta, S.A. on 4 May 2017.

The following table summarizes the impacts on the balance sheet at the acquisition date:

Statement of financial position - Acquisition date
Caption	Amount
Non-current assets	2,075,180
Current assets	3,426,473
Total assets	5,501,653
Equity	1,593,190
Non-current liabilities	461,277
Current liabilities	3,447,186
Total liabilities	3,908,463
Total equity and liabilities	5,501,653

The main impacts on results at 30 September 2017 are as follows and refer to the months from May to September:

Income Statement - 30.09.2017
Caption	Amount
Revenues	5,650,679
Operating costs	(7,647,120)
Earnings before financial income and taxes	(1,996,441)
Other captions	391,184
Net profit for the period	(1,605,257)

8. INVESTMENTS HELD TO MATURITY

As at 30 September 2017 and 31 December 2016, this caption showed the following composition:

	30.09.2017	31.12.2016
Non-current
Debt securities and other fixed-income securities
Public issuers	182,841,137	78,863,164
Other issuers	22,501,297	15,122,951
	205,342,434	93,986,115
Current
Debt securities and other fixed-income securities
Public issuers	8,328,740	878,115
Other issuers	29,006	230,313
	8,357,746	1,108,428
	213,700,180	95,094,543

The analysis of the residual maturity of the investments held to maturity as at 30 September 2017 and 31 December 2016, is detailed as follows:

			30.09.2017
		Current		Non-current
	Due within 3 months	Over 3 months and less than 1 year	Over 1 year and less than 3 years	Over 3 years	Undetermined	Total
Debt securities and other fixed-income securities
Public issuers	3,202,191	5,126,549	32,105,105	150,736,032	-	191,169,877
Other issuers	29,006	-	-	22,501,297	-	22,530,303
	3,231,197	5,126,549	32,105,105	173,237,329	-	213,700,180
			31.12.2016
		Current		Non-current
	Due within 3 months	Over 3 months and less than 1 year	Over 1 year and less than 3 years	Over 3 years	Undetermined	Total
Debt securities and other fixed-income securities
Public issuers	878,115	-	12,256,862	66,606,302	-	79,741,279
Other issuers	22,818	207,495	-	15,122,951	-	15,353,264
	900,933	207,495	12,256,862	81,729,253	-	95,094,543

9. FINANCIAL ASSETS AVAILABLE FOR SALE

As at 30 September 2017 and 31 December 2016, the composition of this heading is as follows:

	30.09.2017	31.12.2016
Non-current
Debt securities and other fixed-income securities
Public issuers	560,515	540,400
Other issuers	4,717,181	3,933,214
	5,277,696	4,473,614
Current
Debt securities and other fixed-income securities
Public issuers	5,136,200	139,180
Other issuers	3,565,637	1,834,531
	8,701,837	1,973,711
	13,979,533	6,447,325

The analysis of the Financial assets available for sale and the corresponding residual maturity is detailed as follows:

	30.09.2017
	Cost (1)	Fair value reserve	Impairment losses	Total
Debt securities and other fixed-income securities
Public-debt securities
National	5,669,001	27,714	-	5,696,715
Foreign	-	-	-	-
Other issuers
National	2,550,118	-	-	2,550,118
Foreign	5,707,632	25,068	-	5,732,700
	13,926,751	52,782	-	13,979,533

(1) Acquisition cost regarding shares and other equity instruments and amortised cost regarding debt securities.

			30.09.2017
		Current		Non-current
	Due within 3 months	Over 3 months and less than 1 year	Over 1 year and less than 3 years	Over 3 years	Undetermined	Total
Debt securities and other fixed-income securities
Public-debt securities
National	5,136,200	-	-	560,515	-	5,696,715
Foreign	-	-	-	-	-	-
Other issuers
National	2,550,118	-	-	-	-	2,550,118
Foreign	815,352	200,167	4,603,882	113,299	-	5,732,700
	8,501,670	200,167	4,603,882	673,814	-	13,979,533
		Cost (1)	Fair value reserve	Impairment losses		Total
Debt securities and other fixed-income securities
Public-debt securities
National		679,406		174	-	679,580
Foreign		-		-	-	-
Other issuers
National		-		-	-	-
Foreign		5,754,445		13,300	-	5,767,745
		6,433,851		13,474	-	6,447,325

(1) Acquisition cost regarding shares and other equity instruments and amortised cost regarding debt securities.

				31.12.2016
		Current		Non-current
	Due within 3 months	Over 3 months and less than 1 year	Over 1 year and less than 3 years	Over 3 years	Undetermined	Total
Debt securities and other fixed-income securities
Public-debt securities
National	14,866	124,314	-	540,400	-	679,580
Foreign	-	-	-	-	-	-
Other issuers
National	-	-	-	-	-	-
Foreign	562,258	1,272,273	3,614,529	318,685	-	5,767,745
	577,124	1,396,587	3,614,529	859,085	-	6,447,325

10.OTHER BANKING FINANCIAL ASSETS AND LIABILITIES

As at 30 September 2017 and 31 December 2016, the headings Other banking financial assets and Other banking financial liabilities showed the following composition:

	30.09.2017	31.12.2016
Non-current assets
Investments in credit institutions	8,105,618	-
	8,105,618	-
Current assets
Investments in credit institutions	72,165,625	58,718,171
Other	704,067	336,132
	72,869,692	59,054,303
	80,975,310	59,054,303
Current liabilities
Other	9,264,156	1,218,205
	9,264,156	1,218,205

Regarding the caption Investments in credit institutions, the scheduling by maturity is as follows:

	30.09.2017	31.12.2016
Up to 3 months	32,063,129	42,111,692
From 3 to 6 months	1,365,773	4,500,135
From 6 to 12 months	38,736,723	12,106,344
From 1 to 3 years	5,160,908	-
Over 3 years	2,944,710	-
	80,271,243	58,718,171

11.CREDIT TO BANK CLIENTS

As at 30 September 2017 and 31 December 2016, the caption Credit to bank clients was detailed as follows:

	30.09.2017	31.12.2016
Performing loans	42,427,108	7,104,322
Mortgage loans	29,222,944	-
Overdrafts	231,106	69,498
Other credits	12,973,058	7,034,824
Overdue loans	60,167	-
Credit risk impairment	(82,512)	(417)
	42,404,763	7,103,905

The maturity analysis of the Credit to bank clients as at 30 September 2017 and 31 December 2016 is detailed as follows:

				30.09.2017
	Current			Non-current
	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
Mortgage loans	-	-	-	-	29,193,616	29,193,616
Overdrafts	228,285	-	-	-	-	228,285
Other credits	-	12,973,058	-	-	-	12,973,058
Overdue loans	-	9,804	-	-	-	9,804
	228,285	12,982,862	-	-	29,193,616	42,404,763

		Non-current
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
69,498	-	-	-	-	69,498
-	7,034,407	-	-	-	7,034,407
-	-	-	-	-	-
-	-	-	-	-	-
69,498	7,034,407	-	-	-	7,103,905
		Current		31.12.2016

During the nine-month period ended 30 September 2017 and the year ended 31 December 2016, the movement in the Credit risk impairment caption was as follows:

			30.09.2017
	Opening balance	Increases	Reversals	Utilisations	Closing balance
Non-current assets
Credit to bank clients	-	29,564	(236)	-	29,328
	-	29,564	(236)	-	29,328
Current assets
Credit to bank clients	417	61,366	(8,600)	-	53,184
	417	61,366	(8,600)	-	53,184
	417	90,930	(8,836)	-	82,512
			31.12.2016
	Opening balance	Increases	Reversals	Utilisations	Closing balance
Current assets
Credit to ban clients	-	417	-	-	417
	-	417	-	-	417

12.DEFERRALS

As at 30 September 2017 and 31 December 2016, the Deferrals included in Current assets and Current and Non-current liabilities showed the following composition:

	30.09.2017	31.12.2016
Assets deferrals
Current
Rents payable	1,262,567	1,293,963
Meal allowances	1,644,719	1,668,745
Other	5,827,442	3,166,223
Diferimentos	8,734,728	6,128,931
Liabilities deferrals
Non-current
Tangible fixed assets	321,217	334,191
Diferimentos	321,217	334,191
Current
Deferred capital gains	535,844	2,143,378
Phone-ix top ups	145,676	158,698
Deferred comissions	57,318	799,062
Investment subsidy	17,299	17,299
Other	468,781	1,059,172
Diferimentos	1,224,918	4,177,609
	1,546,135	4,511,800

In the financial years 2001 and 2002, CTT sold certain properties, which it subsequently leased. The gains on these sales were deferred and are being recognised over the period of the lease contracts.

During the nine-month period ended 30 September 2017 and the year ended 31 December 2016, the amounts of 1,607,534 Euros and 3,394,833 Euros, respectively, were recognised under Other operating income in the consolidated income statement, related to the above-mentioned gains. The amount recognised in the year ended 31 December 2016 includes the amount of 1,725,642 Euros regarding Conde Redondo building as a result of the lease contract's termination.

Following the agreement signed with Cetelem in 2014, an amount of 57,318 Euros is deferred during the nine-month period ended 30 September 2017 (799,062 Euros as at 31 December 2016).

13.ACCUMULATED IMPAIRMENT LOSSES

During the nine-month period ended 30 September 2017 and the year ended 31 December 2016, the following movements occurred in impairment losses:

			30.09.2017
	Opening balance	Increases	Reversals	Utilisations	Changes in the consolidation perimeter	Closing balance
Non-current assets
Tangible fixed assets	173,055	-	(92,786)	-	-	80,269
Investment properties	1,291,498	-	(6,762)	-	-	1,284,736
	1,464,553	-	(99,548)	-	-	1,365,005
Credit to bank clients	-	29,564	(236)	-	-	29,328
Other non-current assets	1,748,286	80,532	-	-	-	1,828,818
TA105019 - Imparidade	1,748,286	110,096	(236)	-	-	1,858,146
	3,212,839	110,096	(99,784)	-	-	3,223,151
Current assets
Accounts receivable	30,309,524	2,053,209	(810,941)	(708,707)	2,278,091	33,121,176
Credit to bank clients	417	61,366	(8,600)	-	-	53,184
Other current assets	8,173,677	50,128	(521,205)	(109,481)	326,796	7,919,915
	38,483,618	2,164,703	(1,340,746)	(818,188)	2,604,887	41,094,275
Merchandise	1,565,187	294,234	(455)	(81,241)	-	1,777,725
Raw, subsidiary and consumable	579,327	90,295	-	-	-	669,622
	2,144,514	384,529	(455)	(81,241)	-	2,447,347
	40,628,132	2,549,232	(1,341,201)	(899,429)	2,604,887	43,541,622
	43,840,971	2,659,328	(1,440,985)	(899,429)	2,604,887	46,764,773

			31.12.2016
	Opening balance	Increases	Reversals	Utilisations	Transfers	Closing balance
Non-current assets
Tangible fixed assets	296,769	-	(123,714)	-	-	173,055
Investment properties	1,282,622	12,491	(3,615)	-	-	1,291,498
	1,579,391	12,491	(127,329)	-	-	1,464,553
Other non-current assets	1,472,836	83,597	-	-	191,853	1,748,286
INESC loan	347,021	-	(347,021)	-	-	-
TA105019 - Imparidade	1,819,857	83,597	(347,021)	-	191,853	1,748,286
	3,399,248	96,088	(474,350)	-	191,853	3,212,839
Current assets
Accounts receivable	31,737,169	2,875,921	(2,267,005)	(2,036,561)	-	30,309,524
Credit to bank clients	-	417	-	-	-	417
Other current assets	8,622,168	440,664	(691,210)	(6,092)	(191,853)	8,173,677
INESC loan	49,740	-	(49,740)	-	-	-
	40,409,077	3,317,002	(3,007,955)	(2,042,653)	(191,853)	38,483,618
Merchandise	1,397,098	198,203	(438)	(29,676)	-	1,565,187
Raw, subsidiary and consumable	565,513	21,592	(7,778)	-	-	579,327
	1,962,611	219,795	(8,216)	(29,676)	-	2,144,514
	42,371,688	3,536,797	(3,016,171)	(2,072,329)	(191,853)	40,628,132
	45,770,936	3,632,885	(3,490,521)	(2,072,329)	-	43,840,971

In the nine-month period ended 30 September 2017, the caption Changes in the consolidation perimeter refers to the balances of Transporta at the acquisition date.

The net amount between increases and reversals of impairment losses of inventories was recorded in the Consolidated income statement under the caption Cost of sales.

14.EQUITY

As at 30 September 2017, 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 2017 and 31 December 2016 the Company's shareholders with greater than or equal to 2% shareholdings, according to the information reported, are as follows:

			30.09.2017
Shareholder		No. of shares	%	Nominal value
Gestmin SGPS, S.A. (1)		15,401,967	10.268%	7,70 0,984
Manuel Carlos de Melo Champalimaud (1)	Total	15,686,852	10.458%	7,843,426
Allianz Global Investors GmbH(2)	Total	7,552,637	5.035%	3,776,319
Wilmington Capital, S.L. (3)		7,501,583	5.001%	3,750,792
Indumenta Pueri, S.L. (3)	Total	7,501,583	5.001%	3,750,792
BNP Paribas Asset Management SAS (4) (5)		0	3.710%	0
BNP Paribas Investment Partners S.A. (5)	Total	7,274,095	4.849%	3,637,048
Norges Bank	Total	3,333,792	2.223%	1,666,896
Wellington Management Group LLP (6)	Total	3,105,222	2.070%	1,552,611
CTT, S.A. (own shares) (7)	Total	1	0.000%	0.50
Other shareholders	Total	105,545,818	70.364%	52,772,909
Total		150,000,000	100.000%	75,000,000

(1) Includes GestminSGPS, S.A. with 15,329,698 shares and members of the Board of Directors of Gestmin with 72,269 shares, the latter attributable to Gestmin. Qualifying shareholding directly and indirectly attributable to Manuel Carlos de Melo Champalimaud, who holds a controlling interest in Gestmin and also holds directly 284,885 shares corresponding to 0.190% of the share capital and voting rights in CTT.

(2) Previously, Allianz Global Investors Europe GmbH.

(3) Wilmington Capital, S.L. is controlled by Indumenta Pueri, S.L..

(4) Company controlled by BNP Paribas Investment Partners S.A..

(5) Percentages indicatedby the shareholder in the last notification of qualifying holdings, disclosed through a press release of 4 May 2017 available at CTT website (www.ctt.pt) and CMVM website (www.cmvm.pt): BNP Paribas Asset Management - 1.86% directly; BNP Paribas Investment Partners Belgium SA - 1.09% directly (proxy voting by BNP Paribas Investment Partners UK Ltd); BNP Paribas Investment Partners Luxembourg - 1.90% indirectly (proxy voting by BNP Paribas Asset Management 1.846% + BNP Paribas Investment Partners Nederland N.V. 0.055%).

(6) The full chain of controlled undertakings through which the voting rights are held includes Wellington Management Group LLP, Wellington Group Holdings LLP, Wellington Investment Advisors Holdings LLP and Wellington Management Company LLP.

(7) 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.

			31.12.2016
Shareholder		No. of shares	%	Nominal value
Gestmin SGPS, S.A. (1)		14,576,115	9.717%	7,288,058
Manuel Carlos de Melo Champalimaud		284,885	0.190%	142,443
Manuel Carlos de Melo Champalimaud	Total	14,861,000	9.907%	7,430,500
Standard Life Investments Limited (2)		9,910,580	6.607%	4,955,290
Ignis Investment Services Limited (2)		97,073	0.065%	48,537
Standard Life Investments (Holdings) Limited	Total	10,007,653	6.672%	5,003,827
Allianz Global Investors GmbH (3)	Total	7,552,637	5.035%	3,776,319
BNP Paribas Investment Partners Belgium S.A. (4)			0.833%
BNP Paribas Investment Partners Luxembourg S.A. (4)			2.972%
BNP Paribas Asset Management SAS (4)			1.197%
BNP Paribas Investment Partners S.A.	Total	7,502,430	5.002%	3,751,215
Norges Bank	Total	7,422,099	4.948%	3,711,050
BlackRock, Inc. (5)	Total	4,961,965	3.308%	2,480,983
F&C Asset Management plc (6)		3,124,801	2.083%	1,562,401
Banco de Montreal (6)	Total	3,124,801	2.083%	1,562,401
Kames Capital PLC (7)	Total	3,022,170	2.015%	1,511,085
Wilmington Capital, S.L. (8)		3,020,368	2.014%	1,510,184
Indumenta Pueri, S.L. (8)	Total	3,020,368	2.014%	1,510,184
CTT, S.A. (own shares) (9)	Total	600,531	0.400%	300,266
Other shareholders	Total	87,924,346	58.616%	43,962,173
Total		150,000,000	100.000%	75,000,000

(1) Shareholding directly and indirectly attributable to Manuel Carlos de Melo Champalimaud.

(2) Company held by Standard Life Investments (Holdings) Limited.

(3) Previously, Allianz Global Investors Europe GmbH.

(4) Companies controlled by BNP Paribas Investment Partners S.A..

(5) The full chain of BlackRock, Inc. controlled undertakings through which the voting rights and/or financial instruments are effectively held may be consulted at the attachments of the qualifying holding press releases, available at: http://www.ctt.pt/ctt-einvestidores/relacoes-com-investidores/comunicados.html?com.dotmarketing.htmlpage.language=1#panel2-1

(6) This qualified shareholding is imputable to F&C Asset Management plc, as the entity with whom each of F&C Management Limited, F&C Investment Business Limited and F&C Managers Limited are in a dominion relationship. F&C Asset Management plc is under the dominion of BMO Global Asset Management (Europe) Limited which in turn is under the dominion of the Bank of Montreal.

(7) Kames Capital PLC is acting as investment manager for Scottish Equitable PLC, Royal County of Berkshire Pension Fund, Kames Capital Investment Company (Ireland) PLC and Kames Capital ICVC and is the nominated holder of the voting rights and custodian of the shares to which voting rights are attached.

(8) Wilmington Capital, S.L. is controlled by Indumenta Pueri, S.L..

(9) The voting rights inherent to own shares held by the Company are suspended pursuant to article 324 of the Portuguese Companies Code.

15.OWN SHARES, RESERVES, OTHER CHANGES IN EQUITY AND RETAINED EARNINGS

Own shares

The commercial legislation regarding own shares requires that a non-distributable reserve must be created for the same amount of the acquisition price of such shares. This reserve is not available for distribution while the shares stay in the Company's possession. In addition, the applicable accounting standards determine that the gains or losses obtained with the sale of such shares are recognised in reserves.

On 31 January 2017, and pursuant to the remuneration policy approved by the Remuneration Committee for the 2014-2016 term of office and the Share Plan to the executive members of the Board of Directors approved by the General Meeting on 5 May 2015, CTT granted a total of 600,530 own shares, representing 0.400% of the corresponding share capital, to the Company's executive members of the Board of Directors, as long-term variable remuneration.

As at 30 September 2017, CTT held 1 own share, with a nominal value of 0.50 €, being all the inherent rights suspended pursuant to article 324 of the Portuguese Companies Code.

Own shares held by CTT are within the limits established by the Articles of Association of the Company and by the Portuguese Companies Code. These shares are recorded at acquisition cost.

During the nine-month period ended 30 September 2017 and the year ended 31 December 2016, the movements that occurred in this caption were as follows:

	Quantity	Value	Average price
Balance at 31 December 2016 Acquisitions	600,531 -	5,097,536 -	8.488 -
Attribution	(600,530)	(5,097,527)	8.488
Balance at 30 September 2017	1	8	8.488
	Quantity	Value	Average price
Balance at 31 December 2015	200,177	1,873,125	9.357
Acquisitions	400,354	3,224,411	8.054
Disposals	-	-	-

Reserves

As at 30 September 2017 and 31 December 2016, the heading Reserves is detailed as follows:

			30.09.2017
	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	-	-	39,307	-	39,307
Share Plan (attribution)	-	-	-	(4,480,638)	(4,480,638)
Closing balance	15,000,000	8	52,781	64,897,551	79,950,341
			31.12.2016
	Legal reserves	Own shares reserves	Fair Value reserves	Other reserves	Total
Opening balance	18,072,559	1,873,125	(540)	13,438,968	33,384,112
Own shares acquisitions	-	3,224,411	-	(3,224,411)	-
Assets fair value	-	-	14,014	-	14,014
Share Plan	-	-	-	1,493,546	1,493,546
Closing balance	18,072,559	5,097,536	13,474	11,708,102	34,891,671

As deliberated at the General Meeting of Shareholders, which was held on 20 April 2017, an operation of reduction and increase of CTT's share capital was performed according to the following terms:

• (i) decrease in the share capital, to release capital surplus, from €75m to €25.5m, with the decrease in the amount of €49.5m to be transferred to free reserves (through the reduction of the nominal value of each share from €0.50 to €0.17), and the share capital increase from €25.5m to €75m, corresponding to an increase of €49.5m (through the increase of the nominal value of each share from €0.17 to €0.50 and considering that article 4 (1) and (2) of the Articles of Association of CTT remains unchanged) to be carried out by way of incorporation of reserves mainly resulting from retained earnings arising from revaluations of tangible fixed assets, carried out under special legislation in the amount of € 44m and other retained earnings amounting to € 5.5m; and
• (ii) adjustment of the amount of the Company's legal reserve, which will thus amount to €15m, by transferring the amount of €3m to free reserves.

Legal reserves

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.

Own shares reserve (CTT, S.A.)

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, the correspondent reserve was, in January 2017, reduced in the amount of 5,097,527 Euros.

As at 30 September 2017, 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.

Other reserves

This heading records the profits transferred to reserves that are not imposed by the law or articles of association, nor constituted pursuant to contracts signed by the Company.

As at 31 December 2016, it also recorded the amount recognised in each year related to the Share Plan that constituted the long-term variable remuneration to be paid to the executive members of the Board of Directors under the new remuneration model of the Statutory Bodies defined by the Remuneration Committee, in the amount of 4,480,638 Euros.

Retained earnings

During the nine-month period ended 30 September 2017 and the year ended 31 December 2016, the following movements were made in the heading Retained earnings:

	30.09.2017	31.12.2016
Opening balance	93,589,211	91,727,994
Application of the net profit of the prior year	62,160,395	72,065,283
Distribution of dividends (Note 16)	(72,000,000)	(70,264,792)
Share capital increase	(49,500,000)	-
Adjustments from the application of the equity method	16,174	19,820
Other movements	-	40,906
Closing balance	34,265,781	93,589,211

Other changes in equity

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 2017 and the year ended 31 December 2016, the movements occurred in this heading were as follows:

	30.09.2017	31.12.2016
Opening balance	(27,137,824)	(18,644,832)
Actuarial gains/losses - Healthcare	-	(11,827,990)
Tax effect - Healthcare	-	3,334,998
Closing balance	(27,137,824)	(27,137,824)

16.DIVIDENDS

According to the dividends distribution proposal included in the 2016 Annual Report, at the General Meeting of Shareholders, which was held on 20 April 2017, a dividend distribution of 72,000,000 Euros regarding the financial year ended 31 December 2016 was proposed and approved. The dividend amount assigned to own shares was transferred to Retained earnings, totaling 0.48 Euros.

On 28 April 2016 a dividend distribution of 70,500,000 Euros regarding the financial year ended 31 December 2015 and corresponding to a dividend per share of 0.47 Euros, was also approved at the General Meeting of Shareholders. The dividend was paid on 25 May 2016. The dividend amount assigned to own shares was transferred to Retained earnings, totaling 235,208 Euros.

	30.09.2017	31.12.2016
Assigned dividends	72,000,000	70,500,000
Dividends assigned to own shares	(0.48)	(235,208)
Dividends paid	72,000,000	70,264,792

17.EARNINGS PER SHARE

During the nine-month periods ended 30 September 2017 and 30 September 2016, the earnings per share were calculated as follows:

30.09.2017	30.09.2016
	46,034,675
149,934,007	149,569,956
0.13	0.31
0.13	0.31
	19,509,567

The average number of shares is detailed as follows:

	30.09.2017	30.09.2016
Shares issued at begining of the period	150,000,000	150,000,000
Own shares effect	65,993	430,044
Average number of shares during the period	149,934,007	149,569,956

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 2017, the number of own shares held by the Group is 1 and its average number for the period ended 30 September 2017 is 65,993, reflecting the fact that the acquisition of own shares occurred in previous years and their attribution occurred on 31 January 2017.

There are no dilutive factors of earnings per share.

18.PROVISIONS, GUARANTEES PROVIDED, CONTINGENT LIABILITIES AND COMMITMENTS

Provisions

For the nine-month period ended 30 September 2017 and the year ended 31 December 2016, in order to face legal proceedings and other liabilities arising from past events, the Group recognised provisions, which showed the following movement:

				30.09.2017
	Opening balance	Increases	Reversals	Utilisations	Transfers	Changes in the consolidation perimeter	Closing balance
Non-current provisions
Litigations	4,838,552	1,685,124	(2,377,684)	(950,184)	120,789	30,000	3,346,597
Other provisions	9,288,931	30,650	(96,996)	(304,286)	(120,789)	-	8,797,510
	14,127,483	1,715,774	(2,474,680)	(1,254,470)		- 30,000	12,144,107
Restructuring	-	1,198,418	-	(1,052,197)		- -	146,221
	14,127,483	2,914,192	(2,474,680)	(2,306,667)		- 30,000	12,290,328
	Opening balance	Increases	Reversals	31.12.2016	Utilisations	Transfers	Closing balance
Non-current provisions
Litigations	9,102,699	1,929,078	(5,715,244)		(2,093,786)	1,615,805	4,838,552
Onerous contracts	14,358,103	139,058	(6,613,918)		(7,883,243)	-	-
Other provisions	17,035,233	180,942	(6,263,597)		(47,842)	(1,615,805)	9,288,931
	40,496,035	2,249,078	(18,592,759)		(10,024,871)	-	14,127,483
Investments in subsidiary and associated companies	189,775	-		(189,775)	-	-	-
Restructuring	46,522	-		-	(46,522)	-	-

Provisões 40,732,332 2,249,078 (18,782,534) (10,071,393) - 14,127,483

In the nine-month period ended 30 September 2017, the caption changes in the consolidation perimeter refers to the balances of Transporta 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 758,906 Euros (7,465,719 Euros as at 30 September 2016).

Litigations

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.

Onerous Contracts

Following the termination of the Conde Redondo building lease contract, CTT recorded, in the first quarter of 2016, a reversal of the provision for onerous contracts regarding the lease contract of this building, in the amount of 2,913,557 Euros.

The utilisations, during the year ended 31 December 2016, in the amount of 7,883,243 Euros relate to the payment of rents due during the period as well as part of the outstanding rents of the Conde Redondo building.

As a result of the restructuring of CTT's retail network and the new sublease contracts, the associated profitability now exceeds the amount of the rents paid under the lease contracts in force, therefore, these contracts are no longer considered as onerous contracts.

Consequently, as at 30 September 2017 and 31 December 2016 there are no amounts recognised as onerous contracts.

Other provisions

For the nine-month period ended 30 September 2017, 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 7,912,694 Euros (8,130,479 Euros as at 31 December 2016).

In the period ended 31 December 2016 reversals in the amount of 6,263,597 Euros were recorded as a result of the following situations:

• in CTT, S.A. they include the result of the review of the calculation methodology associated with this provision through the incorporation of additional historical data, namely, information regarding the outcome of the legal proceedings.
• at CTT Expresso, S.A., as a result of the favourable outcome of the court actions, in 2016, the probability of the provision was revised and the total amount of the provision, amounting to 2.1 million Euros, was reversed. Therefore, in 2016, these proceedings were considered as contingent liabilities.

As at 30 September 2017, in addition to the previously mentioned situations, this heading also includes:

• the amount of 56,191 Euros to cover costs for dismantlement of tangible fixed assets and/or removal of facilities and restoration of the sites;
• the amount of 278,498 Euros, which arise from the assessment made by the management regarding the possibility of tax contingencies.

Investments in associated companies

The provision for investments in associated companies corresponds to the assumption by the Group of legal or constructive obligations regarding the associated company PayShop Moçambique, S.A.. The reversal recorded in the year ended 31 December 2016 results from the Group's assessment in which it concluded that the previously existing obligations are no longer maintained.

Restructuring

During the nine-month period ended 30 September 2017, a provision for restructuring was recognised in the accounts of the subsidiary Transporta – Transportes Porta a Porta, S.A., for 1,198,418 Euros, following the human resources optimisation and restructuring process. This provision was recorded under the heading Staff costs in the consolidated income statement (Note 23).

Guarantees provided

As at 30 September 2017 and 31 December 2016, the Group had provided bank guarantees to third parties as follows:

Description	30.09.2017	31.12.2016
FUNDO DE PENSÕES DO BANCO SANTANDER TOTTA	3,030,174	3,030,174
PLANINOVA - Soc. Imobiliária, S.A.	2,033,582	2,033,582
LandSearch, Compra e Venda de Imóveis	1,792,886	1,792,886
NOVIMOVESTE - Fundo de Investimento Imobiliário	1,523,201	1,523,201
LUSIMOVESTE - Fundo de Investimento Imobiliário	1,274,355	1,274,355
Autoridade Tributária e Aduaneira	823,187	590,000
Municipal autarchy	185,681	183,677
Courts	118,704	167,107
Solred	80,000	80,000
ANA - Aeroportos de Portugal	68,000	34,000
TIP - Transportes Intermodais do Porto, ACE	50,000	50,000
INCM - Imprensa Nacional da Casa da Moeda	46,167	46,167
Fonavi, Nave Hospitalet	40,477	40,477
SPMS - Serviços Partilhados do Ministério da Saúde	30,180	30,180
EMEL, S.A.	26,984	19,384
Águas do Norte	23,804	-
EPAL - Empresa Portuguesa de Águas Livres	21,433	21,433
ACT Autoridade Condições Trabalho	21,404	58,201
Serviços Intermunicipazilados Loures e Odivelas	17,000	-
Direção Geral do Tesouro e Finanças	16,867	16,867
Portugal Telecom, S.A.	16,658	16,658
Refer	16,460	-
Instituto de Gestão Financeira Segurança Social	16,406	16,406
SMAS Sintra	15,889	-
Repsol	15,000	-
Other entities	14,103	29,992
Administração Regional de Saúde LVT	13,086	-
Águas do Porto, E.M	10,720	10,720
SMAS Torres Vedras	9,909	9,909
Instituto de Segurança Social	8,190	-
Inmobiliaria Ederkin	7,998	7,998
Promodois	6,273	6,273
TNT Express Worldwide	6,010	6,010
Consejeria Salud	4,116	4,116
Instituto do emprego e formação profissional	3,718	3,718
Casa Pia de Lisboa, I.P.	1,863	-
IFADAP	1,746	1,746
Águas de Coimbra	870	870
Lisboagás, S.A.	-	190,000
Record Rent a Car (Cataluña, Levante)	-	40,000
SetGás, S.A.	-	30,000
Estradas de Portugal, EP	-	5,000
	11,393,100	11,371,107

Guarantees for lease contracts

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 2017 and 31 December 2016.

Commitments

As at 30 September 2017, the Group had subscribed promissory notes amounting to approximately 41.5 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 89,853 Euros, which are still active as at 30 September 2017.

As at 30 September 2017, the commitments assumed by the Group regarding the sponsoring of "Taça da Liga" (Football League Cup) for three seasons amount to 0.7 million Euros.

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 4 and 5.

19.ACCOUNTS PAYABLE

As at 30 September 2017 and 31 December 2016, the heading Accounts payable showed the following composition:

	30.09.2017	31.12.2016
Non-current
Other accounts payable	386,099	375,379
	386,099	375,379
Current
Advances from customers	2,945,410	3,039,657
CNP money orders	195,219,436	200,238,100
Suppliers	63,366,269	65,044,068
Invoices pending confirmation	11,528,352	8,559,890
Fixed assets suppliers	1,606,156	13,684,684
Invoices pending confirmation (fixed assets)	1,746,163	6,206,806
Amounts collected on behalf of third parties	10,181,747	8,955,667
Postal financial services	132,603,056	131,878,955
Advances regarding disposals	5,097,434	2,516,337
Other accounts payable	4,991,668	4,739,536
Contas a pagar	429,285,691	444,863,700
	429,671,790	445,239,079

CNP money orders

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.

Postal financial services

This heading records mainly the amounts collected related to taxes, insurance, savings certificates and other money orders.

Advances regarding disposals

The increase of this heading mainly regards the deposit reinforcement provided in the agreement for the sale of real estate properties located at Rua de S. José.

20.BANKING CLIENTS' DEPOSITS AND OTHER LOANS

As at 30 September 2017 and 31 December 2016, the composition of the heading Banking clients' deposits and other loans is as follows:

	30.09.2017	31.12.2016
Sight deposits	341,297,115	114,041,001
Term deposits	131,757,562	131,417,483
Savings deposits	67,375,571	8,486,356
	540,430,248	253,944,840

The above-mentioned amounts relate to Banco CTT clients' deposits. As at 30 September 2017 and 31 December 2016, the residual maturity of banking clients' deposits and other loans, is detailed as follows:

				30.09.2017
	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	341,297,115	-	-	-	-	341,297,115
Term deposits	-	50,707,943	81,049,619	-	-	131,757,562
Savings deposits	67,375,571	-	-	-	-	67,375,571
	408,672,686	50,707,943	81,049,619	-	-	540,430,248
	No defined maturity	Due within 3	Over 3 months and	31.12.2016 Over 1 year and less	Over 3 years	Total
		months	less than 1 year	than 3 years
Sight deposits	114,041,001	-	-	-	-	114,041,001
Term deposits	-	73,693,366	57,724,117	-	-	131,417,483
Savings deposits	8,486,356	-	-	-	-	8,486,356

21. INCOME TAXES RECEIVABLE /PAYABLE

As at 30 September 2017 the caption reflects the difference between the estimated income tax regarding the nine-month period ended 30 September 2017 and the amounts already paid regarding payments on account and additional payments on account.

22.OTHER OPERATING INCOME

During the nine-month periods ended 30 September 2017 and 30 September 2016, the composition of the heading Other operating income was as follows:

	30.09.2017	30.09.2016
Supplementary revenues	3,371,433	3,116,168
Altice agreement	-	7,500,000
Early settlement discounts received	48,161	33,666
Favourable exchange rate differences of assets and liabilities other than financing	2,595,044	698,685
Income from financial investments	487,062	450,142
Income from non-financial investments	2,544,724	4,669,493
Income from services and commissions	3,131,897	184,144
Interest income and expenses - financial services	147,372	246,428
VAT adjustments	1,888,084	3,522,637
Other	395,386	1,174,518
	14,609,163	21,595,881

Following the Memorandum of understanding signed with Altice and being the acquisition of PT Portugal completed by Altice, CTT received from Altice the agreed initial payment, which was recognised in the consolidated income statement over the period for the negotiation of the partnerships, as provided in the Memorandum. This recognition ended in December 2016.

The caption Income from non-financial investments includes, in the period ended 30 September 2016, the gain in the amount of 1.7 million Euros regarding Conde Redondo building as a result of the lease contract termination.

The amount related to VAT adjustments mainly results from the improvements made in the procedures of the VAT deduction methodology.

23.STAFF COSTS

During the nine-month periods ended 30 September 2017 and 30 September 2016, the composition of the heading Staff Costs was as follows:

	30.09.2017	30.09.2016
Statutory bodies remuneration	4,056,562	3,414,643
Staff remuneration	195,768,586	190,939,279
Employee benefits	3,316,737	1,897,108
Indemnities	3,079,821	1,448,996
Social Security charges	43,588,369	42,414,425
Occupational accident and health insurance	2,538,400	2,334,349
Social welfare costs	5,030,242	4,873,169
Other staff costs	121,425	38,044
	257,500,142	247,360,012

Remuneration of the statutory bodies

In the nine-month periods ended 30 September 2017 and 30 September 2016, the fixed and variable remunerations attributed to the members of the statutory bodies of the different companies of the Group were as follows:

			30.09.2017
	Board of Directors	Audit Comittee	Remuneration Board	General Meeting of Shareholders	Total
Short-term remuneration
Fixed remuneration	3,044,642	298,857	36,291	4,500	3,384,290
Annual variable remuneration	672,272	-	-	-	672,272
	3,716,914	298,857	36,291	4,500	4,056,562
Long-term remuneration
Defined contribution plan RSP	185,197	-	-	-	185,197
Long-term variable remuneration - Share Plan	616,890	-	-	-	616,890
	802,087	-	-	-	802,087
	4,519,001	298,857	36,291	4,500	4,858,649
	Board of Directors	Audit Comittee	30.09.2016 Remuneration Board	General Meeting of Shareholders	Total
Short-term remuneration
Fixed remuneration	2,462,431	145,714	24,464	4,500	2,637,109
Annual variable remuneration	777,534 3,239,965	- 145,714	- 24,464	- 4,500	777,534 3,414,643
Long-term remuneration
Defined contribution plan RSP	167,625
Long-term variable remuneration - Share Plan	1,120,159	-	-	-	1,120,159
	1,287,784	-	-	-	1,287,784
	4,527,749	145,714	24,464	4,500	4,702,427

Following the new remuneration model for the statutory bodies defined by the Remuneration Committee for the 2014-2016 term of office and in compliance with the Share Plan to the executive members of the Board of Directors, 600,530 own shares were granted to the Company's executive members of the Board of Directors. The amount of 616,890 Euros recorded under the caption "Longterm variable remuneration – Share Plan" results from the derecognition of the liability after the attribution of the shares, reflecting the difference between that liability, estimated on 31 December 2014, and the value of the own shares recorded in Equity granted to the statutory bodies on 31 January 2017.

The annual variable remuneration will be determined and paid on an annual basis.

Employee benefits

The variation registered under Employee benefits mainly reflects the liability reduction related to the Telephone subscription fee due to the adjustment to the actual cost of the beneficiaries in the nine-month period ended 30 September 2017 and 30 September 2016, in the amount of 425,298 Euros and 1,815,868 Euros respectively.

Indemnities

During the nine-month period ended 30 September 2017, this caption includes the amount of 1,215,142 Euros related to compensation paid for termination of employment contracts by mutual agreement.

It also includes the amount of 1,198,418 Euros related to the provision for restructuring recorded in Transporta following the human resources optimisation process.

Social welfare cost

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 2017 and 30 September 2016, the heading Staff costs includes the amounts of 622,537 Euros and 517,842 Euros, respectively, related to expenses with workers' representative bodies.

For the nine-month periods ended 30 September 2017 and 30 September 2016, the average number of staff of the Group was 12,579 and 12,432, respectively.

24. INCOME TAX FOR THE PERIOD

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 7% 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. and Banco CTT, S.A., through the Special Regime for the Taxation of Groups of Companies ("RETGS"). The remaining companies are taxed individually.

Reconciliation of the income tax rate

In the nine-month periods ended 30 September 2017 and 30 September 2016, the reconciliation between the nominal rate and the effective income tax rate is as follows:

	30.09.2017	30.09.2016
Earnings before taxes	32,596,697	66,382,227
Nominal tax rate	21.0%	21.0%
	6,845,306	13,940,268
Tax Benefits	(272,766)	(164,833)
Accounting capital gains/(losses)	(270,842)	(441,208)
Tax capital gains/(losses)	(105,587)	(844,621)
Equity method	-	(8,518)
Provisions not considered in the calculation of deferred taxes	828	-
Impairment losses and reversals	(106,771)	275,835
Other situations, net	1,606,365	2,322,015
Adjustments related with - autonomous taxation	918,559	1,159,059
Adjustments related with - Municipal Surcharge	751,830	920,446
Adjustments related with - State Surcharge	2,550,165	3,152,854
Tax losses without deferred tax	1,306,821	1,298,506
Excess estimated income tax	767	(1,023,983)
Income taxes for the period	13,224,676	20,585,820
Effective tax rate	40.57%	31.01%
Income taxes for the period
Current tax	10,810,930	14,785,924
Deferred tax	2,412,979	6,823,879
Excess estimated income tax	767	(1,023,983)
	13,224,676	20,585,820

During the nine-month period ended 30 September 2017, the heading Insufficiency/(Excess) estimated income tax mainly relates to the reimbursement of Autonomous Taxation of 2011 and 2012 in the amount of 347,036 Euros, the insufficiency of the income tax estimate of 2016 and 2015 amounting to 1,391,132 Euros and to the tax credit related to SIFIDE of 2015 in the amount of 1,079,208 Euros. In the nine-month period ended 30 September 2016 the same caption includes the amount of 268,898 Euros regarding the tax credit allocated under the SIFIDE program of 2014 of CTT – Correios de Portugal, S.A..

Deferred taxes

As at 30 September 2017 and 31 December 2016, the balance of deferred tax assets and liabilities was composed as follows:

	30.09.2017	31.12.2016
Deferred tax assets
Employee benefits - healthcare	70,235,522	70,523,096
Employee benefits - pension plan	86,753	-
Employee benefits - other long-term benefits	4,602,758	5,301,326
Deferred accounting capital gains	151,697	606,790
Impairment losses and provisions	3,065,631	3,030,558
Tax losses carried forward	881,952	327,183
Impairment losses in tangible fixed assets	323,038	360,333
Share Plan	-	1,268,470
Land and buildings	1,434,993	1,847,637
Tangible assets' tax revaluation regime	2,594,129	2,680,786
Other	490,421	274,583
	83,866,894	86,220,762
Deferred tax liabilities
Revaluation of tangible fixed assets before IFRS	2,994,065	3,151,709
Suspended capital gains	908,462	934,821
Other	36,616	36,616
	3,939,143	4,123,146

As at 30 September 2017, the expected amount of deferred tax assets and liabilities to be settled within 12 months is 3.9 million Euros and 0.2 million Euros, respectively.

During the nine-month period ended 30 September 2017 and the year ended 31 December 2016, the movements which occurred under the deferred tax headings were as follows:

Deferred tax assets Opening balances 86,220,762 87,535,941 Effect on net profit Employee benefits - healthcare (287,574) 29,917 Employee benefits - pension plan 86,753 - Employee benefits - other long-term benefits (698,568) (1,230,552) Deferred accounting gains (455,093) (1,116,452) Impairment losses and provisions 35,074 (5,967,001) Tax losses carried forward 554,769 2,857 Impairment losses in tangible fixed assets (37,295) (45,040) Share plan (1,162,764) 421,330 Land and buildings (412,644) 454,713 Tangible assets' tax revaluation regime (86,657) 2,680,786 Other 110,131 119,265 Effect on equity Employee benefits - healthcare - 3,334,998 Closing balance 83,866,894 86,220,762 30.09.2017 31.12.2016 Deferred tax liabilities Opening balances 4,123,146 4,576,598 Effect on net profit Revaluation of tangible fixed assets before IFRS adoption (157,644) (410,811) (36,858) Suspended capital gains (26,359) Other - (5,783) Closing balance 3,939,143 4,123,146	30.09.2017	31.12.2016

The tax losses carried forward are related to the losses of the subsidiaries Tourline, Escrita Inteligente and Transporta, and are detailed as follows:

Company	Tax losses	Deferred tax assets
Tourline	43,251,063	320,408
Escrita Inteligente	58,026	12,185
Transporta	2,615,993	549,359
Total	45,925,082	881,952

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 year 2015 have no time limit for deduction. As far as Escrita Inteligente is concerned the tax losses refer to the years 2015, 2016 which may be carried forward in the next 12 years and the tax losses regarding the nine-month period ended 30 September 2017 may be carried forward in the next 5years. Transporta's tax losses refer to the nine-month period ended 30 September 2017 and may be carried forward in the next 5years.

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 2.5 million Euros.

SIFIDE

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.

In relation to the expenses incurred with R&D during 2014 of 736,033 Euros and according to the notification dated 18 January 2016 of the Certification Commission, a tax credit of 268,898 Euros was attributed to CTT.

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.

Other information

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 periods are extended or suspended. Therefore, the Group's income tax returns from 2013 may still be reviewed and corrected, since the income tax returns prior to this date have already been inspected.

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 2017.

25.RELATED PARTIES

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 2017 and 30 September 2016, the following transactions took place and the following balances existed with related parties:

	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
Board of Directors	-	-	-	3,716,914	-
Audit Committee	-	-	-	298,857	-
Remuneration Committee	-	-	-	36,291	-
General Meeting	-	-	-	4,500	-
	248,498	857	385,036	4,129,950	72,000,000

		30.09.2016
	Accounts receivable	Accounts payable	Revenues	Costs	Dividends
Shareholders	-	-	-	-	70,264,792
Other shareholders of Group companies
Associated companies	8,622	9,277	9,194	52,128	-
Jointly controlled	127,060	-	380,937	18,664	-
Members of the
Board of Directors	-	-	-	2,462,431	-
Audit Committee	-	-	-	145,714	-
Remuneration Committee	-	-	-	24,464	-
General Meeting	-	-	-	4,500	-
	135,682	9,277	390,131	2,707,900	70,264,792

The transactions and balances between subsidiaries are eliminated in the consolidation process and are not disclosed in this note.

26.OTHER INFORMATION

Regulatory proceedings

CTT's activity is regularly subject to inquiry and check-up procedures from the supervisory entities for verification of effective compliance with the rules and regulations in force. In this framework, the Company adopts an attitude of collaboration by providing the necessary clarifications and due answer.

Following a thorough analysis of the "statement of objections" that the Company received from the Competition Authority on 16 August 2016 concerning an infraction proceeding on the basis of an alleged obstruction of access of its competitors to the postal network infrastructure, CTT gave its answer within the legal deadline, which refuted those allegations and considered them as unfounded for the following main reasons:

• (i) The Company has always shown and will continue to show its willingness to give access to its postal network in non-discriminatory conditions whenever the requested terms are compatible with an efficient management of the operation and with the sustainability of the universal service provision (agreements regarding access to the postal network have already been concluded with other operators);
• (ii) The Company intends to adopt good competition practices in this field which take into account both the efficiency of its postal network and the access conditions set up by universal postal service operators from other Member States.

The case is still under instruction phase and there is no decision by the Competition Authority yet. A final decision of this entity to impose a potential fine and / or penalties is still subject to a court appeal.

Acquisition of Transporta,S.A.

Following the acquisition of Transporta - Transportes Porta a Porta, SA, which occurred on 4 May 2017, the integration process is underway, as the first stage of the human resources optimisation plan has started, entailing a process of collective redundancies which encompassed 41 workers. This integration process will continue to assess growth opportunities in adjacent markets and with business synergies with the CEP market.

Financing contract

On 27 September 2017, a financing contract between CTT and BBVA and Bankinter was signed, for an initial period of 5 years and for a total amount of 90 million Euros, with the possibility of using the funds until September 2018. As at 30 September 2017, no amount has been used.

27.SUBSEQUENT EVENTS

After the end of the year and up to the present date, no relevant or material fact has occurred in the Group's activity that has not been disclosed in the notes to the financial statements.

THE DIRECTOR OF ACCOUNTING & TREASURY THE BOARD OF DIRECTORS