Poste Italiane — Earnings Release 2016

Nov 9, 2016

9 November 2016

Investor Relations

(€m)

Key Numbers

	9M 2015	9M 2016	Var %
Revenues	23,921	25,729	+8%
EBIT	930	1,196	+29%
Net Profit	622	807	+30%

9M 2016: FIGURES HIGHLIGHTS

1. Including other segments (Poste Mobile and 'Consorzio Telefonia Mobile')

TOTAL ASSETS UNDER MANAGEMENT/ADMINISTRATION

FOCUS ON FINANCIAL SERVICES (1/3) REVENUES EVOLUTION

(€m)

1. Current accounts/Active Portfolio Management includes interests income, realized capital gain and income from financial assets at FVTPL (Fair Value through profit or loss)

2. Transaction banking includes: payment slips, F24, money transfers, pension cheques and other revenues from current accounts. Net of intercompany values

3. Payment Card Fees includes a one-off capital gain of €121 million related to the acquisition and merger of Visa Europe Ltd with the US-registered company, Visa Incorporated

FOCUS ON FINANCIAL SERVICES (2/3) REVENUES BREAKDOWN

	9M 2016 €m 9M 16 vs 9M 15 (var.%)	Rationale
Return on Current Account Deposits	1,610 +1.4%	Enhanced active management of BancoPosta's asset portfolio
Fees from Postal Savings Collection	1,174 -3.3%	Lower fees related to lower recognized commercial costs
Fees from Transaction Banking	786 +1.7%	Higher revenues from payments slips (F23/F24)
Distribution Fees	245 +22.5%	Increase mainly due to a better performance on personal loans
Distribution Fees Payment Card Fees Payment Card Fees	292 +67.8%	Includes a one-off capital gain from VISA Europe and higher revenues from Postepay Evolution offset by lower fees from debt/prepaid cards

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FOCUS ON FINANCIAL SERVICES (3/3)

ACTIVE PORTFOLIO MANAGEMENT

4.4% 4.1% AVERAGE DEPOSITS1 ACTIVE PORTFOLIO MANAGEMENT2 Average return3 (%) Unrealized gains (€m) Portfolio duration (years) 43,364 5,616 44,906 5,475 48,840 4,338 1,588 1,610 4,881 5.8 5.7 8.8% (€m)

1. Including interest income and realized capital gains

2. Average yield calculated as interest income and realized capital gains (pro rata temporis) on total financial assets

9M 2015 9M 2016

BANCOPOSTA REGULATORY FRAMEWORK AND CAPITAL POSITION

FOCUS ON INSURANCE & ASSET MANAGEMENT

GROUP GWP AND TECHNICAL RESERVES EVOLUTION

1. Including non-life technical reserves and net of re-insurance reserves

FOCUS ON MAIL & PARCELS (1/2) VOLUMES AND MARKET REVENUES EVOLUTION

Revenues - Mail & Parcels (€m)

FOCUS ON MAIL & PARCELS (2/2) TOTAL REVENUES AND COST STRUCTURE

Depreciation & Amortization Intersegment Costs & Other Costs

TOTAL GROUP OPERATING COSTS EVOLUTION

Group Operating Costs

(€m)

COST STRUCTURE AT CONSOLIDATED LEVEL FOCUS ON LABOUR COSTS

(€m)

FROM GROUP EBIT TO NET INCOME

(€m)

GROUP CAPITAL EXPENDITURES

Capex evolution (€m) Capex Breakdown by Division (%)

INDUSTRIAL NET FINANCIAL POSITION

ACCELERATING ON PLAN EXECUTION (1/2) …ORGANICALLY

	VALUE DRIVERS
		• Superior ROE in Financial Services	9M16 ROE 34%
Financial Services	FOCUS ON PROFITABILITY	• Ongoing optimization of client assets	Well balanced mix Clear resilience of postal savings Material increase of deposits
	& ROE	• Disciplined Active Portfolio Management	Longer Duration from 5.5 to 5.7 years in Q316 Superior Yield >4% Embedded Gains €4.3bn
		• Growing Life GWP	• +6% vs 9M2015
Insurance Services
& Asset Management	FOCUS ON GROWTH	• Growing in non-life	• +55.6% vs 9M2015
		• Consolidating Growth in AuM	• +30% vs 9M2015
		• Accelerating the deployment of new delivery process	COGS -1.3% Labour costs -0.8%
Mail & Parcels	FOCUS ON TURNAROUND	• Re-balancing revenue mix towards parcels	17% Parcels on total revenues vs 15.2% 9M2015
	& GROWTH	• Optimizing CAPEX	CAPEX €224m

APPENDIX

€m	9M 2015	9M 2016	Var.%
Revenue from sales and services	6,498	6,406	(1.4%)
Insurance premium revenue	14,543	15,388	5.8%
Other income from financial and insurance activities	2,828	3,887	37.4%
Other operating income	52	48	(7.7%)
Sales	23,921	25,729	7.6%
Personnel costs	(4,370)	(4,333)	(0.8%)
Other operating expenses	(2,721)	(2,312)	(15.0%)
Net change in technical provisions for insurance business and other claims expenses	(15,475)	(17,449)	12.8%
Depreciation & amortization	(425)	(439)	3.3%
EBIT	930	1,196	28.6%
Net interest income / (Expense)	41	21	(48.5%)
Profit before tax	971	1,217	25.3%
Tax	(349)	(410)	17.5%
Net income	622	807	29.7%

GROUP KEY BALANCE SHEET ITEMS 9M 2016

€m	FY 2015	9M 2016	Var.%
Cash & Equivalents	3,142	2,373	(24.5%)
BancoPosta related Cash	3,161	2,918	(7.7%)
Receivables & Inventory	2,158	2,253	4.4%
Financial Assets	160,090	179,572	12.2%
Tangible and Intangible Assets	2,796	2,602	(6.9%)
Other	4,489	4,910	9.4%
Total Assets	175,836	194,628	10.7%
Trade Payables	1,453	1,332	(8.3%)
Financial liabilities	57,478	63,397	10.3%
Technical Reserves	100,314	113,878	13.5%
Other	6,933	6,994	0.9%
Total Liabilities	166,178	185,601	11.7%
Shareholders capital	1,306	1,306	-
Reserves	8,352	7,721	(7.6%)
Totale Equity	9,658	9,027	(6.5%)
Total Liabilities & Equity	175,836	194,628	10.7%

GROUP CASH FLOW STATEMENT 9M 2016

€m	9M 2015	9M 2016	$Var.$ %
Net income	622	807	29.7%
Depreciation and amortization	425	439	3.3%
Net provisions for risks and charges	138	150	8.7%
(Use of Provisions for risks and charges)	(263)	(383)	45.6%
Net change in employee termination benefits and pension plans	(49)	(65)	32.7%
(Gains) / Losses on disposals	0	1	n.m.
Other	14	38	n.m.
FFO	887	987	11.3%
Change in working capital	409	(115)	n.m.
Cash flow from operations	1,296	872	(32.7%)
Capital expenditures	(229)	(252)	10.0%
Net change in subsidiaries and associates	(211)	0	n.m.
Disposals	2	7	n.m.
Cash flow from investments	(438)	(245)	44.1%
Dividend paid	(250)	(444)	77.6%
State aid restitution	535	0	n.m.
Cash Flow from financial assets and liabilities	(991)	(952)	3.9%
Cash flow from financing	(706)	(1, 396)	(97.7%)
Net change in cash	152	(769)	n.m.

€m	9M 2015	FY 2015	9M 2016	Var.%
Trade receivables	3,362	2,346	2,326	(0.9%)
Inventories	140	134	137	2.2%
Other receivables and assets	3,186	3,200	3,589	12.2%
Current tax receivables	705	72	180	n.m.
Trade payables	(1,318)	(1,453)	(1,332)	(8.3%)
Other liabilities	(2,722)	(2,945)	(3,070)	4.2%
Current tax liabilities	(354)	(53)	(354)	n.m.
Working Capital	2,999	1,301	1,476	13.5%
Deferred tax asset	608	623	650	4.3%
Deferred tax liabilities	(1,108)	(1,177)	(927)	(21.2%)
Working Capital and deferred taxes	2,499	747	1,199	60.5%

CHANGE IN GROUP WORKING CAPITAL 9M 2016

€m	9M 2015	9M 2016	Var.%
Trade receivables	399	20	(95.0%)
Inventories	(1)	(3)	n.m.
Other receivables and assets	299	(389)	n.m.
Current tax receivables	(46)	(108)	n.m.
Trade payables	(104)	(121)	16.3%
Other liabilities	64	125	95.3%
Current tax liabilities	330	301	(8.8%)
Deferred tax assets	94	(27)	n.m.
Deferred tax liabilities	61	(250)	n.m.
Total	1,096	(452)	n.m.
Financial Income on discounted receivables	13	5	(61.5%)
Net w rite-dow ns and loss on receivables	(5)	(23)	n.m.
Deferred tax on fair value changes and TFR actuarial income	(160)	355	n.m.
Cancellation of shareholder receivables CE 16/07/08 (Legge di stabilità 2015)	(535)	0	n.m.
Adjustments (non monetary items and shareholders' transactions)	(687)	337	n.m.

€m

9,929	Totale Equity and Liabilities	9,929
3,753	Total Current liabilities	4,235
1,061
188	Financial liabilities	1,035
322	Other liabilities	1,435
83	Current tax liabilities	53
1,966	Trade payables	1,224
133	Provisions for risks and charges	488
6,176	Total Non-current liabilities	3,047
152
387	Other liabilities	72
4	Deffered tax liabilities	30
1,259	Financial liabilities	1,253
1,877	Employee termination benefits and pension plans	1,443
397	Provisions for risks and charges	249
57
2,043	Totale Equity	2,647

Assets Equity adn Liabilities

Totale Equity	2,647
Provisions for risks and charges	249
Employee termination benefits and pension plans	1,443
Financial liabilities	1,253
Deffered tax liabilities	30
Other liabilities	72

l Total Non-current liabilities	3,047
Provisions for risks and charges	488
Trade payables	1.224
Current tax liabilities	53
Other liabilities	1,435
Financial liabilities	1.035

Total Current liabilities	4.235
Totale Equity and Liabilities	9.929

1. It includes investments accounted for at cost in financial and insurance sectors

MAIL & PARCELS AND OTHER SERVICES NET DEBT BREAKDOWN 9M 2016

€m	FY 20152	9M 2016	Var.%
Cash and Cash Equivalents	1,331	1,070	(19.6%)
Current Financial Assets	169	65	(61.5%)
Short term debt	(515)	0	n.m.
Current part of long term debt	(16)	(8)	(50.0%)
Other current financial liabilities	(20)	(23)	15.0%
Current Financial Position	(551)	(31)	94.4%
Current Net Financial Position	949	1,104	16.3%
Long term debt	(400)	(400)	-
Bonds	(797)	(798)	0.1%
Other non current financial liabilities	(57)	(56)	(1.8%)
Non Current Financial Position	(1,254)	(1,254)	-
Net Financial Position	(305)	(150)	50.8%
Non current financial assets	553	658	19.0%
Net Financial Position - Mail & Parcel and Other Sercvices	248	508	n.m.
Intersegment financial receivables	674	724	7.4%
Intersegment financial payables	(615)	(958)	55.8%
Net Financial Position (net of intersegments)1	307	274	(10.7%)

1. Including a Net Financial Position of Other Services (€ 54m for the first 9 months of 2016 and € 38m in 2015)

2. Poste Tributi previously included in Mail & Parcel sector has been reclassified to Financial services

€m	9M 2015	9M 2016	Var.%
Total revenue	4,337	4,520	4.2%
o/w Market revenue	3,949	4,107	4.0%
o/w Intercompany revenue	388	413	6.5%
Personnel costs	(92)	(92)	n.m.
Other operating expenses	(3,574)	(3,724)	4.2%
EBITDA	671	705	5.0%
EBITDA margin	15.5%	15.6%
Depreciation and amortisation	(1)	(1)	n.m.
EBIT	670	704	5.1%
EBIT margin	15.4%	15.6%

€m	9M 2015	9M 2016	Var.%
Total revenue	16,962	18,725	10.4%
o/w Market revenue	16,962	18,725	10.4%
o/w Intercompany revenue	0	0	n.m.
Personnel costs	(23)	(29)	27.5%
Other operating expenses	(16,564)	(18,250)	10.2%
EBITDA	376	446	18.7%
EBITDA margin	2.2%	2.4%
Depreciation and amortisation	(7)	(10)	n.m.
EBIT	368	436	18.5%
EBIT margin	2.2%	2.3%

€m	9M 2015	9M 2016	Var.%
Total revenue	6,193	6,257	1.0%
o/w Market revenue	2,829	2,728	(3.6%)
o/w Intercompany revenue	3,364	3,529	4.9%
Personnel costs	(4,239)	(4,200)	(0.9%)
Other operating expenses	(1,702)	(1,618)	(4.9%)
EBITDA	251	439	74.9%
EBITDA margin	4.1%	7.0%
Depreciation and amortisation	(389)	(404)	3.9%
EBIT	(137)	35	n.m.
EBIT margin	-2.2%	0.6%

OTHER SERVICES POSTE MOBILE KEY FINANCIALS

P&L - €m	9M 2015	9M 2016	Var.%
Total revenue	249	207	(17.0%)
o/w Market revenue	181	169	(6.5%)
o/w Intercompany revenue	69	38	(44.7%)
Personnel costs	(17)	(14)	(17.7%)
Other operating expenses	(176)	(149)	(15.5%)
EBITDA	57	44	(21.5%)
EBITDA margin	22.7%	21.4%
Depreciation and amortisation	(28)	(24)	(15.1%)
EBIT	29	21	(27.8%)
EBIT margin	11.5%	10.0%
Non-operating income/(expenses)	(1)	(1)	17.0%
Profit before taxes	28	20	(29.0%)
Taxes	(10)	(7)	(30.1%)
Profit after taxes	18	13	(28.3%)

Cash flow statement - €m	9M 2015	9M 2016	Var.%
FFO	44.6	34.9	(21.7%)
Cash flow from investments	(12.0)	21.2	276.9%
Net change in cash	(5.5)	(6.7)	(21.6%)
Other key data
Average number of users (sim cards -#k)	3,432	3,632	5.8%
1 ARPU (€)	5.3	4.8	(9.1%)

1. calculated on total sim cards (active and non active sim cards)

FINANCIAL SERVICES COST STRUCTURE AND PROFITABILITY AT DIVISIONAL LEVEL

1. Includes intersegment revenues

FOCUS ON INSURANCE AND ASSET MANAGEMENT REVENUES BREAKDOWN

INSURANCE AND ASSET MANAGEMENT COST STRUCTURE AND PROFITABILITY AT DIVISIONAL LEVEL

1. Includes intersegment revenues

(€m)

	Mail & Parcels Including Network	Financial Services	Insurance and Asset Management	Poste Italiane Group2
Market Revenues	2,728	4,107	18,725	25,729
Intersegment Revenues	3,529	413	0	0
Totale Revenues	6,257	4,520	18,725	25,729
Personnel Costs	(4,200)	(91)	(29)	(4,333)
Other operating costs1	(1,954)	(221)	(417)	(2,751)
Net change in Technical Provisions	0	0	(17,449)	(17,449)
Intersegment Costs	(68)	(3,503)	(395)	0
Operating Costs	(6,222)	(3,816)	(18,289)	(24,533)
Operating Profit (Loss)	35	704	436	1,196

1. Including external costs, and D&A

2. Including Other Services (Poste Mobile)

DISCLAIMER

This presentation contains certain forward-looking statements that reflect the Company's management's current views with respect to future events and financial and operational performance of the Company and its subsidiaries. These forward-looking statements are based on Poste Italiane S.p.A.'s current expectations and projections about future events. Because these forward-looking statements are subject to risks and uncertainties, actual future results or performance may differ materially from those expressed in or implied by these statements due to any number of different factors, many of which are beyond the ability of Poste Italiane S.p.A. to control or estimate precisely, including changes in the regulatory environment, future market developments, fluctuations in the price and availability of fuel and other risks. You are cautioned not to place undue reliance on the forward-looking statements contained herein, which are made only as of the date of this presentation. Poste Italiane S.p.A. does not undertake any obligation to publicly release any updates or revisions to any forward-looking statements to reflect events or circumstances after the date of this presentation. This presentation does not constitute a recommendation regarding the securities of the Company. This presentation does not contain an offer to sell or a solicitation of any offer to buy any securities issued by Poste Italiane S.p.A. or any of its subsidiaries. Pursuant to art. 154-BIS, par. 2, of the Unified Financial Act of February 24, 1998, the executive in charge of preparing the corporate accounting documents at Poste Italiane S.p.A., Luciano Loiodice, declares that the accounting information contained herein corresponds to document results, books and accounting records.

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