Poste Italiane — Earnings Release 2017

Feb 19, 2018

Preliminary Results FY 2017

Rome, 19 February 2018

Investor Relations

DOUBLE DIGIT GROWTH OF NET PROFIT IN 2017 REACHING 689€M. DIVIDEND PAYOUT OF C.80% CORRESPONDING TO 0.42 € DPS

(€m)

	FY 2016	2017P	Var.	Var. %
Revenues	33,112	33,441	+328	+1.0%
EBIT EBIT Margin	1,041 3.1%	1,123 3.4%	+82	+7.8%
Normalized1 EBIT EBIT Margin	922 2.8%	1,110 3.4%	+188	+20.4%
Net Profit Net Profit Margin	622 1.9%	689 2.1%	+67	+10.8%
Normalized1 Net Profit Net Profit Margin	510 1.6%	722 2.2%	+212	+41.6%
DPS (€)	0.39	0.42	+0.03	+7.7%

Payout ratio of about 80% on 2017 preliminary net profit, corresponding to a dividend of 0.42 € p.s., up by 7.7% vs. 2016

1. 2017 non recurring items: capital gains investment portfolio (-532m), capital gain Mastercard stake disposal (-91m), early retirements incentives (+499m), real estate funds provisions (+113m) and write-offs of Alitalia stake (+82m, no impact on EBIT); tax effect on one-offs equal to -37m. 2016 non recurring items: capital gains from investment portfolio (-467m), capital gain on VISA stake disposal (-121m) early retirements incentives (+509m), real estate funds provisions (+68m), one-off revenues from USO (-108m); tax effect on one-offs equal to +6m.

PRELIMINARY RESULTS 2017: SEGMENTS HIGHLIGHTS

Mail and parcels impacted by 108 €m one-off revenue in 4Q 2016 and 23 €m one-off cost in 4Q2017

TOTAL FINANCIAL ASSETS

1. Deposits do not include Repo and Poste Italiane liquidity

FOCUS ON FINANCIAL SERVICES OVERVIEW OF MARKET REVENUES

REVENUES EVOLUTION

FOCUS ON FINANCIAL SERVICES CURRENT ACCOUNTS

1. Including current accounts, time deposits and repurchase agreements

2. 1. Entirely invested in floating rate deposits c/o MEF
3. 1. Entirely invested in Italian Government bonds
4. 1. It only refers to Incomes

5. Average yield calculated as interest income and realized capital gains on total average financial assets

FOCUS ON FINANCIAL SERVICES POSTAL SAVINGS

Investor Relations 7

Books

FOCUS ON FINANCIAL SERVICES BANCOPOSTA REGULATORY FRAMEWORK AND CAPITAL POSITION

1. 10.50% Min. CET1 ratio required to distribute earnings (transitionally reduced to 9.25% in 2017)

2. ROE defined as net earnings/CET 1 capital (excluding valuation reserves)

FOCUS ON FINANCIAL SERVICES

TRANSACTION BANKING - REVENUES

(€m)

	FY 2016	2017P	Var.	Var. %
Cards	223	269	+46.9	+21.1%
Acquiring	4	5	+1.7	+45.2%
VISA/Mastercard Capital Gains	121	91	-29.6	-24.5%
Subtotal	347	366	+19.0	5.5%
Payment Slips	619	572	-46.1	-7.5%
Bank & Money Transfer	75	75	-0.5	-0.6%
Subtotal	694	647	-46.6	-6.7%
Current Accounts fees	210	212	+1.9	+0.9%
Other Revenues	156	157	+1.4	+0.9%
Subtotal	366	369	+3.3	0.9%
Total	1,407	1,383	-24.4	-1.7%

FOCUS ON FINANCIAL SERVICES TRANSACTION BANKING - VOLUMES

				FY 2016	2017P	Var.	Var. %
	Pre-Paid cards	# of cards	(m)	16.1	17.7	+1.6	+9.7%
		Transaction Value	(€m)	8,095	10,164	+2,068	+25.6%
g n	Debit Cards	# of cards	(m)	7.0	7.1	+0.1	+1.5%
ri ui q		Transaction Value	(€m)	11,457	12,643	+1,185	+10.3%
c A &	Credit Cards	# of cards	(m)	0.40	0.40	n.m.	+1.3%
s d ar		Transaction Value	(€m)	1,045	1,073	+28	+2.7%
C	Acquiring	# POS1	(m)	0.10	0.09	n.m.	-3.1%
		Transaction Value1	(€m)	11,800	12,650	+850.0	+7.2%
y e s, n er o nt	Payments Slips	# of payments2	(m)	404.6	387.7	-16.9	-4.2%
M sf e & m n Tra y k a n P a	Bank & Money Transfer	# of transactions	(m)	19.1	20.1	+1.0	+5.0%
B		Strong growth in electronic payments replacing traditional payment systems

1. Including POS and transaction value from Postal Offices

2. Including F23/F24

FOCUS ON FINANCIAL SERVICES

TRANSACTION BANKING DIGITALIZATION PROGRESS

0.71m² Daily Average Users

€2.3bn

Transaction Value

1. Registration includes both web and Apps

2. Related to 4Q 2017

Daily Average Visitors

FOCUS ON INSURANCE & ASSET MANAGEMENT KEY METRICS

(€m)

	FY 2016	2017P	Var.	Var. %
Subscription fees	402	397	-4.9	-1.2%
Management fees	757	942	+184.8	+24.4%
1 Life	1,159	1,339	+179.8	+15.5%
Subscription fees	23	25	+2.2	+9.6%
Management fees	26	53	+27.1	+104.4%
Other Incomes	57	-2	-58.7	n. m.
Private Pension Plan	106	76	-29.3	-27.7%
Technical Margin1	63	78	+14.6	+23.2%
P&C	63	78	+14.6	+23.2%
Subscription fees	4	12	+7.6	+183.0%
Management fees	56	73	+17.8	+31.9%
ASSET MANAGEMENT	60	85	+25.4	+42.4%
Acquisition costs	495	523	+28.1	+5.7%
Labour cost	36	38	+1.9	+5.3%
Operating costs	83	85	+1.7	+2.0%
Other costs (mainly evaluation of liabilities)	138	93	-45.3	-32.9%
TOTAL COSTS	752	738	-13.7	-1.8%
EBIT Insurance & AM Services	636	840	+204.2	+32.1%

1. Includes EBIT from Poste Welfare Servizi

FOCUS ON INSURANCE & ASSET MANAGEMENT

GROUP GROSS WRITTEN PREMIUM

FOCUS ON INSURANCE & ASSET MANAGEMENT LIFE PREMIUMS NET INFLOWS

(€bn)

Investor Relations 14

FOCUS ON INSURANCE & ASSET MANAGEMENT

TECHNICAL RESERVES EVOLUTION

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

FOCUS ON INSURANCE & ASSET MANAGEMENT ASSET MANAGEMENT

Agreement with Anima supporting wealth management strategy of Poste Italiane

Mifid II fully implemented across the network

Continued Growth in Asset Management thanks to Equity and Balanced products

FOCUS ON INSURANCE & ASSET MANAGEMENT STRONG SOLVENCY RATIO

295%

17%

-32%

AVERAGE NUMBER OF PRODUCTS HELD BY RETAIL CUSTOMERS

• Insurance Services

• Asset Management

Steady increase of cross-selling overtime

FOCUS ON MAIL & PARCELS TOTAL REVENUES & EBIT

VOLUMES AND MARKET PRICE FOCUS ON MAIL & PARCELS

1. Net of Unaddressed Mail Volumes in 2016

AVERAGE PRICE INDEX – MAIL AVERAGE PRICE INDEX – PARCELS

TOTAL GROUP OPERATING COSTS

(€m)

Depreciation and Amortization

Costs of Goods Sold

Early Retirement Incentives

Labour Cost

Strong discipline in cost management

TOTAL GROUP OPERATING COSTS FOCUS ON LABOUR COSTS

Successful track record to reduce FTE

FROM GROUP EBIT TO NET INCOME 2017P

(€m)

Non operating items impacted by write-offs (94 €m)

CAPEX EVOLUTION (€m)

CAPEX BREAKDOWN BY CATEGORY (%)

1. Other includes infrastructure to support delivery and logistics integration

INDUSTRIAL NET CASH POSITION

NEW SEGMENTS HIGHLIGHTS

PERIMETER CHANGES AHEAD OF CMD

CURRENT REVENUES SPLIT		NEW REVENUES SPLIT
Financial 1 Services	• Transaction Banking • Current Accounts • Postal Savings • Third Parties Distribution Products	• Current Accounts • Postal Saving • Asset Management • Third Parties Distribution Products	Financial 1 Services
Insurance & 2 Asset Management	• Life • Private Pension Plan • P&C • Asset Management	• Life • Private Pension Plan • P&C	Insurance 2 Services
3 Mail & Parcels	• Mail Services • Parcels Services • Other Services • Distribution & Captive Services	• Mail Services • Parcels Services • Other Services • Distribution & Captive Services	Mail, 3 Parcels & Distributions
Other 4 Services	• Telecommunication Services	• Telecommunication Services • Cards & Acquiring Services • Money Transfer & Payments	Payments, 4 Mobile & Digital

PERIMETER CHANGES AHEAD OF CMD INSURANCE PREMIUMS TO BE PRESENTED ON A NET BASIS

POSTE ITALIANE SEGMENT REORGANIZATION NEW SEGMENT REPORTING: REVENUES BREAKDOWN

(€m)

POSTE ITALIANE SEGMENT REORGANIZATION NEW SEGMENT REPORTING: EBIT BREAKDOWN

(€m)

2017P

CLOSING REMARKS

OUR FOCUS NOW

APPENDIX

GROUP PROFIT & LOSS STATEMENT

€m	FY 2016	2017P	Var.	Var.%
Revenue from sales and services	8,743	8,463	(280)	(3.2%)
Insurance premium revenue	19,884	20,343	459	2.3%
Other income from financial and insurance activities	4,421	4,560	139	3.1%
Other operating income	64	75	10	16.0%
Sales	33,112	33,441	328	1.0%
Personnel costs	(6,241)	(6,093)	148	2.4%
Other operating expenses	(3,292)	(3,345)	(54)	(1.6%)
Net change in technical provisions for insurance business and other claims expenses	(21,958)	(22,335)	(377)	(1.7%)
Depreciation & amortization	(581)	(545)	36	6.2%
EBIT	1,041	1,123	82	7.8%
Net interest income / (Expense)	15	(56)	(70)	(462.5%)
Profit before tax	1,056	1,067	11	1.1%
Tax	(434)	(378)	56	12.9%
Net income	622	689	67	10.8%

FINANCIAL SERVICES PROFIT & LOSS

€m	FY 2016	2017P	Var.	Var.%
Total revenues	5,837	5,810	(27)	(0.5%)
o/w Market revenues	5,294	5,246	(49)	(0.9%)
o/w Intercompany revenues	543	565	22	4.0%
Personnel costs	(126)	(109)	17	13.3%
Other operating expenses	(4,896)	(4,927)	(30)	(0.6%)
EBITDA	815	773	(41)	(5.0%)
EBITDA margin	14.0%	13.3%	-0.6%
Depreciation and amortisation	(1)	(1)	(0.3)	(106.6%)
EBIT	813	773	(41)	(5.0%)
EBIT margin	13.9%	13.3%
Net interest income / (Expense)	(7)	1	8	111.4%
PROFIT BEFORE TAX	806	773	(33)	(4.0%)
Tax	(246)	(188)	58	23.7%
NET INCOME	560	586	26	4.6%

INSURANCE AND ASSET MANAGEMENT PROFIT & LOSS

€m	FY 2016	2017P	Var.	Var.%
Total revenues	23,773	24,354	581	2.4%
o/w Market revenues	23,772	24,353	581	2.4%
o/w Intercompany revenues	1	1	0	13.5%
Personnel costs	(39)	(41)	(2)	(5.4%)
Other operating expenses	(23,084)	(23,455)	(371)	(1.6%)
EBITDA	650	857	207	31.9%
EBITDA margin	2.7%	3.5%	0.8%
Depreciation and amortisation	(14)	(17)	(3)	(23.0%)
EBIT	636	840	204	32.1%
EBIT margin	2.7%	3.4%
Net interest income / (Expense)	49	57	7	14.9%
PROFIT BEFORE TAX	685	896	211	30.9%
Tax	(262)	(311)	(49)	(18.6%)
NET INCOME	423	586	163	38.5%

€m	FY 2016	2017P	Var.	Var.%
Total revenues	8,362	8,129	(233)	(2.8%)
o/w Market revenues	3,822	3,632	(190)	(5.0%)
o/w Intercompany revenues	4,540	4,497	(43)	(0.9%)
Personnel costs	(6,059)	(5,928)	131	2.2%
Other operating expenses	(2,204)	(2,213)	(10)	(0.5%)
EBITDA	99	(12)	(112)	(112.0%)
EBITDA margin	1.2%	-0.1%	-1.3%
Depreciation and amortisation	(536)	(505)	31	5.8%
EBIT	(436)	(517)	(81)	(18.5%)
EBIT margin	-5.2%	-6.4%
Net interest income / (Expenses)	(26)	(112)	(86)	(330.4%)
PROFIT BEFORE TAX	(462)	(629)	(167)	(36.1%)
Tax	83	127	44	52.8%
NET INCOME	(379)	(502)	(123)	(32.4%)

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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