FY 2015 Results. March 22, 2016

FY 2015 Results March 22, 2016 Opening Remarks (€m) FY 2014 FY 2015 Var % Revenues 28,512 30,739 +8 % EBIT 691 880 +27 % Net Profit 212...
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FY 2015 Results March 22, 2016

Opening Remarks (€m)

FY 2014

FY 2015

Var %

Revenues

28,512

30,739

+8 %

EBIT

691

880

+27 %

Net Profit

212

552

+160 %

ROBUST CASH GENERATION DPS 34 €/CENTS 2

Investor Relations

Delivering against plan

PROFITABLE, CASH GENERATIVE SERVICE INFRASTRUCTURE ‘‘Superior returns in Transaction Banking and Asset Gathering’’ ‘‘Growth in Insurance and Asset Management’’

‘‘Turnaround in Mail – Growth in Parcels’’

ROE: FY15 30% vs. 24% FY14

GWP +18% in FY15 Operating Costs -4.1% vs FY14 Parcels Volumes +12% vs FY14

FY 2015 NUMBERS SUPPORT EXECUTION OF OUR PLAN EBIT €880m

Cash distributed €444m Investor Relations 3

FY 2015: Figures Highlights Financial Services (€m)

Insurance Services (€m)

Mail & Parcels (€m)

Poste Italiane Group (€m)2 7.8% 30,739 28,512

1%

1%

13.7%

Revenues1

(3.2%)

66%

70%

19%

17% 5188.634

14%

13%

21,415

18,840

(4.4%) 5,358

5,188

4,074

FY 2014

FY 2015

FY 2014

FY 2015

3,893

FY 2014

FY 2015

FY 2014

FY 2015

Mail & Parcels

Financial Services

Insurance Services

Other

21.4% 27.4%

930 766

880

17.3%

Operating Profit

415

691

487

n.m. FY 2014

FY 2014

FY 2015

FY 2014

FY 2015

FY 2014

(504)

1. 2.

FY 2015 FY 2015

(568)

Investor Relations

Net of Intersegment revenues Including other segments (PosteMobile and “Consorzio Telefonia Mobile”)

4

Total Asset Under Management / Administration FY 2014

FY 2015 +3.1%

462 €bn

476 €bn Postal Saving Books

92.2 20%

114.4 25%

44 9%

Average Deposits 211.3 46%

105.9 22%

Postal Bonds

Funds and Net Technical Reserves

118.7 25%

45.2 10% 206.1 43%

Robust clients’ asset base with a well balanced mix

Investor Relations 5

Focus on Financial Services (1/3) – Revenues Evolution

Revenues (€m) 5,358

-3.2%

5,188

229 290

241 305

1,154

1,058

1,640

1,610

2,045

1,974

FY 2014

FY 2015

Current Accounts /APM1

Postal Savings

Distribution

Payment Cards Fees

Fees from Transaction Banking2

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

6

Investor Relations

Focus on Financial Services (2/3) – Revenues Breakdown Revenue source

2015 €m

Returns on Current

1,974

Account Deposits

-3.5%

Fees from Postal

1,610

Savings Collection

-1.8%

Fees from

1,058

Transaction Banking

-8.3%

Distribution Fees

Payment Card Fees

Total Revenues

Rationale

2015 vs 2014 (var. % )

 Lower revenues mainly due to interest rate reduction

 Lower Postal Saving total collection

 Decrease mainly due to payments slips and F23/F24

305

 Better performance on personal loans

+ 5.2%

and other personal financing products

241

 Increase of Postepay cards issued

+ 5.2%

5,188 -3.2%

7

Investor Relations

Focus on Financial Services (3/3) – Active Portfolio Management Average Deposit1 (€m)

Active Portfolio Management Return2 (€m) Average return (% )

+2.8%

43,953

45,169

Unrealized gains (€m )

5,660

P ortfolio duration (years)

5,382

3

4.6%

4.4%

4,467

5,434

5.2

2,045 38,571

FY 2014

5.6

1,974

39,509

FY 2014

FY 2015

Avg deposits from Public Administration

Entirely invested in floating rate deposit c/o MEF

Avg deposits from Retail and Corporate customers

Entirely invested in Italian Government bonds

FY 2015

Investor Relations

1.

Including current accounts, time deposits and repurchase agreements

2.

Including interest income and realized capital gains

3.

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

8

BancoPosta Regulatory Framework and Capital Position Capital Requirements (€m)

Capital Position 1 (€m)

CET1 Capital

RWA

Market risk

12,250

11,779

4

21 158

Leverage ratio %

1,009

981

942 35 117

12,613

5

26 166

CET1 ratio %

7

3.3%

3.3%

3.2%

15.3%

15.9%

15.5%

Counterparty risk Credit risk

785

797

810

1799.0

1949.0

1949.0

FY 2013

FY 2014

FY 2015

FY 2013

FY 2014

FY 2015

Operational risk

BancoPosta regulatory framework aligned to Basel III standards effective December 2014

Key regulatory constraints: 8% min. CET1 ratio2 / 3% min. leverage ratio

ROE 3 FY15 30% (vs FY14 24%) 1.

CET1 Capital numbers already include the net profit related to

2.

10,5% Min. CET1 ratio required to distribute earnings

3.

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

Investor Relations 9

Focus on Insurance Services – Group GWP and Technical Reserves Evolution

Group GWP Evolution (€bn)

Group Net Technical Reserves Evolution (€bn)

Investment Portfolio Breakdown Life guaranteed (Ramo I) investment mix

Reduction of Life-linked due to increasing demand of traditional products

• Avg. portfolio rating: BBB • Avg. investment portfolio duration: ~6 years

+15%

100.3 4%

87.2 +18%

15.5

11%

16%

14%

18.2 80%

FY 2014

FY 2015

FY 2014

FY 2015

75%

FY 2014

Govies

FY 2015

Corporate Bonds

Alternative Funds

Investor Relations 10

Strong Solvency II under our approved standard model

Estimated Sensitivities of Coverage Ratio

BASE €m 6.841

Interest Rate UP (+100 bps)

- 91 pts

314%

Gov. Spread UP (+100 bps)

- 115 pts

290%

Coverage Ratio

405%

1.687 Ultimate Forward Rate to 3.2% (-100 bps) SCR

- 2 pts

403%

OF Eligible

Investor Relations 11

Focus on Mail & Parcels (1/2) – Volumes and Revenues Evolution Volumes - Mail (m)

4,324

Volumes - Parcels (m)

-9.0%

1,284 46 1,093

76

3,937

+12.4%

86 14 3 7

13 5 6

1,152 42

216

207

1,685

1,556

FY 2014

FY 2015

29

20

980

Unrecorded Mail and Philately

Recorded Mail

Direct Marketing and Unaddressed Mail

Integrated Services

32

33

FY 2014

FY 2015

B2B

B2C

C2C

International

Other

Other

Revenues - Mail & Parcels (€m)

4,074

-4.4%

3,893

Investor Relations FY 2014

FY 2015

12

Focus on Mail & Parcels (2/2) – Revenues, Cost Structure and Profitability

Total Revenues (€m)

Operating Costs (€m)

Operating Profit (€m)1

-4.1% -5.1%

8,658

9,162

8,216

4,584

8,784

99 235 614

127 32 530

6,066

5,977

2,148

2,118

n.m.

4,323

-4.4%

4,074

3,893

FY 2014

FY 2014 Market Revenues

FY 2015 Infrasegement Revenues

FY 2014

FY 2015

FY 2015

Cost of Goods Sold

Labour Costs

Depreciation & Amortization

Other

(504)

Intersegment Costs

(568)

Investor Relations 1.

Includes intersegment revenues

13

Total Group Operating Costs Evolution Group Operating Costs (€m)

-2.4%

9,548

9,322

671

581

2,648

2,590

6,229

6,151

FY 2014 Labour Costs

FY 2015

Costs of Goods Sold

Depreciation and Amortization

Investor Relations 14

Cost Structure at Consolidated Level – Focus on labour costs (€m)

-1.3%

6,229 6,151

FY 2014

145K

FY 2015

Avg. workforce

144K

Investor Relations 15

From Group EBIT to Net Income (€m)

880

53

(381)

552

EBIT

Net Financial Income

Taxes

Net income

Proposed DPS 34 Euro/CENTS Investor Relations 16

Group Capital Expenditures Capex evolution (€m) 488 437

FY 2014

FY 2015

Capex Breakdown by Division (%) 100%

100%

3% 1%

8%

83%

86%

FY 2014

FY 2015

13%

Mail&Parcels / Network

6%

Other

Financial Services

17

0%

Insurance Services

Investor Relations

Cash Generation Profile (€m) 2015

(488)

2

1,099 611

1

FFO

Capex

1

FFO - Capex

2014

(437) 1,062 625

FFO1

1.

Capex

Calculated as: Net Income + D&A + Net provisions for risks and charges – Use of Provisions for risks and charges + Net change in employee termination benefits and pension plans + Other (Details in Appendix)

2.

Including goodwill and fair value of the technology platform of SDS acquired by PosteVita (about €m 20)

18

1

FFO - Capex

Investor Relations

Mail & Parcels and Other Services Net Financial Position (€m)

+1,753

720

1,608 1.608

5

302

(656)

76

(1.451) (1,451) Net Financial Position FY 2014

Funds from Operation (FFO)

Change in Working Capital

Capex

Net Dividend Cash In and other Equity movements

Other

Net Financial Position FY 2015

Investor Relations 19

2016: Year two of our five year plan

How the year started – main items

 Robust inflows towards postal savings products and current accounts  Continuing growth in insurance; new offer in asset management  In Mail & Parcels: deployment of the new delivery process

Minimum 80% pay-out confirmed for FY 2016 Investor Relations 20

Appendix

Group Profit & Loss Statement – FY 2015

€m

FY 2014

FY 2015

Var.%

9,150

8,810

(3.7%)

15,472

18,197

17.6%

3,772

3,657

(3.0%)

118

75

(36.9%)

28,512

30,739

7.8%

Personnel costs

(6,229)

(6,151)

(1.3%)

Other operating expenses

(3,038)

(3,444)

13.3%

(17,883)

(19,683)

10.1%

Depreciation & amortization

(671)

(581)

(13.4%)

EBIT

691

880

27.4%

6

53

n.m.

Profit before tax

697

933

33.9%

Tax

(485)

(381)

(21.4%)

Net income

212

552

160.8%

P&L Revenue from sales and services Insurance premium revenue Other income from financial and insurance activities Other operating income

Sales

Net change in technical provisions for insurance business and other claims expenses

Net interest income / (Expense)

Investor Relations 22

Group Key Balance Sheet Items – FY 2015 €m

FY 2014

FY 2015

Var.%

Cash & Equivalents

1,704

3,142

84.4%

BancoPosta related Cash

2,873

3,161

10.0%

Receivables & Inventory

2,751

2,158

(21.6%)

142,689

160,090

12.2%

Tangible and Intangible Assets

2,892

2,796

(3.3%)

Other

6,051

4,489

(25.8%)

158,960

175,836

10.6%

1,422

1,453

2.2%

Financial liabilities

55,359

57,478

3.8%

Technical Reserves

87,220

100,314

15.0%

6,541

6,933

6.0%

150,542

166,178

10.4%

Shareholders capital

1,306

1,306

-

Reserves

7,112

8,352

17.4%

8,418

9,658

14.7%

158,960

175,836

10.6%

Balance sheet

Financial Assets

Total Assets Trade Payables

Other Total Liabilities

Totale Equity Total Liabilities & Equity

Investor Relations 23

Group Cash Flow Statement – FY 2015

€m

FY 2014

FY 2015

Var.%

Net income

212

552

n.m.

Depreciation and amortization

671

581

(13.4%)

Net provisions for risks and charges

412

454

10.2%

(245)

(392)

60.0%

(77)

(65)

(15.6%)

2

0

n.m.

87

(31)

n.m.

1,062

1,099

3.5%

(429)

2,162

n.m.

633

3,261

n.m.

(437)

(488)

11.7%

Net change in subsidiaries and associates

5

(211)

n.m.

Disposals

9

5

(44.4%)

Cash flow from investments

(423)

(694)

(64.1%)

Dividend paid

(500)

(250)

(50.0%)

549

(1,414)

n.m.

49

(1,129)

n.m.

259

1,438

n.m.

Cashflow statement

(Use of Provisions for risks and charges) Net change in employee termination benefits and pension plans (Gains) / Losses on disposals Other FFO Change in working capital Cash flow from operations Capital expenditures

Cash Flow from financial assets and liabilities Cash flow from financing Net change in cash

Investor Relations 24

Group Working Capital – FY 2015

FY 2014

FY 2015

Var.%

3,761

2,346

(37.6%)

139

134

(3.6%)

3,540

3,258

(8.0%)

Deferred tax assets

702

623

(11.3%)

Current tax receivables

659

72

(89.1%)

Trade payables

(1,422)

(1,453)

2.2%

Other liabilities

(2,658)

(2,945)

10.8%

Deferred tax liabilities

(1,047)

(1,177)

12.4%

(24)

(53)

n.m.

3,650

805

(77.9%)

€m Working Capital Trade receivables Inventories Other receivables and assets

Current tax liabilities Working Capital

Investor Relations 25

Change in Group Working Capital – FY 2015 €m

Var.%

FY 2014

FY 2015

(14)

1,415

n.m.

7

5

(28.6%)

(1,034)

282

n.m.

(29)

79

n.m.

59

587

n.m.

Trade payables

(99)

31

n.m.

Other liabilities

256

287

12.1%

Deferred tax liabilities

542

130

(76.0%)

Current tax liabilities

(77)

29

n.m.

(389)

2,845

n.m.

25

16

(36.0%)

(71)

42

n.m.

(543)

(210)

(61.3%)

535

(535)

n.m.

14

4

(71.4%)

(40)

(683)

n.m.

(429)

2,162

n.m.

Change in Working Capital Trade receivables Inventories Other receivables and assets Deferred tax assets Current tax receivables

Total Financial Income on discounted receivables Net write-downs and loss on receivables Deferred tax on fair value changes and TFR actuarial income Cancellation of shareholder receivables CE 16/07/08 (Legge di stabilità 2015) Reinsurers' technical reserves Adjustments (non monetary items and shareholders' Change in Working Capital per cash flow statement

26

Investor Relations

Mail & Parcels Key Balance Sheet Items – FY 2015

€m

FY 2015

€m

Assets Property, plant and equipment Investment property Intangible assets Investment accounted for using the equity method Financial assets Trade receivables

Equity adn Liabilities

439 954 5 157

Current tax assets

Provisions for risks and charges

1,885

Other receivables and assets

Trade receivables

2,604

61

446

Inventories

Totale Equity

2,144

Deferred tax assets Total Non-current assets

FY 2015

295

Employee termination benefits and pension plans

1,330

Financial liabilities

1,251

Deffered tax liabilities

25

Other liabilities

72

6,091

Total Non-current liabilities

2,973

131

Provisions for risks and charges

696

1,823

Trade payables

97

Current tax liabilities

1,301 0

Other receivables and assets

293

Other liabilities

1,423

Financial assets

436

Financial liabilities

1,190

Cash and cash equivalents Total Current assets Total Assets

1,316 4,096

Total Current liabilities

10,187

Totale Equity and Liabilities

4,610 10,187

Investor Relations 27

Mail & Parcels and Other Services Net Debt Breakdown – FY 2015

€m

FY 2014

FY 2015

Var.%

Cash and Cash Equivalents

320

1,332

n.m.

Current Financial Assets

183

169

(7.7%)

(1,351)

(516)

(61.8%)

Current part of long term debt

(13)

(14)

7.7%

Other current financial liabilities

(24)

(21)

(12.5%)

(1,388)

(551)

(60.3%)

Current Net Financial Position

(885)

950

n.m.

Long term debt

(400)

(400)

-

Bonds

(796)

(798)

0.3%

(66)

(56)

(15.2%)

Non Current Financial Position

(1,262)

(1,254)

(0.6%)

Net Financial Position

(2,147)

(304)

(85.8%)

654

553

(15.4%)

(1,493)

249

n.m.

811

668

(17.6%)

(769)

(615)

(20.0%)

(1,451)

302

n.m.

Net Debt - Mail & Parcels and Other Services

Short term debt

Current Financial Position

Other non current financial liabilities

Non curernt financial assets Net Financial Position - Mail & Parcel and Other Sercvices Intersegment financial receivables Intersegment financial payables Net Financial Position (net of intersegments) 1

Investor Relations 1.

Including a Net Financial Position of Other Services (38 Eurom in 2015 and 30 Eurom in 2014)

28

Other Services – Poste Mobile Key Financials €m

FY 2014

FY 2015

Var.%

325

334

2.5%

240

242

1.0%

86

91

6.8%

(25)

(22)

(12.4%)

(239)

(242)

1.5%

62

70

12.7%

P&L Total revenue

o/w Market revenue o/w Intercompany revenue Personnel costs Other operating expenses EBITDA

EBITDA marg in

1 9 .0 %

Depreciation and amortisation EBIT

EBIT marg in

2 0 .9 %

(48)

(39)

(20.0%)

14

31

127.9%

4 .2 %

9 .3 %

Non-operating income/(expenses)

(0)

(1)

114.4%

Profit before taxes

13

30

128.4%

Taxes

(5)

(11)

109.8%

8

19

141.4%

57

56

(2.1%)

(51)

(29)

43.2%

(6)

1

118.6%

3,098

3,471

12.1%

5.7

5.2

(8.6%)

Profit after taxes Cash flow statement FFO Cash flow from investments Net change in cash Other key data Average number of users (sim cards -#k) ARPU (€)

Investor Relations 29

Financial Services – Cost Structure and Profitability at Divisional Level

Financial Services – Operating Costs (€m)

Financial Services – Operating Profit (€m)1

-5.2%

4,996 4,737

80

+21.4%

132

930

4,561

766

4,292

116 239

126 187

FY 2014

FY 2015

Cost of Goods Sold

Labour Costs

Intersegment Costs

Other

FY 2014

FY 2015

Investor Relations 1.

Includes intersegment revenues

30

Insurance Services – Cost Structure and Profitability at Divisional Level

Insurance Services – Operating Costs (€m)

Insurance Services – Operating Profit (€m)1

Change in Insurance Technical Provisions

19,683 17,883 +129% +17.3%

1,245

487 415 695

544 69

455

396 23 56

27 68

FY 2014

FY 2015

Cost of Goods Sold

Labour Costs

Intersegment Costs

Other

FY 2014

FY 2015

Investor Relations 1.

Includes intersegment revenues

31

Segment Flow Description – FY 2015 (€m) Mail & Parcels Including Network Total Revenues

Financial Services

Insurance Services

Poste Italiane Group2

8,216

5,667

21,415

M arket Revenues

3,893

5,188

21,415

I ntersegm ent Revenues

4,323

479

0

(8,784)

(4,737)

(20,928)

(29,859)

Operating Costs

30,739

Personnel Costs

(5,977)

(126)

(27)

(6,151)

Other Operating Costs 1

(2,680)

(319)

(763)

(4,025)

(19,683)

(19,683)

N et change in Technical Provisions I ntersegm ent Costs

(127)

(4,292)

(455)

Operating Profit (Loss)

(568)

930

487

880

Investor Relations 1. 2.

Including external costs, and D&A Including Other Services (Poste Mobile)

32

Contact Us

Poste Italiane Investor Relations Office Head of IR Luca Torchia Tel: +39 06 5958 2273 Email: [email protected] Poste Italiane, Viale Europa 175, 00144, Rome, Italy www.posteitaliane.it/en/investor-relations 33

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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