FINANCIAL POSITION AND CASH FLOW

GROUP FINANCIAL POSITION AND CASH FLOW

GROUP FINANCIAL POSITION AND CASH FLOW

The Poste Italiane Group’s net invested capital at 31 December 2015 amounts to €999 million, amply financed by equity. A comparison with the end of the previous year, when the figure was €3,677 million, shows a significant reduction due to movements in working capital, following the collection of significant receivables, as described in greater detail below.
Non-current assets of €3,010 million are up €117 million compared with the end of 2014. The movement in this indicator in 2015 reflects the Parent Company’s acquisition of a 10.32% interest in Anima Holding SpA from Monte Paschi Siena SpA (BMPS) on 25 June 2015 for a consideration of €210.5 million. Further movements in non-current assets reflect capital expenditure of €488 million, primarily relating to investment in IT assets. Depreciation, amortisation and impairments (after reversals of impairments) of property, plant and equipment, intangible assets and investment property during the year amounts to €581 million.

Working capital amounts to €1,301 million at 31 December 2015, marking a decline of €2,640 million compared with the end of 2014. This primarily reflects recognition of the main items receivable from central and local government entities after discussions with the MEF. On 7 August 2015, the MEF committed “the Ministry to complete all the procedures necessary in order to pay the amounts due in accordance with procedures and timing consistent with the current privatisation process (…) including provision of the necessary funding” and, to this end, sent the Parent Company a letter signed by the Director General of the Treasury Department and General Accounting Office. As a result of this commitment, the Company received amounts accruing in 2015 and in previous years as Universal Service compensation and other items, making a total of €1,628 million.
The balance of working capital also reflects the collection of €535 million of amounts due from the Parent Company’s majority shareholder,the MEF,in accordance with the 2015 Stability Law, relating to the return of amounts deducted from the Parent Company’s retained earnings in 2008 and transferred to the MEF, pursuant to European Commission Decision C42/2006. Further details on this are provided in the section 12, “Other information”. The reduction in working capital is also due to the collection of fees receivable in return for the Parent Company’s distribution of postal savings products on behalf of Cassa Depositi e Prestiti, which under the agreement signed on 4 December 2014 are now invoiced on a quarterly, rather than a half-yearly, basis.

Equity amounts to €9,658 million at 31 December 2015, marking an increase of €1,240 million compared with 31 December 2014. The increase primarily reflects profit for the year of €552 million and movements in the fair value reserves net of tax (€926 million), as a result of positive and/or negative movements in the value of investments in securities held by BancoPosta RFC and Poste Vita SpA. Reductions in equity, in 2015, include the Parent Company’s payment of dividends to the then sole shareholder, the MEF, totalling €250 million.

ANALYSIS OF NET (DEBT)/FUNDS

Group net (debt)/funds by operating segment

INDUSTRIAL NET DEBT IN ACCORDANCE WITH ESMA GUIDELINES

An analysis of the industrial net funds/(debt) of the Postal and Business Services and Other Services segments at 31 December 2015, in accordance with ESMA guidelines, computed on the basis of paragraph 127 of the recommendations contained in ESMA document 319 of 2013, is provided below:

LIQUIDITY

Operating activities generated a cash inflow of €2,563 million as a result of, among other things, profit for the year (€552 million) and the positive movement in working capital (up €2,040 million). As noted above with regard to movements in working capital, this reflects the collection of Universal Service compensation and other receivables.
The cash generated was used to fund the acquisition of a 10.32% interest (€210.5 million) in Anima Holding SpA, to finance capital expenditure which, after disposals, resulted in an outflow of €484 million, and to pay off short-term borrowings of approximately €800 million. 
Cash and cash equivalents is up €1,438 million, after the payment of dividends of €250 million and the collection of €535 million from the MEF as a result of the return of amounts deducted from the Parent Company’s retained earnings in 2008 and transferred to the MEF, pursuant to European Commission Decision C42/2006.

Net funds amount to €8,659 million at 31 December 2015, marking a significant improvement on the figure for 31 December 2014 (when net funds totalled €4,741 million). This reflects, among other things, the component linked to fair value measurement of investments in securities, primarily by BancoPosta RFC, and, to a lesser extent, by the subsidiary, Poste Vita, amounting to approximately €3,775 million (€2,651 million at 31 December 2014).