GROUP OPERATING RESULTS

CONSOLIDATED STATEMENT OF PROFIT AND LOSS

 Increase/(decrease)
millions of Euro20142015Amount%
Revenue from sales and services 4,593 4,390 (203) (4.4)
Insurance premium revenue 8,249 9,474 1,225 14.9
Other income from financial and insurance activities 2,063 2,055 (8) (0.4)
Other operating income 53 31 (22) (41.5)
Total revenue 14,958 15, 950 992 6. 6
Cost of goods and services 1,278 1,233 (45) (3.5)
Net change in technical provisions for insurance business and other claims expenses 9,584 10,385 801 8.4
Other expenses from financial and insurance activities 54 311 257 n/s
Personnel expenses 3,031 2,983 (48) (1.6)
Depreciation, amortisation and impairments 342 289 (53) (15.5)
Capitalised costs and expenses (10) (12) (2) 20.0
Other operating costs 173 123 (50) (28.9)
Total costs 14,452 15, 312 860 6. 0
Operating profit/(loss) 506 638 132 26.1
Finance income 141 88 (53) (37.6)
Finance costs 129 61 (68) (52.7)
Profit/(loss) on investments accounted for using the equity method (1) - 1 n/s
Profit/(loss) before tax 517 665 148 28.6
Income tax expense 295 230 (65) (22.0)
Profit for the period 222 435 213 95.9

n/s: not significant.

Notwithstanding the expected reduction in postal sector revenues, the Group’s operating results during the first six months of 2015 were positive, with Operating profit reaching Euro 638 million, an increase of 26.1% with respect to the corresponding period in the prior year (Euro 506 million) and Profit for the period of Euro 435 million (Euro 222 million for the first six months of 2014).
Revenues in the Financial Services segment increased with respect to the first six months of 2014 (Euro 2,680 million in the first six months of 2015 compared with Euro 2,665 million in the first six months of 2014) with contribution to Operating profit up 48.6% on the corresponding period (Euro 468 million for the first six months of 2015 compared with Euro 315 million for the same period in 2014).
The results achieved by the Insurance Services segment were also positive, with Poste Vita SpA generating Euro 9.4 billion in insurance premiums collected (compared with Euro 8.2 billion in the corresponding period in 2014).
Total revenue generated by the Poste Group during the first six months of 2015 amounts to Euro 15,950 million, an increase of 6.6% with respect to the corresponding period in 2014; in addition to the positive performance of the Insurance business, which generated total revenue of Euro 11,209 million (Euro 10,109 million during the first six months of 2014), this was due to the increased revenue of the Financial Services segment which increased from Euro 2,665 million in the first six months of 2014 to Euro 2,,680 million in the first six months of 2015 and Other Services. These positive results more than compensated for the lower revenue generated by the Postal and Business Services segment which decreased from Euro 2,073 million during the first six months of 2014 to Euro 1,938 million in the first six months of 2015.

Revenue by operating segment for the six months ended 30 June

  Total revenue Increase/(decrease)
(millions of Euro) 2014

2015

 Amount %
Postal and Business Services 2,073 1,938 (135) (6.5)
Financial Services 2,665 2,680 15 0.6
Insurance Services 10,109 11,209 1,100 10.9
Other Services 111 123 12 10.8
Total Poste Italiane Group 14,958 15,950 992 6.6
(*) After consolidation adjustments and elimination of intercompany transactions.

Postal and Business Services for the six months ended 30 June

  Total revenue Increase/ (decrease)
(milioni di euro) 2014  2015  Amount %
Poste Italiane SpA (*) 1,732   1,690      
intercompany revenue 39   147      
Poste Italiane SpA external revenue   1,693   1,543 (150) (8.9)
SDA Express Courier SpA 254   253      
intercompany revenue 56   61      
SDA Express Courier SpA external revenue   198   192 (6) (3.0)
Consorzio Logistica Pacchi ScpA 89   86      
intercompany revenue 80   67      
Consorzio Logistica Pacchi ScpA external revenue   9   19 10 n/s
Postel SpA (**) 163   113      
intercompany revenue 83   47      
Postel SpA ricavi external revenue   80   66 (14) (17.5)
Italia Logistica srl (***) 37   24      
intercompany revenue 17   12      
Italia Logistica srl external revenue   20   12 (8) (40.0)
Mistral Air Srl 46   53      
intercompany revenue 17   17      
Mistral Air Srl external revenue   29   36 7 24.1
PosteShop SpA 13   5      
intercompany revenue -   -      
PosteShop SpA external revenue   13   5 (8) (61.5)
Postecom SpA 44   39      
intercompany revenue 39   36      
Postecom SpA external revenue   5   3 (2) (40.0)
Other companies 109   148      
intercompany revenue 83   86      
Altre società external revenue   26   62 36 n/s
Total external revenue   2,073   1,938 (135) (6.5)
n/s: not significant
(*) This item includes Postal services revenue (including compensation for the Universal Service, amounting to Euro 131.2 million during the first six months of 2015 and Euro 167.9 million during the first six months of 2014), other revenue from the sale of goods and services and other operating income. It does not include the portion attributable to BancoPosta RFC.
(**) The amount for the six months ended 30 June 2014 includes revenue from the subsidiary company PostelPrint SpA, which was merged by incorporation into Postel SpA on 30 April 2015, with the merger becoming effective from an accounting and tax viewpoint from 1 January 2015.
(***) Italia Logistica Srl was merged by incorporation into SDA Express Courier SpA with the merger becoming effective from an accounting and tax viewpoint from 1 June 2015. Accordingly, revenue for the six months ended 30 June 2015 relates only to the first 5 months of 2015.

Cost Analysis for the six months ended 30 June

(millions of Euro) 2014 2015 % inc/ (dec)
Cost of goods and services 1,278 1,233 (3.5)
Net change in technical provisions for insurance business and other claims expenses 9,584 10,385 8.4
Other expenses from financial and insurance activities 54 311 n/s
Personnel expenses 3,031 2,983 (1.6)
Depreciation, amortisation and impairments 342 289 (15.5)
Capitalised costs and expenses (10) (12) 20.0
Other operating costs 173 123 (28.9)
Total costs 14,452 15,312 6.0
n/s: not significant

The cost of goods and services decreased by 3.5%, from Euro 1,278 million in the first six months of 2014 to Euro 1,233 million in the first six months of 2015, mainly due to the reduction in the cost of funding, represented by interest paid to customers by BancoPosta RFC. Net change in technical provisions for the insurance business and other claims expenses, which is closely linked to the aforementioned growth in premium revenue recorded by Poste Vita, amounted to Euro 10,385 million, an increase of 8.4% on the corresponding period in the previous year.
Other expenses from financial and insurance activities increased from Euro 54 million in the first six months of 2014 to Euro 311 million in 2015 as a result of the greater incidence of fair value losses on financial instruments held for the main part by PosteVita.

Personnel expenses for the six months ended 30 June

      Increase/(decrease)
(millions of Euro) 2014 2015 Amount %
Salaries, social security contributions and sundry expenses (*) 2,997 2,969 (28) (0.9)
Early retirement incentives 37 17 (20) (54.1)
Net provisions for/(uses of) provisions for disputes with staff (3) (3) - n/s
Total Personnel expenses 3,031 2,983 (48) (1.6)

n/s: not significant
(*) This includes the following items reported in note C8 to the condensed interim financial statements: salaries and wages; social security contributions; employee termination benefits; temporary work; Directors’ fees and expenses; and other staff costs/(cost recoveries).

Total personnel expenses decreased by 1.6%, from Euro 3,031 million in the first six months of 2014 to Euro 2,983 million in the first six months of 2015. Ordinary personnel expenses, however, consisting of salaries, contributions and sundry expenses, decreased by 0.9% (representing a reduction of Euro 28 million) with respect to the first six months of 2014 reflecting a decrease in the average number of employees during the period (on average, more than 1200 fewer full- time equivalents were employed during the first six months of 2015, compared with the same period of the previous year) and use of the provisions for early retirement costs set up in previous periods. The aforementioned movements in revenues and costs have resulted in Operating profit for the period of Euro 638 million (Euro 506 million for the first six months of 2014).