GROUP OPERATING RESULTS

	Three months ended 31 March
Results of operations (€m)	2018	2017	Increase/(decrease)
Total revenue	2,884	2,833	51	1.8%
of which:
Mail, Parcels and Distribution	898	914	(16)	-1.8%
Payments, Mobile and Digital	143	130	13	10.0%
Financial Services	1,519	1,462	57	3.9%
Insurance Services	324	327	(3)	-0.9%
Total costs	2,049	2,165	(116)	-5.4%
of which:
Total personnel expenses	1,430	1,480	(50)	-3.4%
of which personnel expenses	1,424	1,478	(54)	-3.7%
of which early retirement incentives	6	2	4	n/s
sOther operating costs	619	685	(66)	-9.6%
EBITDA	835	668	167	25.0%
Depreciation, amortisation and impairments	132	142	(10)	-7.0%
EBIT	703	526	177	33.7%
EBIT Margin	24.4%	18.6%	5.8%
Finance income/(costs)	8	6	2	33.3%
Profit before tax	711	532	179	33.6%
Income tax expense	226	181	45	24.9%
Profit for the year	485	351	134	38.2%
Earnings per share	0.372	0.269	0.10	38.2%

n/s: not significant

	Three months ended 31 March
Group capital expenditure	2018	2017	Increase/(decrease)
Capital expenditure	56	81	(25)	-30.9%

Financial position (€m)	At 31 March 2018	At 31 March 2017	Increase/(decrease)
Non-current assets	3,000	3,077	(77)	-2.5%
Net working capital	2,125	1,452	673	46.3%
Gross invested capital	5,125	4,529	596	13.2%
Sundry provisions and other assets/liabilities	(3,159)	(2,546)	(613)	24.1%
Net invested capital	1,966	1,983	(17)	-0.9%
Equity	9,627	7,550	2,077	27.5%
Net funds	(7,661)	(5,567)	(2,094)	37.6%
Net debt/(funds) of the Mail, Parcels and Distribution segment (ESMA)	(385)	(845)	460	-54.4%

Principal KPIs

Principals KPIs (€m)	At 31 March 2018	At 31 March 2017	Increase/(decrease)
Client assets (€m)¹	513,932	497,372	16,560	3.3%
Net inflows (€m)²	4,173	4,065	108	2.7%
Average workforce shown in full-time equivalent terms	135,740	137,916	(2,176)	-1.6%
Ordinary unit cost of labour (€000)	42.0	43.1	(1.1)	-2.6%
Mail, Parcels and Distribution
Letters handled by the Group (volumes in millions)	813	838	(25)	-3.0%
Parcels handled by Group (volumes in million)	29.1	27.6	2	5.4%
Number of delivery centres	2,039	2,101	(62)	-3.0%
Number of post offices	12,822	12,822	-	-
Payment, Mobile and Digital
Number of cards in issue (in millions)	26.0	23.8	2.2	9.2%
Value of transactions (€m)	6,250	5,442	808	14.8%
PosteMobile SIM cards (average in thousands)	3,812	3,659	153	4.2%
Financial Services
Postal Savings (average in €m)	309,977	309,046	931	0.3%
Average return	0.5%	0.47%	0.1%
Current account deposits (average for the period in €m)	57,757	54,533	3,224	5.9%
Average return on current accounts without capital gains	2.53%	2,73%	-0.2%
Net gains (€m)	378	397	(19)	-4.8%
Insurance Services
Net technical provisions (€m)³	128,189	115,300	12,889	11.2%
Gross premium revenue, Poste Vita group (€m)⁴	5,336	5,935	(599)	-10.1%

1 These amounts include postal savings deposits, the mutual investment funds marketed, Poste Vita's technical provisions and current account deposits. The value of client assets at 31 December 2017 was €506,240 million.
2 Net inflows at 31 December 2017 amounted to €3,304 million.
3 The value of technical provisions at 31 December 2017 amounted to €123,579 million.
4 Includes premium revenue before premium reserve and outward reinsurance premiums.

Other non-financial KPIs

Workforce by gender (shown in full-time equivalent terms)	At 31 March 2018	At 31 December 2017	Increase/(decrease)
Total permanent workforce	126,805	127,435	(630)	-0.5%
of which
Men	58,458	58,812	(354)	-0.6%
Women	68,347	68,623	(276)	-0.4%
Total flexible workforce	8,335	9,120	(785)	-8.6%
of which
Men	4,944	5,436	(492)	-9.1%
Women	3,391	3,684	(293)	-8.0%

Quality of the universal postal service			At 31 March 2018	At 31 December 2017
of which	Delivery within	Target	Actual	Actual
Posta 1 - Priority¹	1 day	80.0%	82.7%	82.2%
Posta 1 - Priority¹	4 days	98.0%	99.3%	99.1%
Posta 4 - Ordinary²	4 days	90.0%	90.2%	91.2%
Bulk mail¹	4 days	90.0%	98.6%	96.7%
Registered mail¹	4 days	90.0%	94.2%	95.1%
Insured mail¹	4 days	90.0%	99.2%	99.6%
Standard parcels¹	4 days	90.0%	96.7%	92.2%

1 Monitored by the electronic tracking system. Increase/(decrease)
2 Based on data certified by IZI at the request of AGCom (as figures for March are not yet available, the performance shown refers to February 2018).

CONSOLIDATED OPERATING RESULTS

The Group’s total revenue amounts to €2.9 billion, an increase of €51 million (1.8%) compared with the same period of the previous year.

The performance in the first quarter of 2018 has resulted in consolidated operating profit of €703 million, an increase of 33.7% compared with the same period of the previous year (€526 million). This primarily reflects the positive performance recorded by Financial Services and reductions in operating costs and personnel expenses.

Profit for the period of €485 million is up 38.2% on the first three months of 2017 (a profit of €351 million).

In detail, total revenue from Mail, Parcels and Distribution services amounts to €898 million, a reduction of 1.8% compared with the first quarter of 2017. This is due to a decrease in traditional letter post, with the number of items falling from 838 million in 2017 to 813 million (a decline of 3.0%). Parcel revenue, on the other hand, continued to grow, with volumes rising 5.4% from 27.6 million items in the first quarter of 2017 to 29.1 million.

The Payments, Mobile and Digital segment contributed €143 million to total revenue, up 10% on the first quarter of 2017. This figure includes revenue from payment services, e-money products and PosteMobile SpA’s telecommunications services.

Total revenue from Financial Services is up from €1,462 million in the first quarter of 2017 to €1,519 million, marking an increase of 3.9% and reflecting the positive performance of the management of Postal Savings. Moreover, the figure for the comparative period included revenue from the investment in Banca del Mezzogiorno–MCC, amounting to approximately €25 million.

The Insurance Services segment contributed €324 million to total revenue (€327 million in the same period of the previous year), reflecting a slowdown in the life business, where premium revenue is down from €5.9 billion in the first quarter of 2017 to €5.3 billion. In contrast, the non-life business performed well, with net premium revenue of €28 million, compared with €25 million in the first quarter of 2017.

As anticipated, total costs are down from the €2,307 million of 2017 to €2,181 million, a decline of 5.5%, confirming the Group’s commitment to achieving cost savings.

Personnel expenses are down 3.4% from €1,480 million in the first quarter of 2017 to €1,430 million in 2018, primarily reflecting a decrease in the average workforce (almost 2,200 fewer FTEs compared with the same period of the previous year).

Other operating costs are down from €685 million in the first quarter of 2017 to €619 million in 2018, a reduction of 9.6% due to cost efficiencies and higher provisions for risks and charges in the first quarter of 2017.

Finally, if depreciation, amortisation and impairments, amounting to €132 million in the first quarter of 2018 and €142 million in the first quarter of 2017, are taken into account, total costs amount to €2,181 million. This marks a reduction of 5.5% compared with the same period of the previous year (€2,307 million in the first quarter of 2017).

OPERATING RESULTS BY OPERATING SEGMENT

Three months ended 31 March 2018 (€m)	Mail, Parcels & Distribution	Payments, Mobile & Digital	Financial Services	Insurance Services	Adjustments and eliminations	Total
Total revenue	2,267	225	1,780	324	(1,712)	2,884
External revenue	898	143	1,519	324	-	2,884
Intersegment revenue	1,369	82	261	-	(1,712)	-
Total costs	2,004	168	1,541	180	(1,712)	2,181
Costs	1,969	54	103	35	-	2,181
Total personnel expenses	1,390	8	22	10	-	1,430
of which personnel expenses	1,385	8	21	10	-	1,424
of which early retirement incentives	5	-	1	-	-	6
Other operating costs	477	40	81	21	-	619
Depreciation, amortisation and impairments	122	6	-	4	-	132
Intersegment costs	15	114	1,438	145	(1,712)	-
EBIT	263	57	239	144	-	703
EBIT MARGIN	11.6%	25.3%	13.4%	44.4%		24.4%
Finance income/(costs)	(11)	-	-	14	-	3
Profit/(loss) on investments accounted for using the equity method	-	1	4	-	-	5
Intersegment finance income/(costs)	3	-	(1)	(2)	-	-
Profit/(Loss) before tax	255	58	242	156	-	711
Income tax expense	81	15	69	61	-	226
Profit for the period	174	43	173	95	-	485

Three months ended 31 March 2017 (€m)	Mail, Parcels & Distribution	Payments, Mobile & Digital	Financial Services	Insurance Services	Adjustments and eliminations	Total
Total revenue	2,248	216	1,720	327	(1,678)	2,833
External revenue	914	130	1,462	327	-	2,833
Intersegment revenue	1,334	86	258	-	(1,678)	2,307
Total costs	2,113	161	1,529	182	(1,678)	2,307
Costs	2,098	53	121	35	-	2,307
Total personnel expenses	1,432	8	31	9	-	1,480
of which personnel expenses	1,431	8	30	9	-	1,478
of which early retirement incentives	1	-	1	-	-	2
Other operating costs	534	39	90	22	-	685
Depreciation, amortisation and impairments	132	6	-	4	-	142
Intersegment costs	15	108	1,408	147	(1,678)	-
EBIT	135	55	191	145	-	526
EBIT MARGIN	6.0%	25.5%	11.1%	44.3%		18.6%
Finance income/(costs)	(11)	-	-	13	-	2
Profit/(loss) on investments accounted for using the equity method	-	-	4	-	-	4
Intersegment finance income/(costs)	3	-	(2)	(1)	-	-
Profit/(Loss) before tax	127	55	193	157	-	532
Income tax expense	47	16	58	60	-	181
Profit for the period	80	39	135	97	-	351