GROUP OPERATING RESULTS
The Group’s reports a positive operating performance for the first nine months of 2015, with operating profit of €930 million up 27% on the same period of 2014 (€733 million in the first nine months of 2014) and profit for the period of €622 million (€333 million for the first nine months of 2014).
Poste Vita achieved excellent operating results in the insurance sector, registering premium revenue of €14.5 billion (€12.7 billion in premium revenue in the same period of the previous year).
Revenue from Financial services is up on the same period of the previous year (€3,974 million in 2015, €3,960 million in 2014), whilst the contribution to operating profit is up 44% (€687 million in the first nine months of 2015, compared with the €477 million of 2014).
Finally, profit for the period of €622 million reflects a proportionate reduction in income tax expense compared with the comparative period, due primarily to the change in legislation that came into effect from 1 January 2015. This has made it possible to deduct personnel expenses for staff employed on permanent contracts from the IRAP tax base.
Reclassified consolidated statement of profit or loss
| for the nine months ended 30 September | Increase/(decrease) | |||
|---|---|---|---|---|
| (€m) | 2015 | 2014 | Values | % |
| Revenue from sales and services and insurance premium revenue | 21,041 | 19,499 | 1,542 | 7.9% |
| Postal and Business Services | 2,787 | 2,965 | (178) | -6.0% |
| Financial Services | 3,532 | 3,616 | (84) | -2.3% |
| Insurance Services | 14,543 | 12,740 | 1,803 | 14.2% |
| Other Services | 179 | 178 | 1 | 0.6% |
| Other income from financial and insurance activities | 2,828 | 2,985 | (157) | -5.3% |
| Financial Services | 441 | 339 | 102 | 30.1% |
| Insurance Services | 2,387 | 2,646 | (259) | -9.8% |
| Other operating income | 52 | 76 | (24) | -31.6% |
| Postal and Business Services | 49 | 69 | (20) | -29.0% |
| Financial Services | 1 | 5 | (4) | -80.0% |
| Other Services | 2 | 2 | - | n/s |
| Total revenue | 23,921 | 22,560 | 1,361 | 6.0% |
| Cost of goods and services | 1,864 | 1,930 | (66) | -3.4% |
| Net change in technical provisions for insurance business and other claims expenses | 15,475 | 14,641 | 834 | 5.7% |
| Other expenses from financial and insurance activities | 684 | 71 | 613 | n/s |
| Personnel expenses | 4,370 | 4,482 | (112) | -2.5% |
| Capitalised costs and expenses | (21) | (16) | (5) | 31.3% |
| Other operating costs | 194 | 227 | (33) | -14.5% |
| Total costs | 22,566 | 21,335 | 1,231 | 5.8% |
| EBITDA | 1,355 | 1,225 | 130 | 10.6% |
| Depreciation, amortisation and impairments | 425 | 492 | (67) | -13.6% |
| Operating profit/(loss) | 930 | 733 | 197 | 26.9% |
| Finance income/(costs) (*) | 41 | 15 | 26 | n/s |
| Profit/(Loss) before tax | 971 | 748 | 223 | 29.8% |
| Income tax expense | 349 | 415 | (66) | -15.9% |
| Profit for the period | 622 | 333 | 289 | 86.8% |
n/s: not significant
(*) The figure for the first nine months of 2014 includes losses on investments accounted for using the equity method, amounting to €1 million.
Total revenue by operating segment
| for the nine months ended 30 September | Increase/(decrease) | |||
|---|---|---|---|---|
| (€m) | 2015 | 2014 | Valori | % |
| Postal and Business Services | 2,836 |
3,034 |
(198) | -6.5% |
| Financial Services | 3,974 | 3,960 | 14 | 0.4% |
| Insurance Services | 16,930 | 15,386 | 1,544 | 10.0% |
| Other Services | 181 | 180 | 1 | 0.6% |
| Total Poste Italiane Group | 23,921 | 22,560 | 1,361 | 6.0% |
(*) After consolidation adjustments and elimination of intercompany transactions.
The Poste Italiane Group’s total revenue for the period amounts to €23,921 million, marking an increase of 6% on the same period of 2014. In addition to the strong performance of the insurance segment, where total revenue is €16,930 million (€15,386 million in the same period of 2014), the improvement also reflects stable revenue from Financial services. These positive results more than offset the structural decline of the Postal and Business services segment, where revenue is down from €3,034 million in the first nine months of 2014 to €2,836 million in the same period of 2015.
Taking a closer look, total revenue from Postal and Business services is down €198 million compared with 2014, reflecting the growing popularity of digital media and communication, which has led to a progressive reduction in demand for traditional products and services.
As mentioned above, total revenue from Financial services is up €14 million on the same period of the previous year, driven by the positive performance of other income from financial activities, which is up from the €339 million of 2014 to €441 million in the first nine months of 2015 (an increase of 30%). This category of revenue includes income from the sale of available-for-sale financial assets, in the form of euro area government securities, in which the postal current account deposits of BancoPosta RFC’s private customers are invested. In spite of an increase in average current account deposits, revenue and other income is down €84 million as a result of a reduction in the average interest earned on deposits invested in government securities and on interest-bearing deposits with the Ministry of the Economy and Finance.
The Insurance services segment delivered excellent results during the period, with Group companies (represented by Poste Vita and its subsidiary, Poste Assicura) recording premium revenue of €14.5 billion (€12.7 billion in the same period of 2014). This primarily reflects the performances of traditional Class I investment and savings products, where the Group has built up a strong presence. Other income from financial and insurance activities is, however, down from the €2,646 million of 2014 to €2,387 million, reflecting fair value losses on the financial instruments held to cover obligations to policyholders.
Total revenue from other services amounts to €181 million. This is in line with the same period of 2014, despite improved operating results from Poste Mobile.
The cost of goods and services is down 3.4% from €1,930 million in the first nine months of 2014 to €1,864 million in the same period of 2015, reflecting a reduction in the cost of funding, represented by interest paid to customers by BancoPosta RFC, and in purchases of goods.
The net change in technical provisions for the insurance business and other claims expenses, which is closely linked to the above growth in premium revenue recorded by Poste Vita, amounts to €15,475 million, marking an increase of 5.7% compared with the same period of the previous year.
Other expenses from financial and insurance activities are up from €71 million in the first nine months of 2014 to €684 million in the same period of 2015, reflecting the greater impact of fair value losses on financial instruments, for the most part attributable to the subsidiary, PosteVita.
Personnel expenses are down 2.5% from the €4,482 million of the first nine months of 2014 to €4,370 million in the same period of 2015. This reflects a reduction in the average workforce employed during the period (almost 1,200 fewer full-time equivalents on average in the first nine months of 2015, compared with the same period of the previous year) and the use of provisions for early retirement costs set aside in previous years.