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2019 Integrated Report

We go further to bring the world closer.

2019

Integrated
Report

Chief Executive Officer

“I am very proud of what CTT accomplished in my first 7 months as CEO, but nothing could have been achieved without the efforts and commitment of our employees, as well as the involvement and alignment with most of our other stakeholders, certainly all our clients and shareholders, as well as the strong support from our Board of Directors. But allow me a special word of thanks to my great team of executive committee colleagues and the remarkable set of first-line managers, including those that recently joined the team.”

Highlights 2019

Committed to deliver.

For CTT, to evolve is to be closer. Innovation and demand for excellence are a part of our DNA for over 500 years.

We are closer in a constantly moving world.

Our Key Figures

Logistics player

619m items Addressed Mail
521m items Unaddressed Mail
38m items Express & Parcels

with growing financial services business

€4.0bn Savings & Insurance Placements
€1.3bn Customer Deposits
461k Current Accounts
€886m Credit to clients Net of impairments

Retail Network

2 497

Human Resources

539

Post Offices

1 831

Postal Agencies

Distribution Network

5 971

Human Resources

4 402

Mailmen & Women

3 804

Operational Fleet

Transition Year

+4.6%
(+1.4% in 2018) Revenues growth accelerates
€101.5m
(€90.4m in 2018) EBITDA guidance delivered
€16.5m
(€15.0m initial objective) The operating costs savings under the OTP1 exceed the full year objective
1 Operational Transformation Plan.
-2.1%
Mail Revenues remain resilient Despite an acceleration of addressed mail volumes decline to -9.1%
+11.2%
Parcels volumes growth in Portugal Leading to increases in transport & distribution costs to resolve capacity bottlenecks
€3.7m
Landmark year for Banco CTT Reaches positive EBITDA in its fourth year of operation, with the contribution of 321 Crédito
€4.0bn
Savings & insurance placements Strong performance by the Financial Services business unit

Transformation

€18.4m 2018
€18.2m 2019
Specific items Non-recurring costs impacting EBIT
€16.5m Realised
€15.0m Objective
Operating costs savings Impact on the P&L
€12.5m Cash
€0.5m Capital gain
Asset sales Cash proceeds & capital gains

Sustainability

Last years 2013 2019 (60.1k tonnes)
-22.8Kt -27.5% Carbon Emissions CO2e tonnes (scopes 1+2+3) vs. 2013 base year (CTT science-based target)
A-
CDPTM score report Climate change 2019
-2.5%
Decrease in energy consumption Mainly driven by the decrease in electricity
315
Ecological vehicles in fleet The largest ecological transport and distribution fleet in Portugal
+4.2%
Increase in training hours 251k hours with 88% of the employees participating
+47%
Voluntary work initiatives 22 corporate voluntary social & environmental initiatives. Participation of 358 volunteers, for a total of 1,548 hours

2020 Outlook

Celebrating 500 years of history with Net profit at Banco CTT and margin improvement in Express & Parcels

Mid single-digit revenues growth

Supported by organic developments in the growth levers and the contribution of 321 Crédito

EBITDA of ≥€110m and high single-digit EBIT growth

Reflecting improvements in Express & Parcels and Banco CTT, and continued efficiency measures

Sound increase in dividend

The Board of Directors will propose a dividend of €0.11 per share for the 2019 financial year (increase of 10% vs. prior year), payable in May 2020

New universal postal service concession

CTT has formally announced its intent to be the new universal service concessionaire, of a more sustainable concession contract

Addressed mail volumes decline

Expected decline to be in the -6% to -8% range.
E-substitution driven decline in transactional mail. Special impacts: +2 working days

Capex of €40m

Forecasted double-digit parcels growth entails an accelerated investment programme to increase automation and eliminate capacity bottlenecks in Express & Parcels

Key Figures 2019

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500 years of History

Discover the chapters that marked our history of innovation and excellence.

For CTT, evolution begins with a committment to deliver.

Creating innovative solutions, always one step further.
Committed to the community, from the North to the South of Portugal and beyond.

1520

Creation of the Office of Master of the
Post by Royal Charter of King Manuel I

Creation of the Office of Master of the
Post by Royal Charter of King Manuel I

A noble agreement

King Filipe II sells the Postal Services

1606


Concession awarded to Gomes da Mata family

Source: Portuguese Foundation of Communications

Selo
The mail coach service

The beginning of a service made for all

1798


Mail coach, Lisbon-Oporto Itinerary

Source: Portuguese Foundation of Communications

Selo
The postal reformation

A model for the Portuguese modern postal service

1852


Mail box installed on the 1st Postal District, one of the 18 Lisbon districts

Source: Portuguese Foundation of Communications

Selo
Modernisation of the postal service

Introduction of the 4-digit postal code

1978


Postal Express Train Lisbon - Oporto

Source: Portuguese Foundation of Communications

Selo
Adopting the digital revolution

Industry 4.0 is here to stay

2019


RestMail Machine at Cabo Ruivo Production & Logistics Centre

Source: CTT

Selo

01

Introduction to CTT

Love by mail

With an exemplary history dating back to 1520, we have influenced the lives of people in Portugal: without CTT, many love letters would have gone unsent.

We go further to bring the world closer.

We go further in

Proximity

  • 1

    Introduction to CTT

  • 1.1

    Statement of the Chairman of the Board of Directors

  • 1.2

    Statement of the CEO

  • 1.3

    Explanation of the Nature of the Integrated Report

  • 1.4

    Key Figures

  • 1.5

    External Awards and Distinctions

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01

02

Strategic background

A 500-year legacy

CTT's legacy as a leader rests on our determination, enthusiasm and capacity to rise to the challenges of an increasingly competitive and demanding market.

We go further to bring the world closer.

We go further in

Leadership

  • 2

    Strategic background

  • 2.1

    Economic, Sectoral and Regulatory Environment

  • 2.2

    Strategic Lines

  • 2.3

    Sustainable Development Goals

  • 2.4

    Analysis of Materiality

  • 2.5

    Stakeholder Engagement

  • 2.6

    Corporate Ethics

  • 2.7

    Risk Management

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02

03

CTT Business Units

Business deals are just a shipment away

With products and services that respond to the needs of our clients, we are the biggest ally not only of individuals but also of businesses.

We go further to bring the world closer.

We go further in

Ambition

  • 3

    CTT Business Units

  • 3.1

    Mail

  • 3.2

    Express & Parcels

  • 3.3

    Banco CTT

  • 3.4

    Financial Services

  • 3.5

    Future perspectives

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03

04

Performance

The revolution is digital

We are pioneers in Europe introducing robotic solutions that make our distribution processes more agile. For CTT, 4.0 Industry is here to stay.

We go further to bring the world closer.

We go further in

Innovation

  • 4

    Performance

  • 4.1

    Financial Capital

  • 4.2

    Human Capital

  • 4.3

    Intellectual Capital

  • 4.4

    Social Capital

  • 4.5

    Natural Capital

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04

05

Corporate Governance

The right partner

In our operations and relations with our partners, we forge bonds of trust with the community, guided by such principles as respect and integrity.

We go further to bring the world closer.

We go further with

Confidence

  • 5

    Corporate Governance

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05

06

Proposal for the appropriation of results

All-round excellence

Every point of contact reflects the excellence of our operation. Always striving to expand our products and services universe with innovative delivery and logistics solutions.

We go further to bring the world closer.

We go further in

Excellence

  • 6

    Proposal for the appropriation of results

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06

07

Consolidated and individual financial statements

  • 7

    Consolidated and individual financial statements

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07

08

Declaration of conformity

  • 8

    Declaration of conformity

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08

09

Reports - audit report, report and opinion of the audit committee and independent limited assurance report

  • 9

    Reports - audit report, report and opinion of the audit committee and independent limited assurance report

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09

10

Investor Support

  • 10

    Investor Support

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10

11

Website

  • 11

    Website

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11

Annex I

Curricula

  • Annex I

    Curricula

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Annex I

Annex II

Management transactions of CTT Shares

  • Annex II

    Management transactions of CTT Shares

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Annex II

Annex III

Sustainability commitments

  • Annex III

    Sustainability commitments

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Annex III

Annex IV

GRI index and indicators

  • Annex IV

    GRI index and indicators

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Annex IV