2012 - posteitaliane.it · Sede legale: Viale Europa, 190 · 00144 Rome · Italy Tel. 06.59581 ......

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ANNUALREPORT

2012

Poste Italiane SpA

(Società con socio unico)

Sede legale: Viale Europa, 190 · 00144 Rome · Italy

Tel. 06.59581

www.poste.it

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ANNUAL REPORT 2012

001-143 REPORT ON OPERATIONS 2012 OK:Layout 1 23/09/13 14:24 Pagina 1

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SUMMARY OF CONTENTS

Poste Italiane | Annual Report 2012


FINANCIAL AND OPERATIONAL HIGHLIGHTS 4

CORPORATE OFFICERS 6

DIRECTORS’ REPORT ON OPERATIONS 9

POSTE ITALIANE GROUP 144Consolidated financial statements 2012

POSTE ITALIANE SPA 298Separate financial statements 2012

– BANCOPOSTA RFC SEPARATE REPORT 425

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4


FINANCIAL AND OPERATIONAL HIGHLIGHTS

Poste Italiane Group Results of operations Poste Italiane SpA

2010 2011 2012 for the year ended 31 December (€m) 2012 2011 2010

19,639 19,646 20,464 Revenue from sales and services and insurance premium revenue 9,206 9,468 9,572

of which:

5,050 5,005 4,533 from Postal and Business services(1) 3,801 4,240 4,505

4,665 4,906 5,145 from Financial services 5,319 5,141 4,962

9,505 9,526 10,531 from Insurance services n/a n/a n/a

419 209 255 from Other services 86 87 105

1,870 1,641 1,382 Operating profit 951 1,402 1,452

1,018 846 1,032 Profit for the year 722 699 729

9.5% 8.4% 6.8% ROS(*) 10.3% 14.8% 15.2%

2.0% 1.7% 1.3% ROI(**) 1.7% 2.7% 2.8%

42.2% 45.7% 33.5% ROE(***) 29.3% 49.5% 37.4%

To ensure the comparability of amounts for the two years, certain amounts for 2011 have been reclassified.n/a: not applicable(1) Poste Italiane SpA’s revenue is generated by Postal services.(*) ROS (Return on Sales) is the ratio of operating profit to revenues from ordinary activities.(**) ROI (Return on Investment) is the ratio of operating profit to average operating assets. Operating assets equal assets less investment property and non-current

assets held for sale.(***) ROE (Return on Equity) is the ratio of profit before tax to equity for the two comparative periods.

Poste Italiane Group Financial position Poste Italiane SpA

2010 2011 2012 at 31 December (€m) 2012 2011 2010

4,383 2,848 5,651 Equity 4,313 2,002 3,613

(1,057) 1,198 (1,959) Net (funds)/debt 189 2,739 3

3,326 4,046 3,692 Net invested capital 4,502 4,741 3,616

Poste Italiane Group Other information Poste Italiane SpA

2010 2011 2012 (€m) 2012 2011 2010

436 419 482 Investment during the period 401 822 386of which:

433 415 477 in property, plant and equipment and intangible assets 401 344 3801 1 5 in investment property - - -2 3 - financial investments (equity investments) - 478 6

149,703 146,363 144,628 Average workforce(*) 140,315 142,343 146,014(*) The average workforce (shown in full-time equivalent terms) includes the flexible workforce and excludes seconded and suspended staff.

Other information about Poste Italiane SpA at 31 Dec 2010 at 31 Dec 2011 at 31 Dec 2012

Operational data (€m)

Current accounts (average for the period) 35,949 38,021 41,452

Post office savings books 97,656 92,614 98,778

Interest-bearing postal certificates 198,489 208,187 213,270

Other indicators

Number of outstanding current accounts (‘000) 5,533 5,575 5,883

Number of post offices 14,005 13,945 13,676

Levels of service delivery within 2010 2011 2012

Priority mail 1 day 92.0% 94.7% 92.9%


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Total revenue – Contribution by operating segment

201123.8%23.2%52.0%1.0%

201023.2%22.6%51.3%2.8%

201219.3%22.1%57.5%1.1%

201125.5%25.0%48.5%1.0%

201025.7%23.8%48.4%2.1%

201222.2%25.1%51.5%1.2%

Revenue from sales and services and insurance premium revenue – Contribution by operating segment

201042.4%1.8%54.6%1.2%

201237.5%1.4%60.1%1.0%

Market revenue

POSTE ITALIANE GROUP

POSTE ITALIANE SPA

(€m) 2010 2011 2012 11 vs. 10 12 vs. 11Postal and Business services 5,065 5,162 4,657 1.9 (9.8)Financial services 4,946 5,033 5,312 1.8 5.5Insurance services 11,206 11,278 13,833 0.6 22.7Other services 620 220 267 (64.5) 21.4Total 21,837 21,693 24,069 (0.7) 11.0

(€m) 2010 2011 2012 11 vs. 10 12 vs. 11Postal and Business services 5,050 5,005 4,533 (0.9) (9.4)Financial services 4,665 4,906 5,145 5.2 4.9Insurance services 9,505 9,526 10,531 0.2 10.6Other services 419 209 255 (50.1) 22.0Total 19,639 19,646 20,464 n/s 4.2

n/s: not significant.

(€m) 2010 2011 2012 11 vs. 10 12 vs. 11Mail and Philately 3,855 3,725 3,321 (3.4) (10.8)Express Delivery and Parcels 161 135 120 (16.3) (11.3)BancoPosta services 4,962 5,141 5,319 3.6 3.5Other revenues 105 87 86 (17.1) (1.1)Total(*) 9,083 9,088 8,846 0.1 (2.7)

(*) Market revenue does not include electoral subsidies and universal service compensation, totalling €360 million (€380 million in 2011).

201141.0%1.5%56.5%1.0%

% increase/(decrease)




ORGANISOCIALI

BOARD OF DIRECTORS (1)

CHAIRMANGiovanni IalongoCHIEF EXECUTIVE OFFICER AND GENERAL MANAGER (2)

Massimo SarmiDIRECTORSMaria Claudia Ioannucci - Antonio Mondardo - Alessandro Rivera

Giovanni Ialongo

1. The Board of Directors, which was elected by the General Meeting of 21 April 2011, has a term of offi ce of three years, which will expire on approval of the fi nancial statements for 2013.

The Board of Directors’ meeting of 6 May 2011 elected the Chief Executive Offi cer (CEO). 2. The appointment as General Manager was approved by the Board of Directors’ meeting of 24 May 2002.

CORPORATE OFFICERS

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BOARD OF STATUTORY AUDITORS (3)

CHAIRMANSilvana Amadori

AUDITORSErnesto Calaprice - Francesco Ruscigno

ALTERNATES Vinca Maria Sant’Elia - Giovanni Rapisarda

MAGISTRATE APPOINTED BY THE ITALIAN COURTOF AUDITORS TO AUDIT POSTE ITALIANE (4)

Adolfo Teobaldo De Girolamo

INDEPENDENT AUDITORS (5)

PricewaterhouseCoopers SpA

Massimo Sarmi

3. The Board of Statutory Auditors was elected by the General Meeting of 4 May 2010 and has a term of offi ce of three years, which will expire on approval of the fi nancial statements for 2012.

4. The functions were assigned by the Council of the Presidency of the Court of Auditors,in its Resolution of 6-7 July 2010, with effect from 27 July 2010.

5. Appointed for the nine years by the General Meeting of 14 April 2011, as required by Legislative Decree 39/10.

ANNUALREPORT2012



DIRECTORS’ REPORT ON OPERATIONSAT 31 DECEMBER 2012

ANNUALREPORT2012



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1. CORPORATE GOVERNANCE 12

2. ORGANISATION 212.1 Organisational structure of Poste Italiane SpA 21

2.1.1 Private Customer 232.1.2 Large Account and Public Sector 252.1.3 Postal services 252.1.4 Other Business functions 272.1.5 Corporate functions 28

2.2 Structure of the Poste Italiane Group 29

3. FINANCIAL REVIEW 303.1 Risk Management for the Group and Poste Italiane SpA 30

3.1.1 Focus on the key aspects of strategy 363.2 Operating results 373.3 Financial position and cash flow 47

4. AREAS OF BUSINESS 554.1 Postal and Business services 56

4.1.1 Commercial offering 614.1.2 Operating results 67

4.2 Financial services 754.2.1 BancoPosta’s commercial offering 774.2.2 Operating results 82

4.3 Insurance services 854.3.1 Commercial offering 854.3.2 Operating results 86

4.4 Other services 874.4.1 Commercial offering 874.4.2 Operating results 88

5. DISTRIBUTION CHANNELS 895.1 Retail/SME 895.2 Business and Public Sector 905.3 The Contact Centre and the Internet 90

6. HUMAN RESOURCES 926.1 Headcount 926.2 Training 94

CONTENTS



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6.3 Human Resources management 966.4 Industrial relations 986.5 Labour disputes 99

7. INVESTMENT 1007.1 Financial investments 1007.2 Capital expenditure 100

7.2.1 IT and telecommunications networks 1017.2.2 Modernisation and upgrade of properties 1027.2.3 Postal logistics 102

8. THE ENVIRONMENT 103

9. EVENTS AFTER THE END OF THE REPORTING PERIOD 105

10.OUTLOOK 106

11.OTHER INFORMATION 109

12.BANCOPOSTA RFC MANAGEMENT REVIEW 11212.1 BancoPosta RFC’s Corporate Governance 11212.2 BancoPosta’s Internal Control System and Risk Management 115

12.2.1 Internal Control System 11512.2.2 Risk Management System 116

12.3 BancoPosta RFC financial review 11912.3.1 Operating results 12212.3.2 Assets, liabilities and cash flow 127

12.4 BancoPosta’s operations for the period 12912.5 Events after the end of BancoPosta RFC’s reporting period 13512.6 Outlook for BancoPosta RFC 13512.7 Other information on BancoPosta RFC 136

13.BOARD OF DIRECTORS’ PROPOSALS TO THE SHAREHOLDER 137

APPENDIXKey Performance Indicators for principal Poste Italiane Group companies 138

GLOSSARY 142

Report on Operations


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1. CORPORATE GOVERNANCE

This section takes the place of the Corporate Governance Report required by art. 123-bis of Legislative Decree 58/1998(the Consolidated Law on Finance), having regard to the disclosures required by paragraph 2.b1.

Poste Italiane SpA is a wholly owned subsidiary of the Ministry of the Economy and Finance (the MEF). General Meet-ings are held periodically to vote on resolutions regarding matters within its purview in accordance with the law.

The governance model adopted by Poste Italiane SpA is based on the traditional separation of the functions of the Boardof Directors and those of the Board of Statutory Auditors. Responsibility for auditing the Group has been assigned to anauditing firm.

The Board of Directors consists of 5 members and meets once a month to examine and vote on resolutions regardingthe operating performance, the results of operations, proposals relating to the organisational structure and transactions ofstrategic importance. The Board met 11 times during 2012.The Chairman exercises the powers assigned by the Articles of Association and those assigned to him by the Board ofDirectors’ meeting of 6 May 2011. In compliance with the provisions of the 2008 Budget Law and subsequent amend-ments and additions, the Board of Directors has been given the authority by the General Meeting to grant the Chairmanexecutive powers in respect of the following matters: communication and Government relations, international relations andlegal affairs.The Chief Executive Officer (CEO) and General Manager, to whom all key departments report, has full powers for the ad-ministration of the Company across the organisational structure, with the exception of following powers reserved to theBoard of Directors:• the issue of bonds and the assumption of medium/long-term borrowings of amounts in excess of €25,000,000, unless

otherwise indicated in specific resolutions passed by the General Meeting or the Board of Directors itself; • strategic agreements;• agreements (with ministries, local authorities, etc.) involving commitments in excess of €50,000,000;• the incorporation of new companies, and the acquisition and disposal of equity holdings; • changes to the Company’s organisational model;• the purchase, exchange and disposal of properties with a value of more than €5,000,000;• the approval of regulations governing supplies, tenders, services and sales;• the appointment and termination of the Manager responsible for financial reporting, as proposed by the CEO and with

the prior approval of the Board of Statutory Auditors;• the appointment, at the proposal of the CEO, of the Head of BancoPosta.

The Board of Directors also examines and approves the long-term business plans and annual budgets prepared by the CEO,approving strategic guidelines and directives for Group companies proposed by the CEO. The Board must approve the CEO’s

1. Not having issued shares traded on regulated markets or multilateral trading systems, the Company has elected to take up the option, provided for byparagraph 5 of art. 123-bis, of not publishing the disclosures referred to in paragraphs 1 and 2, with the exception of those required by paragraph 2.b.


131. Corporate Governance


proposals regarding the exercise of the Group’s vote at the extraordinary general meetings of subsidiaries and other in-vestee companies.

The Board of Statutory Auditors has 3 standing members elected by the General Meeting. Pursuant to art. 2403 of theItalian Civil Code, the Board verifies compliance with the law, the Articles of Association and with correct corporate gov-ernance principles, also verifying the adequacy of the organisational structure and administrative and accounting systemsadopted by the Company and their effective functionality. In 2012 the Board of Statutory Auditors was assigned the roleof the Supervisory Board required by Legislative Decree 231 of 8 June 2001. In fact, Poste Italiane’s Board of Directorshas exercised the option, granted by art. 14, paragraph 12 of Law 183 of 12 November 2011 (the so-called Legge di Sta-bilità 2012, or “Stability Law 2012”), to assign the role of the Supervisory Board to the Board of Statutory Auditors; thus,at the meeting held on 19 September 2012, it approved the new “231” Organisational Model, introducing the option ofassigning the Supervisory Board’s functions to the Board of Statutory Auditors, at the same time reformulating the crite-ria for the composition of the “231” supervisory boards of Group companies.The Board met 30 times during the year.

The audit firm PricewaterhouseCoopers SpA has been appointed to audit the Company’s accounts for the period 2011-2019. The appointment was made in conformity with Legislative Decree 39/2010 (”Implementation of Directive 2006/43/ECon statutory audits of annual accounts and consolidated accounts”).

The Board of Directors has established a Remuneration Committee, which is responsible for making proposals to theBoard regarding the remuneration of executive directors.

In accordance with Law 259 of 21 March 1958, requiring parliamentary scrutiny of the financial management of organisationsnormally financed by the state, Poste Italiane SpA’s budget and financial management are controlled by the Italian Court ofAuditors. The controls entail the ascertainment of the propriety and regularity of management and internal controls.

The system for delegating powers entails the delegation of powers to the heads of the various functions with respect totheir activities by the granting of special powers of attorney to specific persons.

The By-laws for organising and managing BancoPosta RFC have been drawn up in line with the model used by Poste Ita-liane and incorporate the following levels:• Board of Directors; • CEO; • Head of BancoPosta;• Cross-functional Committee.

BancoPosta RFC is managed by Poste Italiane’s Board of Directors, which has responsibility for strategic supervisionand which, with regard to the ring-fence, is exclusively responsible for, among other things, establishing strategic


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guidelines, adopting and amending business and financial plans, and for assessing the adequacy of the organisation-al, administrative and accounting structure, and the functionality, efficiency and effectiveness of the internal controlsystem.The Chairman of the Board of Directors carries out the role assigned by the Articles of Association.BancoPosta RFC is the responsibility of Poste Italiane’s Chief Executive Officer who has all powers required for the im-plementation of strategy and the management of BancoPosta RFC.Without prejudice to the powers assigned to the Head of BancoPosta, the CEO may avail himself of the support of Ban-coPosta, of Poste Italiane’s other business and corporate functions involved in operations relating to BancoPosta and ofthe Cross-functional Committee. The CEO delegates responsibility for BancoPosta’s operations, granting the necessary powers to the Head of BancoPo-sta, who has a duty to report to the Cross-functional Committee, to prepare and update internal regulations governing lev-els of service together with other functions, and to prepare reports, on at least a six-monthly basis, for the Board of Di-rectors on the overall performance of the operations for which he is responsible.The Cross-functional Committee, whose permanent members are the CEO, who also acts as chairman, the Head of Ban-coPosta and the heads of the functions that interact with BancoPosta, provides advice and makes recommendations andcoordinates BancoPosta’s operations with those of other corporate functions involved in its operations. These activitiesare regulated by a specific set of BancoPosta Cross-functional Committee Guidelines approved by the CEO on the recom-mendation of the Board of Statutory Auditors. The Committee meets once a month.The Board of Directors has also approved General Operating Guidelines governing BancoPosta RFC, establishing rules andthe activities that the various functions within Poste Italiane must carry out on behalf of BancoPosta, and defining the cri-teria to be used in assessing the related contributions.Poste Italiane’s Board of Statutory Auditors, also with regard to the role of the Supervisory Board required by LegislativeDecree 231, and Poste Italiane’s independent auditors are also responsible for carrying out the respective controls in re-lation to BancoPosta RFC and as required by the related regulations.Having adapted its work to the particular nature of BancoPosta, the Board of Statutory Auditors oversees, with due re-gard to the need for operationally and formally segregated controls, compliance with the law, the Articles of Associationand best management practices, and the adequacy of the organisational, administrative and accounting structure and ofBancoPosta’s internal control system. BancoPosta also has its own independent controls: Risk Management, Internal Auditing, Compliance and Anti-MoneyLaundering. Support is provided by Poste Italiane’s Internal Auditing function under a service contract.

Internal control systemTo assure the continuity and gradual strengthening of corporate governance within the Group, steps were taken in 2012to revisit the design and functions of the internal control system.The Board of Directors’ meeting of 27 June 2012 approved “Guidelines for Poste Italiane’s Internal Auditing function” re-quiring, among other things, Internal Auditing to report directly to the Company’s Board of Directors for organisational andoperational matters.Poste Italiane SpA’s internal control system consists of a body of rules, procedures and organisational structures, whichaim to prevent or limit the consequences of unexpected events and enable the Company to achieve its strategic and op-erating objectives, comply with the relevant laws and regulations and ensure the fairness and transparency of internal andexternal reporting.In this context, the Internal Auditing function assists the organisation in the pursuit of its business and governance goals,supporting executives and management through its independent and objective professional contribution. The departmentis responsible for monitoring and making improvements to the Company’s control and risk management processes andits corporate governance. The scope of the Internal Auditing function’s work has progressively expanded to include all of Poste Italiane’s principalprocesses (as determined through risk analysis), thus assuring assessment of the adequacy of the design and function-ing of the internal control system, on the basis of an integrated approach, in support of, among others, the Manager re-sponsible for financial reporting and the audit plans drawn up by the Supervisory Board.




Audits were conducted in 2012 with the aim of strengthening management of the Company’s and the Group’s process-es, regarding both the structure and functionality of controls, through a synergistic approach to risk management and con-trol. In this context, the Internal Auditing function has consolidated its role in respect of third-level controls so as to mon-itor management of the various risk areas and ensure a more integrated, efficient and economical management of the over-all control system.In line with the annual audit plan, which was added to in response to specific reports or requests, initiatives in 2012 thusfocused on processes applied throughout the Parent Company, at central and local level, and on processes within sub-sidiaries, dedicating particular attention to the reliability of the processes involved in managing the Group’s resources insupport of its businesses, such as the management of its financial resources, human resources, its real estate assets andits IT resources in respect of the different aspects of applications development, the operation of systems and security. In terms of Postal services, controls focused on: the effective functionality of the internal control system as regards de-livery and quality management processes, the process of accepting postal products handed in by retail customers at postoffices and the workplace safety process. Further audits regarded assessment of the internal control system overseeingthe management of the post office channel, after-sales processes and the procurement and accounting activities carriedout by the Administrative Competence Centres and Area Logistics Offices.In addition, the design of the overall control system for back-office processes carried out by the Centralised Service Teamsand by the Unified Service Automation Centres was assessed, as were the processes involved in monitoring fraud pre-vention and managing requests for the asset assessments carried out by the Multi-service Centre in Turin. Particular attention was also given to monitoring implementation of the improvements agreed with management follow-ing previous audits.Support continued to be given to the Manager responsible for financial reporting in carrying out his assessment of the ad-equacy of the controls forming part of administrative and accounting procedures and, more generally, regarding businessprocesses having an impact on the activities carried out by the Manager responsible for financial reporting, including theprocesses involved in the management of BancoPosta RFC and of third party securities, logistics processes and those re-lating to payments for third party asset seizures, in addition to the testing of the procedures required by Law 262/05, thedesign of which has already been assessed.During the year the Internal Auditing function also developed a specific IT tool to support risk identification and risk as-sessment processes, ensuring effective risk management in keeping with international standards and best practice. In par-ticular, following the enactment of significant new legislation2, which has further extended the list of crimes for which en-tities can be held to have administrative liability (Legislative Decree 231/01), risk assessment procedures were conduct-ed in order to identify areas of operation potentially affected by the new legislation, focusing above all on assessment ofthe various management processes (existing and to be implemented) in the light of the changes introduced, with the aimof rapidly aligning the Company’s 231 Model with the new regulations.Great importance was attached to support Group companies in reviewing their organisational models, ensuring consistencywith the Parent Company’s approach and providing specialist assistance. This involved training initiatives and the circulationof memoranda focusing on certain revisions of interest. In this context, in order to strengthen aspects of 231 governancethroughout the Group, and in addition to the continuous monitoring of Group companies’ models, the supervisory boards ofsubsidiaries are now required to report regularly to Poste Italiane’s Supervisory Board. This is in line with best practice at oth-er major groups while, however, safeguarding the independence of each organisational structure. Moreover, the previouslymentioned assignment of the Supervisory Board’s functions to Poste Italiane’s Board of Statutory Auditors has given conti-nuity to and strengthened coordination within the Group, including periodic meetings between the Parent Company’s Boardof Statutory Auditors and the board of statutory auditors and supervisory boards of its subsidiaries.Again with reference to Group companies, audits were carried out to assess the internal control system relating to theprocurement and receivables management processes of Mistral Air Srl, revenue management processes at Poste MobileSpA, the processes involved in the outsourcing of transport services by SDA Express Courier SpA, and certain processesoutsourced to other Group companies by BancoPosta Fondi SpA SGR.

2. Law 190 of 6 November 2012 containing “Measures for the prevention and suppression of corruption and criminal activity in the public administration”(the so-called “Anti-corruption law”) and Legislative Decree 109 of 16 July 2012, which has extended the scope of Legislative Decree 231 to include thecrime of “using immigrant workers without residence permits”.


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The existing risk management and control system for financial reporting pursuant to art.123-bis, paragraph 2, letter b of the Consolidated Law on Finance

Protagonists, roles and responsibilitiesIn addition to corporate bodies and internal auditing and control functions (described above), the Manager responsible forfinancial reporting, appointed pursuant to Law 262/05 by the Board of Directors, and who is also the Chief Financial Offi-cer, is responsible for the establishment of administrative and accounting procedures and, together with the CEO, certi-fies their effectiveness and functionality, in addition to the accuracy and correctness of the financial reports to which theprocedures refer. The position has also been created for those subsidiaries that contribute a significant share of the Group’sconsolidated net assets, income and cash flows3.The Manager responsible for financial reporting is supported by the Accounting Controls function, which forms part of Ac-counting and Control, in analysing potential risks to the reliability of financial reporting and the preparation of administra-tive and accounting procedures. This function works closely with all the other protagonists involved in risk management,partly via pre-established periodic reporting procedures.The involvement of corporate functions in the internal control system, with varying roles and responsibilities, is structuredaccording to three levels, which is also reflected in the structure of monitoring activities described below:

Line or first-level controlsPoste Italiane’s corporate functions are each responsible for the system’s application, thus assuring the execution of lineor first-level controls as required by the previously cited administrative and accounting procedures. The Head of the ChiefInformation Office plays a role of prime importance in this connection, since he is responsible for the IT systems that sup-port financial reporting and is required, at least once a year, to provide the Manager responsible for financial reporting withan attestation regarding the reliability of the system of internal controls as regards information technology.

Second-level controlsThe processes relating to risk analysis and management at Poste Italiane SpA involve various functions with responsibili-ty for overseeing categories/areas of risk based on approaches and models that are specific to their area of responsibili-ty, and whose activities are at various stages of progress. These functions include:• Enterprise Risk Analysis and Security Intelligence of security and safety which, adopting the international Enterprise Risk

Management model, carry out an analysis of operational risks at Company and Group level through a process of Self-Assessment of the various risk factors, in terms of probability of occurrence and potential impact;

• BancoPosta’s Risk Management function, which oversees operational and financial risks at BancoPosta and Poste Ita-liane. In terms of operational risk, the function has adopted measurement models in line with those proposed by theBank of Italy, which are partly based, among other things, on the collection and analysis of historical data regarding in-ternal and external operating losses, integrated with an analysis of the Business Environment and with self-assessmentscarried out by the various departments involved in the processes linked to BancoPosta products. In a financial context,the function oversees liquidity, interest rate, counterparty and concentration risks to which both BancoPosta and the Cor-porate functions are exposed, despite the investment restrictions in place. The risk of BancoPosta’s non-compliance withregulatory requirements falls within the responsibility of BancoPosta’s Compliance function.

Third-level controls• Internal Auditing reporting to the Board of Directors supports the Manager responsible for financial reporting through

continual quality assurance of the design and functioning of controls over accounting procedures that form the basis offinancial reporting. Given the function’s organisational independence and autonomy, it is in a position to evaluate the ad-equacy of the design and effective application of administrative-accounting control procedures. Its work is based on anaudit plan that covers existing procedures, in addition to incorporating any audit tests specifically requested by the Man-ager responsible for financial reporting, with whom methods and audit criteria are agreed. Audit findings are promptly

3. Poste Vita, SDA Express Courier and Postel, in addition to Banca del Mezzogiorno-MedioCredito Centrale which, pursuant to Legislative Decree 58/98,is required by law to appoint a Manager responsible for financial reporting.




reported to the Manager responsible for financial reporting in an agreed manner and format and are reported at leastevery six months to the Board of Directors through the Chairman;

• BancoPosta’s Internal Auditors coordinate their activities with Internal Auditing to assure adequate periodic reports tothe Manager responsible for financial reporting on the evaluation of the functionality of all internal control systems re-lating to BancoPosta.

Finally, Group companies have established and maintain their own systems of internal control over financial reporting, theeffective application of which is assured by certain of those companies through a manager responsible for financial report-ing. Each company specifically assures the correctness of financial information and the reliability of any additional infor-mation for annual and interim consolidated financial statements and the report on operations. Certain of the companiesalso have Auditing, Risk Management and Compliance units similar to those of the Parent Company, thus replicating thesame internal control structure.

Principal characteristics of Poste Italiane’s systemGenerally the system embodies “cross-functional” components across Company and/or Group processes and operations(job descriptions, powers and delegations, etc.) and the individual processes used for financial reporting. In accordancewith the principles adopted by Poste Italiane, the system consists of the following components: Control Environment, Risksand Control Activities, Information and Communication, and Monitoring.

Control Environment: the general environment in which Poste Italiane’s staff perform their duties. It encompasses in-tegrity and other Poste Italiane’s ethical values, its organisational structure, system of allocating and exercising authoritiesand responsibilities, the separation of duties, staff management and incentive policies, personnel competence and, morein general, corporate culture. Other factors characterising the control environment at Poste Italiane, which are of particu-lar importance for the internal control system applied to financial reporting, are primarily:• organisational models pursuant to Legislative Decree 231/01 described above and the relevant corporate procedures.

One of the internal controls foreseen by legislation is the segregation of duties, which is applied in accordance with theimportance and nature of the relevant activity, thereby in order to avoiding organisational over-concentration of powersand the need for additional controls, even after taking the geographical dispersion of activities throughout Italy into ac-count. The segregation of duties is of fundamental importance for certain activities, regardless of their effects on finan-cial reporting, for the safeguarding of assets and, in general, fraud prevention;

• the Group’s Code of Ethics, as supplemented by the Group Suppliers and Partners Code of Conduct, which protectPoste Italiane against litigation and court orders arising from breaches of trust;

• the organisational structure of Poste Italiane and Group companies as reflected in organisational charts, service orders,organisational notices and procedures, which determine the duties and responsibilities of corporate functions;

• the system for delegating powers, which entails the delegation of powers to the heads of the various functions with re-spect to their activities, by the granting of special powers of attorney to specific persons;

• the Group’s Interrelations Map, which incorporates a system of behavioural and technical rules guaranteeing the stan-dard application of corporate governance through coordination of decision-making processes regarding aspects, issuesand activities of strategic interest and/or importance, or whose impact may involve significant financial risks for theGroup.

In addition to the above, of a more general nature, an in-house set of standards and principles has been developed for theregulation and implementation of the position of the Manager responsible for financial reporting. Specifically:• Guidelines for the Manager responsible for financial reporting, as reported to the Board of Directors, which determine

the powers, resources, duties and relationship of the Manager with corporate and control bodies, corporate functionsand Group companies, in compliance with the Articles of Association. The Guidelines are consistent with the standardsof the Italian association of chief executive and financial officers (Associazione nazionale direttori amministrativi e fi-nanziari or “ANDAF”). The Guidelines require that the Manager responsible for financial reporting be selected fromamong the Company’s managers and have executive responsibilities. The Manager must have direct responsibility foradministrative, accounting, tax and management control units. The Manager’s appointment may only be revoked for due


18


cause. Finally, the Manager must be given full and unfettered access to all corporate information deemed relevant forthe pursuit of his duties;

• the Financial Reporting Model of Governance and Control (the “Model”) issued by the Manager responsible for finan-cial reporting, together with the Head of Human Resources and Organisation, which sets out the method of coordina-tion, within the Group, of processing, preparing and controlling accounting records, in addition to the principles appliedby Poste Italiane for the establishment and maintenance of suitable internal controls over financial reporting. The Mod-el incorporates the COSO4 Report recommended by Confindustria (the Confederation of Italian Industry) in the guide-lines for the duties of the Manager for financial reporting, pursuant to art. 154-bis of the Consolidated Law on Financeand by ANDAF in a position paper on the manager responsible for financial reporting, entitled “Il Dirigente Preposto al-la redazione dei documenti contabili e societari”. As required by the Model, the Manager has developed and distributed“Procedural and Operational Guidelines” throughout the Group, describing the analytical criteria, operational proceduresand a selection of instruments to be used in one way or the other by the functions and personnel involved in the im-plementation, verification and revision of the system. The objective of the document is to provide guidance on the prac-tical implementation of the methodological principles adopted.

The Manager responsible for financial reporting has developed procedures based on these principles that regulate PosteItaliane’s administrative and accounting processes and the related controls described below.Finally, the Chief Financial Officer (the Manager responsible for financial reporting) is invited to attend meetings of the Boardof Statutory Auditors and is a member of the Supervisory Board’s Technical Secretariat, thus assuring a reciprocal and ef-fective exchange of information. He is also a member of BancoPosta’s Cross-functional Committee and the Finance Com-mittee, and chairs the Financial Risk Committee.In detail, the Finance Committee has a consultative function and provides strategic guidance to and supervision of PosteItaliane and the Group in addition to the development of “Operational Guidelines for Poste Italiane’s Financial Manage-ment” for approval by the Board of Directors, whereas the Financial Risk Committee assesses and monitors the Group’soverall exposure to financial risks, and verifies compliance with the above Guidelines. BancoPosta’s Cross-functional Com-mittee provides advice and makes recommendations and coordinates BancoPosta’s operations with those of other corpo-rate functions involved.

Risk and Control Activities: Poste Italiane identifies and analyses risk through a structured process, which is implement-ed and supported by various corporate functions that are strictly complementary to each other. A detailed description ofrisk management is contained in the section of this Report entitled “Risk Management for the Group and Poste ItalianeSpA” and, with regard to financial risks in the strictest sense of the term (interest rate, liquidity and counterparty risk,etc.), in the notes to the separate financial statements, in the attached Separate Report for BancoPosta RFC and in thenotes to the consolidated financial statements (note 3 in each of the above documents). It should be noted, in that con-nection, that the Company uses certain consolidation methods that permit the integrated and synergistic assessmentand management, at Group level, of the principal risks inherent in its business processes. As explained above, Corpo-rate Protection Enterprise Risk Analysis and Evaluation Security Intelligence and BancoPosta’s Risk Management sup-port other corporate functions and Group companies in conducting operational risk analysis, assessment and manage-ment. The method used is based on management’s risk control self-assessment. BancoPosta’s Risk Management hasadapted this method, which was developed through the dissemination of specific models and guidelines, in order to en-sure compliance with regulatory requirements for the providers of banking services. BancoPosta also has a specific or-ganisational unit, named Projects, Processes and Procedures, for defining and reviewing procedures in accordance withthe applicable laws and regulations.

Poste Italiane also has specific organisational units to assure its assets and data are safeguarded. Their work in this con-nection entails both the detection of internal and external criminal acts (e.g., theft), and preventative measures, involving

4. The Committee of Sponsoring Organizations of the Treadway Commission (COSO) defines the system of internal control “as a process, effected by an enti-ty’s board of directors, management and other personnel, designed to provide “reasonable assurance” regarding the achievement of objectives in the follow-ing categories: effectiveness and efficiency of operations; reliability of financial reporting; and compliance with applicable laws and regulations”.




the development of policy and procedures and the analysis of potential vulnerability and critical events, above all in con-nection with data protection. Finally, changes are being made with regard to the various specialist functions with respon-sibility for safety at work.The assessment of the risk of errors in financial reporting is carried out in connection with the development of admin-istrative and accounting procedures, conducted by the above-mentioned Accounting Controls function, which forms partof Accounting and Control. The documents are issued by the Manager responsible for financial reporting in conjunctionwith Human Resources and Organisation and regulate, among other things, line (first-level) accounting controls of thevarious corporate functions involved in the preparation of financial statements. The purposes of these procedures are,particularly, to: • regulate administrative and accounting aspects of the relevant processes, through identification of the roles and respon-

sibilities of the functions involved, by defining and describing their activities, the information systems used and the con-trols required to meet certain objectives (so-called “financial statement assertions”)5, necessary in order to reasonablyassure the accuracy and reliability of financial reporting;

• provide a method for monitoring by the process owner and independent verification.

The process of preparing these procedures entails the following phases:• the identification or updating, starting from the general ledger accounts and the component captions of the financial state-

ments, of the various processes that, directly or indirectly, relate to the elaboration and preparation of financial reports,by mapping the processes in decreasing order of relevance with respect to quantitative (effect on the income statementand/or financial position and cash flows) and qualitative factors;

• the identification or updating, for each process identified, of activities and inter-related administrative-accounting controlswith respect to the above-mentioned financial statement assertions inherent in these processes, which are then formalisedas a specific procedure and control. Controls intended to prevent irregularities that can cause errors in financial report-ing are then classified as “preventative”; those intended to identify irregularities that have already occurred are “subse-quent”. A distinction is also made between “manual” and, for those controls made by information systems used forthe processes, “automated”;

• the assessment, which is conducted at the same time as the previous phase, of the effectiveness of existing controlsin the mitigation of the inherent underlying risk of error, which is the inability to achieve one or more financial statementassertions. In the event that existing controls are found to be inadequate, other so-called “to-beactual“ controls arespecifically designated to assure the overall adequacy and effectiveness of the system of internal control over theprocess;

• the documentation, for each procedure, of the analysis conducted for the identification and assessment of risks, pre-pared in the form of a matrix showing how risks and controls are related (the risk-control matrix). The risks are then as-sessed in terms of their potential effect and probability of occurrence, as shown by quantitative and qualitative variables,on the assumption of no controls;

• the verification of the effectiveness and testing of controls by the independent Internal Auditing function, as a part of itsannual audit plan, or by the Accounting Controls function that reports to the Manager responsible for financial reporting;

• periodic reports to the Board of Directors on the state of the System and any planned revisions, including progress onthe remedy of areas requiring improvement, at the time resolutions approving separate and consolidated annual finan-cial statements and the condensed interim consolidated financial statements are deliberated.

Based on the above approach, the current status of the project is that certain administrative-accounting processes havebeen identified as important and are currently being tested for effectiveness.

5. The assertions are: Existence: the assets and liabilities of the enterprise actually exist and the postings to accounts represent actual occurrences;Completeness: all transactions have been recorded in the financial statements; Claims and Obligations: the assets and liabilities of an enterprise repre-sent the company’s claims and obligations; Measurement/Recognition: measurement means that items have been recorded in the financial statementsin compliance with the relevant accounting standards (IAS/IFRS) applied in an appropriate and pertinent manner; recognition means that value of trans-actions is correctly computed, accurately recorded, posted to the ledgers and documented; Presentation and Disclosure: financial statement items arecorrectly designated, classified and described and, where applicable, analysed and commented on in the notes and are released together with the mostrecent information needed for a complete representation of the company’s earnings and net assets.


20


The managers responsible for financial reporting appointed by the most important Group companies follow the same ap-proach as the Parent Company, applying the methods circulated by it. At the end of each annual and half-year reportingperiod, each manager responsible for financial reporting issues a certificate jointly signed by the company’s CEO and withthe same wording as the Parent Company’s, as required by the CONSOB.Compliance with ongoing changes in tax rules and accounting standards is provided by specific technical units under Ac-counting and Control. In addition, the Company also participates in technical round-table discussions held by major sectorassociations and professional bodies on administration, taxation accounting and internal control over financial reporting.There is also a system of in-house attestation by Poste Italiane’s Chief Financial Officer (the Manager responsible for fi-nancial reporting), which serves as a basis for attestations relating to various aspects of financial reporting. These are is-sued by the heads of corporate functions and attest to, among other things, the correctness and completeness of account-ing records and related reports, in addition to compliance with relevant administrative and accounting procedures. Analo-gous attestations are also issued by the Group’s senior management.

Information and Communication: Poste Italiane’s information flows are supported by information systems that, amongother things, collate, classify and record transactions for the purposes of processing as well as preparing and controllingfinancial reporting. The IT internal control system is based on COBIT methodology6 and covers infrastructure and trans-versal processes that are typically the responsibility of the Chief Information Office7 (the so-called Company Level Con-trols and IT General Controls) and the so-called Application Controls over processes that support business. IT CompanyLevel Controls and IT General Controls relate to the processes of development and maintenance planning for hardwareand software, the determination of the organisational structure of dedicated units, the acquisition and implementation ofIT resources, the provision of services and assistance to users, the monitoring and assessment of objectives.

Finally, Monitoring is conducted at various levels based on the roles and responsibilities described above. The Compa-ny’s earnings and cash flows are also continually monitored through management reports that, as a result of the organi-sational structure of the Company, are made by the Accounting and Control function and other corporate functions throughtheir own administration and control units.

6. COBIT (Control Objectives for Information and Related Technology) is a set of best practices (framework) for information technology management creat-ed by the American ISACA (Information Systems Audit and Control Association ) and ITGI (IT Governance Institute) to provide an internationally general-ly accepted measures for the assessment and improvement of a company’s IT governance and control.

7. IT systems relating to human resources are under the direct control of Human Resources and Organisation.


212. Organisation


2. ORGANISATION

2.1 ORGANISATIONAL STRUCTURE OF POSTE ITALIANE SPA

Poste Italiane SpA’s organisation breaks down into the following business and corporate functions:

Business functions

Postal Services

BancoPosta

Private Customer

Large Account and Public Sector

Marketing Postal Services

Marketing and Management of Logistics Services

Corporate functions

Purchasing

Public Affairs

Legal Affairs

Corporate Affairs

Accountancy and Control

External Relations

Internal Auditing

Finance

Real Estate

Strategic Planning

Human Resources and Organisation

Chief Information Office

Security & Safety


22

The BancoPosta, Marketing Postal Services and Marketing and Management of Logistics Services business functionsare responsible for developing the related products and services and managing a part of the operations involved in theirsupply. In addition, the Philately function is responsible for the development and production of philately products.

The Private Customer and Large Account and Public Sector functions are the commercial channels responsible for devel-oping and managing frontline commercial activities for all customer segments. The Private Customer function is also re-sponsible for first level customer care.

Postal Services is responsible for planning and managing the logistics process (mail and parcels) and for the supply of in-tegrated services.

Corporate functions are central departments that manage, control and provide business support services.

In view of the current macroeconomic environment, marked by growing difficulties and competitive pressures, the initia-tives taken in 2012 were aimed at providing an increasingly effective response to market needs, redefining the commer-cial approach in order to focus more closely on customers and exploit specialist expertise, above all with regard to inno-vative digital services.Against this backdrop, the main organisational changes regarded the following:• organisational restructuring of the Large Account and Public Sector function to bring the organisation closer to cus-

tomers through the establishment of six Area Offices with responsibility for all phases of business, covering pre-sales,sales and post-sales processes and business plans. The reorganisation entailed making area offices responsible for largeaccount customer services which were previously provided by Postal Services’ Area Logistics Offices, whilst at thesame time revisiting the customer care model;

• continued exploitation of the advantages provided by the Group’s expertise in the development, management and inte-gration of online and web-based services and internet channel. This entailed the transfer to Postecom SpA of the de-velopment of digital and hybrid services, as well as the e-Commerce, e-Government and Cloud services previously pro-vided by Marketing and Management of Logistics Services and Marketing Postal and Digital Services, the latter beingat the same time renamed Marketing Postal Services;

• ongoing efforts to boost the efficiency and effectiveness of the processes involved in the design and installation of theCompany’s technology infrastructure, and the ability of systems and services to meet the needs of the business, revis-iting the structure of the Chief Information Office. The new organisational structure aims above all to strengthen plan-ning, the ability to respond to design needs and development of the identified solutions, including through increased de-partmental specialisation.

Further initiatives during the year also include:• reorganisation of BancoPosta’s Compliance function in order to optimise risk management and monitoring with regard

to compliance with regulatory requirements regarding organisation, procedures and internal controls for the preventionof money laundering and the financing of terrorism;

• the rationalisation of customer care and complaint handling for Express Delivery, Logistics and Parcels services/produc-ts through the reorganisation of the Marketing and Management of Logistics Services’ Customer Care function, whichalso includes complaints relating to Italian parcels services previously allocated to the Postal services Quality function.

Finally, with regard to the increased number of contracts awarded by tender, organisational steps were taken to ensurethe utmost efficiency during the preparation of bids and in evaluating the technical and financial feasibility of the solutionsidentified.



2.1.1 PRIVATE CUSTOMER

The Private Customer function manages the commercial front-end and pre- and after-sales support for the Private Cus-tomer and SME and Local Government segments for which it is responsible.

The organisation of the commercial network and related operational support processes breaks down into three levels:• Multi-regional Area Offices (referred to as Private Customer Area Offices); • Branch Offices;• post offices, which from a commercial point of view are classified as central, relations, transit, standard, service, sup-

port and PosteImpresa offices.

In continuation of the rationalisation process, in 2012 the number of post offices was reduced from 13,945 at 31 Decem-ber 2011 (including 258 PosteImpresa offices) to 13,676 at 31 December 2012 (including 263 PosteImpresa offices).

Back-office activities are partly carried out at post offices, and partly at 15 specialist service centres (Centralised ServiceTeams) spread around the country and under the control of the Customer Services function.These centres, which have been created with the goal of streamlining, standardising and speeding up after-sales activi-ties for financial services (the management of current accounts and ancillary services, loan and mortgage applications andcertain after-sales activities), have been developed with the goal of transforming them into the sole point of reference forpost offices with regard to such activities, handling both Private customers and Business customers (SMEs and Local Gov-ernment).

With the aim of optimising front and back-office processes, rendering sales network support more effective and strength-ening market position, implementation of the projects launched at the end of the previous year continued during the year,alongside the development of new initiatives. The main initiatives implemented /launched include:• the development of internal/external customer care within Customer Services continued through specialist

product/service/customer expertise, which also included the designation of the Genoa contact centre as a specialistbusiness customer care location;

• the centralisation of money laundering prevention within the Centralised Service Teams (previously these activities werecarried out by Branch Offices), providing a single, structured reference point for every local area. The change in process-es will ensure greater consistency and standardisation of procedures and the availability of specially trained staff (mon-ey laundering prevention specialists and operators);

• in order to strengthen the Company’s market position and take advantage of all the growth opportunities available inthe retail segment, a network of Specialist Commercial Financial Promoters has been introduced within the scope ofArea Office Private Commercial activities, with responsibility for promoting and selling certain investment productsand services;

• on 12 December 2012 the Company signed a statement of agreement with the unions regarding a new model of clas-sification for post offices, in keeping with the Company’s strategy of taking advantage of new business opportunitiesand meeting changing customer needs. The new classification, which will come into effect from 1 January 2013, envis-

232. Organisation


At 31 Dec 2011 At 31 Dec 2012

Number Workforce Number Workforce

Private Customer Area Offices 9 1,749 9 2,035

Branch Offices 132 4,652 132 4,720

Post offices 13,945 60,076 13,676 59,582

All workforce data is shown in full-time equivalent terms.


24

ages segmentation of the post office network as follows: central, relations, standard and basic, without affecting theclassification of PosteImpresa offices;

• with the aim of consolidating and developing Poste Italiane’s positioning in the increasingly competitive mobile teleph-ony market, exploiting the Company’s extensive sales network to the full, spaces have been created in 61 post officesdedicated to the promotion and sale of the products and services offered by Poste Mobile (PosteMobile Corners). Thespaces have a display, a counter showing off products and specially trained personnel (Poste Mobile sales staff).

Furthermore, in order to optimise support for the sales network:• the rationalisation of Area Office Accounting and Control was consolidated by transferring operational oversight, previ-

ously provided by 35 Operational Management Analysis and Control Planning centres, to 25 Branch Planning and Con-trol Centres and through the centralisation, in the second half of 2012, of administrative activities at 20 AdministrativeCompetence Centres (previously carried out at 27 locations);

• new working hours for Centralised Service Teams were introduced to bring them into line with post offices, thus ensur-ing maximum support for post offices in the areas for which the teams are responsible and strengthening synergies be-tween front-end and back-office operations. The new working hours came into effect in February 2013.

PRIVATE

In order to improve service quality and develop the network’s commercial potential, by differentiating service provision fromactivities offering higher added value, special “Financial and Loan Products” areas have been created for private customerswithin post offices. At 31 December 2012 there were 4,750 of these areas, including 194 in the process of being set up.

SMALL AND MEDIUM ENTERPRISES AND LOCAL GOVERNMENT

During 2012 the commercial model for the Business segment, forming part of the SME and Local Government segmentmanaged by the Private Customer function, evolved with the georeferencing of customers across 263 PosteImpresa of-fices. Compared with the previous year, the PosteImpresa areas were closed, with management of relations with the rel-evant customers being transferred to specialist personnel, deployed at post offices with high commercial potential.

In addition to counter staff and the recently introduced PosteImpresa consultant, PosteImpresa offices also offer special-ists in each industrial sector tasked with establishing direct relations with customers in order to acquire new business anddevelop relations with customers in the various sectors (communication, marketing, services and B2B-Business to Busi-ness, Ho.Re.Ca.8 and B2C-Business to Consumer; companies; freelance professionals and property managers).The commercial model also involves dedicated sales personnel focusing on Business and Local Government customers,with the role of protecting and growing the volume of business with customers belonging to their assigned portfolio andof acquiring new customers.Finally, each geographical area has a commercial organisation providing a link between central departments and PosteIm-presa offices and areas, disseminating commercial policies, offering specialist support to the channel in marketing the of-fering, carrying out surveys of the market and of changes in customer needs, and checking on the progressive implemen-tation of commercial strategies at local area level.The geographical structure of the Business Commercial function was altered in the second half of 2012, with the trans-fer to Area Offices of Business and Local Government sales personnel previously assigned to Branch Offices. This solu-tion enables the Company to benefit from synergies between the staff functions engaged in pre-sales, after-sales and com-mercial planning activities. The sales management team has also been strengthened to ensure more effective coordina-tion of salespeople.


8. Ho.Re.Ca., the acronym for Hotellerie-Restaurant-Café, indicates enterprises operating in the hotel or food and beverage sectors.


252. Organisation

This new commercial model for the Business segment will be progressively rolled out and further refined during 2013.

Geographical distribution of post offices and Branch Offices Geographical distribution of Area offices

2.1.2 LARGE ACCOUNT AND PUBLIC SECTOR

The Large Account and Public Sector function is responsible for developing business with Large Account, Central Govern-ment and some Local Government customers. With the aim of putting in place a more customer-centred commercial model, in 2012 the Company established six AreaOffices with responsibility for all phases of business (pre-sales, sales and post-sales processes and commercial planning)with large accounts and the relevant Local Government customers. These offices operate alongside two sales units forCentral Government customers, on the one hand, and commercial partnership agreements, on the other. The operatingmodel for this latter activity was further adapted with the aim of maximising the potential for revenue growth linked tothe management of indirect networks (belonging to third parties).Central functions also exist to support and coordinate pre- and after-sales activities and liaise with the related marketingfunctions.

2.1.3 POSTAL SERVICES

Postal services is responsible for planning and managing the integrated logistics chain (mail and parcels), overseeing theentire process of collection, transport, sorting and delivery.

The logistics network is organised on two levels, the first of which deals with coordination and is represented by Area Lo-gistics Offices responsible for one or more regions, whilst the second is operational and includes Sorting Centres (me-chanical and manual) and distribution centres (Delivery Offices).


North-westernAreabased in Turin:PiedmontValle d’AostaLiguria

Lombardy Areabased in Milan

North-eastern Areabased in Venice:VenetoTrentino Alto AdigeFriuli Venezia Giulia

Central Area 1based in Florence:TuscanyUmbria

North-central Areabased in Bologna:Emilia RomagnaMarche

Southern Area 1based in Bari:PugliaMoliseBasilicata

based in Naples:Southern Area

CampaniaCalabria

Central Areabased in Rome:LazioSardiniaAbruzzo

Southern Area 2based in Palermo:Sicily

279 2

452 4

1,001 11

458 5

1,452 12

71 1

2,015 19

839 12

1,029 9

340 2

350 4

1,098 8

978 10

446 5

503 4

174 2

493 5

186 2

673 6

839 9

Post officesBranch Offices


26

In September 2012 a Joint National Technical Committee was set up to examine the technical and organisational aspectsof the reorganisation of Postal services. The Company presented details of the proposed new model and the related op-erating processes to the Committee. After this, in December, the Committee’s closing statement was signed, in readi-ness for the start-up of talks at political level. The statement set out the following issues:• the growth strategy;• changes to the method of calculating the workload of postmen and women and a proposal for delivery services to be

provided every other day;• coverage of delivery services;• restructuring of the logistics network.

In addition, as part of a wider plan to integrate parcels logistics within the Group, with the aim of improving efficiency,containing costs and boosting volumes through specific initiatives, in December the Group began trialling the sorting anddelivery of parcels previously handled by SDA Express Courier SpA under the Poste brand at the Padua Sorting Centre(the provinces of Padua, Vicenza and Rovigo). Further initiatives in 2012 regarded:• the establishment of a central Innovative Delivery Services unit to manage the development and coordination of inno-

vative services to be provided through the delivery network;• initiation of experimentation with a new model for the monitoring of delivery services in order to continually improve

service organisation and quality, including the propriety of services provided and customer care, through structured con-trols of the outside work of postmen and women;

• extension of the scope of the “Electronic Postman” project; • opening of the Delivery Operations Centre, a second level customer care call centre. The Centre is the interface between

delivery centres and customers desiring to arrange an appointment for “PosteItaliane per te” services (the payment ofpre-printed bills by payment slip at home, Postepay and mobile phone topups, carnets for parcels service, the Poste PickUp service) or to obtain information on these services. It also supports postmen and women attached to the InnovativeServices unit in managing the provision of services to addressees (such as “Seguimi”) and in the entering of orders fromhardcopies of the PosteShop catalogue. In addition, the Operations Centre provides after-sales assistance regarding thequality of delivery (Insured and Registered Mail and Postafree) and the management of mail deliveries at the second at-tempt agreed with customers, and was used to activate to free “Seguimi” service for people affected by the earthquakeof May 2012;

• the creation of an Integrated Notification Service Operations Centre with the aim of managing pre- and after-sales activ-ities using the interface with internal and external customers. Trials involving 20 customers were launched in 2012 withover 600 requests fulfilled, activating a direct channel using a dedicated freephone number;

• the construction of 5 warehouses (Bologna, Novara, Padua, Pescara and Rome Fiumicino) thereby insourcing the processof repackaging and storage for the Process Server service provided to Equitalia, previously carried out by Italia Logisti-ca. The new facilities form part of the project that will enable paper document storage to be carried out for internal and


At 31 Dec 2011 At 31 Dec 2012

Number Workforce Number Workforce

Area Logistics Offices(*) 9 3,181 9 3,228

Sorting Centres 21 10,432 21 10,271

Priority Centres 15 1,302 15 1,242

Delivery Offices(**) 2,924 48,133 2,788 47,318

All workforce data is shown in full-time equivalent terms.(*) During 2012 the Delivery Operations Centre was established within the Area Logistics Office for the Central Area, with responsibility for providing specialist

assistance to customers.The geographical distribution of Offices at 31 December 2012 is as follows: Piedmont, Valle d’Aosta and Liguria; Lombardy; Veneto, Trentino Alto Adige and FriuliVenezia Giulia; Emilia Romagna and Marche; Tuscany and Umbria; Lazio, Abruzzo, Molise and Sardinia; Campania and Calabria; Puglia and Basilicata; Sicily.

(**) Delivery staff include 38,769 postmen and women and delivery supervisors (39,679 at 31 December 2011).


272. Organisation

external customers (Process Server, Sorting Centre document storage, Mail Rooms, etc.);• extension of the Tracking Service for large accounts, previously only available for Bulk Mail, to include Priority Mail and

Posta Target, and the return of undelivered mail. The creation of a single platform will enable the Company to track un-recorded mail from the collection and sorting stages through to delivery, including any returned items.

In addition, in December 2012 the T&T (Tracking & Tracing) contract was awarded. This envisages transformation of the cur-rent tracking platform via the development of new functions and additional levels of configuration for the existing systems.Finally, the following services were provided under international consultancy agreements with postal operators: • consultancy to Liban Post (Automation Requirements Definition Service), representing the first of two services to be pro-

vided under the agreement of 2 May 2012 between Poste Italiane and Liban Post;• on-the-job training for Russian Post at the Milan Roserio, Milan Peschiera Borromeo and Genoa Sorting Centres (as part

of the agreement signed in December 2010 by Russian Post, Poste Italiane and Selex Elsag).

Distribution of Area Logistics Offices Distribution of Postal Network Centres

2.1.4 OTHER BUSINESS FUNCTIONS

The Other Business functions are centralised departments which, partly by coordinating the operations of a number ofGroup companies, create, design and manage the Group’s offerings, with the related responsibilities assigned as follows: • Marketing Postal Services for domestic postal products/services, integrated services; • Marketing and Management of Logistics Services for domestic and international logistics products/services and interna-

tional mail products/services; • BancoPosta for financial products/services.


SC PC

Piedmont - Valle d’Aosta - Liguria 3 1

Lombardy 3 1

Triveneto 3 3

Emilia Romagna - Marche 2 1

Tuscany - Umbria 2 2

Lazio (*) - Abruzzo - Molise - Sardinia 3

Campania - Calabria

3

2 1

Puglia - Basilicata 1 2

Sicily 2 1

Total 21

(*)

15

The Priority Centres include the Romanina and Portonaccio printing in Rome (logistical support centres hosting the remaining manual processes).


28

In addition, BancoPosta carries out a number of operating processes relating to its area of business at sites located aroundthe country, as follows: • four Unified Service Automation Centres, where the bills paid at post offices are sent and processed; • two Cheque Centres for the processing of cleared cheques;• a Multi-service Centre, located in Turin, which carries out certain back-office processes (fraud analysis and management,

credit checks, the management of payment orders for legal and other expenses).

In the last quarter of 2012 analysis and reorganisation of operating processes at the Unified Service Automation Centresand the Multi-service Centre began. The revisited processes will be rolled out in 2013.

2.1.5 CORPORATE FUNCTIONS

Corporate functions work closely with the business functions in order to provide support across all areas of business withthe aim of ensuring the smooth running of the Company. Certain functions (Human Resources and Organisation, Purchas-ing, Internal Auditing, Chief Information Office, Real Estate and Security & Safety) also have their own local units respon-sible for the correct operational implementation of guidelines laid down by the respective central functions.



292. Organisation

2.2 STRUCTURE OF THE POSTE ITALIANE GROUP

(*) The company was established on 6 December 2012.


10%

100%

85%

100%

100%

100%

55%5%39%

100%

100%

28.57%

5%

49%

45%

100%

10%

70%

100% 100% 51%

Postel SpA PostecomSpA

Poste Tributi ScpA

PostelPrint SpA

Docutel Communication

Service SpA

Docugest SpA

Europa Gestioni Immobiliari SpA

Poste Vita SpA

Poste Assicura SpA

BancoPosta Fondi SpA SGR

Banca del Mezzoggiorno-MedioCreditoCentrale SpA

PosteTutela SpA 100%

PosteShop SpA 100%

Poste Energia SpA

100%

Telma-SapienzaScarl

30.20%

PosteMobile SpA

100%

Consorzio per i servizi di Telefonia

Mobile ScpA51%

Innovazione e Progetti ScpA(in liquidation)

15%

Mistral Air Srl 100%

Uptime SpA

Italia Logistica Srl

KipointSpA

SDA Express Courier SpA

Consorzio LogisticaPacchi ScpA

100%

49%51% Address Software Srl

PatentiViaPosteScpA(*)

17.21% 69.65%

5%


30


3. FINANCIAL REVIEW

3.1 RISK MANAGEMENT FOR THE GROUP AND POSTE ITALIANE SPA

MACROECONOMIC ENVIRONMENT2012 was marked by a slowdown in the world economy, due primarily to lower growth in euro zone countries and emerg-ing markets, with a resulting downturn in international trade. Recovery was delayed until the closing part of the year,when there were encouraging signs of a pickup in internal demand in the USA and in emerging countries. The global slow-down did not, on the other hand, result in a fall in the oil price, which remained slightly above the level seen in 2011 (up1%). The recent vitality of emerging markets and the year-end agreement designed to avoid the fiscal cliff in the USA have ledanalysts to improve their forecasts for 2013, which envisage global economic growth in excess of 3%, slightly ahead ofthe figure for 2012. In the euro zone, the European Central Bank has mitigated the danger of a serious crisis and improved confidence, evenif the main risk to financial stability remains the negative spiral between low economic growth, deteriorating public financesand the difficulties in the banking system.In Italy, GDP fell by over 2 percentage points in 2012 compared with 2011, reflecting, moreover, sharp declines in con-sumption and investment. Despite the current recession, inflation remained high at around 3%. Consumers’ spending pow-er is falling and savings are down to 17% as a proportion of income, compared with 22% in Germany and 18% in France. Businesses have cut investment due to the poor economic environment and the ongoing credit crisis. Industrial outputfell by over 6 percentage points in 2012. Analysts expect a further decline in Italian GDP in 2013, partly due to the factthat the economy will be hit by a further slowdown in the real economies of all the major European countries. However, the end of 2012 saw renewed confidence among overseas investors, who began purchasing Italian governmentsecurities again, with a positive impact on spreads and thus on the value of the securities in the Group’s portfolio. Thesituation in the real estate market remains critical, as does the situation regarding the financial products linked to it.The climate of economic uncertainty forms the backdrop to Poste Italiane’s operations. Our Group aims, therefore, tomaintain an adequate level of revenue by developing services with a high degree of innovative content, accompanied byefforts designed to contain and rationalise operating costs in order to defend profitability.

MARKET CONDITIONS AND COMPETITION As elsewhere in Europe, postal services in Italy have been deregulated (Legislative Decree 58 of 31 March 2011, whichhas transposed EU Directive 2008/6/EC into Italian law). This has resulted in the entry of competitors with a range of of-ferings. These operators, who initially focused on limited geographical areas, have expanded to provide national coverage,concentrating on the most profitable urban areas (i.e., those with the greatest density of population and highest mail vol-umes) and business customers, where margins are higher. In particular, companies controlled by overseas postal opera-tors, looking for new opportunities in deregulated markets, now have an established presence.The new competitive scenario coincides with a structural decline in the use of traditional forms of communication, as aresult of its progressive replacement by digital communication and the economic downturn. Against this backdrop, Poste


313. Financial review

Italiane continues to provide widespread geographical coverage and a high degree of quality and accessibility to its serv-ices, in keeping with its Universal Service Obligation.Poste Italiane has responded to these market challenges by investing heavily in infrastructure designed to renew its serv-ice delivery platform and expand its network coverage. This has enabled the Company, on the one hand, to maintain itstraditional services whilst, on the other, diversifying into totally new markets.Technology has played a key role across the entire process of innovation and reorganisation. The use of Information Com-munication Technology has enabled the Company to increase the degree of functional integration between the various ar-eas of business (postal, financial and telecommunications) and to develop differentiated offerings for the various customersegments, providing products that offer security, simplicity and reliability.

Information on the financial services markets is provided in section 12 “BancoPosta RFC management review”.

RISK MANAGEMENTPoste Italiane has established processes for risk identification and analysis across a number of functions which have beenstructured based on the complementarity of the functions’ expertise. In this context, the Company has significantly bol-stered its Enterprise Risk Management system in order to support and supplement the processes, tools and initiativesneeded to assess the levels of risk to which the different areas of the Company are exposed. The system is based on amodel for integrating internal information flows and focuses primarily on process analysis and the measurement of risk inqualitative and quantitative terms, using key performance and risk indicators (KPIs and KRIs) in line with the most recentinternational risks management standards and best practices. The principal types of risk are described below.

FRAUD AND EXTERNAL EVENT RISKS One of Poste Italiane’s areas of focus is post office security in order to protect its staff and the Company’s assets, anddeal with the risks deriving from fraud or crime perpetrated by outsiders. Compared with the previous year, figures for2012 show a fall of 2.1% in the number of crimes perpetrated (a decline of 24.3% since 2008), thus confirming the suc-cess of the corporate security plan designed to protect the various assets and the effectiveness of remote surveillance,which plays a key role in fraud and crime prevention.Particular importance is attached to the diffusion of a corporate security culture, thus demonstrating that staff conduct isthe most important aspect of a post office’s general security arrangements. 2012 saw a growing number of new forms of attack on ATMs, above all in the last quarter of the year. These include so-called “Cash Trapping”9, which enables criminals to capture some of the money being dispensed. In order to combat theproblem, from 2013 the Company has introduced changes to software components and installed new security devices inATMs around the country, giving priority to areas most at risk of attack.

Great attention is also paid to combating the risks deriving from potential fraud inside and outside the Company and spe-cific steps taken. Poste Italiane has adopted a range of tools, used by the various departments within the Company, toprevent the occurrence of such events, including the Oracolo system for checking proof of identity and the Identity Checksystem for controlling access to the website at www.poste.it.

Although to a lesser extent than in the recent past, phishing continues to be one of the most prevalent and sophisticat-ed forms of online fraud. Poste Italiane has for some time used a series of organisational and technological controls forthe prevention, management and elimination of crime. A Central Warning system was established in November 2005, thescope of which includes the identification of attempted phishing to the detriment of Poste Italiane and the immediate de-ployment of counter measures.


9. Cash trapping involves the insertion of a device into note-dispensing slots that temporarily capture notes inside the ATM.


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Implementation of an Early Warning system to handle reports of new cyber threats was completed in 2012, coveringvulnerability, malicious codes, security risks, critical issues and IP addresses identified as malicious and other data. TheEarly Warning service is currently able to signal the discovery of new vulnerabilities and the presence of new threats,providing a description of the problem, its potential impact, how it spreads and the actions necessary to mitigate orcombat the risk. Overall, the risks of fraud and/or criminal acts perpetrated by outsiders are monitored by the Central Warning system, theEarly Warning system and the Security Control Room. In addition, customer awareness campaigns and ongoing trainingof staff, in combination with greater coordination with the police and magistrates, make a significant contribution to fraudprevention.

INFORMATION SECURITYDuring 2012 the Company focused significant attention on data security, conducting specific information security riskanalyses and assessments, accompanied by the definition of policies, guidelines and procedures, and monitoring and con-trol of their correct application. In particular, in 2012 Poste Italiane adopted an InfoSec10 Risk Management methodologyderived from the “Corporate Information Security Governance Policy” and the related processes at Company level. Imple-mentation of the methodology was based on an approach that focused on the significance and critical nature of the busi-ness processes to be protected.

FINANCIAL RISKS Definition and optimisation of the financial structure, over both the short and medium/long term, and management of theGroup’s related cash flows is the responsibility of the Parent Company’s Finance department, acting in accordance withthe general guidelines established by governance bodies.Group financial and associated risk management is primarily needed for the Parent Company and the insurance subsidiary,Poste Vita SpA.Balanced financial management and monitoring of the main risk/return profiles are carried out by organisational structuresoperating separately and independently. In addition, specific processes are in place governing the assumption, manage-ment and control of financial risks, including the progressive introduction of appropriate information systems.From an organisational viewpoint, risk management is the responsibility of:• a Finance Committee, which oversees Poste Italiane SpA’s financial strategy, based on indicators referring to internal

planning and the external economic/financial cycle. The Committee meets at least on a quarterly basis and is a special-ist body that advises on the analysis and identification of investment and disinvestment opportunities;

• an Investment Committee established at the Group’s insurance company, Poste Vita SpA, and which, based on analy-ses by the relevant functions, provides advice to executives on the development, implementation and oversight of in-vestment strategy;

• BancoPosta RFC’s Cross-functional Committee, headed by the CEO. Other permanent members are the Head of Ban-coPosta and the heads of the functions primarily involved with BancoPosta. The Committee provides advice, makes rec-ommendations and coordinates BancoPosta’s operations with those of other Poste Italiane functions. The Committeemeets once a month;

• a Risk Measurement and Control function established at the Parent Company and subsidiaries providing financial andinsurance services (BancoPosta Fondi SGR SpA, Banca del Mezzogiorno-MedioCredito Centrale SpA and Poste VitaSpA), and that operate on the basis of the organisational separation of risk assessment from risk management activi-


10. InfoSec means the application of security measures designed to protect information processed, stored or transmitted by communication and informationsystems, or by other electronic devices, against the accidental or intentional loss of confidentiality, integrity or availability, and prevent the loss of integri-ty and availability of the systems themselves. InfoSec measures include computer security and the security of data transmission and issue and cryptog-raphy, as well as the identification, documentation and neutralisation of threats to information and systems.



ties. The results of these activities are examined by the relevant advisory committees, which are responsible for carry-ing out an integrated assessment of the main risk profiles. The outcomes of these assessments are then examined bya Financial Risk Committee set up by the Parent Company.

The Parent Company’s financial transactions primarily consist of BancoPosta’s operations, the financing of assets and theinvestment of the Company’s cash holdings. BancoPosta operations are regulated by Presidential Decree 144/2001. Itscapital has been ring-fenced since 2 May 2011. Poste Italiane SpA attributed €1 billion of retained earnings to BancoPos-ta RFC for the creation of ring-fenced capital. BancoPosta RFC’s operations consist of the investment of cash held inpostal current accounts invested in the name of BancoPosta but subject to statutory restrictions, and collections and pay-ments on behalf of third parties. The Company is required to invest the funds deriving from postal current account deposits by private customers in eurozone government securities, whilst deposits by Public Sector entities are deposited with the MEF. During 2012 BancoPostawas engaged in the following: reinvestment of the funds deriving from maturing government securities; the trading ofsecurities designed to progressively match the maturity profile of the portfolio with the investment model adopted by theCompany in 2010; and in the arrangement of two repo loans, totalling €5 billion, entered into with two first ranking finan-cial institutions, as promoted by the European Central Bank in February 2012, with the loan proceeds subsequently invest-ed in fixed rate Italian government securities in order to anticipate the renewal of investments maturing over the next threeyears. The maturity profile is based, among other things, on a leading market operator’s statistical/econometric model thatreflects the interest rates and maturities typical of postal current accounts. The model is also used as the basis for invest-ment policies in order to limit exposure to interest rate risk and liquidity risks by foreseeing deviations caused by the needto combine the exigencies of risk management with those of improving returns which are dependent on movements inthe market yield curve.Operations not covered by BancoPosta RFC primarily relate to the management of the Company’s own liquidity, carried outin accordance with investment guidelines approved by the Board of Directors, which require the Company to invest ininstruments such as Government securities, high-quality corporate or bank bonds and term bank deposits. Liquidity is alsodeposited in postal current accounts, with the resulting deposits subject to the same requirements applied to the invest-ment in deposits by private current account holders.With regard to cash flow management within the Group, a centralised treasury management system enables the automat-ic elimination of co-existing large debit and credit balances attributable to individual companies, offering the Group advan-tages in terms of improved liquidity and a reduction in the related risk. The system includes the four main subsidiaries andentails zero balance cash pooling with transfers effected through the banking system. In this way cash flows between thecurrent accounts of subsidiaries and the Parent Company are transferred on a daily basis.

Poste Italiane Group’s business is by its nature exposed to elements of reputational risk, associated mainly with the place-ment of investment products issued by third-party credit institutions, such as real estate mutual funds and index-linkedbonds, and/or insurance policies issued by the subsidiary Poste Vita SpA. In this respect, in July 2008, in accordance withthe Markets in Financial Instruments Directive by the EU (Directive 2004/39/EC, “MiFID”), the Company has adopted the“consulting service” model.The financial instruments held by the insurance company, Poste Vita SpA, primarily regard investments designed tocover its contractual obligations to policyholders who have taken out classic with profit life policies and index-linkedand unit-linked policies. Other investments in financial instruments regard investment of the insurance company’s freecapital.Traditional life policies, classified under Branch I, include products whose benefits are revaluated based on the return gen-erated through the management of separate pools of financial assets, with certain autonomy, in accounting terms, fromthe rest of the company’s assets (so-called separately managed accounts). On these products, the company provides aminimum rate of return payable upon maturity of the policy. It follows that the impact of financial risk on investment per-formance can be absorbed in full or in part by the insurance provisions based on the level and structure of the guaranteedminimum returns and the profit-sharing mechanisms of the “separate portfolio” for the policyholder. The company deter-mines the sustainability of minimum returns through periodic analyses using an internal financial-actuarial model which sim-ulates, for each separate portfolio, the change in value of the financial assets and the expected returns under a “central



34

scenario” (based on current financial and commercial assumptions) and under stress and other scenarios based on differ-ent sets of assumptions. Some Branch I products sold in 2012 entail guaranteed revaluations linked to a specific asset (so-called capitalisation con-tracts). The assets are comprised of securities issued by Cassa Depositi e Prestiti and government securities. Returns areonly indexed for the initial years of a product’s term. Subsequent to the second or third year, returns are indexed, as areother Branch I products, to separate pools of assets. The financial risk of capitalisation products is fully covered by insur-ance liabilities, except for default by the issuer which is borne by the insurer.Index-linked and unit-linked products, relating to Branch III insurance products, regard policies with premium invest-ed in structured financial instruments, Italian Government securities, warrants and mutual investment funds. For thistype of product, issued prior to the introduction of ISVAP Regulation 32 of 11 June 2009, the company does not guar-antee capital or a minimum return and, as such, the associated financial risks are borne almost entirely by the cus-tomer. However, in the case of policies issued after the introduction of the regulation, the company assumes sole lia-bility for solvency risk associated with the instruments in which premiums are invested. The company continuouslymonitors changes in the risk profile of individual products, focusing especially on the risk linked to the insolvency ofissuers.The crisis of recent years has had profound effects on the performance of all the financial instruments on the market, aboveall on the value of Italian Government securities, which account for a large part of the Group’s investments, as well as theperformance of the real estate market and the products related to it.Even though the Group has developed over time prudential policies in the customers’ best interests, entailing theselection of domestic and foreign issuers solely with investment grade ratings, the situation has prompted even clos-er scrutiny at Group level, so as to ensure full awareness of the performance of the products placed and the risks forcustomers. Sovereign risk became a major component of market risk from 2011, due to the importance of the impact of the spreadsapplicable to government securities on the fair value of euro zone government securities, which reflects the market’s per-ception of the credit rating of sovereign issuers. From July 2012 spreads between German bunds and government bondsissued by many other European countries, including Italy, have been falling, as the spreads on ten-year bonds dropped to321 bps at 31 December 2012 (527 bps at 31 December 2011).

In constructing the Risk Model adopted in order to monitor credit, liquidity and interest rate risks, the Group has also takeninto account the regulations provided by the Bank of Italy’s prudential supervisory standards, despite the fact thatBancoPosta RFC is not yet required to apply such standards, whilst waiting for specific instructions.Further information on financial risk management is provided in the notes to the consolidated and separate financial state-ments for the year ended 31 December 2012 (note 3 in both documents).

REGULATORY RISK Given that the Group operates in a range of different sectors (postal, integrated communication services, logistics, finan-cial), it is subject to numerous laws and regulations (specific laws and regulations, including tax and environmental legisla-tion, and regulations issued by supervisory authorities). Compliance requires continual revision to internal processes andprocedures, their application to market offerings, initiatives designed to prevent external disputes and appropriate stafftraining, to list only a few. Regulatory compliance is the responsibility of specific units within the various departments, inaddition to the Legal Affairs function.Corporate Affairs also carries out ongoing analysis and assessment of acts of parliament, government policies and legisla-tion in general, keeping other functions within the Company promptly informed. The function also lobbies for changes tolegislation in the process of enactment or in force.

RISKS CONNECTED TO THE MANAGEMENT OF HUMAN RESOURCES The significance of the Company’s personnel expenses means that any changes in legislation, regarding contributions orother staff-related matters, can have a substantial impact on operating results.




In addition, the Company continues to be involved in labour disputes regarding fixed-term contracts. The consequence isa number of important labour union agreements designed to resolve the situation. Achievement of the Company’s objectives is dependent on continual staff development through training and e-learningdesigned to enhance the professional skills of the Company’s employees.

OTHER OPERATIONAL RISKSCertain important business relationships are governed by separate agreements and contracts. Negotiations regarding therelated financial conditions and other aspects of their renewal are often complex. In the case of certain services regulated by legislation and specific agreements or contracts (the Universal Service, elec-toral tariff subsidies), for which the government has undertaken to reimburse a part of the costs incurred by the Company,the amounts payable to Poste Italiane SpA are not always covered by the state budget. Given the length of time thesereceivables have been outstanding, Poste Italiane SpA has to manage working capital, with a negative impact on cash flow.



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3.1.1 FOCUS ON THE KEY ASPECTS OF STRATEGY

Poste Italiane has for some time adopted a business model based on diversification and innovation. The strategy imple-mented focuses on the creation of a modern integrated system of networks and platforms, capable of providing financial,insurance and mobile telecommunications services alongside its traditional postal offering. The commercial resultsachieved have been just “reward” for this wide-ranging diversification of the offering: Poste Italiane is now one of the lead-ing players in the various markets in which it is present. A key aspect of this integration strategy is the possibility to exploit the potential of the Company’s ICT (Information &Communication Technology) infrastructure in order to synergistically connect the different service platforms and extend therange of services offered, above all digital ones.The modern e-Government and e-Commerce platforms (the one supplying public services on line, the other used for theonline sale of goods, and for payments, logistics and distribution) are two examples of the potential of this integratedapproach when applied to two markets expected to see significant future growth. The most apparent effects of this policy regard the new relationships that Poste Italiane is developing with citizens, busi-nesses and Public Sector entities, presenting itself as an entity capable of satisfying a whole range of differing needs, andas a provider of integrated solutions and platforms. This had made it easier for the various groups to interact with eachother and has rendered public services more accessible (digital signatures, Certified Electronic Mail, certificates online,etc.). In relation to digital communication, Poste Italiane also assumes the role of third-party guarantor.The experience acquired in developing digital technologies has also enabled the Company to make cyber security one ofthe important elements in its growth strategy. The Company has acquired key expertise in design and monitoring throughthe creation of the different control rooms.The most important application of the IT know-how acquired, above all with regard to data protection and security, is rep-resented by the Cyber Security project, one of the most important in the field of cyber security and which has involvedPoste Italiane at international level. Indeed, thanks to the skills and expertise developed, the Company is in an ideal posi-tion to transfer its know-how to other operators (with many of whom it has entered into cooperation agreements for thedevelopment of the postal system, logistics infrastructure, payment systems and telecommunications services).




3.2 OPERATING RESULTS

This section provides a summary of the operating results, financial position and cash flow of the Poste Italiane Group andthe Parent Company, Poste Italiane SpA, in 2012. In order to ensure a consistent basis for comparison with amounts for2011, certain items in the statement of profit or loss and the statement of cash flows have been reclassified.

STATEMENT OF PROFIT OR LOSS

(€m)

Whilst not as strong as 2011, the operating performances of the Poste Italiane Group and its Parent Company were posi-tive in 2012, particularly in view of the backdrop of economic uncertainty and an unfavourable regulatory environment.Indeed, despite a significant decline in postal service revenue, Poste Italiane achieved good results thanks to its sound busi-ness model described above, with the Group outperforming the market in the various sectors in which it operates.Highlights include the performances recorded by financial services, the insurance services provided by the Group insurancecompany, PosteVita, and the telecommunications services provided by Poste Mobile.


Poste Italiane Group Poste Italiane SpA

Increase/(Decrease) Year ended 31 Dec Year ended 31 Dec Increase/(Decrease)

% Amount 2011 2012 2012 2011 Amount %

(1.8) (187) 10,120 9,933 Revenue from sales and services 9,206 9,468 (262) (2.8)10.6 1,005 9,526 10,531 Insurance premium revenue n/a n/a n/a n/a84.5 1,586 1,877 3,463 Other income from financial and insurance activities 156 125 31 24.8

(16.5) (28) 170 142 Other operating income 123 166 (43) (25.9)11.0 2,376 21,693 24,069 Total revenue 9,485 9,759 (274) (2.8)

7.5 197 2,631 2,828 Cost of goods and services 2,121 1,946 175 9.0Net change in technical provisions

31.4 3,101 9,887 12,988 for insurance business and other claims expenses n/a n/a n/a n/a(81.4) (718) 882 164 Other expenses from financial and insurance activities 1 9 (8) (88.9)

n/s (1) 5,896 5,895 Personal expenses 5,658 5,681 (23) (0.4)19.3 105 544 649 Depreciation, amortisation and impairments 526 475 51 10.729.2 (14) (48) (62) Capitalised costs and expenses (8) (8) - n/s

(13.5) (35) 260 225 Other operating costs 236 254 (18) (7.1)(15.8) (259) 1,641 1,382 Operating profit/(loss) 951 1,402 (451) (32.2)

(20.3) (30) 148 118 Finance costs 115 146 (31) (21.2)(0.6) (1) 160 159 Finance income 90 135 (45) (33.3)

Profit/(Loss) on investments accounted n/s (1) 1 - for using the equity method n/a n/a n/a n/a

(14.0) (231) 1,654 1,423 Profit/(Loss) before tax 926 1,391 (465) (33.4)

(17.3) (140) 808 668 Income tax expences 474 692 (218) (31.5)Income tax for previus years

n/a n/a - (278) following change in legislation (270) - n/a n/a22.0 186 846 1,032 Profit for the year 722 699 23 3.3

To ensure the comparability of amounts for the two years, certain amounts for 2011 have been reclassified.n/a: not applicable.n/s: not significant.(*) Profit is entirely attributable to owners of the Parent, and no portion is attributable to non-controlling interests.


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In addition to these positive results, the Group also recognised a gain deriving from an application for a tax refund, due tothe deduction of IRAP paid on personnel expenses for the period 2007-2011 from the IRES tax base, amounting to €278million at Group level (€270 million for Poste Italiane SpA). This benefit was generated by the reforms introduced by LawDecree 201 of 6 December 2011, which permit companies, from 2012, to deduct IRAP paid on personnel expenses in fullfrom the IRES tax base, and to apply for a refund of the IRES overpaid in previous years.

OPERATING RESULTS OF THE POSTE ITALIANE GROUP

Revenue by operating segment(*)


Total revenue for the year ended 31 December Increase/(Decrease)

(€m) 2011 2012 Amount %

Postal and Business services 5,162 4,657 (505) (9.8)

Financial services 5,033 5,312 279 5.5

Insurance services 11,278 13,833 2,555 22.7

Other services 220 267 47 21.4

Total Poste Italiane Group 21,693 24,069 2,376 11.0

To ensure the comparability of amounts for the two years, certain amounts for 2011 have been reclassified.(*) After consolidation adjustments and elimination of intercompany transactions.

Group - Total revenue (€m)

Other services

Insurance services

Financial services

Postal and Business services

+22.7%

+5.5%

-9.8%

+21.4%

0

5,000

10,000

15,000

20,000

25,000

20122011




Other income fromRevenues from sales Insurance financial and Other operating

and services premium revenue insurance activities income% % % %

(€m) 2011 2012 inc./(dec.) 2011 2012 inc./(dec.) 2011 2012 inc./(dec.) 2011 2012 inc./(dec.)

Postal and Business services 5,005 4,533 (9.4) - - - - - - 157 124 (21.0)

Financial services 4,906 5,145 4.9 - - - 125 162 29.6 2 5 -

Insurance services - - - 9,526 10,531 10.6 1,752 3,301 88.4 - 1 -

Other services 209 255 22.0 - - - - - - 11 12 9.1

Total PosteItaliane Group 10,120 9,933 (1.8) 9,526 10,531 10.6 1,877 3,463 84.5 170 142 (16.5)

To ensure the comparability of amounts for the two years, certain amounts for 2011 have been reclassified.

Postal and Business services Total revenue for the year ended 31 December Increase/(Decrease)

(€m) 2011 2012 Amount %

Poste Italiane SpA(*) 4,491 4,006of which: intercompany revenue 56 59Poste Italiane SpA - external revenue 4,435 3,947 (488) (11.0)SDA Express Courier SpA 441 452of which: intercompany revenue 118 111SDA Express Courier SpA - external revenue 323 341 18 5.6Postel group 400 376of which: intercompany revenue 168 180Postel group - external revenue 232 196 (36) (15.5)Italia Logistica Srl(**) 46 52of which: intercompany revenue 14 18Italia Logistica Srl - external revenue 32 34 2 6.3Mistral Air Srl 110 109of which: intercompany revenue 37 37Mistral Air Srl - external revenue 73 72 (1) (1.4)Poste Shop SpA 46 33of which: intercompany revenue - -Poste Shop SpA - external revenue 46 33 (13) (28.3)Postecom SpA 81 113of which: intercompany revenue 74 103Postecom SpA - external revenue 7 10 3 42.9Other companies 316 370of which: intercompany revenue 302 346Other companies - external revenue 14 24 10 71.4

Total external revenue 5,162 4,657 (505) (9.8)

(*) This item includes other operating income and does not take into account the pro-rata share attributed to BancoPosta RFC.(**) This company, originally consolidated using proportionate consolidation, is consolidated on a line-by-line basis from 1 October 2012 following the

acquisition of full control by SDA Express Courier SpA.

For the year ended 31 December


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The Poste Italiane Group’s total revenue for 2012, amounting to €24,069 million, is up 11.0% on 2011 (total revenue of€21,693 million in 2011), essentially thanks to the positive performances of insurance and financial services, which com-pensated in full for the fall in revenue from postal and business services.However, due to the limited variability of postal service costs, the overall increase in revenue and the different revenuemix, with a greater proportion generated by insurance and financial services, were not sufficient to offset the negativeimpact of the reduction in revenue from postal services on the operating results.Total revenue from Postal and Business services amounts to €4,657 million (€5,162 million in 2011). The reduction prima-rily reflects a structural decline in volumes of traditional mail, resulting from growing use of digital forms of communicationand reduced volumes of mail sent by large customers (companies and Public Sector entities). This has all occurred againsta backdrop of increased competition, in part reflecting full deregulation of the postal market.Total revenue from Financial services is up 5.5% from €5,033 million in 2011 to €5,312 million in 2012, reflecting strongrevenue and income growth (up €239 million on 2011) due to the positive performance of postal savings deposits andreturns on the investment of postal current account deposits.Insurance services made a positive contribution to total revenue, with revenue up from €11,278 million in 2011 to €13,833million in 2012. As in 2011, this is in contrast to the ongoing decline in the market, with the overall value of insurance pre-mium revenue in the life market falling to the levels seen in 2006. In contrast to the market as a whole, therefore, PosteVita recorded an excellent performance, with insurance premium revenue totalling €10,531 million (€9,526 million in 2011)at consolidated level and net of outward reinsurance premiums.Total revenue from Other services amounts to €267 million (€220 million in 2011) and includes PosteMobile SpA’s revenuefrom mobile telecommunications services, which continue to grow.

COST ANALYSIS

An analysis of costs and other charges shows an increase of 13.1% (€22,687 million in 2012, compared with €20,052 mil-lion in the previous year). This is essentially due to the increase in technical provisions for the insurance business, whichare closely linked to the volume of premium revenue recorded by the subsidiary Poste Vita, during the year. The increase in the cost of goods and services (up €197 million or 7.5%) essentially reflects increased interest paymentsto BancoPosta customers (a €171 million increase in interest paid compared with 2011). This is a result of higher interestrates on new commercial offerings introduced during 2012. This means that expenditure remained constant despite theincrease in the cost of non-deductible VAT, real estate taxes and transport and thanks to costs controls.


Costs

for the year ended 31 December (€m) 2011 2012 % inc./(dec.)

Cost of goods and services 2,631 2,828 7.5Net change in technical provisions for insurance business and other claims expenses 9,887 12,988 31.4Other expenses from financial and insurance activities 882 164 (81.4)Personnel expenses 5,896 5,895 n/sDepreciation, amortisation and impairments 544 649 19.3Capitalised costs and expenses (48) (62) 29.2Other operating costs 260 225 (13.5)Total costs 20,052 22,687 13.1

To ensure the comparability of amounts for the two years, certain amounts for 2011 have been reclassified.n/s: not significant.



Other expenses from financial and insurance activities are down 81.4% (€164 million in 2012, compared with €882 mil-lion in 2011) due to a reduction in impairments linked to the fair value measurement of financial instruments largely attrib-utable to the portfolio held by the subsidiary, Poste Vita.

Ordinary personnel expenses, comprising salaries, wages and sundry expenses, are essentially in line with 2011 (€5,608million in 2012, compared with €5,613 million in 2011) and include the effect of the renewal of employment contractsagreed by Poste Italiane SpA and the trade unions in April 2011, offset by a reduction in average employment during theyear (over 1,900 less full time equivalents on average in 2012, compared with the previous year) and the release of provi-sions for charges connected to personnel expenses made in previous years and no longer necessary.Personnel expenses also include redundancy payments, which are down from €287 million in 2011 to €208 million in2012), and litigation costs, primarily relating to the Parent Company’s use of fixed-term employment contracts. These costsreflect the established effect of application of the so-called Collegato lavoro legislation, which has introduced a cap on com-pensation payable on claims brought by workers on fixed-term contracts, who have been re-employed on permanent con-tracts by court order. The amounts reflect the overall favourable level of claims actually paid. In 2012 personnel expenses also include provisions of €190 million for restructuring charges, reflecting the liabilities thatPoste Italiane SpA will reasonably have to incur under the current redundancy scheme for employees leaving the Companyby 31 December 2014.Finally, personnel expenses also reflect income deriving from fixed-term contract agreements, amounting to €82 million in2012 (€55 million in 2011). This income reflects the agreement of 18 May 2012 between the Parent Company and thelabour unions, regarding the re-employment by court order of staff previously employed on fixed-term contracts (in line withprevious agreements).Overall personnel expenses are thus substantially on a par with the previous year at €5,895 million.Depreciation, amortisation and impairments includes €42 million regarding impairment losses on the goodwill arising fromconsolidation of certain subsidiaries (SDA Express Courier and Mistral Air).


Personnel expenses Increase/(Decrease)

for the year ended 31 December (€m) 2011 2012 Amount %

Salaries, social security contributions and sundry expenses(*) 5,613 5,608 (5) (0.1)Redundancy payments 287 208 (79) (27.5)Net provisions for disputes 110 (29) (139) n/sProvisions to the Solidarity Fund (59) - 59 n/sProvisions for restructuring charges - 190 190 n/s

Total 5,951 5,977 26 0.4

Income from fixed-term contract agreement (55) (82) (27) 49.1

Total personnel expenses 5,896 5,895 (1) n/s

n/s: not significant.(*) This includes the following items reported in note 33 to the consolidated financial statements: salaries and wages; social security contributions employee

termination benefits; temporary work; Directors’ fees and expenses; other costs (cost recoveries).


42

The above movements in revenue and costs have resulted in operating profit of €1,382 million (€1,641 million for 2011),as shown in the following table.

After net finance income of €41 million (€13 million in 2011), profit before tax amounts to €1,423 million (profit before taxof €1,654 million for 2011).In addition to a decline in income tax expense from €808 million in 2011 to €668 million in 2012, the Group has recog-nised tax income of €278 million following the reforms introduced by Law Decree 201 of 6 December 2011, which havehad a total impact of €390 million.Law Decree 201 of 6 December 2011 permits companies to deduct IRAP paid on personnel expenses in full from the IREStax base from 2012, and to apply for a refund of the IRES overpaid in previous years, in accordance with the procedureestablished by the tax authorities in the ruling issued on 17 December 2012. In compliance with this procedure, whichrequires applications to be submitted electronically on pre-established dates (so-called “click days”), on 6 March 2013Poste Italiane applied for a refund of the overpaid tax for periods of assessment that remain open. The Group has recog-nised tax income of €278 million relating to the years from 2007 to 2011 in the financial statements for 2012, assessedon a prudent basis and taking into account the absence of consistent interpretations of the new legislation.This occurrence has resulted in a substantial reduction in the effective tax rate to 27.43%, compared with the tax rate of48.9% for 2011.


Operating profit by operating segment Increase/(Decrease)


Postal and Business services 834 416 (418) (50.1)Financial services 580 565 (15) (2.6)Insurance services 199 371 172 86.4Other services 26 28 2 7.7Elimination(*) 2 2 - n/s

Total Poste Italiane Group 1,641 1,382 (259) (15.8)

To ensure the comparability of amounts for the two years, certain amounts for 2011 have been reclassified.n/s: not significant(*) Elimination of cost incurred by Poste Italiane SpA for interest paid to consolidated subsidiaries (recognised by the latter in finance income).



OPERATING RESULTS OF POSTE ITALIANE SPA

Poste Italiane SpA’s revenue from sales and services amounts to €9,206 million, down 2.8% on the previous year(€9,468 million in 2011). Market revenue is down 2.7% from €9,088 million in 2011 to the €8,846 million of 2012. The reduction reflects the con-traction in postal services, which have been in decline for some years, reflecting the ongoing impact of the economic cri-sis and the uncertain prospects for recovery. In fact, the positive results achieved by BancoPosta services (up €178 mil-lion compared with 2011) were not sufficient to offset the downturn in market revenue from postal services (down €419million on the previous year).Within the Postal services segment, Mail and Philately saw a fall in volumes and revenue (down €404 million comparedwith 2011). This was primarily the result of a reduction in Unrecorded Mail and Direct Marketing volumes due, among otherthings, to a decline in electoral mailings, growing use of digital forms of communication and a reduction in mailings by majorcustomers, partly reflecting the well-established presence of competing providers. Express Delivery services have alsobeen hard hit by the economic downturn. This situation, which is in line with the trend seen in 2011, has essentially hadtwo effects: a general fall in volumes and tough price competition. As noted above, market revenue from BancoPosta services is up 3.5% from €5,141 million in 2011 to €5,319 million in2012. This reflects the positive performance of postal savings and growing returns on the investment of current accountdeposits. Whilst awaiting the conclusion of negotiations regarding the Contratto di Programma (Planning Agreement) for 2012-2014,determination of the compensation partially covering the cost of the Universal Service for 2012 has been based on thesame subsidy cap used in the Contratto di Programma (Planning Agreement) for 2009-2011. The cost incurred by PosteItaliane SpA was calculated using the new “net avoided cost” method, introduced by EU Directive 2008/6/EC and trans-posed into Italian law by Legislative Decree 58 of 31 March 201111. The model developed by Poste Italiane SpA is current-ly being assessed by AGCom (the Italian communications authority) as part of a specific investigation launched by resolu-tion 444/12/CONS12, and only after completion of this process will it be possible to confirm the cost calculated by the


Revenue from sales and sevices Increase/(Decrease)


Mail and Philately 3,725 3,321 (404) (10.8)Express Delivery and Parcels 135 120 (15) (11.3)Total market revenue from Postal services(*) 3,860 3,441 (419) (10.9)

BancoPosta services 5,141 5,319 178 3.5

Other revenue 87 86 (1) (1.1)

Market revenue 9,088 8,846 (242) (2.7)

Universal Service Obligation (USO) compensation(*) 357 350 (7) (2.0)

Electoral subsidies(*) 23 10 (13) (56.5)

Total Poste Italiane SpA 9,468 9,206 (262) (2.8)

(*) Market revenue from Postal Services 3,860 3,441USO compensation 357 350Electoral subsidies(**) 23 10

Total Postal services 4,240 3,801 (439) (10.4)

(**) Subsidies for tariffs discounted in accordance with the law.

11. This method defines the cost incurred as the difference between the net operating cost incurred by a designated Universal Service provider when sub-ject to Universal Service obligations and the net operating cost without such obligations. Application of the method requires a series of assumptions inorder to construct the hypothetical postal operator without obligations, on which to base assessment of the related net cost/profit.

12. An investigation of the Universal Postal Service: analysis and applicability of the method for allocating and assessing the net cost for 2011.


44

Company. The amount of compensation, estimated to be €350 million, is in any event significantly lower than the cost calculatedusing the new method being assessed by the authority. Had the cost been calculated using the established method, useduntil last year, the value of compensation would in any event have been lower.

Electoral subsidies of €10 million (€23 million in 2011) refer to discounts granted to election candidates.

Total revenue of €9,485 million (€9,759 million in 2011) also includes €156 million in other income from financial activitiesattributable to BancoPosta RFC (€125 million in 2011) and €123 million (€166 million in 2011) in other operating income.

COST ANALYSIS

An analysis of costs and other charges shows an increase of 2.1% (€8,534 million in 2012, compared with €8,357 millionin 2011). This essentially reflects a rise in the cost of goods and services, with a large part of the €175 million increaseattributable to the greater amount of interest paid on BancoPosta current account deposits (an increase of €169 million),as a result of higher interest rates on new commercial offerings introduced during 2012. This means that expenditureremained constant despite the increase in the cost of non-deductible VAT, real estate taxes and transport and thanks tocosts controls.


Cost analysis


Cost of goods and services 1,946 2,121 9.0Other expenses from financial activities 9 1 (88.9)Personnel expenses 5,681 5,658 (0.4)Depreciation, amortisation and impairments 475 526 10.7Capitalised costs and expenses (8) (8) n/sOther operating costs 254 236 (7.1)

Total costs 8,357 8,534 2.1

To ensure the comparability of amounts for the two years, certain amounts for 2011 have been reclassified.n/s: not significant.



Personnel expenses break down as follows.

The ordinary component of personnel expenses, relating to salaries, wages and sundry expenses, is down 0.6% from the€5,407 million of 2011 to €5,373 million in 2012. It includes the effect of the renewal of employment contracts agreed byPoste Italiane SpA and the trade unions in April 2011, offset by a reduction in average employment during the year (over2,000 less full time equivalents on average in 2012, compared with the previous year) and the release of provisions forcharges connected to personnel expenses made in previous years and no longer necessary.Personnel expenses also include redundancy payments, which are down from €287 million in 2011 to €208 million in 2012and litigation costs, primarily relating to the Parent Company’s use of fixed-term employment contracts. These costs reflectthe established effect of application of the so-called Collegato lavoro legislation, which has introduced a cap on compen-sation payable on claims brought by workers on fixed-term contracts, who have been re-employed on permanent contractsby court order. The amounts reflect the overall favourable level of claims actually paid. Again with regard to fixed-term contracts, the Company recruited 8,485 people on fixed-term contracts in 2012 (8,944 in2011), equal to 8,275 FTEs, weighting individual contracts by the related working hours (8,702 FTEs in 2011), of which8,433 correspond to 8,238 FTEs pursuant to art. 2, paragraph 1-bis of Legislative Decree 368/200113. The permanent work-force at 1 January 201214 amounted to 144,420 (146,459 at 1 January 2011), equal to 139,635 FTEs (142,171 FTEs at 1January 2011).

In 2012 personnel expenses also include provisions of €190 million for restructuring charges, reflecting the liabilities thatPoste Italiane SpA will reasonably have to incur under the current redundancy scheme for employees leaving the Companyby 31 December 2014.Finally, personnel expenses also reflect income deriving from fixed-term contract agreements, amounting to €82 million in2012 (€55 million in 2011). This income reflects the agreement of 18 May 2012 between the Parent Company and thelabour unions, regarding the re-employment by court order of staff previously employed on fixed-term contracts. Thisagreement, which is similar to previous agreements regarding the same issue, enabled the Company to enter into individ-ual agreements with staff, giving stable employment to approximately 3,000 people who, at 18 May 2012, were workingwithin the Company by virtue of a provisional court order. Under the individual agreements, each signatory elected not to


Personnel expenses Increase/(Decrease)


Salaries, social security contributions and sundry expenses(*) 5,407 5,373 (34) (0.6)Redundancy payments 287 208 (79) (27.5)Net provisions for disputes 101 (31) (132) n/sProvisions to the Solidarity Fund (59) - 59 n/sProvisions for restructuring charges - 190 190 n/s

Total 5,736 5,740 4 0.1

Income from fixed-term contract agreement (55) (82) (27) 49.1

Total personnel expenses 5,681 5,658 (23) (0.4)

n/s: not significant.(*) This includes the following items reported in note 29 to the separate financial statements salaries and wages; social security contributions; employee

termination benefits; temporary work; Directors’ fees and expenses; other costs (cost recoveries).

13. Art. 2, paragraph 1-bis of Legislative Decree 368/01 requires, among other things, that fixed-term contracts must not represent more than 15% of a com-pany’s workforce in the year in which the staff are recruited.

14. The workforce at 1 January of each year is identical to the workforce at 31 December of the previous year.


46

enforce the legal and financial aspects of the court order requiring their re-employment and approximately 2,720 employ-ees agreed to return, without interest, in variable instalments the remuneration paid for periods not worked and which theCompany had already charged to profit or loss in previous years.

Overall personnel expenses are thus down 0.4% from €5,681 million in 2011 to the €5,658 million of 2012.

After net finance income, profit before tax from ordinary activities amounts to €926 million (€1,391 million for 2011).

In addition to a decline in income tax expense from €692 million in 2011 to €474 million in 2012, the Company has recog-nised tax income of €270 million following the reforms introduced by Law Decree 201 of 6 December 2011, which havehad a total impact of €204 million.Law Decree 201 of 6 December 2011 permits companies to deduct IRAP paid on personnel expenses in full from the IREStax base from 2012, and to apply for a refund of the IRES overpaid in previous years, in accordance with the procedureestablished by the tax authorities in the ruling issued on 17 December 2012. In compliance with this procedure, whichrequires applications to be submitted electronically on pre-established dates (so-called “click days”), on 6 March 2013Poste Italiane applied for a refund of the overpaid tax for periods of assessment that remain open. The Group has recog-nised tax income of €270 million relating to the years from 2007 to 2011 in the financial statements for 2012, assessedon a prudent basis and taking into account the absence of consistent interpretations of the new legislation.This occurrence has resulted in a substantial reduction in the effective tax rate to 22.03%, comprising a tax rate of 26.13%for IRES and a tax rate of 25.08% for IRAP, after the extraordinary impact of the recognition of the refund of tax overpaidin previous years, totalling €270,299 thousand (a reduction of 29.18%). The Company reports a profit for 2012 of €722 million (€699 million for 2011).




3.3 FINANCIAL POSITION AND CASH FLOW

FINANCIAL POSITION AND CASH FLOW OF THE POSTE ITALIANE GROUP

The Poste Italiane Group’s net invested capital amounts to €3,692 million (€4,046 million at 31 December 2011), 100%financed by equity.

Non-current assets break down as follows at 31 December 2012 and 2011:

Compared with the end of 2011, non-current assets are down €195.8 million as a result of reductions of €678.1 millionand additions totalling €482.3 million. Reductions regard depreciation, amortisation and impairments, totalling €648.8 million, of which €394.8 million regardsproperty, plant and equipment, €246 million (including €42 million in impairment losses on the goodwill arising from con-solidation of SDA Express Courier and Mistral Air) intangible assets and €8 million depreciation and impairments of invest-ment property, after reversals of impairments. Further reductions in non-current assets regard:• sales of investment property, totalling €3.6 million;• sales of property, plant and equipment, amounting to €2.8 million; • sales of intangible assets, totalling €3.9 million;• sales of industrial properties accounted for in non-current assets held for sale, amounting to €3.2 million;• adjustments and reclassifications, totalling €15.1 million;• changes in the scope of consolidation, amounting to €0.7 million.

Additions of €482.3 million primarily regard capital expenditure, as follows: • €257.6 million in property, plant and equipment, primarily by the Parent Company and largely attributable to the purchase

of new hardware for the Group’s post offices and headquarters premises and to the restyling and upgrade of the postoffice network and other sites;


At 31 December (€m) Note(*) 2011 2012 Increase/(Decrease)

Non-current assets 3,516 3,320 (196)Working capital 1,726 1,812 86Employee termination benefits and pension plans [22] (1,196) (1,440) (244)

Net invested capital 4,046 3,692 (354)

(*) Notes to the consolidated financial statements.


Property, plant and equipment [5] 2,789 2,650 (139)Investment property [6] 149 136 (13)Intangible assets [7] 558 524 (34)Investments accounted for using the equity method [8] 10 10 -Non-current assets held for sale [15] 10 - (10)

Non-current assets 3,516 3,320 (196)



48

• €219.2 million in intangible assets, regarding the development of software both within the Group and by the Parent Com-pany to support the IT platform and the platform used in the provision of postal services and BancoPosta services;

• €5.3 million in purchases of investment property.

The Group also invested in establishment of the PatentiViaPoste consortium (€104 thousand), in which the ParentCompany (69.65%) and Postecom SpA (17.21%) hold interests, and in covering the losses incurred by Uptime SpA andthis company’s recapitalisation (€115 thousand).

Working capital breaks down as follows at 31 December 2012 and 2011:

Working capital of €1,812 million is up €86 million compared with the end of 2011. The increase is essentially due to thefollowing:• an increase in trade payables and other current liabilities, totalling €216 million and deriving, despite a reduction in trade

payables, from an increase in tax payable on Poste Vita’s technical reserves;• a reduction in net current and deferred tax assets, totalling €503 million, due, on the one hand, to fair value gains on

securities held by BancoPosta RFC (resulting in a reduction in deferred tax assets) and, on the other, to an increase incurrent tax assets deriving from the application for a refund of IRES due to IRAP paid on non-deductible personnel ex-penses between 2007 and 2011, pursuant to Law Decree 201 of 2011;

• a reduction in provisions for risks and charges, totalling €137.5 million, representing the balance of new provisions, to-talling €586 million, and uses/releases of €723.5 million, primarily relating to liabilities linked to personnel expenses anddisputes with personnel;

• a €230 million increase in trade receivables and other non-current assets and liabilities, principally reflecting tax assetsdue to prepayment by Poste Vita (for the years from 2007 and 2012) of withholding and substitute tax on capital gainson life policies.

At 31 December 2012 equity totals €5,650.5 million (€2,848.2 million at 31 December 2011) and breaks down as follows:• Share capital €1,306.1 million • Reserves €1,264.1 million • Retained earnings €3,080.3 million.

Compared with 31 December 2011, equity has increased by €2,802.3 million due to the following changes.Additions:• a €2,262.8 million increase in fair value reserves net of tax, as a result of changes in the value of the securities invest-

ments of BancoPosta RFC;• changes in the cash flow hedge reserves, amounting to €60.7 million net of tax;• profit for the year of €1,032.5 million.



Inventories [10] 47 59 12Trade receivables and other current assets [11] [12] 4,567 4,561 (6)Trade payables and other current liabilities [24] [25] (3,550) (3,334) 216Current and deferred tax assets and liabilities [38] 1,455 952 (503)Provisions for risks and charges [21] (1,549) (1,412) 137Trade receivables and other non-current assets and liabilities [11] [12] [25] 756 986 230

Working capital 1,726 1,812 86




Reductions:• the payment of dividends to the shareholder, totalling €350 million;• net actuarial gains and losses on provisions for employee termination benefits, totalling €203.7 million net of tax.

Net debt/(funds) at 31 December 2012 is summarised below:

Net funds amount to €1,959 million, compared with net debt of €1,198 million at the end of 2011, which reflected fairvalue losses on securities held by BancoPosta.



Financial liabilities [23] 45,152 51,158 6,006

- Postal current account deposits 37,145 39,920 2,775- Financial liabilities designated at fair value 59 - (59)- Bonds 1,366 635 (731)- Loans from Cassa Depositi e Prestiti 533 226 (307)- Financial institutions borrowings 2,904 7,032 4,128- Other borrowings 39 19 (20)- Derivative financial instruments 643 856 213- Other(**) 2,463 2,470 7Technical provisions for insurance business [20] 44,260 56,771 12,511

Financial assets [9] (83,733) (104,148) (20,415)

- Loans and receivables (9,343) (8,403) 940- Held-to-maturity financial assets (14,364) (14,048) 316- Available-for-sale financial assets (50,152) (71,495) (21,343)- Financial instruments at fair value through profit or loss (9,642) (9,964) (322)- Derivative financial instruments (232) (238) (6)Technical provisions for claims attributable to reinsurers [12] (18) (28) (10)

Net financial liabilities/(assets) 5,661 3,753 (1,908)

Cash and deposits attributable to BancoPosta [13] (2,560) (3,179) (619)

Cash and cash equivalents [14] (1,903) (2,533) (630)

Net debt/(funds) 1,198 (1,959) (3,157)

(*) Notes to the consolidated financial statements.(*) Includes financial liabilities payable to subsidiaries and other financial liabilities.


50

LIQUIDITY

FINANCIAL POSITION AND CASH FLOW OF POSTE ITALIANE SPA

Poste Italiane SpA’s net invested capital amounts to €4,502 million (€4,741 million at 31 December 2011), which is 96%financed by equity and 4% by net debt.


For the year ended 31 December (€m) 2011 2012

Cash and cash equivalents at beginning of year 1,093 1,903

Cash flow from/(for) operating activities 958 607

- cash flow generated by operating activities before movements in working capital 1,175 (594)- movement in working capital 48 (502)- financial assets and liabilities attributable to financial activities (573) 1,115- BancoPosta deposits not yet invested in financial assets - (1,168)- financial assets and liabilities attributable to insurance activities 308 1,756Cash flow from/(for) investing activities 79 (395)Cash flow from/(for) financing activities 123 (400)Cash flow from/(for) shareholder transactions (350) (350)

Adjusted movement in cash(1) 810 (538)

Adjusted cash and cash equivalents at end of year 1,903 1,365

Escrow account held at the Italian Treasury (324) -Amounts that cannot be drawn on due to court rulings (18) (25)Current account overdrafts (15) (15)

Unrestricted net cash and cash equivalents at end of year 1,546 1,325

(1) Cash flow has been adjusted, for management reporting purposes, to take account of liquidity of €1,168 million deposited in the buffer account held at theMEF at 31 December 2012. This sum regards BancoPosta's customer deposits and is thus subject to investment restrictions.

Reconciliation with statement of cash flows in financial statementsAdjusted cash and cash equivalents at end of year 1,903 1,365Restricted cash - 1,168

Net cash and cash equivalents at end of year 1,903 2,533


Non-current assets 4,567 4,380 (187)Working capital 1,337 1,521 184Employee termination benefits [19] (1,163) (1,399) (236)

Net invested capital 4,741 4,502 (239)

(*) Notes to the separate financial statements.



Non-current assets break down as follows at 31 December 2012 and 2011:

Compared with the situation at the end of 2011, non-current assets report a net decrease of €187.1 million, following addi-tions of €401.4 million and reductions of €588.5 million.

Additions almost entirely regard capital expenditure, of which 58% relates to investment in ICT (Information &Communication Technology), 26% to the modernisation and renovation of buildings and 16% to postal logistics. In moredetail, additions during the year include €228.9 million invested in property, plant and equipment, €171.9 million investedin intangible assets and €0.5 million invested in investment property. The Company also subscribed 69.65% of the sharecapital of the newly established PatentiViaPoste ScpA (equal to €84 thousand), whose business purpose is to carry out thecentralised printing, distribution and delivery of the new European driving licences.

Reductions primarily regard depreciation, amortisation and impairments (€525.5 million), of which €357.8 million relatingto property, plant and equipment, €162.8 million to intangible assets and €4.9 million to the depreciation of investmentproperty, after reversals of impairments. Further reductions in non-current assets regard:• sales of property, plant and equipment, amounting to €2.2 million;• sales of investment property, totalling €2.5 million;• impairment losses of €58.1 million on investments, regarding impairment of the investments in SDA Express Courier

SpA (€45.8 million) and Mistral Air Srl (€12.3 million);• sales of non-current assets held of sale, totalling €0.2 million.

Working capital breaks down as follows at 31 December 2012 and 2011:



Property, plant and equipment [4] 2,621 2,496 (125)Investment property [5] 80 74 (6)Intangible assets [6] 371 380 9Investments [7] 1,488 1,430 (58)Non-current assets held for sale [14] 7 - (7)

Non-current assets 4,567 4,380 (187)



Trade receivables and other current assets [10] [11] 4,171 4,385 214Trade payables and other current liabilities [22] [23] (3,087) (2,722) 365Current and deferred tax assets and liabilities [33] 1,476 973 (503)Provisions for risks and charges [18] (1,493) (1,354) 139Trade receivables and other non-current assets and liabilities [10] [11] [23] 270 239 (31)

Working capital 1,337 1,521 184



52

Working capital amounts to €1,521 million, representing an increase of €184 million compared with the end of 2011. Therise is primarily due to the following:• a €214 million increase in the balance of trade receivables and other current assets. The reasons for the increase in-

clude an increase in fees receivable from Cassa Depositi e Prestiti due to the positive performance of postal savings de-posits (the fees were collected in early 2013) and partial payment of the Universal Service compensation due for previ-ous years, collected in November in accordance with European Commission decision C(2012)8230, which approved thestate compensation envisaged by the Contratto di Programma (Planning Agreement) for 2009-2011;

• a reduction of €365 million in the net balance of trade payables and other current liabilities, including release of the €324million deposited by the Ministry of the Economy and Finance, in December 2011, in a non-interest bearing escrow ac-count held at the Italian Treasury to partially cover the costs incurred by Poste Italiane in previous years in providing theuniversal postal service. This amount was released following the above European Commission decision approving theterms of the Contratto di Programma (Planning Agreement) for 2009-2011;

• a reduction of €503 million in net current and deferred tax assets, due, on the one hand, to fair value gains on securi-ties held by BancoPosta RFC (resulting in a reduction in deferred tax assets) and, on the other, to an increase in currenttax assets deriving from the application for a refund of IRES due to IRAP paid on non-deductible personnel expensesbetween 2007 and 2011, pursuant to Law Decree 201 of 2011;

• a reduction in provisions for risks and charges, totalling €139 million, representing the balance of new provisions/financecosts, totalling €563 million, and uses/releases of €702 million, primarily relating to liabilities linked to personnel expens-es and disputes with personnel.

At 31 December 2012 equity amounts to €4,312.9 million and breaks down as follows:• Share capital €1,306.1 million • Reserves €1,163.6 million • Retained earnings €1,843.2 million.

Compared with 31 December 2011, equity has increased by €2,311.1 million due to the following changes.Additions:• a €2,076.2 million increase in fair value reserves net of tax, as a result of changes in the value of the securities invest-

ments of BancoPosta RFC;• changes in the cash flow hedge reserves, amounting to €60.7 million net of tax;• profit for the year of €722.2 million. Reductions:• the payment of dividends to the shareholder, totalling €350 million;• net actuarial gains and losses on provisions for employee termination benefits, totalling €198.1 million net of tax.




Net debt/(funds) at 31 December 2012 is summarised below:

Net debt at 31 December 2012 is €189 million, compared with net debt of €2,739 million at the end of 2011, which reflect-ed fair value losses on securities held by BancoPosta.



Financial liabilities attributable to BancoPosta [20] 42,252 48,722 6,470

Postal current account deposits 37,252 40,019 2,767Financial institutions borrowings 1,989 5,566 3,577Derivative financial instruments 624 816 192Other 2,387 2,321 (66)Financial liabilities [21] 2,734 2,121 (613)

Bonds 770 - (770)Loans from Cassa Depositi e Prestiti 533 226 (307)Financial institutions borrowings 934 1,442 508Other borrowings 20 - (20)Derivative financial instruments 9 40 31Other(**) 468 413 (55)Financial assets attributable to BancoPosta [8] (36,669) (44,334) (7,665)

Receivables (8,754) (7,818) 936Held-to-maturity financial assets (14,364) (14,048) 316Available-for-sale financial assets (13,465) (22,456) (8,991)Derivative financial instruments (86) (12) 74Financial assets [9] (1,809) (1,683) 126

Loans and receivables (1,277) (1,171) 106Available-for-sale financial assets (532) (512) 20Net financial liabilities/(assets) 6,508 4,826 (1,682)

Cash and deposits attributable to BancoPosta [12] (2,560) (3,179) (619)

Cash and cash equivalents [13] (1,209) (1,458) (249)

Net debt/(funds) 2,739 189 (2,550)

(*) Notes to the separate financial statements.(**) Includes financial liabilities payable to subsidiaries and other financial liabilities.


54

LIQUIDITY

There has been a reduction in adjusted cash and cash equivalents to €192 million, primarily due to payment of dividendsto the shareholder, totalling €350 million, and redemption of the €750 million bond listed on the Luxembourg StockExchange at the bond’s scheduled maturity date. The Company has, in any event, renewed its EMTN (European MediumTerm Note) programme with the same stock exchange, thereby permitting it to issue new bonds should it be necessaryto raise funds to invest in future business opportunities.


For the year ended 31 December (€m) 2011 2012

Cash and cash equivalents at beginning of year 908 1,209

Cash flow from/(for) operating activities 939 147- cash flow generated by operating activities before movements in working capital 1,123 595- movement in working capital 67 (360)- financial assets and liabilities attributable to BancoPosta (251) 1,178- BancoPosta deposits not yet invested in financial assets - (1,266)Cash flow from/(for) investing activities (649) (335)Cash flow from/(for) financing activities 361 (479)Cash flow from/(for) shareholder transactions (350) (350)

Adjusted movement in cash(1) 301 (1,017)

Adjusted cash and cash equivalents at end of year 1,209 192

Escrow account held at the Italian Treasury (324) -Amounts that cannot be drawn on due to court rulings (18) (26)

Unrestricted net cash and cash equivalents at end of year 867 166

(1) Cash flow has been adjusted, for management reporting purposes, to take account of liquidity of €1,266 million deposited in the buffer account held atthe MEF at 31 December 2012. This sum regards BancoPosta’s customer deposits and is thus subject to investment restrictions.

Reconciliation with statement of cash flows in financial statementsAdjusted cash and cash equivalents at end of year 1,209 192Restricted cash - 1,266

Net cash and cash equivalents at end of year 1,209 1,458


554. Areas of business


4. AREAS OF BUSINESS

Over the years the Group has strongly focused on innovation and diversification of its business and, thanks partly to inte-gration of the service platform, is now able to offer throughout Italy a huge range of value added services via a nationwidephysical and virtual network.Pursuant to Legislative Decree 58/2011, Poste Italiane SpA is the provider of the Universal Postal Service for a period of15 years as of 30 April 2011.Attention paid to innovation and intelligent use of new technologies have enabled complete transformation of theCompany’s structure, aimed at making it more dynamic whilst maintaining its role of providing Italy with a great serviceinfrastructure. An infrastructure that can contribute towards modernising the economy and the Public Sector, mainly thanksto its capacity to integrate various skills and thus offer products, together with traditional services – collection, paymentand reporting services – in tune with the development of e-government processes. Via its post office network the Groupalso provides socially relevant services by enabling access to public services of an administrative and financial nature, suchas the “Reti Amiche” project and the “Social Card” initiative.

Following the establishment of BancoPosta RFC, the methods of measuring and presenting segment information havebeen revised. The new segments for the purposes of the 2012 Annual Report are: Postal and Business services, Financial services,Insurance services and Other services. • Postal and Business services include mail, express delivery, logistics, parcels and philately activities carried out by

Poste Italiane SpA and certain subsidiaries (SDA Express Courier SpA, Postel group, Mistral Air Srl, Consorzio LogisticaPacchi ScpA, Italia Logistica Srl, Postecom SpA, Poste Tutela SpA, PosteShop SpA, Europa Gestioni Immobiliari SpA,Poste Energia SpA), as well as the activities carried out by the various units of the Parent Company for the other seg-ments in which the Group operates. The Postal and Business services segment also includes revenue deriving from ac-tivities carried out by various Poste Italiane SpA functions on behalf of BancoPosta RFC.

• Financial services include the activities carried out by BancoPosta and the subsidiaries, Banca del Mezzogiorno-MedioCre-dito Centrale SpA and BancoPosta Fondi SpA SGR.

• Insurance services include the activities carried out by Poste Vita SpA (whose products are distributed through post of-fices) and its subsidiary, Poste Assicura SpA.

• Other services include the activities carried out by Poste Mobile SpA and the Consorzio per i servizi di telefonia MobileScpA.

Furthermore, since 2010 Poste Italiane SpA has been one of the founding members and promoters of the Global CyberSecurity Center Foundation, a non-profit organisation set up to promote the study of, research into and implementation ofprojects and initiatives regarding the security of information and communication systems.


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4.1 POSTAL AND BUSINESS SERVICES

Postal and Business services include mail, express delivery, logistics, parcels, philately and activities carried out by the var-ious units of the Parent Company for the other segments in which the Group operates. The Postal and Business servicessegment also includes revenue deriving from activities carried out by various Poste Italiane SpA functions on behalf ofBancoPosta RFC.The segment includes these activities:• Mail, comprising Poste Italiane SpA’s provision of traditional postal services, as well as direct marketing and innovative

services within the broader sector of paper-based and electronic communications; document management, communi-cation and e-procurement services for companies and the Public Sector carried out by the Postel group and digital/hy-brid services, as well as e-Commerce, e-Government and Cloud services, provided by Postecom SpA.

• Philately, covering the sale of postage and revenue stamps, and products for stamp collectors.• Express Delivery and Parcels, including express delivery products offered on the deregulated market by Poste Italiane

SpA to Retail and SME customers, and by SDA Express Courier SpA to Business customers. The provision of ordinaryparcel services falls under the Universal Service Obligation (USO).

As mentioned above, various companies operate in support of the Group’s business: Mistral Air Srl provides air trans-port services; Consorzio Logistica Pacchi ScpA carries out sorting, handling and delivery activities relating to theparcels service; and Italia Logistica Srl provides integrated logistics and multimodal services to customers outside theGroup.In addition to the Parent Company, other activities are carried out by Europa Gestioni Immobiliari SpA, PosteShop SpA,Poste Energia SpA and PosteTutela SpA.

The Contratto di Programma (Planning Agreement) regulates relations between the Ministry for Economic Developmentand Poste Italiane SpA in connection with the Universal Postal Service. The Contratto di Programma (PlanningAgreement) for 2009-2011, approved by Law 183 of 12 November 2011, was formally notified to the EuropeanCommission on 22 June 2012. Subsequently, on 20 November 2012, with Decision C(2012)8230 the Commissionapproved the government compensation provided for under the Contratto di Programma (Planning Agreement) for 2009-2011, granted to Poste Italiane in partial coverage of the expenses incurred in fulfilling its USO, deeming them compat-ible with EU legislation regarding state aid.The draft of the Contratto di Programma (Planning Agreement) for 2012-2014, of which a first version was agreed onby Poste Italiane and the Ministry for Economic Development, is currently being examined by AGCom (Autorità per leGaranzie nelle Comunicazioni, Italy’s communications authority) and will later be sent to the Ministry of the Economyand Finance, the Interministerial Committee for Economic Planning (CIPE) and the relevant Parliamentary Committees.The new Contratto di Programma (Planning Agreement) will be submitted to the European Commission for assess-ment of the part regarding government compensation, in accordance with EU legislation on state aid. It is, consequent-ly, not yet possible to predict the time needed for approval. The 2009-2011 agreement remains in effect until approvalis given.The Philately business is also regulated by the Contratto di Programma (Planning Agreement), as far as the issuance ofpostage and revenue stamps is concerned, granting the Ministry for Economic Development the exclusive right to pro-gramme such issues, with distribution and marketing handled by Poste Italiane SpA. The Ministry for EconomicDevelopment appoints the Philately Advisory Committee and the Philately Commission: the first, chaired by the Ministerconcerned, advises on guidelines for Italy’s philatelic policies and the annual programme of issues, and the second exam-ines and selects images and designs for stamps.

During the year legislation governing the sector was affected by various initiatives, including implementation of certainamendments provided for by Legislative Decree 58 of 31 March 2011 (implementation of Directive 2008/6/EC, whichamends Legislative Decree 261 of 22 July 1999). In particular, the delivery of addressed direct advertising, calledPostatarget in Italy and Premium and Economy internationally (renamed Posta Target International Plus and Posta TargetInternational), was removed from the USO on 1 June 2012.




Legislative Decree 58/2011 had originally provided for the transfer of postal sector regulatory and supervisory responsibil-ities from the Ministry for Economic Development to a newly created National Agency for the Regulation of the PostalSector (Agenzia nazionale di regolamentazione del settore postale). The so-called “Salva Italia” (“Rescue Italy”) Decree,(Law Decree 201 of 6 December 2011), converted into Law 214 of 22 December 2011 (art. 21, paragraphs 13 and 14) elim-inated the Agency, providing for postal sector regulation and supervision to be carried out by the existing AGCom. ThePostal Services Directorate established within AGCom became fully operational in January 2012. The new universal postal service Quality Charter15 submitted to the regulatory authorities for approval was publishedin April 2012. Unlike previous versions, it only relates to universal services, as revised by the postal tariff decrees ofrecent years. The third paragraph of art. 21 of Law Decree 216 of 29 December 2011, as amended by Law 14 of 24 February 2012, hasexpanded the scope of the tariffs16 for the publications of parties entered in the Registry of Communications Providers toinclude mail sent by non-profit associations and organisations pursuant to Law Decree 353 of 24 December 2003, in addi-tion to publications sent by armed and combat forces.

On 5 June 2012 the AGCom adopted Resolution 286/12/CONS, which launched the procedure relating to “approval ofPoste Italiane rate changes”, completed with Resolution 640/12/CONS of 20 December 2012.As a result of this measure some important changes have been introduced from 1 January 2013, relating to the range andtariffs for products covered by the Universal Service, regarding non-bulk national and overseas mail, national registered mailand mail relating to legal process. Two new services, Posta Prioritaria Pro and Posta Raccomandata Pro (regarding priorityand registered mail) have been developed for use by customers sending direct mail within Italy – with no special prepara-tion or packaging – franked using methods other than stamps and those available in post offices. Online tariffs for PostaRaccomandata and Posta Prioritaria (registered and priority mail) have also been reviewed. Finally, on 6 February 2013, AGCom adopted Resolution 92/13/CONS, which approved, with amendments, technical con-ditions regarding provision of the bulk mail service.

Other regulatory measures which, not specifically regarding the postal sector, could have an effect on Poste Italiane’s oper-ations are described below.Art. 8 of Law Decree 5 of 9 February 2012 requires that applications to participate in competitive civil service recruit-ment programmes announced subsequent to the effectiveness of the above Law Decree must be sent by electroniccommunications methods in accordance with Legislative Decree 82 of 7 March 2005 (certified e-mail). All announce-ments notifying methods other than the above are null and void, including those requiring applications to be sent by tra-ditional registered mail.Also regarding certified e-mail, the Ministry of the Economy and Finance Decree of 26 April 2012 on “Technical rules forthe use of Certified E-Mail for tax purposes and in particular notices pursuant to article 16, paragraph 1-bis of LegislativeDecree 546 of 31 December 1992”, came into force on 15 May 2012.The Decree, which relates to tax procedures, is one of a number of recent regulations and laws requiring the use of certi-fied e-mail for court proceedings. These laws are intended to permit the use of electronic instruments for civil, penal,administrative and tax-related proceedings as a replacement for traditional direct communication by the Clerk of the Courtor by mail pursuant to Law 890 of 20 November 1982.It should, however, be noted that the Decree of 26 April 2012 does not eliminate the service offered through post offices,but offers the new technology as an alternative option.The use of certified e-mail and digital technology was further promoted by Legislative Decree 179 of 18 October 2012regarding “Additional urgent measures to promote growth in Italy”, converted by Law 221 of 17 December 2012, whichamong other measures: • has prescribed provisions for implementation of the Italian Digital Agenda (art. 1);


15. The postal services Quality Charter defines operating procedures regarding complaints and compensation, giving a detailed description of the times with-in which a complaint may be made and the times within and the means by which it will be answered, types of complaint, and the refunds to be given.

16. Rates fixed by Ministry for Economic Development Decree of 21 October 2010.


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• has established the “digital address” (art. 4), which gives citizens the option to notify their “digital address” to publicauthorities, namely their certified e-mail issued pursuant to article 16-bis, paragraph 5, of Legislative Decree 185 of 29November 2008, converted, with amendments, by Law 2 of 28 January 2009;

• has extended the obligation to obtain a certified e-mail address to one-person firms and artisans (art. 5); • regulates the electronic health service card (art. 12), prescriptions and digital medical records (art. 13);• has endorsed the use of certified e-mail by the courts (articles 16 et seq.).

Internationally, REIMS V has come into force. It sets out the conditions for regulating terminal rates from 2012. TheAgreement has been signed by most European postal operators.Poste Italiane is also a signatory to Sub-Agreement C EPG (European Parcel Group) Convention for the development of anEasy Return Solution (ERS). The Convention was signed by Europe’s major postal operators. It provides for the develop-ment of a prepaid return to distant sellers of e-commerce goods that do not meet the addressee’s expectations.

PROCEEDINGS PENDING AND RELATIONS WITH THE AUTHORITIES

On 18 June 2012 Lazio Regional Administrative Court rejected the appeals of Xerox SpA and Italposte Radio Recapiti Srlfor the reversal of a contract award by the CEO of AMA SpA (Resolution 126 of 21 June 2011) to a temporary consortiumconsisting of Postel SpA and Poste Italiane SpA for the printing, personalisation, enveloping and sending of refuse collec-tion tax documents for households and businesses.The court’s decision is of importance because it clarifies with respect to bid prices that “the regulatory requirements (theDecree establishing the price of the universal service) is not, in this case, absolutely binding (it obviously depends on thenature of the tendered service which clearly cannot be compared with, and hence, regulated, with respect to type ornature, as a universal postal service)”.Indeed “the price of the [bid] service cannot be fixed since each participant must determine the potential cost savings asso-ciated with services bid”. In conclusion, the court held that “the system of computing pricing was, and could not have beenotherwise, assessed with reference to the reasonableness of the bid without there being an a priori automatic mechanismfor the rejection of a bidder for reasons only derived from the cited Ministerial Decree of 19 June 2009, as the appellanthas maintained”.

Antitrust AuthorityOn 4 April 2012, the Lazio Regional Administrative Court upheld the appeal brought by Poste Italiane SpA against the impo-sition of a €39 million fine by the Antitrust Authority on 14 December 2011 in relation to procedure A/413. This concernedalleged abuse of a dominant market position in connection with certain business practices of Poste Italiane, relating to thePosta Time product and participation in certain tenders. The Court expressly held that the process used by the Company to return to sender items originally entrusted to anothercarrier for shipment, but returned via Poste Italiane’s network, was in full compliance with existing laws and regulations. Italso held that the Antitrust Authority’s allegation of abuse of power with respect to Poste Time and Notification Messengerhad not been proven.On 25 October 2012 (notified to the Company on 2 November 2012), the Antitrust Authority lodged an appeal regardingthe sentence handed down by the Lazio Regional Administrative Court, against Poste Italiane and regarding TNT Post ItaliaSpA and other parties, requesting its cancellation and/or amendment; TNT Post Italia SpA lodged an appeal requesting itspartial amendment. Poste Italiane then submitted a cross appeal, requesting rejection of the main appeal lodged by the Antitrust Authority or,otherwise, acceptance of the cross appeal.

On 9 March 2011 the Antitrust Authority launched investigation A/438 regarding an alleged abuse of a dominant positionrelating to commercial practices adopted by Poste Italiane with reference to the bulk mail service. Specifically, this inves-tigation aims to ascertain whether through its behaviour the Company hindered – to the advantage of its subsidiary Postel– the presence in the market of the company Selecta.




In June and July 2011 Poste Italiane submitted its commitments pursuant to art. 14-ter of Law 287/90. The commitmentswere held to be sufficient to remove the anti-competitive practices that gave rise to the investigation. As a result, on 26March 2012 the Authority closed its investigation without imposing a fine and effectively rendered Poste Italiane’s com-mitments compulsory.

The Antitrust Authority opened an inquiry on 14 March 2012 into Poste Italiane’s business practices (A/441) to establishwhether the Company had abused its dominant position in the deregulated postal services market. The purpose of the pro-cedure is to determine the extent to which Poste Italiane could be deemed to have abused its dominant position in viola-tion of article 102 of the European Treaty, given that the Company does not charge VAT on services it considers to be dereg-ulated, in compliance with prevailing national legislation (which exempts VAT for Universal Service provision, includingderegulated services). In June 2012 Poste Italiane submitted its commitments, which were rejected by the Authority witha directive on 25 July 2012, as they were deemed insufficient to resolve the abuse.On 4 February 2013 the Authority released the results of its investigation, where it noted that the national VAT legislationis not in keeping with that of the EU which, as such, must be disapplied. Therefore, Poste Italiane may not be sanctioned for behaviour prior to the Authority’s decision to disapply Italian legislation(art. 102 TFEU regarding abuse of dominant position). However, the Authority deemed that Poste Italiane had abused itsdominant position in the bulk mail, registered mail, insured mail and direct advertising by mail (Postatarget) markets, byapplying discounts – due to the non-application of VAT – that its competitors could not match. Therefore, following the endof the proceedings, Poste Italiane must cease and desist from any such abuse.This date, which was originally scheduled for 4 February 2013, has been extended until 30 April 2013.

On 24 March 2011 the Antitrust Authority launched procedure PS/6858 regarding alleged unfair commercial practices pur-suant to Legislative Decree 206/05 (the Consumer Code) regarding the unavailability of forms relating to standardRegistered Mail and Parcel products at post offices. On completion of its investigation, the Authority imposed a fine of€540 thousand on Poste Italiane. The fine was paid in February 2012 but the Company has appealed the fine to the LazioRegional Administrative Court.

On 28 June 2012 the Antitrust Authority launched an investigation (PS/7023) into the Parent Company’s alleged infringe-ment of articles 20, paragraph 2, 21 and 22 of the Consumer Code regarding the dissemination of misleading advertisingon its website aimed at promoting the Paccocelere Internazionale delivery service, and requested information. The inves-tigation, during which Poste Italiane submitted depositions and commitments, was completed on 19 December 2012. The€45 thousand fine imposed was paid on 6 February 2013.

With regard to the Antitrust Authority’s initiation of a PB/455 procedure regarding PosteShop in 2009, in order to investi-gate alleged infringements connected with the advertising material used by the subsidiary to promote the activities of theKipoint franchise retail network, on 30 March 2010 the Authority imposed a fine of €100 thousand on the company. Theappeal against the fine before Lazio Regional Administrative Court was turned down on 10 November 2010 and PosteShopSpA filed appeal with the Council of State on 11 March 2011. The case before the Council of State has been suspendedas the preliminary request regarding application of the legislation pertinent to the fine has been accepted and the case hasbeen referred to the European Court of Justice. Therefore, the Council of State will pass judgement following the decisionof the European court.

AGCom (the Italian Communications Authority)As mentioned above, Legislative Decree 201 of 6 December 2011, converted into Law 214 of 22 December 2011, hastransferred responsibility for the regulation and supervision of the postal sector from the Ministry for EconomicDevelopment to the Postal Services Directorate established within AGCom from 25 January 2012.In 2012 AGCom launched a number of investigations of the postal sector, some of which were completed (for example,the procedure relating to “approval of Poste Italiane tariff changes” or approval of the technical conditions regarding pro-vision of the bulk mail service, as mentioned above). The principal investigations started in 2012 and still in progress are:• on 4 October 2012 procedure 444/12/CONS, “The universal postal service: analysis and application of the allocation



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mechanism and assessment of the net cost of the service for 2011”, was launched. The procedure is aimed at check-ing the calculation of the net cost of the Universal Postal Service, defining a methodology to be applied that complieswith the provisions of Directive 2008/6/EC, and identifying, when necessary, a mechanism for sharing the expenseamong operators that minimises market distortions. The investigation is expected to be completed on 13 May 2013;

• on 5 June 2012 procedure 287/12/CONS regarding “setting of the price cap for services falling within the scope of theuniversal service ” was launched. The investigation is due for completion on 26 February 2013 and the Company is await-ing information from the Authority;

• on 2 August 2012 procedure 353/12/CONS regarding “evaluation of the General Terms and Conditions for providing theuniversal postal service” was launched; it is expected to be completed by 28 May 2013.

European CommissionWith regard to the proceedings regarding alleged state aid, in the form of remuneration in return for the use of currentaccounts to attract deposits, which is received from the Ministry of the Economy and Finance under the agreement of 23February 2006, on 16 July 2008 (Decision C42/2006) the European Commission ordered Poste Italiane to return sumsregarding the three-year period 2005-2007, deemed by the Commission to be “state aid”, to the Ministry. The Commissionheld that the rate of interest paid to the Company (pursuant to art, 1, paragraph 31 of Law 266 of 23 December 2005, the2006 Budget Law) was above interest rates that would be charged to a private borrower, thus meeting the state aid testfor the years 2005-2006-2007 in breach of art. 88, paragraph 3 of the EU Treaty, both with respect to the method in whichit was determined, as well as the volatility of the benchmark rate. Having returned the amounts requested (€443 million, plus interest of €41 million), on 1 December 2008 the Companyfiled an appeal before the European Community’s Court of First Instance requesting cancellation of the Commission’s deci-sion.At a hearing concluded on 25 October 2012, the Company clearly asserted the absence of any advantage deriving fromapplication of the parameter pursuant to the 2006 agreement between the Ministry of the Economy and Finance and PosteItaliane. The Court’s judgment is awaited.Furthermore, on 20 November 2012, as previously mentioned, with Decision C(2012)8230 the European Commissionapproved the compensation for provision of the Universal Postal Service in accordance with the Contratto di Programma(Planning Agreement), deeming it to be compatible with European legislation regarding state aid. This circumstance led toremoval of the restriction on the €324 million deposited at the Italian Treasury by the Ministry of the Economy and Financein December 2011.




4.1.1 COMMERCIAL OFFERING

Mail Growing use of digital technologies and the continuation of the economic crisis, in an increasingly competitive marketplace,were the main critical factors that led to a slowdown in volumes of traditional products in 2012. In this context, Poste Italiane aims to redefine its offering and business model by pursuing the dual objective of consoli-dating its leading position in traditional postal services by strengthening customers relations and making the logistics anddelivery network more efficient, as well as upgrading the range of new services, which are complementary to mail deliv-ery, thus taking full advantage of its integrated technological platforms. Indeed, the Electronic Postman is the most impor-tant technological innovation by a postal operator in the delivery segment. By using their palmtops, postmen and womenhave become the focus for the modernisation of the delivery network, playing a key role in expanding Poste Italiane’saccess to new business opportunities through the use of multi-channel distribution. This is enabling the Group to providefinancial and telecommunications services, as well as new services supplied directly to customers’ homes.In 2012 the commercial offering saw development of the following initiatives:• Posta Easy Basic, a complementary pre-dispatch mail service for the preparation of items to be mailed. The service pro-

vided by the Innovative Services unit is for the franking and processing of registered mail;• Pick Up Light by phone, a new service option for collection of domestic and international mail weighing two kilos or less.

The service can be arranged through the purchase of a carnet for use within one year;• Posta Pick Up Full, an additional service for collection of domestic and international registered and unregistered mail,

and parcels with a total weight of 30 kilos or less per home pick-up; • Pre-franked Minibox Track, a tracking service for parcels sent to any of 20 European countries with free of charge home

pick-up. The service is available for parcels weighing two kilos or less and paid for when sent;• Postazone Contact, unaddressed mail service for trade publications, advertising material, and promotional information

for delivery to all addresses within one postcode or a part of one postcode anywhere in Italy.

The roll-out of the new Postafree product range for documents and small parcels of two kilos and less, which is also on offerat post offices, was completed. The product entails the sale of pre-franked and pre-packaged envelopes and boxes at homethrough postmen and women, and also in selected post and PosteImpresa offices from which the items can be sent.

New high value-added services introduced in 2012 tailored for the government and medium to large-sized customers in con-junction with existing products and services include Poste Mobile Door to Door services for the home delivery of SIM cardsand collection of signed contracts integrating corporate end-to-end systems for proactive process monitoring and control.A “quick tracking” service was introduced in April for electronic information on the delivery of registered and insured mail.

The number of Integrated Notification Services has been increased through the addition of certain ancillary services aimedat expanding the value chain, such as the collection of traffic fines through the use of penalty charge notices and an inter-national fines collection service for non-Italian vehicles and/or citizens. Another new Integrated Service available fromJanuary in 47 Italian cities was the Professionals Integrated Notification Service introduced for members of the legal pro-fession for the service of court documents.

The Postatarget International service was introduced to send bulk advertising materials of a minimum of 100 items, iden-tical in weight, format and content, to one or more countries anywhere in the world. A new Pre-franked Minibox Track serv-ice was also developed for private customers wishing to send small parcels of two kilos or less addressed to any of 20European countries for which home pick-up can be arranged through the Innovative Services unit.

PhilatelyPhilately customers, consisting of stamp collectors and occasional customers, continue to express interest in the range ofstamps and associated products on offer. The subscription service rose by more than 900 customers during the year, whileonline sales of stamps to tobacconists registered around 12,000 orders (around 2,500 orders in 2011).



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The number of Spazio Filatelia outlets, which continue to be a reference point for stamp collectors, was increased throughthe opening of a new shop in Genoa17. In addition, a total of 1,300 temporary outlets were opened during the year at vari-ous local and national events. The philately programme for the year featured many commemorative issues, including these highlights: the 150th anniver-sary of the Italian lira, the 150th anniversary of Poste Italiane, the 1700th anniversary of the Battle of the Milvian Bridge, theunity and value of Italian surgery, and the Milano 2015 World Expo.Italian art and culture were celebrated in stamps featuring Trani Cathedral, Aligi Sassu, the Baths of Pope Boniface VIII inFiuggi and the Cathedral in Fermo. The “Made in Italy” series included: a sheet of 15 stamps dedicated to fine Italian wineand food, “DOCG wine”; an ordinary stamp dedicated to the Old Pharmacy of Santa Maria Novella, in commemoration ofits 400th anniversary; and stamps dedicated to the Art of Pottery.In 2012 the highly successful series “Stamps from Italy” (33 sheets) came to an end, and in December, in collaborationwith Bolaffi, the new series “Once upon a time we had the lira” went on sale at post offices and Spazio Filatelia outlets,including historic Italian stamps and coins.In addition to organising the customary national philatelic events, MilanoFil and Romafil, in 2012 Poste Italiane took part ininternational philatelic events in the Czech Republic (Prague), Germany (Sindelfingen) and France (Paris).Finally, in addition to the “Philately and Schools” project, involving around 15 thousand pupils from elementary and middleschools, a new social project called “Philately in Prisons” was presented which, through the spread of stamp collecting inprisons, aims to help prisoners in the process of rehabilitation and reintegration within civil society, via a hobby thatbecomes an instrument of knowledge.

Poste Italiane SpA - Public services Poste Italiane continues to develop new initiatives that take advantage of its Sportello Amico network that acts as a con-duit bringing the Public Sector closer to the general public, and as a partner in the management of delegable administra-tive functions, thus speeding up and simplifying administrative processes. In particular, the number of medical services wasincreased in 2012. Real-time payment of health service charges was introduced for the Florence, Cosenza, Caserta andSardinian health authorities. This makes it possible for patients to pay for services provided by eligible entities and to obtaina receipt directly from the health authority. These services are characterised by their social service nature in combinationwith advanced technology.Local tax collection services were introduced, enabling the print out of statements showing the amount payable. Contractshave already been signed with some municipalities regarding tax payments at Sportello Amico counters, such as those forrefuse collection and water supply. A service to issue the certificates required to obtain INPS statements was also activated in 2012.On the basis of an agreement between Rome Provincial Authority and Poste Italiane, since October applications for dig-ging permits and “no parking” signs for entrances to properties in the province of Rome may be submitted at around 200post offices with Sportello Amico counters.In December relations between Poste Italiane and the Ministry of the Interior were further consolidated with the new“Passport home delivery” service. The service, which has been activated on an experimental basis in the provincesof Rome, Verona and Bari, enables direct delivery of a passport issued by the police to an address specified by therecipient.Collaboration continued with ISTAT on the “Ninth census of businesses and services and the census of non-profit organi-sations”, and with INPS regarding the sale and payment of vouchers connected with remuneration of casual labour. Finally, in 2012 Poste Italiane won a contract from the Ministry of Infrastructure and Transport for a project regarding cen-tralised printing and delivery of the new European driving licences. A consortium, PatentiViaPoste ScpA, whose membersinclude the Parent Company and Postecom SpA, was set up for this purpose.

The Postel group, comprising the parent, Postel SpA (a wholly owned subsidiary of Poste Italiane SpA) and the sub-sidiaries, PostelPrint SpA (100% Postel), Docutel (85% Postel and 15% Monte dei Paschi di Siena) and Address Software


17. The Genoa Spazio Filatelia store is in addition to those already existing in Rome, Milan, Venice, Naples, Trieste and Turin.



Srl (50.9% Postel), provides communications services to businesses and Public Sector entities, offering a complete rangeof services aimed at meeting the requirements of Business Process Outsourcing customers18. In addition to printing andenveloping mail, which traditionally represents the Group’s core business, its service offering includes Mass Printing (thegroup of services intended for outsourcers of large volumes of mail); Direct Marketing (integrated communications andmarketing services combined with the printing of commercial documents); Door to Door (corporate support services for“unaddressed” mail campaigns); and Integrated Electronic Document Management, by which the Group offers its cus-tomers traditional optical acquisition and storage services, as well as innovative services such as backup optical filing andelectronic billing, and e-procurement (the management, distribution and supply of stationery, IT products, blank forms,printed matter, consumables and other products required by both Poste Italiane SpA’s network of post offices and by exter-nal parties). In addition to these services, the PostelOffice solution offers SMEs and professionals the chance to buy per-sonalised printing services and office products. The service allows users to manage all their company’s postal communi-cations and printing processes and the personalisation and mailing of all forms of paper document (business cards, head-ed paper, advertising postcards and mailings), thus streamlining existing procedures.The Group continued to support business development during the period through innovation and competitive differentia-tion of the lines of business and placing emphasis and focus on the continual enhancement of the efficiency of operatingand support processes, which are essential to the maintenance of service standards and responding effectively to compet-itive pressures.In fact, the bulk of the Group’s capital expenditure during the year related to infrastructure needed for the provision of serv-ices for its traditional business, but above all for its innovative Integrated Electronic Document Management services.Regarding the liquidation of Postel do Brasil Ltda19 (99.98% owned by Postel SpA and 0.02% by Address Software Srl), fol-lowing the issue of a certificate by the Brazilian tax authorities on 28 September 2012, certifying that no outstanding taxeswere due from the company, the winding up of Postel do Brasil has been completed.


18. Business Process Outsourcing means the outsourcing of a corporate process to a supplier who is responsible for managing it, based on targets and pre-defined conditions and measurement criteria.

19. A Brazilian company incorporated to participate in the competition regarding development of hybrid mail services in Brazil, via the Consórcio BRPOSTAL.The Postel Group was the Consórcio BRPOSTAL’s technology partner for the operation of hybrid mail services and the supply of the relevant softwareplatform.


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Service quality The table below shows the quality achieved compared with the targets set.

Express Delivery and ParcelsIn 2012 Express Delivery and Parcels services saw the Group strongly engaged in laying the foundations for a radicaloverhaul of the segment that will regard product portfolios, commercial models and means of relating with retail and busi-ness customers. The INMAC (Ingegneria Nuovo Modello di Assistenza Clienti) project, aimed at creating a new model forcustomer care in line with best market practices, was launched. Project activities led to the activation of a help desk forpost offices in October, which provides specific support to counter staff nationwide regarding parcel delivery management.CSS-PRIME20, a computerised system for managing complaints about international registered and insured mail, was alsoactivated. The development of products and services for Italian SMEs continued, aimed at promoting the use of pick-ups (a supple-mentary service offered in combination with the Postacelere 1 Plus, Paccocelere 1 and Paccocelere 3 products). Prepaidcarnets for use with these services were also promoted. The delivery time for Home Boxes was reduced from 6 to 4 days. In addition new options were incorporated that make itpossible for customers to independently track their outgoing parcels on the web and to integrate the tracking with theirown IT systems. In October the international product range saw the launch of Export Box, an Express Delivery product thatenables delivery of documents and goods weighing up to 30 kilos to more than 200 destinations around the world. Thisservice, accessible via the internet or paper consignment notes, integrates the functions of the SDA Express Courier SpA’stechnological platform with the logistics offered by the main operators in the EMS/QPE (Express Mail Service/Quick PackEurope) market.

SDA Express Courier SpA, a wholly owned subsidiary of Poste Italiane SpA, in addition to being one of the largest Italiancouriers, provides its customers with integrated solutions for distribution, logistics and catalogue sales. Poste Italiane, infact, only uses SDA Express Courier for the distribution of all domestic and international Paccocelere, ordinary parcel andJ+3 services.During the year, the slowdown in the domestic and world economies, and the growing uncertainty regarding growth anddevelopment prospects, had a negative impact on the company’s activities. These persistent market difficulties, coupledwith growing price competition, were further aggravated by certain extraordinary events that slowed down, and in somecases even halted, operations. In particular, the lorry drivers’ strike connected to a protest against hikes in fuel prices and


2011 2012

Delivery within Target Actual Target Actual

Prioritary Mail(*) 1 day 89.0% 94.7% 89.0% 92.9%International Mail(**)

inbound 3 days 85.0% 92.9% 85.0% 92.0%outbound 3 days 85.0% 91.3% 85.0% 89.6%

Registered Mail(***) 3 days 92.5% 93.8% 92.5% 94.9%Insured Mail(***) 3 days 94.0% 98.9% 94.0% 98.8%(*) Based on data certified by IZI on behalf of AGCom.(**) IPC - UNEX End-to-End Official Rule data.(***) Monitored by the electronic tracking system.

20. PRIME is an initiative undertaken by a group of postal operators, in collaboration with the International Post Corporation, to develop value added servic-es using the integrated CSS-Customer Service System.



the earthquake in the Emilia Romagna region made it impossible for the company to provide its services, resulting in sub-stantial cost increases.In this context, the company continued with efforts to improve its commercial offerings, with a view to protecting mar-ket share and acquiring new customers in emerging segments of the market, such as e-commerce. In particular, therange of special delivery services in Italy such as the “Al piano” service for deliveries to the floor of the building onwhich the addressee is located, the “Su appuntamento” service for deliveries on days and at times pre-arranged withcustomers, and “di Sabato” and “di Sera” services that offer Saturday and evening delivery for addressees who are notat home during working hours. These services were previously only available for on line customers, but are now provid-ed to other customers using paper consignment notes. From October, with the aim of expanding the offering for B2Ce-commerce customers and standardising the requests of B2B customers (entailing delivery to firms and offices at spe-cific times and days), the “giorno-orario definito“ service was launched. This new special service enables the schedul-ing of outgoing mail items for specific days and within a set time period. In response to market demand, insurance hasbeen introduced for domestic parcels based on a percentage of the declared value, as an alternative to insurance bymaximum insured amount. Internationally, a new service, roadEurope, was introduced in March in conjunction with Network Eurodis, a leading com-bined crate and pallet haulier, to 34 European countries. The service meets the requirements of the B2B market and iscombined with separate technological solutions for the full management and monitoring of despatches (from printing con-signment notes to digital proofs of delivery), in addition to providing combi-freight services for transport by crate or pallet.A cooperation agreement signed with UPS (United Postal Service Inc.) last year means that sorting, pick-ups, transporta-tion and distribution of express courier parcels has now been outsourced to SDA. The operating centres involved are thosein Ravenna, Perugia, Trento, Pescara, Udine, Genoa, Ancona, Novara, Siena and Reggio Emilia.

With regard to corporate actions, on 28 September 2012 FS Logistica SpA sold its 50% stake in Italia Logistica Srl to SDAExpress Courier SpA. Therefore, as of 1 October 2012 Italia Logistica is a wholly owned subsidiary of SDA.

Consorzio Logistica Pacchi ScpA, which is a wholly owned subsidiary of the Group (51% by Poste Italiane SpA, 39% bySDA Express Courier SpA, 5% by SDA Logistica Srl and 5% by Mistral Air), continued to coordinate, supplement and super-vise consortium members’ operating activities, and to engage in activities relating to the sorting, handling and delivery ofparcels that Poste Italiane SpA, in its role as a Universal Service provider, is required to carry out. The consortium is alsoresponsible for the transport of air mail (night flights) between certain Italian airports provided by the consortium memberMistral Air, and for the integrated logistics and document management services provided by the consortium member ItaliaLogistica Srl. From 2011 it also manages the Home Box service for around 1,500 business customers (300 business cus-tomers in 2011). On the international front, in order to complete the range of transport services by offering an international service via itsnetwork of consortium members, the consortium carries out special activities relating to transport of the new Export Boxproduct, launched in October.

Online postal services Poste Italiane, in collaboration with Postecom SpA, offers hybrid communications solutions, from digital to paper, whichenables Registered Mail, Telegrams and Priority Mail to be sent online. The service is aimed at business and retail cus-tomers and is accessible via the Poste Italiane website, www.poste.it. These services are also available to business cus-tomers: the dedicated website www.posta-online.it; the host-to-host solution, aimed at large companies, which entailsdirect integration of customers’ management systems with Poste Italiane’s systems, also enabling large volumes of mailto be sent; the PostaonlineDesk, which enables mail to be sent via software installed on a computer. In 2012 an optionwas introduced to send Registered and Priority Mail to overseas destinations online. Development of digital mail services also saw the launch of Postemailbox Professional. This offering integrates the latestservices that enable professionals to manage their communications and personal documents electronically in a single webenvironment, which is deployed on a safe and efficient platform. Aimed at the registered business users of thewww.poste.it website, Postemailbox Professional is offered as a package that includes certified e-mail services, digital sig-natures, and storage and backup of electronic documents, in accordance with regulatory requirements.



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The Postemailbox offering for retail customers, launched at the end of 2011, was enhanced in November 2012 with theintroduction of a new service activation channel that allows users to request an appointment with a postman or woman,free of charge, in order to subscribe directly to the offering at home.

The Express Delivery and Parcels segment saw an upgrade and further development of the functions of online PaccoWeb(launched at the end of 2011), which enables the pick-up and sending of Paccocelere 1 plus and/or Paccocelere 3 parcels,with the launch of the “Professional” section dedicated to SMEs and professionals, in line with the Postemailbox offering.A new internet site, www.ioinvio.it, was also introduced in April for the online booking (including cash on delivery and useof the electronic purse) of SDA Express Courier and Consorzio Logistica Pacchi services. “IoInvio Impresa” is offereddirectly to SMEs by the marketing team.SDA Express Courier continued to offer interactive services through its www.sda.it website. 15 million visits were loggedin 2012 (11.9 million in 2011), whilst around 35 million tracking requests were made and around 2.4 million customerslogged on to schedule pick-ups. In addition to tracking and scheduling pick-ups, other integrated services available on thewebsite include: a branch locator and search for areas served; checks for pick-ups; clearance of shipments by the sender,via a system that automatically sends the stock list, together with codes the customer may use to clear shipments free ofcharge from the website; clearance of failed deliveries by the addressee; search for delivery times to check active servic-es and respective delivery times, based on the postcode and place of origin and the postcode and place of arrival; searchfor places served by so-called “time definite” services; requests for materials. A new web platform was also launched inNovember 2011, allowing final customers, including retail customers, to manage their shipment on their own, printing therelated forms, paying for the shipment and arranging pick-up from the sender’s address.During 2012 the website benefited from several restyling initiatives, aimed at improving accessibility and user-friendliness,including for mobile devices. To this end, the SDA Mobile application was created to directly monitor and manage deliver-ies using smartphones. With the free SDA Mobile app, which can be downloaded from the Apple Store or the Google PlayStore, it is possible: to track an item by typing the consignment note number or scanning the barcode, request a pick-up,clear shipments, search for the nearest SDA branch, and receive the latest updates on SDA services.

Service qualityThe targets for Postacelere and Paccocelere are contractually binding and were established by SDA and the ParentCompany.


2011 2012

Delivery within Target Actual Target Actual

Standard Parcels 3 days 94% 97.6% 94% 96.8%

Postacelere Express Delivery 1 day 90% 94.5% 90% 88.7%

Paccocelere 3 days 98% 99.7% 98% 99.3%

All products are monitored with an electronic tracking system.



4.1.2 OPERATING RESULTS

Mail and Philately

The ongoing economic crisis and the uncertain recovery have exacerbated the already weak performance of mail and phi-lately services. The results in 2012 reveal reductions in both volumes and revenue of 12.1% (4,546 million items handledin 2012, compared with 5,169 million in 2011) and 11.1% (€3,331 million in 2012, compared with €3,748 million in 2011).The reduction in volumes is primarily due to Unrecorded Mail (down 12.6%, equal to 311 million fewer items than in 2011),Direct Marketing (down 17.4%, equal to 208 million fewer items) and Unaddressed Mail (down 13.2%, equal to 81 millionfewer items than in 2011) which, in addition to a decline in electoral mailings, were affected by the fall in the amount ofmail sent by large accounts (corporates and government) and the increased volume of digital communication offered bywell-established competitors. Market revenue, before electoral subsidies (€10 million in 2012, compared with €23 million in 2011), total €3,321 million,marking a reduction of €404 million on 2011 (down 10.8%). This essentially reflects decreases in Unrecorded Mail (down€224 million or 14% on 2011), Recorded Mail (down €42 million, or 3.8% on the previous year) and Direct Marketing(down €55 million, or 18 % on 2011).The contraction in the Unrecorded Mail market affected both Priority and Bulk Mail (respectively, 130 and 125 millionfewer items compared with 2011). Additional service volumes and revenue were also affected by the completion ofactivities relating to the Census of the Italian population and housing in 2011, resulting in 57 million fewer items sentcompared with 2011.


Volumes (‘000) Revenue (€m)

2011 2012 % inc./(dec.) 2011 2012 % inc./(dec.)

Priority Mail 1,028,980 899,144 (12.6) 770 681 (11.6)Bulk Mail 1,386,384 1,261,495 (9.0) 753 685 (9.0)Additional services(*) 63,159 6,517 (89.7) 75 8 (89.3)

Total Unrecorded Mail 2,478,523 2,167,156 (12.6) 1,598 1,374 (14.0)

Registered Mail 229,550 219,126 (4.5) 884 833 (5.8)

Insured Mail and Legal Process 31,588 32,433 2.7 213 222 4.2

Total Recorded Mail 261,138 251,559 (3.7) 1,097 1,055 (3.8)

Philatelic products and Other Basic Services n/s n/s n/s 181 137 (24.3)

Integrated services 56,789 50,725 (10.7) 285 252 (11.6)

Digital and multi-channel services 14,241 14,347 0.7 60 58 (3.3)

Direct Marketing 1,190,139 982,522 (17.4) 305 250 (18.0)

Unaddressed Mail 616,135 534,670 (13.2) 32 32 n/s

Services for publishers 552,211 545,244 (1.3) 158 155 (1.9)

Post office box rental 9 8 (11.1)

Total market revenue 3,725 3,321 (10.8)

including Philately products and Revenue Stamps 180 172 (4.4)

Electoral subsidies 23 10 (56.5)

Total Mail and Philately(**) 5,169,176 4,546,223 (12.1) 3,748 3,331 (11.1)

Postel group - External revenue - - - 232 196 (15.5)

n/s: not significant.From 2009 notices of receipt for registered mail have been treated separately, with priority mail volumes (2011 and 2012) also including these items.(*) Volumes and revenues refer to the collection and delivery of ISTAT questionnaires for the 15th Census of the Italian Population and Housing for 2011.(**) Overall mail volumes, including items handled by Postel and relating to Promoposta (21 million items), amount to approximately 4.6 billion items at 31

December 2012.



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Despite the positive performance of Legal Process services (revenue up €17 million on 2011), Recorded Mail registered a3.7% reduction in volumes (10 million fewer items than the previous year) and a 3.8% decrease in revenue (down €42 mil-lion with respect to 2011).In terms of revenue, Integrated services registered a decrease of €33 million (down 11.6% on 2011), reflecting non-renew-al of contracts with certain large accounts. This was partially mitigated by the good performances registered by NotificationMessenger and ELI2 (Immigrant Workers Regularisation) services, which recorded revenue increases of €0.8 million and€2.1 million, respectively, compared with 2011.Digital and multichannel services revenue is down 3.3%, primarily due to the steady decline in traditional telegram services.Demand for Direct Marketing services was down 17.4% in terms of volumes, resulting in an 18% decline in revenue (208 mil-lion fewer items sent and €55 million less, respectively, than last year). The cause was the reduction in corporate advertising.Unaddressed Mail registered a reduction in volumes of 13.2% (81 million fewer items compared with 2011), while revenuewas stable due to the growth of “project-related” services, which typically involve mailings with a high unit value.Despite the good performance in terms of volumes and revenue of the periodicals produced by publishers enrolled on theRegister of Communications Operators (13 million more items sent and revenue up €6 million on 2011), the market forServices for publishers registered overall decreases in volumes of 1.3% (7 million fewer items sent) and in revenue of 1.9%(down €3 million).

Philately revenue included in postal services revenue, including revenue generated by the sale of Revenue Stamps,amounts to €172 million (€180 million in 2011). This income was generated by a Philately Programme that included 48issues with 83 stamps and 5 postcards, with a value of €56.20 (52 issues with 81 stamps and 11 postcards, with a valueof €59.95 in 2011).

The Postel group’s external revenue is down 15.5%, falling from €232 million in 2011 to €196 million in 2012. This reflectsthe downturns registered in the traditional businesses of Mass Printing (€100 million in 2012, compared with €107.8 mil-lion in 2011) and e-procurement (€4.1 million in 2012, compared with €12.2 million in 2011), which also saw suspensionof the Global Service Provider service in 2011. Therefore, the results achieved by the Integrated Electronic DocumentManagement business, while down on 2011 (€47.6 million in 2012, compared with €48.4 million in 2011), are apprecia-ble in the light of the unfavourable economic backdrop and confirm the wisdom of the strategic decisions aimed at sharp-ening the focus on development and expansion of innovative services, as an effective response to the decline in the seg-ments that make up the Postel group’s core business.The year also saw Postel’s management implement a robust cost cutting drive which, at Group level, resulted in a declinein costs from €231.9 million in 2011 to €183.3 million in 2012.The Postel group’s contributions to consolidated operating profit and profit for the year are €12.7 million (€0.1 million in2011) and €8 million (€2.6 million in 2011), respectively.




Express Delivery and Parcels

Results for the year reflect the weak economy and the poor performance of the transport and above all Express Deliverysegments. This marks the continuation of a trend that was first observed in 2011 and has led to two phenomena: a gen-eral decline in volumes and tough price competition. There was, on the other hand, an increase in traffic almost entirelydue to online retailers. In this context, the business registered a 5.0% increase in volumes, entirely due to the good per-formance of the products marketed by SDA Express Courier SpA, whilst revenue held up, rising from €425.5 million in2011 to €428.6 million in 2012.Poste Italiane SpA’s Express Delivery volumes were down 15.6% and revenue was down 14.5% on 2011. Lower volumeswere observed on both the domestic (down 17.6%) and international (down 7.6%) markets.As mentioned above, the subsidiary SDA Express Courier SpA, made a positive contribution to this segment’s results,recording growth in volumes and revenue of 9.2% and 5.5%, respectively, compared with 2011 (deliveries up 3.7 million,and revenue up €18 million). If the continuation of the economic downturn and tough price competition are taken intoaccount, this positive performance may be linked to growth – albeit limited – in the deliveries of the domestic ExpressDelivery segment (volumes up 3.6% and revenue up 2.4%), deriving from expansion of internet sales, and a substantialincrease in the international Express Delivery segment (volumes up 97.1% and revenue up 40.9%), due to the partnershipagreements with Eurodis and UPS. In particular, the well-established partnership with UPS (United Postal Service Inc.) ledto SDA carrying out more than 3.6 million deliveries in 2012 (1.4 million deliveries on behalf of UPS in 2011). In terms ofrevenue, this increase amounted to over €6.5 million. The partnership with the Eurodis network generated more than 200thousand deliveries, including inbound and outbound, corresponding to revenue of around €3 million.Earnings from Tailor-made services, which are personalised flat-rate services, rose 7.9% due to acquisition of new ordersand the application of higher prices, primarily to banks.Overall, SDA Express Courier SpA saw revenue rise 2.5% from €441 million in 2011 to €452 million in 2012, which didnot, however, offset the increase in operating costs from €452 million in 2011 to €516 million in 2012. Revenue from cus-tomers outside the Poste Italiane Group amounts to €341 million (€323 million in 2011).



2011 2012 % inc./(dec.) 2011 2012 % inc./(dec.)

Poste Italiane SpA’s Express Delivery services

Domestic 6,638 5,470 (17.6) 69.9 56.4 (19.3)

International 1,660 1,534 (7.6) 32.2 30.9 (4.0)

Total 8,298 7,004 (15.6) 102.1 87.3 (14.5)


Domestic Express Delivery 38,277 39,645 3.6 257.4 263.5 2.4

International Express Delivery 2,447 4,822 97.1 19.3 27.2 40.9

Espresso Internazionale Export 151 195 29.1 6.9 7.6 10.1

Espresso Internazionale Import 2,296 4,627 101.5 12.4 19.6 58.1

Tailor-made services n/r n/r n/a 34.0 36.7 7.9

Other revenue n/r n/r n/a 12.7 13.9 9.4

Total SDA Express Courier SpA - External revenue 40,724 44,467 9.2 323.4 341.3 5.5

Total Express Delivery 49,022 51,471 5.0 425.5 428.6 0.7

To ensure the comparability of amounts for the two years, certain amounts for 2011 have been reclassified.n/r: not recordable as such data relates to tailor-made services supplied to banks and insurance companies that cannot be calculated in volume terms.n/a: not applicable.



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The company reports an operating loss of €64 million, compared with a loss of €11 million in the previous year, which was,however, significantly influenced by an impairment loss on goodwill, amounting to €37 million. The loss for the year, which takes into account the €3.2 million impairment of the investment in Italia Logistica, amountsto €50.5 million (compared with the loss of €7.6 million registered in 2011). This led to the application of art. 2447 of theItalian Civil Code (capital below the legal minimum), thereby requiring a general meeting of shareholders to be called totake appropriate measures. Negative equity amounts to €6.8 million (positive equity of €44.9 million in 2011).

Universal Parcels Service revenue of €32.2 million (€32.7 million in 2011) reflects the good performance registered byDomestic Parcels (up 29.0% on 2011), which benefited from standard parcel tariff increases applied in 2011.



2011 2012 % inc./(dec.) 2011 2012 % inc./(dec.)

Universal Service

Domestic Parcels 824 898 9.0 6.9 8.9 29.0

Parcels - international export 483 517 7.0 19.5 21.0 7.7

Parcels - international import 231 191 (17.3) 3.3 2.3 (30.3)

Total Universal Service 1,538 1,606 4.4 29.7 32.2 8.4

Home Box(1) 628 n/a n/s 3.0 n/a n/s

Total Parcels 2,166 1,606 (25.9) 32.7 32.2 (1.5)

To ensure the comparability of amounts for the two years, certain amounts for 2011 have been reclassified.(1) In 2012 this product was transferred to CLP ScpA.n/a: not applicable.n/s: not significant.

Parcels

for the year ended 31 December



OTHER COMPANIES IN THE POSTAL AND BUSINESS SERVICES SEGMENT

Postecom SpAPostecom SpA is the Poste Italiane Group company engaged in technological innovation, specialising in the development,operation and integration of internet, intranet and digital certification services. The most important areas of specialisationrelate to digital certification and communications, payments and e-commerce, document management, e-Government proj-ects, particularly for health services and local taxation, e-Procurement and e-learning, in addition to advanced IT securityservices. Moreover, as mentioned in the section on organisation, during the year Postecom was identified as responsiblewithin the Poste Group for development of e-Commerce, e-Government and Cloud computing solutions, in line with theinitiative undertaken to exploit the potential arising from the existence of a competence centre highly skilled in the devel-opment, operation and integration of online services and the internet.Operations during the year, in the context of a still sluggish market, were affected by the decline registered in the IT sec-tor, in which IT demand deriving principally from corporate capital expenditure is mainly suffering because of the inabilityof corporates to take advantage of the opportunities provided by IT, which has manifested itself through making do withexisting equipment rather than driving innovation. During the year the company launched activities regarding marketing, innovation and development of Poste Italiane’s dig-ital services offering, which were widely covered in the section on online postal services, public services and web distri-bution channel.As mentioned above, during the year Poste Italiane promoted a project to radically transform its infrastructure to includecloud-based solutions, by using the best available technologies, and also with a view to positioning the Group in the mar-ket with a specific offering. The objectives envisage the possibility of expanding the range of services on offer to includeprivate, public and hybrid cloud solutions for the Public Sector and companies, as well as improving internal performancesby reducing costs and making processes more efficient. The company’s revenue is up 40% (€113 million in 2012, compared with €81 million in 2011). Substantial growth in inter-company transactions contributed to this performance (€103 million in 2012, compared with €74 million in 2011) which,as in the previous year, represent 91% of total revenue. The 39% increase on the previous year derives from developmentand provision of IT services on line. External revenue also grew, rising from €7 million in 2011 to €10 million in 2012.The increase in intercompany sales led to a rise in the cost of goods and services from €50.7 million in 2011 to €68.5 mil-lion in 2012, essentially reflecting the supply of the technical services necessary to ensure provision and development ofthe services sold primarily to the Parent Company, using external contractors.The company reports operating profit for the year of €8.4 million (€5.8 million in 2011) and profit for the year of €5.1 mil-lion (profit of €4.1 million in 2011).

Mistral Air Srl Mistral Air Srl provides air mail services to Poste Italiane SpA (in conjunction with Consorzio Logistica Pacchi ScpA) as partof postal service operations, in addition to air freight and passenger services for other customers.Operations during the year were influenced by the difficult situation in the sector in which Mistral operates, especially thepassenger segment, as well as external circumstances and events. Similar to the adverse effects on tourism to Egypt andother less important Middle Eastern destinations of the unrest caused by the “Arab Spring” in 2011, there was a fall incharter services in 2012.Mistral Air continues to monitor the situation, whilst focusing on alternative markets, such as the Balearics, the CanaryIslands, Greece, the Balkans and smaller Italian islands, where development of the business in 2011 and 2012 was con-centrated. However, these markets are subject to strong competition from low-cost European carriers.On 19 July 2012 Poste Italiane SpA published a request for expressions of interest to acquire its current 100% sharehold-ing in Mistral Air Srl, with the intention of evaluating the offers received. The procedure is currently underway.The company reports a decrease in total revenue of 1.4% (€108.9 million in 2012, compared with €110.5 million in 2011),due to a reduction in revenue from the transport of postal items and lower volumes of freight and passenger charter flights.Operating costs rose 0.4% (€113.2 million in 2012 compared with 112.8 million in 2011), primarily due to the cost of fuel.In 2012 the operating loss deteriorated from a loss of €2.3 million in 2011 to a loss of €4.3 million in 2012. The net loss



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for the year, taking into account an impairment of the €3.9 million tax credit relating to tax losses in previous years (2006-2009), amounts to €8.2 million (a loss of €2.2 million in 2011), while negative equity is €5.9 million (positive equity of €2.5million in 2011), leading to application of art. 2482-ter of the Italian Civil Code (capital below the legal minimum).

PatentiViaPoste ScpAOn 6 December 2012 PatentiViaPoste, a joint-stock consortium, was incorporated with a share capital of €120 thousand.The newly formed company is owned by Poste Italiane SpA (69.65%), Postecom SpA (17.21%), Dedem Automatica Srl(8.78%) and Muhlbauer ID Services GmbH (4.36%). The non-profit consortium serves as a joint vehicle for the sharehold-ers to manage and execute the contract with the Ministry of Infrastructure and Transport for the centralised printing, dis-tribution and delivery of the new European driving licences, was awarded on 21 November 2012 following a tenderprocess. Within the consortium, Poste Italiane and Postecom will be responsible, respectively, for delivery of the drivinglicences to the public and IT management, while the other partners will print the driving licences.

Italia Logistica Srl As mentioned above, as of 1 October 2012 the company is a wholly owned subsidiary of SDA Express Courier, whichacquired the shares held by FS Logistica SpA.On 5 October an extraordinary general meeting of the shareholders of Italia Logistica was called to approve the company’srecapitalisation, amounting to €2.2 million and at the same time a further capital injection of €300 thousand. The company reports a decrease in operating income (€85 million in 2012, compared with €90 million in 2011), primarilydue to the overall crisis in the freight transport sector. Operating costs also fell to €83 million at the end of 2012 (€90 mil-lion in 2011). The operating loss amounts to €1.4 million (a loss of €2.3 million in 2011), while the net loss for the yearstands at €1.7 million (a loss of €2.8 million in 2011).

Kipoint SpAThis company is wholly owned by SDA Express Courier and, via a network of franchises and directly managed shops, pro-vides national and international express delivery services, urban delivery, secretarial and assistance services to companies,and office equipment rental in the area of insurance products and other services aimed at companies and individuals.At 31 December 2012 the Kipoint network consists of 82 franchise retail outlets and a direct sales outlet in Florence, aswell as two “Ki-Light” retail outlets for mobile telephone operators who, thanks to the franchise, have access to the tradi-tional offerings of Kipoint and PosteMobile.In December 2012 a contract was signed with Grandi Stazioni SpA regarding the lease of the business unit (for a 15-yearperiod from 1 February 2013) that manages traditional left luggage services and ancillary and complementary services (forexample, photocopying, binding, fax sending and the purchase of standard office products) at 13 large railway stations21

where Kipoint outlets will be opened.Operating income rose from €1.2 million in 2011 to €1.4 million in 2012, while the cost of goods and services declined(€1.7 million in 2012, compared with €1.8 million in 2011).This performance led to an operating loss of €366 thousand in 2012 (a loss of €554 thousand in 2011).The net loss for the year amounts to €295 thousand (a loss of €423 thousand in 2011).

PosteShop SpA PosteShop SpA is the Group company that sells various types of product through the post office network, through director catalogue sales, over the internet at www.posteshop.it and via the Contact Centre. In addition, with Poste Italiane’s dis-tinctive services, it is able to supplement its offering with services such as home delivery for catalogue orders, paymentby direct debit from a BancoPosta account, hire purchase and promotional mobile prices for people buying a cell phone.At 31 December 2012 PosteShop retail outlets consist of 219 “Shop in Shops”22 as well as “Basic” post offices, with


21. Turin, Milan, Verona, Mestre, Venice, Genoa Piazza Principe, Genoa Brignole, Bologna, Florence, Rome, Naples, Bari and Palermo.22. “Shop in Shop” outlets are shops set up in the public area of main post offices, where it is possible to buy books, school and other stationery, toys and

gifts, CDs, DVDs and other items.



counter sales of associated postal service products (e.g. envelopes and boxes) and catalogue products, and around 2 thou-sand Basic Top post offices23.Migration of the www.posteshop.it website to a new platform was completed, enabling the upgrade of its functions andrestyling of the site.Turning to new businesses, the sale of lottery scratch cards in 2012 generated a surplus of €1.7 million on total takings of€20.9 million.Moreover, after an experimental phase that was successfully completed last year, Ticketone services and the sale ofMovebox gift packaging were extended to the entire “Shop in Shop” network. The sale of Movebox was also extended tothe entire Innovative Services unit network. The company reported operating income of €33 million in 2012, down €13 million on the previous year, as a result ofthe overall contraction in consumption. Operating costs also fell from €44 million in 2011 to €33 million in 2012, part-ly due to actions implemented by the company to improve cost controls via the optimisation of distribution and stockcontrols. The company reports an operating profit of €159 thousand (€2.1 million in 2011) and net profit for the year of €310 thou-sand (€1.3 million profit in 2011).

Europa Gestioni Immobiliari SpAThe company operates in the real estate sector in order to manage and develop property assets transferred from theParent Company. Due to the nature of the properties, the service is mainly provided to large customers, often PublicSector entities. The difficult economic environment continues to depress demand with a general lengthening of the average time neededto sell properties. Furthermore, the government’s need to reduce rental expense following a spending review has adverse-ly affected the company’s results, since government entities are the primary tenants of EGI’s property holdings.In response to the crisis in the real estate sector and the economic downturn, in tandem with its traditional mission, thecompany has created a comprehensive facility management offering for the external market, as well as support servicesfor property improvement. Operating income totals €19 million (€23 million in 2011) and includes sales and service revenue of €16.1 million, all ofwhich was generated by property rentals, as no sales were made during the year (sales and service revenue of €19.4 mil-lion in 2011, including €16.8 million from property rentals and €2.6 million from property sales). Operating costs rose from €16 million in 2011 to €17.5 million in 2012, including work on the upgrade of real estateassets (excluding technical consultancy) amounting to €1.8 million (€2.2 million in 2011) and the cost of IMU (a newproperty tax) amounting to €4.1 million (the cost of ICI, the old property tax, amounted to €2.4 million in 2011).Operating profit decreased, falling from €6 million in 2011 to €702 thousand in 2012, while a net loss for the year of€497 thousand was reported (a net profit of €6.4 million in 2011), taking into account lower deferred tax expense ongains24 made on property sales.

Poste Energia SpAPoste Energia is the Group company set up to procure electrical energy from the national grid to meet the needs of theParent Company and subsidiaries.During the year the company continued to pursue its pre-established targets, primarily relating to energy procurement(through publication and implementation of calls for tender), contract management and the provision of value added ener-gy services. The company also supported the Parent Company in matters regarding energy savings and reduction of CO2

emissions through the measurement of energy offtake, for monitoring and analysis purposes, in addition to the design andinstallation of photovoltaic equipment.


23. The “Basic” offering (envelopes, boxes) is available across the entire network of post offices, while the “Top” offering provides a wider range of sta-tionery, publications and audio/video products, merchandising and other products.

24. Deferred tax expense for the year ended 31 December 2012 amounts to €5.4 million, compared with €9.4 million at 31 December 2011.


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Operations registered an increase in sales and service revenue, which rose from €80.8 million in 2011 to €86.7 million in2012, primarily due to the increase in the market price of energy. The cost of goods and services also registered anincrease, rising from €79.6 million in 2011 to €85.5 million in 2012. This performance resulted in a net profit for the year of €198 thousand (a profit of €94 thousand in 2011).

Poste Tutela SpAPoste Tutela is a private security company providing the following complementary services: money transfer, fixed andmobile surveillance, and protection of sensitive information. Poste Tutela provides these services to the Parent Company’soperating units and, from 2010, to customers outside the Group, for whom it primarily carries out the movement of cashand valuables.The company achieved sales and service revenue of €83.3 million during the year (€84.2 million in 2011), reporting a netprofit of €1.1 million, in line with the previous year (€1.2 million in 2011).

Global Cyber Security Center Foundation In 2012 Poste Italiane renewed its commitment to research into and raising awareness about cyber security via the GlobalCyber Security Center Foundation (GCSEC), whose aim is to promote and carry out studies, research, projects and initia-tives relating to IT and telecommunications security.During 2012 the Foundation focused its activities on research, including through collaboration with other national and inter-national companies, and on support to national and international institutions through contributions to the development ofIT security strategies. The research activities regarded: support activities for the European Digital Agenda; support, togeth-er with Poste Italiane, for the Universal Postal Union on the definition of the operating and technical model for “.post”;study of Cyber Security strategies; study of strategic and legislative aspects and operational implications of digital identitymanagement25; and the consolidation of guidelines for SCADA (Supervisory Control And Data Acquisition)26 systems for theenergy sector.

Poste Tributi ScpAPoste Tributi is a consortium (its members are Poste Italiane SpA, Postecom SpA, Postel SpA and AIPA - Agenzia Italianaper Pubbliche Amministrazioni SpA) that manages Poste Italiane Group initiatives in the local taxation sector – primarilythrough its consortium members – regarding tax collection and assessment and other complementary services relating tomanagement of the taxes and other revenue of local authorities (Municipalities, provincial and regional authorities, consor-tia, etc.).Regarding the introduction of IMU (a new property tax), in 2012 the consortium set up a new service that takes the char-acteristics of the new tax into account and provides appropriate support to municipalities in collecting the tax, and collec-tion management, including via the Sportello Amico counter network (via which the public may obtain information regard-ing amounts payable to the municipality, and also pay any taxes due).Also during the year, following the abolition of TARSU/TIA (refuse collection taxes), Poste Tributi, in collaboration withPostecom SpA, developed a range of services for the new Refuse Collection and Services Tax (TARES), taking advantageof the Poste Italiane Group’s physical and virtual networks. Finally, collaboration continued with various local authorities to which the consortium provides tailor-made services basedon each authority’s requirements.The company registered an increase in the value of production for the year, which rose from €5.4 million in 2011 to €9.4million in 2012.


25. The digital identity is the set of data and resources provided by an information system to a particular user. 26. Supervisory Control and Data Acquisition refers to a distributed information system for the electronic monitoring of physical systems.




4.2 FINANCIAL SERVICES

The activities of the Financial services segment include collection of postal savings deposits on behalf of Cassa Depositi ePrestiti SpA (Savings Books and Interest-bearing Postal Certificates), management of postal current accounts and relatedservices, delegated pension payment services, money transfers, collection services for third parties carried out byBancoPosta RFC and regulated by Presidential Decree 144 of 14 March 2001, as amended, as well as services regardingthe management of public funds carried out by Banca del Mezzogiorno-MedioCredito Centrale SpA and the promotion ofmutual funds carried out by BancoPosta Fondi SpA SGR.During the year, following the issue of Legislative Decree 179 of 18 October 2012 regarding “Additional urgent measuresto promote growth in Italy” (converted by Law 221 of 17 December 2012), a number of amendments/additions were intro-duced to Presidential Decree 144 of 14 March 2001. In particular, BancoPosta’s activities now also include the possibilityof:• the establishment of branches in other Member States of the European Union and other countries in addition to engag-

ing in operations permitted in other Member States or countries outside the European Union without the need to es-tablish a branch in such Member State or non EU country;

• the off-premises promotion, distribution and provision of banking and financial products and services27;• the introduction of professional gold trading on own behalf and on behalf of third parties, in accordance with Law 7 of

17 January 2000.

In order to assure compliance with requirements having regard to the transparency of transactions, banking and financialservices, and the propriety of relations between intermediaries and customers, a number of measures were introduced in2012, including the following:• revision and updating of documentation (information leaflets, summary documents, basic information on consumer cred-

it, notices) providing for the transparency of contracts and forms for all BancoPosta products and all products distributedby BancoPosta for other parties (loans, salary loans, home loans, credit cards, POS);

• structural rationalisation of internal procedures at counters in order to properly comply with requirements regarding trans-parency.

Activities continued in 2012 to strengthen processes and controls for the prevention of money laundering (adequate veri-fication, recording of transactions in one IT archive, reporting of potentially suspect transactions). Regarding data protection regulations, steps were taken to comply with the obligations and precautions required byLegislative Decree 201/11 (the so-called “Rescue Italy” Decree28) relating to the transmission of data to the tax authorities.Measures were also taken to ensure compliance with security requirements relating to data transmission and storagemethods, as recommended by the Data Protection Authority in a Memorandum of 15 November 2012, and activities con-tinued regarding compliance with the directives of the authority responsible for the circulation of banking information andtransaction tracking.

RELATIONS WITH SUPERVISORY AUTHORITIES

Bank of ItalyIn February 2012 the Bank of Italy began an inspection of the Parent Company in accordance with art. 54 of LegislativeDecree 385/93, with respect to the activities of BancoPosta. The inspection was concluded in August. On 14 December2012 the Company submitted its considerations to the regulator.

27. The permission to offer customers off-premises products was accompanied by activities to strengthen the regulatory requisites for such operations, par-ticularly personnel training and the implementation of appropriate procedural, information technology and control support.

28. Specifically, the provisions of art. 11, paragraphs 2 and 3 (means for supplementary annual communication of the financial report archive) of Law Decree201 of 6 December 2011 converted into Law 214 of 22 December 2011.


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During the year Poste Italiane also underwent inspections by the “Department of external relations and general affairs”within the Bank of Italy’s Supervision Unit (“Servizio rapporti esterni e affari generali” dell’Area Vigilanza) to verify the com-pliance of BancoPosta’s activities. The areas reviewed included, among others, anti-money-laundering, the transparency ofcontractual terms and conditions and fair trade issues. The outcome of the inspections was notified to the Company in aletter dated 18 December 2012. The Company submitted its own considerations to the Bank of Italy, in reply to this letter,on 13 March 2013.

PROCEEDINGS PENDING

On 18 April 2012 the Financial Reporting Unit (Unità di Informazione Finanziaria, or UIF) of the Bank of Italy began an inspec-tion of the Company pursuant to art. 47, paragraph 1 of Legislative Decree 231/07 relating to the reporting of allegedmoney-laundering transactions. The inspection was completed in October 2012. Following the inspection, the Unit identi-fied six failures to report suspicious transactions, in addition to five such failures uncovered and notified by the FinancePolice in 2012. The Company sent a defence brief to the MEF for every notification received.Overall, at 31 December 2012, there are twenty pending proceedings before the MEF, including fourteen for failures toreport suspicious transactions and six in relation to violations of the rules governing limits on the use of cash and bearerinstruments.

Antitrust AuthorityOn 5 November 2012, the Antitrust Authority notified the initiation of proceedings pursuant to art. 27, paragraph 3 ofLegislative Decree 206/05 (the Consumer Code) and art. 6 of the Regulations governing the investigation of unfair com-mercial practices and at the same time demanded information pursuant to art. 12, paragraph 1 of the Regulations regard-ing the PROMO 4% promotion for Bancoposta Più and Bancoposta Click accounts that was made between December2011 and March 2012. In particular, the Authority challenged the manner with which the terms and conditions of theaccounts were advertised. The end of the proceedings is scheduled for 3 June 2013.





4.2.1 BANCOPOSTA’S COMMERCIAL OFFERING

The commercial offering in 2012 was primarily aimed at:• increasing the number of current account transactions, via additional customer segmentation and product offerings aimed

at meeting customer requirements; • developing and consolidating the Company’s position in the postal savings market;• increasing penetration of the market for loans.

Major efforts were made in 2012 with respect to private current accounts, partly to attract new deposits and partly to pre-vent the withdrawal of deposits held by that segment of account holders most easily attracted by the forms of remunera-tion offered by the competition. In that connection:• “Promozione 4%“ aimed at new and existing current account holders was launched. It entailed the payment of a gross

interest rate of 4% per annum on at least a €3,000 increase in balance above that at 30 November 2011;• “Opzione 3.50%”, which was a fixed term deposit for new and existing current account holders paying 3.50% gross

per annum on deposits up to €500 thousand made before 15 July 2012 and maintained until 31 December 2012.

As mentioned above, 2012 was also marked by the effects of the “Rescue Italy” Decree, which provides for the follow-ing, with regard to the reduction in the value of cash payments to be traced to €1 thousand to discourage cash transac-tions:• the mandatory receipt of pension and wage payments in excess of €1 thousand via electronic means, including by pre-

paid card;• a prohibition on banks and finance companies charging account fees and revenue stamps to the recipients of minimum

pensions;• the mandatory offer by banks and finance companies of basic account services with simplified, transparent and easily

comparable fee structures.

In this regard, BancoPosta has developed a promotion to attract current account deposits: Conto BancoPosta Più. The pro-motion consists of free banking for all of 2012 for pensioners who have their pensions credited to their account prior to 1June 2012. Furthermore, the Conto di Base29 was launched on 1 June 2012, which is a limited transaction account com-bined with a simplified structure and a Postamat card, with a fixed number of services and transactions included in theaccount fee.Conto BancoPosta was replaced from 1 June 2012 with Conto BancoPosta Più as the offering to be marketed to cus-tomers. Various promotions were developed for SMEs to attract increased balances and facilitate the cross selling of financial prod-ucts. The 2% gross per annum credit interest promotion on increases in BancoPosta in Proprio balances was extendedthroughout 2012. “Opzione 3.50% Affari” was added in November. This is a fixed-term deposit on which 3.50% per annumgross is paid on balances between €10 thousand and €500 thousand deposited by 31 December 2012 and maintaineduntil 31 May 2013. In the electronic money segment, where a total of 6.6 million Postamat Maestro cards and 9.6 millionPostepay prepaid cards have been issued (6.3 million and 8.2 million, respectively, at 31 December 2011), the followingevents took place in 2012:• the pilot launch of contactless Postepay Maestro debit cards at all Mastercard PayPass30 authorised sales points in Mi-

lan and the surrounding area; • the launch of the online promotion MyPostepay to customise the card design with images uploaded directly from a PC

or selected from a gallery at www.postepay.it;

29. BancoPosta’s Conto di Base is a current account developed to introduce banking services to consumers. The characteristics of the account have beenformally agreed by the Ministry of the Economy and Finance, the Bank of Italy, the Italian Bankers Association, Poste Italiane and the Association of ItalianPayment and Electronic Money Institutions.

30. PayPass is Mastercard’s contactless card. Contactless cards enable their holders to make payments without swiping their card or inserting it into a read-er; it is only necessary to hold the care nearby.


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• the launch, in conjunction with the Albanian Post Office, of Postepay Twin Albania31; • the launch of the Postepay Corporate, a prepaid business card for all companies, the Public Sector and local authorities

to manage company expenses. Cards can be issued for employees so that they can have prepaid named cards to usefor company or institutional purposes. The card is credited by the company or organisation through the BancoPostaIm-presa on line (BPIOL) remote banking service;

• the launch of PostePay Carta Roma, developed after the tender process organized by Roma Capitale (the Municipalityof Rome) and designed for residents of Rome in receipt of pensions or other payments and parents with dependentchildren. The card has an IBAN code making it possible for the holder to receive bank transfers, income payments orother payments and makes it possible to take advantage of offers and discounts made available by Roma Capitale au-thorised sellers;

• the introduction of the Mastercard SecureCode and Verified by Visa services affording greater protection for on-line pur-chases from all authorised e-commerce sites. The service entails the creation of a personal password for each card.

Various loyalty campaigns were also organised during the year in conjunction with credit card issuers to promote their useas an everyday payment instrument (the “Titolari&Vincenti” campaign for Classic and Gold cards) and to promote paymentsby instalment (“Commissione Zero” and “Commissione ridotta” campaigns for BancoPosta Più card holders).The external top-up channel for Postepay cards, comprising around 40 thousand SISAL betting shops, around 14 thousandtobacconists linked up to the Banca ITB network, and the home banking service provided by the BPM Group and the SNAInetwork, boosted the product’s competitive positioning and leadership, thus guaranteeing widespread availability of thetop-up service. Around 18 million top-ups were made via external networks in 2012 (14 million in 2011).To further enhance the offering, a home top-up service provided via the network of postmen and women equipped withPOS was activated in December 2012.Regarding development of the BancaPosta payments system network, a direct acquiring service32 for BancoPosta debitcards designed for corporate customers was launched in 2012. As of December 2012 this service was also extended tothe Electronic Postman channel.

Various measures were introduced to provide new impetus to post office bill payments in the collections segment. In par-ticular, a promotional campaign was launched in collaboration with Banca ITB to encourage the use of the network of autho-rised tobacconists for the payment of bills (20 million bills paid in 2012, compared with 12 million in 2011). Moreover, incollaboration with the tax authorities, a pre-prepared payment slip for the payment of IMU was developed, providing analternative means of payment of property tax other than the F24 form.

A large number of campaigns were run in 2012 in order to promote loan products to private customers, including:• the repricing and redesign of “Prestito BancoPosta” and “Prontissimo BancoPosta Extracash”, the small loan of €1,500

or €3,000 offered at particularly attractive conditions and reserved to customers who already have a Prestito BancoPos-ta or Prontissimo BancoPosta loan and have kept up with their repayments;

• the Prontissimo BancoPosta promotion providing special loan conditions to all postal savings books holders; • the marketing, in conjunction with the Banca del Mezzogiorno-MedioCredito Centrale SpA, of Mutuo BancoPosta home

loans to employees and pensioners of the Poste Italiane Group for the purchase or restructuring of a home;• the marketing of Specialcash Postepay micro loans developed in conjunction with the financial partner Compass SpA

for which all Postepay named and prepaid cardholders are eligible. There are three predefined loans: €750 repayable inmonthly instalments over 15 months, €1,000 over 18 months and €1,500 over 24 months by payment slip or directdebit;


31. The main Postepay Twin Albania is a registered prepaid card which can be used like a Postepay standard card. The second Postepay Twin Albania is abearer, anonymous, prepaid card which can be used like a Postepay New Gift.

32. The direct acquiring service enables Poste Italiane’s authorising systems to communicate directly with the vendor’s POS.



• the Quinto BancoPosta salary loan offer which, in conjunction with Compass SpA, entails the payment of one-fifth ofthe wages of permanent government employees who receive their wages by CreditoNet33. That offer was followed bythe Quinto BancoPosta salary loan for Poste Italiane employees in conjunction with Banca del Mezzogiorno-MedioCre-dito Centrale SpA.

In 2012, in addition to the ongoing marketing of Reverse Factoring Pubblica Amministrazione, offered in conjunction withSACE Fct, Prontissimo Affari BancoPosta was introduced. This is a medium-term loan for all on-person firms and individu-als with a VAT registration number. These initiatives were conducted alongside the operations of Banca del Mezzogiorno, which are reported on below.

In order to keep abreast of market trends and savers’ requirements, partly in connection with the continuation of the diffi-cult macroeconomic situation, especially in the first half of the year, which substantially affected investment choices andthe propensity of Italians to save, there was a thorough innovation of all Postal Savings products in 2012, in addition to sev-eral dedicated offerings. The business and strategic policies associated with the competitiveness of returns and the closepartnership with Cassa Depositi e Prestiti meant that it was possible to rationalise and expand the Interest-bearing PostalCertificates offered. In addition to the projects introduced in the first half year (four new certificates: BFP7insieme,BFP3.50, 3 year plus BFP and 2 year plus BFP and discontinuation of indexed at maturity BFP and BFPPremia), theBFPFedeltà was launched. The Fedeltà Certificate is intended to convert maturing straight thirty year BFP redemptions intonew subscriptions. The distribution of two equity index-linked BFP (BFP maturity Indicizzato a Scadenza and BFP Premia)on the other hand, has been discontinued, since the certificates were no longer of interest to customers.At the end of March the Bonus Interessi promotion, which was originally run at the end of 2011, was re-launched for postalsavings book holders in order to counter competition for deposit accounts. The offer, which was originally planned to endon 31 May was extended to 30 June 2012 due to its success.

Investment services in 2012 were marked by three fixed rate six-month Unicredit SpA bond placements: Fixed Rate6.10%, Fixed Rate 5.00% and Fixed Rate 5.65%.Poste Italiane also participated in a consortium for the placement of publicly offered Enel SpA and Atlantia SpA bonds andprovided its customers with the ability to subscribe to three new Italian BTP.Finally, in the fourth quarter two bonds placed in 2009 “Credit Suisse 2009/2015, Fixed Rate Plus BancoPosta IV place-ment” and “Barclays 2009/2015 Fixed Rate Plus BancoPosta 4.40%” were offered to the public by their issuers.

Online servicesAn electronic invoicing service was introduced during the year for BancoPostaImpresa on line account holders. This makesit possible to combine the management of all facets of electronic invoice issuance through the exchange and archiving ofinvoices with the security of digital signatures. The Interbank Corporate Banking platform was also altered to comply withCustomer to Business Interaction (CBI)34 standards with a concomitant increase in the level of security.Home and Corporate Banking services associated with BancoPosta accounts maintained their upwards growth trend withover 1.3 million consumer customer on-line accounts (1.1 million active consumer accounts at the end of 2011) and approx-imately 239 thousand business and Public Sector accounts (223 thousand at the end of 2011). Online customers generated 21 million payment transactions in 2012 (over 18 million in 2011). Bill payments proved to bethe most successful of the classic internet banking services, with approximately 5.6 million bills paid on line (4.9 million in2011) by current account direct debits and the use of credit/Postepay cards; 650 thousand of these using the BancoPostaClick channel.


33. CreditoNet is a service provided by the Service Personnel Department of General Administration (DAG) which is part of the Ministry of the Economy andFinance, for government employees to obtain financing from credit institutions and finance companies as quickly and as simply as possible.

34. The Customer to Business Interaction (CBI) consortium is a screen based bank service for companies of all sizes to work directly by computer with allbanks where accounts are maintained.


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The volumes of other types of payments were also good:• 2.9 million online bank transfers (2.3 million in 2011), including over 640 thousand using the BancoPosta Click channel

(433 thousand in 2011); • 4.6 million telephone top-ups (4.8 million in 2011); • 5 million Postepay top-ups (also 5 million in 2011); and, • over 1.5 million post office giro transfers (1.2 million in 2011).

Furthermore, in the financial products online sales segment, there were approximately 65 thousand online subscriptionsto Interest-bearing Postal Certificates (116 thousand in 2011) whereas there were over 2,900 online loan disbursements(2,500 in 2011).

Banca del Mezzogiorno-MedioCredito Centrale SpA In 2012 Banca del Mezzogiorno-MedioCredito Centrale (BdM-MCC) developed its business in two main areas of operation:lending activities and the management of public funds.In terms of intermediation, together with provision of traditional medium- to long-term ordinary lending drawn from therevolving fund (Law 311 of 30 December 2004), the bank developed new operations in support of companies and/or busi-ness linked to the economy in southern Italy, in accordance with the objectives set for the bank by law.For these new operations, the bank uses the following as originators: • the Poste Italiane channel, consisting of 250 post offices enabled to sell the bank’s products;• the network of authorised Confidi (credit guarantee consortia) operating throughout the area;• contracts and distribution agreements with industrial districts, intermediaries, agents and other banks.

Operational and commercial activities were consolidated with expansion of the distribution of the bank’s products to postoffices alongside standard post office counter products (typically of reduced average amounts) and ordinary loans (of high-er average amounts). The “Finanziamento Imprenditore” product, backed by guarantees on residential property, was alsolaunched. This product is specifically designed to meet the financial requirements of small entrepreneurs (owners of one-person firms or partners in collective undertakings).In December a Facility Agreement was also signed with the EIF (European Investment Fund) regarding management ofthe JEREMIE Calabria fund which, with similar objectives and operating architecture to the instrument already implement-ed in Campania, is aimed at supporting SMEs in the Calabria region.

The bank manages public funds in its traditional role as the government’s designated provider of funds and subsidies insupport of companies throughout the country in accessing credit markets and developing their businesses, partly by usingItalian and European public funds, such as the Fondo Centrale di Garanzia per le PMI (a central guarantee fund for SMEs)and other forms of subsidy. BdM-MCC manages grants and incentives involving many industrial policy objectives (accessto credit, promotion of research and technological innovation, support for investment in plant and machinery, incentives forSMEs to raise capital) pursued via a wide range of subsidies (interest rate subsidies and capital grants, easy credit terms,tax relief, loan guarantees, equity participation and negotiated planning).The management of public funds during 2012 entailed signature of the following on 28 and 30 March 2012, respectively:• in temporary consortium with other leading banks, a nine-year agreement with the Ministry for Economic Development

to manage the technical, administrative, financial and accounting aspects of the Fondo di Garanzia per le Piccole e Me-die Imprese (a guarantee fund for SMEs) pursuant to art. 2, paragraph 100, letter a) of Law 662/96;

• in temporary consortium with Artigiancassa SpA, a contract with Cassa Depositi e Prestiti SpA to provide certain backoffice operations for the Kyoto Fund.

Regarding grants and subsidies for research, innovation and the environment, the bank continued management activitieson behalf of central government and some regional entities, thus confirming its role as a leading operator in the provisionof public grants and subsidies to support investment in research and development.



BancoPosta Fondi SpA SGR BancoPosta Fondi SpA SGR is the Poste Italiane Group company engaged in the management of Collective InvestmentUndertakings - UCIs (the establishment, promotion and management of BancoPosta funds and the marketing of third-partyfunds) and of Individual Investment Portfolios.UCIs operations in 2012 included the organisation and launch of four new buy & hold bond distribution funds35.

Regarding individual investment portfolio management, Law 228 of 24 December 2012 containing “Provisions regardingformation of the annual and long-term state budget (the 2013 Stability Law)” incorporates within Italian law the positiontaken by the Court of Justice of the European Union in a sentence issued on 19 July 2012 (Case C-44/11), which deemedthat VAT is applicable to the provision of individual investment portfolio management services. Specifically, pursuant to the2013 Stability Law, as of 1 January 2013 individual management of financial instruments is subject to the application of VATat the ordinary rate (currently 21%, rising to 22% as of 1 July 2013). Consequently, due to these changes in tax legislation,the company has taken the following actions: • termination of the exemption from the obligation to issue and register invoices payable pursuant to art. 36-bis of Presi-

dential Decree 633/72; • as of the VAT payment for January 2013, deduction of an estimated pro-rata percentage on purchases of goods and serv-

ices, notwithstanding adjustment at the end of the year, pursuant to art. 19 of Presidential Decree 633/72.


35. Buy and hold is a long-term investment strategy entailing low turnover of securities in a portfolio (normally they are held to maturity). Consequently,investors aim to obtain returns by purchasing securities that are affected as little as possible by price fluctuations and short-term volatility.


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BancoPosta


Revenue


Current Accounts 2,802 2,924 4.4

Payment of bills by payment slip 595 573 (3.7)Income from investment of customer deposits 1,629 1,773 8.8Other revenue from current accounts and prepaid cards(*) 578 578 n/sMoney transfers(*) 71 64 (9.9)

Postal savings and investment 1,888 1,959 3.8

Postal Savings Books and Certificates 1,504 1,649 9.6Government securities 9 10 11.1Equities and bonds 80 35 (56.3)Insurance policies 263 233 (11.4)Investment funds 11 13 18.2Securities Deposits 21 19 (9.5)Delegated Services 179 153 (14.5)

Loan products 167 156 (6.6)

Other products(**) 34 63 85.3

Total BancoPosta revenue 5,141 5,319 3.5

n/s: not significant.(*) This item includes all revenues from domestic and international money orders and inbound and outbound Eurogiros.(**) This item includes revenues from tax collection forms and tax returns, and revenue stamps.

Deposits

at 31 December (€m) 2011 2012 % inc./(dec.)

Current Accounts(*) 38,021 41,452 9.0Postal Savings Books(**) 92,614 98,778 6.7Interest-bearing Postal Certificates(**) 208,187 213,270 2.4(*) Including time deposits, repurchase agreements and Poste Italiane's liquidity.(**) Deposits include accrued interest for the period, calculated on the assumption that all Interest-bearing Postal Certificates arrive at their scheduled maturity

date.

Number of transactions

for the year ended 31 December (‘000) 2011 2012 % inc./(dec.)

Payment slips processed 526,266 480,718 (8.7)

Domestic postal orders(*) 7,207 6,375 (11.5)

International postal orders 3,128 2,858 (8.6)

Inbound 1,694 1,605 (5.3)Outbound 1,434 1,253 (12.6)Pensions and other standing orders 85,406 80,761 (5.4)

Tax services 12,290 23,846 94.0

(*) Includes Vaglia Circolari giro drafts.

Volumes

at 31 December (‘000) 31 2011 31 2012 % inc./(dec.)

Number of customer Current Accounts 5,575 5,883 5.5

Number of Credit Cards 437 460 5.3

Number of Debit Cards 6,290 6,623 5.3

Number of Prepaid Cards 8,217 9,559 16.3

for the year ended 31 December



The results for financial services relating to BancoPosta RFC reflect revenue growth of 3.5% (€5,141 million in 2011, com-pared with €5,319 million in 2012), essentially due to the positive contribution from current account revenue, which rosefrom €2,802 million in 2011 to €2,924 million in 2012 (up 4.4%), and of postal savings revenue, which rose from €1,504million in 2011 to €1,649 million in 2012 (up 9.6%).In detail, current account revenue is up €122 million on 2011, thanks to an 8.8% increase in interest income on the invest-ment of current account deposits, which has risen from the €1,629 million of 2011 to €1,773 million in 2012. This increasewas positively impacted by the success of the commercial offerings described above, and the returns on government secu-rities acquired with the liquidity deriving from the repurchase agreements the company entered into with Cassa Depositie Prestiti and San Paolo IMI, amounting to €5 billion. These loans were obtained from the European Central Bank as partof its Long-Term Refinancing Operations (LTRO)36. Fee income on the payment of bills by payment slip shows a 3.7% decrease (€573 million in 2012, compared with €595million in 2011) due to a reduction in the number of payment slip processed (481 million in 2012, compared with 526 mil-lion in 2011), partially offset by repricing of the product, which came into effect in July 2012.Other revenue from current accounts and prepaid cards amounts to €578 million, in line with the results registered in theprevious year. This reflects the growth of fee revenue from the issue and use of prepaid cards (€98 million in 2012, com-pared with €96 million in 2011), which was absorbed by a sharp drop in bill collection fees deriving from a reduction in thenumber of bills processed.Revenue from Money transfers is down 9.9% (€64 million in 2012, compared with €71 million in 2011), largely due to areduction in the volume of domestic transfers (Domestic Money Orders: 6.4 million transfers in 2012, compared with 7.2million in 2011), resulting in a decline in revenue (€43.8 million in 2012, compared with €50.3 million in 2011). The volumeof international transactions (Eurogiro and Moneygram) is also down, resulting in a 1.5% decline in revenue. This is prima-rily due to a reduction in the fees applied under the agreements entered into with Moneygram.The sale of Interest-bearing Postal Certificates and inflows into Postal Savings Books, the income on which is linked to amechanism agreed with Cassa Depositi e Prestiti SpA37 tied to the achievement of net savings inflow targets, contributed€1,649 million to BancoPosta’s service revenue (€1,504 million in 2011). These positive results are even more significantin the light of the ongoing general economic downturn and were achieved thanks to a well-established synergy with CassaDepositi e Prestiti, which enabled customers’ requirements to be met with high-quality products, despite the market volatil-ity seen in 2012. Postal savings deposits at 31 December 2012 amount to €98.8 billion (€92.6 billion in 2011), while sav-ings in the form of Certificates amount to €213.3 billion (€208.2 billion in 2011). Asset and fund management38 registered a 19.3% fall in revenue (€310 million in 2012, compared with €384 million in 2011),primarily due to the effect of fewer bond placements (1.2 billion in 2012, compared with 2.8 billion in 2011), generating rev-enue of €35 million, compared with €80 million in 2011. The segment also registered lower revenue from the sale of insur-ance policies (down 11.4%), which fell from €263 million in 2011 to €233 million in 2012. Despite growth in insurance pre-mium revenue (€10.5 billion in 2012, compared with €9.5 billion in 2011), this reflects the promotional policies implementedby Poste Vita SpA in 2012. Fees from the placement of funds rose from €11 million in 2011 to €13 million in 2012.Delegated service revenue amounts to €153 million (€179 million in 2011) and includes revenue from the payment of INPS(National Social Insurance Institute) pensions, totalling €82 million (€105 million in 2011) and fees from the payment ofpensions and salaries for the Ministry of the Economy and Finance, totalling €57.3 million. The fall in revenue is primarilydue to the new obligation, deriving from the “Rescue Italy” Decree and regarding sums of more than €1,000, of creditingpension payments directly to current accounts or postal savings books, the income on which is lower than that for over-the-counter payments.Revenue from the distribution of loan products39 registered a decrease of 6.6% (€156 million in 2012, compared with €167million in 2011), due to the combined effect of a €15.7 million decrease in revenue from loan origination fees (revenue of€122.7 million in 2011, compared with €107 million in 2012), partially offset by a €3.6 million increase in revenue frommortgage origination fees (€13.6 million in 2011, compared with €17.2 million in 2012).


36. In order to support intermediaries’ liquidity and avoid exacerbating tensions on financial markets, the ECB has promoted two Long-Term RefinancingOperations (LTRO), in December 2011 and February 2012, by which it granted loans to banks requesting them.

37. The agreement for the three-year period 2011-2013 was signed on 3 August 2011, and subsequently amended on 13 December 2012.38. Asset and fund management includes the distribution of government securities, equities, bonds, life assurance policies, mutual investment funds and

commissions on safe custody accounts.39. Personal loans, mortgage loans, overdrafts, salary loans and credit protection.


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Finally, the increase in revenue from other products (up €29 million, reflecting growth of 85.3% compared with 2011) wasprimarily due to the increase in the volume of payments of taxes using Form F24, following a Ministry of the Economy andFinance order that property taxes must be paid using this form for the June and September 2012 deadlines.

Banca del Mezzogiorno-MedioCredito Centrale SpA2012 was the bank’s first full year of operation within the Poste Italiane Group. The operating results for the period, at con-solidated level, show net interest income of €13.1 million and net profit of €7.1 million.

BancoPosta Fondi SpA SGR Total assets under management in relation to the company’s lines of business at 31 December 2012 amount to €36.5 bil-lion (€17.2 billion at 31 December 2011). Third-party assets in UCIs amount to €4,129 million (€3,492 million at the endof 2011), whereas Individual Investment Portfolio assets managed for the Poste Vita insurance group amount to €32,379million (€13,693 million at 31 December 2011). Gross inflows amount to €1,407 million, compared with the €887 million of the previous year (up 59%), whilst redemp-tions amounted to €1,010 million, slightly down on the €1,022 million of 2011. The pattern of gross inflows and of redemp-tions resulted in net inflows of €397 million, compared with a net outflow of €135 million in 2011.The principal contribution to total gross inflows in 2012 was from traditional bond funds (€707 million or 50.2% of the totalinflow), followed by buy-and-hold funds (588 million or 41.8% of the total inflow). Other contributions were made by bal-anced funds (€66 million, or 4.7% of the total inflow) and equity funds (€43 million, or 3.1% of the total inflow). Flexiblefunds also attracted customer demand (€3 million, or 0.2% of the total inflow). Redemptions were concentrated in tradi-tional bond funds (51% of the total).The company reports a net profit of €8.6 million (€8.5 million in 2011).





4.3 INSURANCE SERVICES

The Insurance services business is run by the Poste Vita insurance group, a registered insurance group that includes theparent, Poste Vita SpA and its subsidiary, Poste Assicura SpA. Poste Vita SpA operates in ministerial Life Insurance Branches I, III and V and ministerial Non-life Branches I and II (acci-dent and medical). Moreover, in order to broaden its range of insurance products and services by adding cover for old-ageand disability, the company applied for and obtained authorisation, under ISVAP40 Order 2987 of 27 June 2012, to engagein Branch IV business which is long-term medical and disability insurance, which may not be terminated for reasons ofgrave infirmity caused by illness, accident or old age. Poste Assicura SpA, which began operating in April 2010, is authorised to sell non-life policies providing personal injury andmedical insurance, General Liability Insurance, Fire and Other Damage insurance, Care insurance, and Legal Protection andFinancial Loss insurance. The range of products has been divided into two principal lines: Personal Protection and PropertyProtection.


Given the economic and market environment in 2012, marked by continuation of the serious economic crisis (with uncer-tain prospects for a global economic recovery), which also had a profound effect on households’ ability to save, the com-pany’s efforts were aimed at maintaining the level of premiums earned from traditional Branch I life insurance products thatoffer customers a high degree of “security”. Poste Vita also consolidated its leadership in the pensions market, with thenumber of subscriptions to Postaprevidenza Valore exceeding 500 thousand (of which more than 120 thousand in 2012alone), taking the company’s pension fund to the top of the rankings, with the highest number of members among all thepension funds operating in Italy.As Poste Vita was authorised to conduct Branch IV business in 2012, in November the Long Term Care recurrent premi-um product, which provides disability insurance via a life-long annuity, was launched. Poste Assicura’s efforts focused on identifying – in close collaboration with the Parent Company, Poste Italiane – specificcommercial and marketing initiatives designed to improve the sales network’s commercial approach and make it moreeffective. Specifically, three new products were launched during the year:• Postaprotezione SiCura, which guarantees payment of medical expenses relating to surgical operations carried out at

public and private medical centres due to accident or illness. This “reimbursement” health product covers all the ex-penses of a surgical operation, regardless of how major the surgery. The contract provides two optional plans that dif-fer only in terms of the maximum annual amount of cover (€1 million or €150 thousand). The insurance policy also of-fers an additional “top-level diagnostics” option which, also regardless of the surgical operation carried out, covers thecost of a wide range of medical tests;

• Postaprotezione Albo, which safeguards chartered professionals who conduct their professional activities in compliancewith the related standards and regulations. The policy compensates the insured person for any loss of assets that mayderive from any damage claimed by third parties – for the first time and notified during the period covered by the insur-ance policy – following actions carried out by the insured person or by a person for whose actions they are held respon-sible in carrying out the professional service. The product is highly standardised (maximum of 4 options) and includesspecific guarantees for determinate professions. These include business and legal professions (lawyers, accountants andlabour consultants) and technical professions (engineers, architects, surveyors, industrial experts, land surveyors, agron-omists and agricultural technicians);

• Postaprotezione Casa Special (replacing the former Postaprotezione Casa), within the scope of fire insurance, whichprovides for payment of bills in the event that unforeseen circumstances render a customer unable to meet householdexpenses, but excludes earthquake insurance.

40. Following the government’s major amendment of the Decree on the spending review (Law Decree 95 of 6 July 2012, converted by Law 135 of 7 August2012), the insurance regulator, ISVAP (Istituto per la Vigilanza sulle Assicurazioni Private e di Interesse Collettivo) was abolished and replaced by IVASS(Istituto per la Vigilanza sulle Assicurazioni), which is controlled by the current Director General of the Bank of Italy.


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Finally, in implementation of new credit protection legislation, the CPI (Credit Protection Insurance) products, Mortgagesand CPI Loan, were brought into line with the new directives regarding policy beneficiaries.


The fallout from the ongoing economic and financial crisis also adversely affected the life insurance market which, as in2011, registered a further downturn, with the overall value of insurance premium revenue falling to the levels seen in 2006.Unlike its peers, Poste Vita’s results are excellent with insurance premium revenue of €10,519 million41 (€9,514 million in2011), partially because of the deployment, in close cooperation with the distribution network, of special customer promo-tions intended to sustain overall premiums through the retention of expiring business, in addition to developing capitalisa-tion products that guarantee a satisfactory level of customer returns. These results were generated primarily by sales oftraditional products, which amount to more than €9 billion (€8.2 billion in 2011), while insurance premium revenue fromBranch III products was over €1 billion (€1.3 billion in 2011). Investment policy during the year focused on keeping investment funds separate in order to match investments to insur-ance obligations and, at the same time, running a portfolio that can provide stable returns in line with the market.Investment policy was marked by maximum prudence with a portfolio primarily invested in Italian government securitiesand highly rated corporate bonds. As a result of movements in government yields, the return on investment was up on2011 (4% for PostaValorePiù and 5.4% for PostaPrevidenza) despite having held the asset managers to extremely conser-vative guidelines.As a result of the operating performance, technical provisions, computed by analysis of each contract in compliance withthe relevant legislation and based on suitable actuarial assumptions, total €55.1 billion42, marking an increase of 15.5%compared with the €47.8 billion of 2011. In particular, Branch I and Branch V provisions amount to €45.5 billion (€38.3 bil-lion in 2011) accounting for 83% of total provisions. These provisions are made to cover all the company’s obligations andinclude mathematical provisions of €45.1 billion (€37.8 billion in 2011), outstanding claims provisions of €204 million (€342million in 2011) and other technical provisions of €84 million (€90 million in 2011).The technical provisions allocated for Branch III products total €9.6 billion compared with €9.5 billion in 2011.Technical provisions for “accident and medical” products amount to €1.5 million (€2.4 million in 2011).The value of assets attributable to separately managed accounts and the company’s free capital are up from €34.9 billionat the beginning of the year to the current €44.9 billion, invested primarily in government securities (79% of the portfolio)and highly rated corporate bonds (17%). The long-term component accounts for approximately 57% of the portfolio, ofwhich 51% refers to government securities, 3% to Undertaking for Collective Investment in Transferable Securities - UCITSwith guaranteed capital and the remaining 3% to corporate bonds.Class D investments amount to €9.7 billion (€9.4 billion at year end 2011) and include €3.8 billion invested in structuredbonds underlying index-linked products and in mutual funds underlying unit-linked products, for which Poste Vita does notprovide any capital guarantee or guaranteed minimum return, and €5.9 billion consisting of financial instruments underly-ing the index-linked products for which the company directly provides capital guarantees and guaranteed minimum returnsfor customers.

As a result of the above, profit for the year is €265.5 million, marking a sharp increase of €133.8 million on the profit of€131.7 million registered in 2011.

During 2012 the subsidiary, Poste Assicura, issued a total of around 250 thousand new policies (268 thousand in 2011),resulting in insurance premium revenue of €48 million (€42.8 million in 2011). This, together with the sound claims recordand the containment of operating costs, has resulted in a profit of €4.6 million (profit of €796 thousand in 2011).


41. Including €10,517 million in life premiums and €2 million in non-life premiums, both gross of outward reinsurance premiums.42. At consolidated level, these provisions total €56.8 billion, given that they take account of the value of the unrealised losses transferrable to policyhold-

ers, calculated using the shadow accounting method which, as of the financial statements for 2011, is based on the prospective yield on each separate-ly managed account, considering an assumed realisation of unrealised gains and losses over a period of time that matches the assets and liabilities heldin the portfolio.




4.4 OTHER SERVICES

Other services include the activities carried out by PosteMobile SpA and the Consorzio per i Servizi di Telefonia Mobile

ScpA.


PosteMobile is an MVNO (Mobile Virtual Network Operator), operating in the telecommunications sector as a mobileEnhanced Service Provider. The company’s focus during the year in response to competitive pressure was its commitment to its “value” strategythrough the promoting of MNP - Mobile Number Portability.The number of lines at 31 December 2012 exceeded 2.5 million (2 million at the end of 2011), 2.3 million of which for con-sumers and approximately 200 thousand for businesses. Terminations totalling approximately 596 thousand were above the figure of 464 thousand at the end of 2011. Churn, howev-er, was below the industry standard in confirmation of the brand’s appeal and the attractiveness of PosteMobile’s product range.In the consumer market commercial initiatives were primarily aimed at high spending customer segments more inclinedto use latest-generation devices. Therefore, the offering was enhanced with new fixed price plans with either voice/SMSor voice/text/data bundles. The first unlimited voice and text plan, “Zero Pensieri Infinito“, was also launched and, startingin September, the integrated sale of Postepay cards with a PosteMobile SIM card began. Finally, several initiatives alsoregarded “all-inclusive” offerings that include a combined voice, text, data and handset package.The business market offering was aimed at growing the SOHO customer segment, by offering innovative solutions anddeveloping “all-inclusive” price plans and the handset offering.Regarding distinctive added value services, PosteMobile’s leading role in the mobile telephone payment services marketwas further strengthened, in both the Remote Financial Services and the Proximity Payment Near Field Communication(NFC) segments. Regarding the latter, the company affirmed its position as number one telephone operator by launchingthe sale of NFC SIM cards, integrated with BancoPosta’s Postepay New Gift, on the NFC service market. The new AppPosteMobile, an application that enables use of the “simplify” services on smartphones and tablets, was launched. Amongother things, this application enables the payment of bills simply by framing them with a smartphone camera, as well astransfers and Postepay top-ups.The number of mobile payment transactions carried out by PosteMobile customers during 2012 amounts to 23.4 million(18.7 million in 2011), including 8.2 million outgoing payments (7 million in 2011). The value of transactions amounted to€256 million, up on the €198 million registered in 2011.

On the regulatory front, 2012 was marked by a revision of mobile termination charges, applied as of 1 July 2012 withAGCom Resolution 621/11/CONS, which brought the rate charged by the main telephone operators down from 5.3 to 2.5euro cents a minute. This measure made a substantial contribution to increasing price competitive for traditional services,as many operators have launched price plans featuring unlimited calls and texts.

Consorzio per i Servizi di Telefonia Mobile ScpA, which is wholly owned by the Group (51% Poste Italiane SpA and49% Poste Mobile SpA), has been assigned the role of providing Poste Italiane with electronic communications networksand the related platforms, systems and terminals, by coordinating, organising and managing the resources, equipment andpeople made available by the consortium members. The consortium is also responsible for supplying the related mobile,fixed-line, integrated and value added services.During the year the consortium continued to carry out activities in accordance with its business purpose, managing certainprojects, as mandated by Poste Italiane, of which these are the most significant: • “Framework agreement regarding mobile telephony and other mobile services for Poste Italiane SpA”; • “Provision of telecommunications and central system services, and peripheral software and specialist support services

for the implementation and management of the Electronic Postman Project”; • “Provision of a one-time password (OTP) generation and validation service for Postepay transactions”.


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Despite a highly competitive market, PosteMobile’s commercial initiatives launched during the year enabled the companyto register a good performance. Sales and service revenue is up 22.5% (€338.7 million in 2012, compared with €276.5million in 2011), reflecting an upturn across all business segments, as well as expansion of the scope of consolidation43.Voice services, with revenue of €202.1 million in 2012 (€175 million in 2011), grew due to expansion of the customer baseand an increase in traffic volumes.The cost of goods and services kept pace with revenue, increasing as a result of traffic growth from €216 million in 2011to €266.8 million in 2012. The company reported operating profit of €27.9 million (€26.3 million in 2011) and profit for the year of €18.1 million(€16.6 million in 2011).


43. The total contribution to revenue from the telecommunications unit amounts to €70.5 million (€53.9 million in 2011).


895. Distribution channels


5. DISTRIBUTION CHANNELS

In 2012 the Company continued its commitment to a multi-channel strategy, aimed at meeting the increasingly sophisti-cated requirements of its customers. The many contact channels activated over the years include: Counters, Financial/LoanProduct areas, the network of PosteShop outlets consisting of “Shop in Shops” set up in post offices, the PosteImpresanetwork, the Contact Centre, ”electronic postmen”, the website and the most innovative social networks, Facebook andTwitter, Pinterest and the YouTube channel. In order to enhance the innovative Poste Mobile offering, which is based on synergy between telephony and financial serv-ices linked to current accounts, PosteMobile Corners, dedicated to the sale and promotion of Poste Mobile products andservices, equipped with a showcase and a product display counter, and run by dedicated staff (Poste Mobile Sales Staff),were set up at 61 post offices during the year.

Sales and contact channels regarding Retail customers, Small and Medium Enterprises (SMEs) and some LocalGovernment customers are overseen by the Private Customer function, which coordinates the network of post offices andcontact centre services. The Large Account and Public Sector function is responsible for managing and developing busi-ness with Large Accounts, Central Government and some Local Government customers.

5.1 RETAIL/SME

The identification continued during the year of specific measures, for the retail and business segments, to improve theorganisational and sales performance of each by increasing the effectiveness of marketing through improvements to postoffice sales support, the streamlining of operations and by placing greater emphasis on new product development. Theseefforts were also ratified by the agreement reached with the labour unions in December, aimed at defining a new modelfor the Private Customer function. In this context, in order to strengthen local presence in the retail customer market, theposition of Financial Sales Promotion Specialist was created, dedicated to the promotion and sale of savings and invest-ment products. Activities aimed at enabling rapid customer access to Group services continued via the queue management system (2,885systems up and running at the end of 2012) and the acquisition of additional ATMs to extend the current national network(the total nationwide network includes more than 6,700 ATMs).Additional separate Postamat windows have also been introduced in some post offices. As of 31 December 2012, 2,684post offices have Postamat tills with a total of 3,692 counters reserved for BancoPosta current account holders.

The PosteImpresa channel, which at 31 December 2012 comprises 263 PosteImpresa Offices, saw consolidation of thenew operating model launched at the end of 2011, aimed at enhancing the SME distribution network through the elimina-tion of Business Offices and the consequent change in scope of Area Offices, Branches and PosteImpresa Offices, as wellas via Business Customer Sales Specialists (502 at 31 December 2012), who manage Business customers at post officeswith high sales potential. In order to proactively manage customers via the traditional sales network, Business customerportfolio reorganisation was carried out, taking advantage of the CRM (Customer Relationship Management) tool to pro-


90


vide information. This tool witnessed development initiatives aimed at encouraging sales activities via several channels (forexample, experimental collaboration with the Contact Centre regarding appointment management), as well as develop-ment of cross- and up-selling techniques.

With the support of Postecom, a pilot project was launched with the Municipality of Fiumicino regarding collection of appli-cations to start, modify or terminate activities that companies must submit to the One-Stop Business Service Centre(Sportello Unico per le Attività Produttive, or SUAP) established pursuant to Presidential Decree 160/10 (regarding the sim-plification and reorganisation of the one-stop business service centre regulations). The regulations stipulate that applica-tions must be submitted electronically and digitally signed. Poste Italiane collects the applications via physical counters,which are then dematerialised at the Administrative Services Centre and sent to the municipality’s service centre.

5.2 BUSINESS AND PUBLIC SECTOR

The market and competitive environment demonstrate the need to protect revenue from traditional services, while at thesame time increasing the Group’s penetration of other market segments, especially with respect to new services. This isparticularly important for the large account and public sector segments, which created the need to develop and implementa new business model, and included these activities in 2012: • the reorientation of commercial policy in accordance with an approach based on the selective differentiation by vertical

segment and/or customer value. The resultant increased specialisation of the sales force and the enhancement of prod-uct skills makes for the maximisation of opportunities relating to the value chain of each segment;

• strengthening the ability to develop and implement vertical solutions with levels of service consistent with the market’scompetitive dynamic, including post-sales assistance, which is indispensable for customer loyalty;

• getting closer to all customers, including high value clients, through the establishment of area offices, with sufficientspecialist skills to oversee all phases of business and to assure customer satisfaction by overseeing pre-sales, sales andpost-sales processes. As discussed in the section on the organisational structure, six Area Offices were established forthe Large Account and Public Sector segments in addition to two functions specialising in sales to partner channels andcentral government.

Regarding development of public sector projects, in 2012 the Company won a contract from the Ministry of Infrastructureand Transport for a project regarding centralised printing and delivery of driving licences. A consortium, PatentiViaPosteScpA, was set up for this purpose, whose members include the Parent Company and Postecom SpA, among others.

5.3 THE CONTACT CENTRE AND THE INTERNET

The activities of the “Poste Risponde” Contact Centre, which plays a key role in customer relationship management andin supporting business functions and Group companies, continued. Approximately 18.3 million contacts were handled dur-ing the year, of which more than 91% for the captive market. In addition to retail customer relationship management regarding financial, postal and internet matters, the main servicesprovided in support of internal Group activities regard: assisting the post office network with enquiries regarding regula-tions, operations and product and service support; after-sales services and assistance to post offices regarding Poste Vita,Poste Assicura products; Poste Mobile; PosteShop customer care. The most important initiatives during the year include:• the establishment of specialist assistance for post offices for Express Delivery and Parcels products;• the establishment of an information and assistance service for post office savings products and Banca del Mezzogiorno

loan products;


915. Distribution channels

• the establishment of a contact centre providing assistance to business customers (Genoa site);• the revision of post-sales processes for financial services to improve the assistance provided to customers and post of-

fices;• the creation of an operating unit to handle complex queries regarding financial services, making post-sales independent

of commercial units and thus reducing the time needed to resolve problems.

The web distribution channel run by Postecom via the website www.poste.it and other dedicated web portals (e.g. www.pos-teecommerce.it, www.poste-impresa.it, www.postepay.it) provides access to online services for around 8.5 million retail andbusiness customers, operating as a direct end-to-end sales channel and as a support provider for other channels. In 2012, in addition to ordinary activities including updates to the editorial and multimedia content of websites and portals,several initiatives were implemented aimed at enriching and optimising Poste Italiane’s online offerings.Specifically, these website improvement initiatives were carried out:• restyling of the Group’s digital image. In particular, the PosteImpresa vortal, a vertical portal44 for professionals, SMEs

and large accounts, was created by porting45 all the content that was previously hosted in the section of the www.poste.itwebsite dedicated to professionals and SMEs;

• functions to support the web distribution channel, regarding direct sales (applications to open current accounts and specialservices via integration with online CRM, development of the Paccoweb service), as well as support to the physical chan-nel. These functions enable optimisation of web customer management and improvement of the customer experience;

• analytic and qualitative monitoring of the web in order to define online customer behaviour (number of visits, origin ofvisits, pages visited, products subscribed to, etc.) and online completion rates. Development of a digital marketing plat-form was also launched, aimed at management of dynamic and profiled advertising campaigns;

• commercial effectiveness through the conceptualisation, design and implementation of digital communications cam-paigns (landing pages46 and banners47, etc.);

• customers’ ability to find content through embedding a search engine and the positioning of products and services onsearch engines;

• availability of and access to online information.

Another important initiative regards the creation of a new top-level domain name, “.post”, leading to the setting up of anew portal website, www.posteitaliane.post, an international showcase within the Universal Postal Union (UPU) that willenable secure exchange of information via the postal operators’ network, and the creation of new services for the gener-al public, companies and institutions. Activities on Poste Italiane’s official social networking sites intensified during 2012, with over 100 thousand Facebookfriends at 31 December 2012, as well as YouTube, Twitter and Pinterest. Social networks are a vehicle for establishing adialogue and immediate contact with customers, who can request information and receive real-time updates on all of thePoste Italiane Group’s services and operations. The activities of other Group companies included the restyling of the web-sites of Poste Vita and Poste Shop, as well as the BancoPostaFondi SGR web portal.

Postecom also launched Poste Italiane’s “Poste e-commerce” offering during the year, an e-commerce solution aimed atmeeting the requirements of various commercial targets. The offering leverages the Group’s distinctive features: a cloud tech-nology platform managed by Postecom SpA, delivery services managed by SDA Express Courier SpA, logistics services man-aged by Italia Logistica Srl and payment services by BancoPosta. In October a commercial offering was launched for microand small enterprises via the Private Customer channel (Smart and Master packages). Finally, with a view to encouraging thegrowth of “Made in Italy” exports and logistical and international payment operations, Postecom and Poste Italiane launchedthe drawing up of bilateral agreements with international postal operators (including China, Russia and Holland).


44. A vortal or vertical portal is a site that offers high added value content and services to meet the specific needs of a particular user category.45. The transfer of an application/program to a platform other than the one it was originally designed for. 46. In web marketing the landing page is the page where the visitor is taken after clicking on a link or advertisement, The landing page can be a separate

page specifically designed to continue or provide more details of the advertising message after clicking or may be part of a domain registered specifical-ly for the purpose.

47. A banner is a bar on a web page and is generally used to contain advertising content for other services or companies.


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6. HUMAN RESOURCES

6.1 HEADCOUNT

The workforce employed by Poste Italiane Group and the Parent Company breaks down as follows:

Poste Italiane Group

Number of employees(*)

Average for the year ended At

Permanent workforce 31 Dec 2011 31 Dec 2012 31 Dec 2011 31 Dec 2012

Executives 734 747 712 764Middle managers 14,853 15,107 14,829 15,284Operational staff 126,470 124,246 123,889 123,434Back-office staff 4,367 4,346 4,048 3,494

Total workforce on permanent contracts 146,424 144,446 143,478 142,976

Traineeships 44 49 51 31Apprenticeships 44 46 48 43

Total 146,512 144,541 143,577 143,050

Average for the year ended

Flexible workforce 31 Dec 2011 31 Dec 2012

Temporary contracts 140 157Fixed-term contracts 1,801 1,844

TOTAL 1,941 2,001

Total permanent and flexible workforce 148,453 146,542

(*) All workforce data is expressed in full-time equivalent terms.


936. Human Resources

Poste Italiane SpA


Number of employees(*)

Average for the year ended At

Permanent workforce 31 Dec 2011 31 Dec 2012 31 Dec 2011 31 Dec 2012

Executives 584 577 556 586Middle managers (A1) 5,788 5,853 5,783 5,867Middle managers (A2) 7,890 7,938 7,806 8,055Grades B, C and D 124,111 121,773 121,485 120,934Grades E and F 4,321 4,294 4,005 3,435

Total workforce on permanent contracts(**) 142,694 140,435 139,635 138,877

Traineeships 14 25 17 18Apprenticeships - - -

Total 142,708 140,460 139,652 138,895(**) including:

- Seconded 13 10 12 9- Suspended without pay 2,077 1904 1,864 1,736- Seconded to Group companies 52 22 42 9

Average for the year ended

Flexible workforce 31 Dec 2011 31 Dec 2012

Temporary contracts 25 32Fixed-term contracts 1,701 1737

TOTAL 1,726 1,769

Total permanent and flexible workforce 144,434 142,229

(*) All workforce data is expressed in full-time equivalent terms.


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6.2 TRAINING

Training activities were aimed at supporting business, customer relations management, also regarding legal aspects, andsupporting organisational changes.An important innovation saw the introduction of the “Internal Company Training Catalogue”, including a wide range of solu-tions for the various professions present within the Company, aimed at providing a prompt and steadfast response tobehavioural, managerial, legal and specialised technical training requests.A total of 1.4 million participations were registered, entailing provision of 376 thousand person days of training, of which281 thousand in the classroom (75%) and 95 thousand through e-learning (25%).

Classroom courses (person days)

E-learning courses (hours)

The main initiatives carried out in the regulatory field included continuation of the online “Banking Transparency” course,aimed at post office staff and designed to provide adequate and up-to-date knowledge of the regulations regarding correctmanagement of all phases of the relationship between the intermediary and the customer. Around 24 thousand staffenrolled for the course in 2012.Also regarding post office staff, the online anti-money laundering course, aimed at meeting the training obligations provid-ed for by law regarding authorised intermediaries and designed to prevent and combat money laundering, continued. Morethan 37 thousand staff participated in the course.


Year ended 31 Dec 2011 Year ended 31 Dec 2012

Middle Middle Grades managers Grades managers

B-C-D-E-F (A1 and A2) Executives Total B-C-D-E-F (A1 and A2) Executives Total

Postal services 31,955 4,329 454 36,738 75,264 4,067 265 79,596

Financial services 239 422 49 710 226 456 77 759

Private Customer/LAPS 154,535 47,922 765 203,222 140,203 53,938 564 194,705

Central functions 2,144 4,486 411 7,041 1,918 3,744 340 6,002

Total 188,873 57,159 1,679 247,711 217,611 62,205 1,246 281,062

Year ended 31 Dec 2011 Year ended 31 Dec 2012

Middle Middle Grades managers Grades managers

B-C-D-E-F (A1 and A2) Executives Total B-C-D-E-F (A1 and A2) Executives Total

Postal services 69,007 3,424 12 72,443 77,592 1,489 15 79,096

Financial services 3,680 696 9 4,385 1,480 934 36 2,450

Private Customer/LAPS 1,099,141 162,634 68 1,261,843 509,344 86,781 245 596,370

Central functions 5,975 6,488 82 12,545 3,154 3,522 112 6,788

Total 1,177,803 173,242 171 1,351,216 591,570 92,726 408 684,704

Total person days 163,584 24,061 24 187,669 82,163 12,879 57 95,098



A new online course was also provided regarding administrative crimes and misdemeanours relating to market abuse,which entails the responsibility of the Company pursuant to Legislative Decree 231/01. The initiative, entitled “Marketabuse: regulations, suspicious transactions and notifications”, involved around 11 thousand participants. The certification programme regarding professional qualifications for insurance service operators continued, with the issueof approximately 217 thousand certificates in accordance with the regulations of the insurance regulator, IVASS - Istitutoper la Vigilanza sulle Assicurazioni (formerly ISVAP).The Postal services classroom programme entitled “Airport Security – Basic training and refresher course”, in compliancewith ENAC (Civil Aviation Authority) regulations regarding the regulated agents who are authorised to check mail at airports,continued. 835 people were involved, including delegates, supervisors and operators.Finally, also regarding regulatory matters, the following online courses were provided across all corporate functions:“Legislative Decree 231/2001: The value of our behaviour and the new corporate responsibility regulations”, involvingaround 42 thousand staff; “IT security at Poste Italiane”, aimed at around 55 thousand staff; and ”Privacy”, aimed ataround 13 thousand staff.

Regarding technical courses, in order to develop and consolidate the knowledge of savings and investment productsales staff regarding financial markets and instruments, a course continued in the Private Customer function on “Assetmanagement”, broken down into 7 online courses, involving 4,200 retail customer sales specialists. Aimed at improv-ing skills relating to the granting of credit and the presentation of products to customers, the classroom training pro-gramme on “Credit culture and techniques” was completed. The course involved 653 staff operating in PrivateCustomer Area Offices and Branches, as well as in 250 post offices from the 8 regions engaged in the Banca delMezzogiorno project.

As business support, online courses regarding specific products offered by the Group were provided. In particular, around99 thousand staff participated in the “PosteMobile X3” and “Poste Mobile X10” initiatives, 20 thousand in “The newBPIOL” course and 55 thousand in the “Conto di Base BancoPosta” course.

In support of the organisational changes that have affected postal deliveries, a classroom training course was provided toaround 20 thousand staff aimed at strengthening the role of postmen and women as strategic figures in customers’ per-ception of service quality. The campaign regarding “Sales techniques for postmen and women and Innovative Services unitstaff”, which involved 768 staff and aimed to develop product and service sales promotion skills, continued.Online courses included the “Electronic Postman” project (more than 6 thousand staff involved), and the “Handling ofother operators’ mail - Course B, processes and quality” initiative, involving 134 staff.

A dedicated training course was provided for BancoPosta, which registered around 760 participants (60% via e-learning,and 40% in the classroom). In particular, a specialised programme was implemented involving 145 people, aimed atenhancing their role and strengthening their professional skills. The content primarily regarded regulatory reports, the tran-sition from Basel 2 to Basel 3, and financial instruments and markets.

Initiatives were activated for Corporate functions involving around 5 thousand participants (63% via e-learning, and 37% in theclassroom), including an assessment of IT security skills, aimed at staff from the Information Technology, Safety & Security,Human Resources and Organisation functions, and the “Engineering Managers and Project Managers” project, which sup-ported the organisational and cultural change implemented by the Engineering function in the Real Estate segment.Online General English and Business English courses were provided to a total of 576 staff, with the aim of developing lan-guage skills in line with the Professional System model.Finally, 53 individual training courses were provided across all corporate functions, aimed at strengthening the skills profileof each person concerned. The corporate management Training Plan, provided via renowned business schools and consult-ing firms, involved an additional 465 staff in a comprehensive refresher course regarding strategic matters.



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FundingAs part of the activities of the Ente Bilaterale per la Formazione e Riqualificazione del Personale (the Bilateral Agency forStaff Training and Retraining), efforts continued to recover costs relating to training activities for non-managerial staff fromthe Fondimpresa inter-professional fund. Funding for 58 training plans with a value of more than €3 million was applied for,whilst approximately €2.7 million was received during the year for 46 plans. Moreover, actions were launched during 2012 to recover the costs of managerial staff training from the Fondirigenti inter-professional fund.

6.3 HUMAN RESOURCES MANAGEMENT

Recruiting and selection procedures, both internal and those conducted in the labour market, focused on distribution chan-nels in 2012. Specifically:• the recruitment of young people to strengthen and rejuvenate front-end sales staff (post offices) continued;• via a specific job posting initiative, internal staff were identified for financial promotion activities, joining other staff re-

cruited from the external labour market;• banking sector professionals were recruited to develop the lending activities of Banca del Mezzogiorno;• in the Private Customer and Large Account and Public Sector functions, managers were recruited to take charge of the

commercial development of Area Offices.

Another initiative accompanied the organisational transformation of the Information Technology function entailing recruit-ment of new managers for key structural roles and professionals to support the operations and management of severalcurrent projects.Efforts continued in 2012 to support the development and consolidation of Group companies, especially Banca delMezzogiorno (strengthening of the Markets function), Postecom (strengthening of the Marketing function regarding thee-Commerce, e-Government and Cloud offerings) and the insurance group (consolidation of the organisational structureand the recruitment of staff with expertise in non-life products).Notwithstanding the decisions that marked recruitment policies in 2012, the Company’s use of the internal labour mar-ket is still the priority line of approach, aimed at ensuring increasing diversification and professional developmentopportunities.

Once again in 2012 staff development was based on the performance appraisal procedure for executives and other staffmembers, involving more than 87 thousand appraisals and around 8 thousand appraisers. In order to make the systemmore effective, timeframes were brought forward and processes and tools were optimised. The feedback process wasscheduled for March 2013.Assessment of managerial potential using the Assessment Centre method involved around 50 middle managers and morethan 540 other staff members in sessions aimed at identifying staff suitable for executive positions or for development asmiddle managers, rather than holding sales and operating management positions in post offices.Development planning was introduced in 2012 which, through the establishment of Area and Central Committees, isintended to assure the propriety of planning the development of persons to provide for the control and exchange of organ-isational roles through the development of the most suitable staff.

With a view to achieving ever tighter integration between assessment and training systems, in response to the trainingneeds arising from the Assessment Centre, Performance Assessments and the Development Committees, the “InternalCompany Training Catalogue” of courses aimed at white-collar staff, executives and middle management, was created.This has enabled participation by more than 1,500 people in intercompany seminars and/or special projects to enhanceorganisational behaviour and specialised technical skills.




Regarding compensation and benefit policies, the policy relating to mobile telephony and wireless connection to the cor-porate network was revised and released (in addition to the policies regarding the use of motor vehicles and entertainmentexpenses issued in the first half of 2012). The “Incentive scheme guidelines” were also sent to the functions concerned.With regard to incentive polices48, the managerial (Management by Objectives), commercial operations and professionalincentive schemes were released. Measures regarding remuneration policy were implemented for middle managers, white-collar staff and executives inNovember and December 2012.


48. The most commonly used incentive schemes are: • MBO (Management by Objectives) for managers, aimed at translating senior management strategy into specific, clear and measurable business and

financial, quality, operational and planning objectives. MBO measures and enhances the contribution of individual managers to overall corporate per-formance;

• the commercial, operational and professional incentive schemes are tools dedicated, respectively, to the sales network, operational functions and pro-fessionals, through which the achievement of objectives is rewarded, whilst taking into account the central importance of customers;

• incentive scheme by objective is an appraisal and compensation mechanism that links cash bonuses for individuals with particularly important manage-ment positions and expertise or occupying managerial positions involving a high degree of direct operational responsibilities.


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6.4 INDUSTRIAL RELATIONS

Industrial relations at Poste Italiane primarily entailed negotiations during 2012 with labour unions on the following matters:• Reorganisation of the Private Customer function: on 12 December discussion of the new organisational model for the

network concluded with the drawing up of an agreement, as mentioned in the section on “Organisation”. Among oth-er things, this resulted in a new classification model for post offices that is able to meet various customer requirements,taking advantage of future market developments by switching from a transaction-based approach to one based more onbuilding relations.

• Election of new amalgamated trade union representatives: the necessary procedures for electing new trade union rep-resentatives were completed, following expiry of the previous term at the end of 2011. Elections were held on 13 and14 November, following a review of the elections protocol. The new trade union representatives will hold office for athree-year period from 1 January 2013.

• Consolidation of the conditions of employment of staff formerly employed on fixed-term contracts and temporary andcontract staff: two agreements were signed with the labour unions on 18 May 2012, offering stable employment to peo-ple working in the Company subsequent to a provisional favourable court decision. The agreement relates, as in the past,to temporary and, for the first time, contract employees. Similar to past agreements, an employee desiring to take ad-vantage of the new arrangements keeps his or her job and returns amounts received from the Company under the courtorder. The application deadline, originally set for 1 October 2012, was extended to 31 January 2013 to give staff con-cerned by the agreement more time to take advantage of the new arrangements.

• Renewal of performance bonuses: the negotiations started in May 2012, relating to the structure of the perform-ance bonus for the three-year period 2011-2013, were completed on 12 June 2012 with the signature of an agree-ment for the payment to employees of the final instalment of the 2011 bonus in June. The bonus is structured insuch a way as to reward, depending on the organisational unit concerned, employees’ contributions to the Com-pany’s results. The most important aspect of the new bonus system is the shift of the weight of overall nationalperformance to local performance from 65%-35% to 60%-40%, through the setting of specific targets which meas-ure the actual contribution of individual organisation units. Further amendments were introduced with the subse-quent agreement of 7 December which, for 2012 and 2013, superseded the previous mechanism that rewardedregular work attendance and increased the unit value of the bonus by an average of approximately €50 for thoseyears.

• Solidarity Fund: in December 2012 the Company and the labour unions signed an agreement designed to request thecompetent bodies of the Ministry of Labour to provide INPS with directions that would enable the provisions that so farhave been allocated for ordinary service to be freed up, in order to finance professional training and retraining pro-grammes for staff. At the same time, a joint Technical Committee was established, to start operating in January 2013,which will be assigned the task of bringing the Solidarity Fund regulations into line with new legislation deriving fromLaw 92 of 28 June 2012, commonly known as the Labour Market Reform.

• Reorganisation of Postal services: the plans were explained to the unions for a reorganisation of the segment to improveservice efficiency and quality, in line with market dynamics. At the same time, as mentioned in the section on organi-sation, a specific Technical Committee was established, comprising both Company and labour union experts, which in-vestigated all the technical and organisational aspects of the Postal services reorganisation process, and completed itswork in December 2012. The outcomes of the Committee’s efforts provide the starting point for the negotiation phasebeginning in January 2013.

As part of the introduction of new conditions of employment pursuant to the National Collective Contract of 14 April 2011,the manner of implementing individual time clocking for post office counter staff (individual time clocking records overtimeworked by post office staff in order to serve customers queuing at post offices at closing time) and of supplementary pay-ments for managers of one-man post offices, became effective on 1 January 2012.Via the appropriate law implementation documents, operating instructions were given regarding correct application of theLabour Market Reform provisions to the various instruments the Law has introduced or amended, paying particular atten-tion to the new regulations relating to fixed-term contracts and dismissals for just cause.




Turning to social security arrangements, given the state of progress of the merger of IPOST into INPS49, alignment of theCompany’s IT systems with those of INPS was completed. Moreover, the more structured relationship with INPS that hasenabled verification and management of many issues of specific concern to the Company, in terms of interpretation andapplication, was consolidated. At the same time, the Company continued to support the various functions via consultancyactivities relating to welfare and pension access issues, and also prepared specific information and explanatory documentsincluding one regarding Law 214 of 22 December 2011 (so-called Fornero Welfare Reform).

Regarding trade associations, the agreement relating to membership of Confindustria (the confederation of Italian indus-try) for the period 2012-2013 was renewed in December, thus confirming Poste Italiane’s presence among the more than100 business associations that comprise the confederation at local level. Therefore the Company will continue to use theservices offered by Confindustria with a view to further boosting its presence and representation.

Poste Italiane’s welfare system was consolidated during 2012 through improvements to services and steps taken to meetthe needs of employees and their families. The focus of the expansion were those areas of especial interest to employ-ees such as their work-life balance, healthcare and the welfare of their children. Particular attention was paid to healthcarethrough numerous information and prevention campaigns and the establishment of specific plans for the provision of healthservices within the Company.The development of teleworking is having a positive effect on the work-life balance, with an average number of 100 tele-working employees who are predominantly persons with specific social needs, such as the disabled, mothers, people com-mencing work after a long illness, an accident or extended leave. Work is continuing on a new company crèche in Bologna.An electronic university project was also started to provide university training for employees in the form of correspondencecourses and entailing flexible working conditions.

6.5 LABOUR DISPUTES

The number of labour disputes registered an overall decrease in 2012.In 2012 the number of labour disputes notified to the Company regarding fixed-term contracts fell from 4,761 in 2011 to3,452 in 2012, a decrease of 27.5%. The percentage of cases lost also registered a reduction: regarding appeals filed inthe previous year and pending decision, the percentage of unfavourable outcomes for the Company was halved, standingat around 16%, compared with the 34% registered in 2011. If the number of cases lost with respect to all 2012 outcomesis analysed without taking account of the year of notification, the figure stands at 27%.

Regarding flexible work (temporary and contract work), 210 appeals were lodged compared with the 293 registered in2011, thus confirming the gradual decline in this type of dispute, while the percentage of cases lost stood at 39% (around44% at 31 December 2011). If the number of cases lost with respect to all 2012 outcomes is analysed without takingaccount of the year of notification, the figure stands at 48%.

Finally, the number of disputes arising from new contractual terms and conditions is still at normal levels, given the num-ber of staff employed, and registered a reduction with respect to the previous year: 1,663 disputes in 2012, compared with1,846 in 2011.


49. The Poste Italiane Group’s welfare and assistance activities were managed by the Istituto Postelegrafonici (IPOST) until 31 May 2010 when – with LawDecree 78 of 31 May 2010, converted into Law 122 of 30 July 2010 – the institute was abolished and all its functions transferred to INPS.


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7. INVESTMENT

7.1 FINANCIAL INVESTMENTS

Amounts invested in 2012 by the Parent Company in subsidiaries and associates regard the subscription of a 69.65% inter-est in the newly established PatentiViaPoste ScpA for €84 thousand. This company is responsible for the centralised print-ing, distribution and delivery of driving licences following award of the related contract by the Ministry of Infrastructure andTransport.

7.2 CAPITAL EXPENDITURE

The Parent Company’s capital expenditure of €401 million euros represents 84% of the Group’s total investment. Asshown in the chart below, 58% of this amount regards ICT (Information & Communication Technology), 26% the moderni-sation and upgrade of properties and 16% postal logistics.

Modernisation and upgrade of propertiesPostal logisticsIT and telecomunications networks

26%

58%16%

(€m) 2010 2011 2012

Intangible assets 156 154 172Property, plant and equipment 224 190 229

Total capital expenditure 380 344 401

Financial investments 6 478 0.1

Total investment by Poste Italiane SpA 386 822 401


1017. Investment

7.2.1 IT AND TELECOMMUNICATIONS NETWORKS

Poste Italiane’s technology infrastructure has, for some years, opened up new market opportunities, thanks to the expert-ise acquired in the design and rollout of highly complicated and complex information systems. In 2012 the Parent Companyinvested approximately €232 million (€196 million in the previous year) in ICT (Information & Communication Technology)projects with the aim of promoting innovation and developing areas of business based around new technologies, bringingtogether highly specialised skills through partnership agreements with universities, research bodies and academic institu-tions. In this context, in relation to ICT platforms, consolidation and development of hardware, storage50 and backup51 systemscontinued, as well as activities aimed at redesigning the Group’s Data Center infrastructure. Specifically, in order to improvethe performance of the Service Delivery Platform (SDP)52, the database server infrastructure has been replaced. Migrationto the new infrastructure was completed successfully in October 2012, in a fully transparent manner for end users andpost office staff. In terms of plant and equipment, over the years the original 35 system rooms distributed nationwide have been reducedto 5 Data Centres53 which, from December 2012, have been joined by the first section of the Turin hub. This, among otherthings, will be used to supply cloud-based services from 2013.During 2012 the Company also proceeded to align its centralised storage and backup infrastructure (the former consistingof networked devices permitting efficient use of storage and the replication of data for business continuity purposes) withexisting business needs. Work focused on two principal areas: increasing the availability of resources, in terms of memo-ry size and performance, and the technological upgrade of existing systems by retiring and replacing obsolete equipmentand updating management tools. Renewal of the hardware and storage systems used by the Unified Service AutomationCentres forms part of this project.Further work on consolidating infrastructure platforms regarded an update of the software used by the virtual infrastruc-ture54 in order to enable it to run the applications it hosts in cloud mode.With regard to Business Continuity & Disaster Recovery for financial services, work was carried out in order to boost thecapacity of the infrastructure and upgrade the technology.On the computerisation front, the upgrade of hardware and software continued at post offices and administrative officeswith the acquisition of personal computers, printers, POS, franking machines, cheque readers and other equipment.The computerisation of Customer Relationship Management (CRM) services and the Enterprise DataWarehouse (EDWH),in support of the sales network, were primarily focused on the development of online business support systems, as wellas the management of corporate credit through the introduction of new pricing and reporting modules. A significantamount of investment related to electronic money instruments. In particular:• work has been completed on the direct management of the authorisation and ledger postings for Postamat and Postepay

payments using POS terminals at participating retailers;• work continued on the new electronic money platform for the operation of electronic card management systems;• the upgrading continued of ATM IT architecture to assure the adequacy and efficiency of self-service systems.

Work on the integration of Poste Italiane’s IT systems with those of Banca del Mezzogiorno-MedioCredito Centrale SpAwithin Poste Italiane’s Data Centre was also completed.


50. The term storage refers to the hardware, infrastructure and software used to store large quantities of electronic data.51. The centralised backup infrastructure enables the Company to make copies of all the data and applications used by the systems located in Poste Italiane’s

Data Centre.52. The SDP optimises operations, reducing processing times, enabling new products and services to be offered, cutting the time to market and, in terms

of Poste Italiane’s technology infrastructure, centralising the control of applications, facilitating their development, testing and operation.53. The 5 Data Centres are Rome Arte Antica, Rome Congressi, Pomezia, Bari and Rozzano.54. Virtual infrastructure is a solution based on hardware and software components that enable it to host a number of virtual servers on one physical server,

with the virtual servers in turn able to host individual applications. As a result, this infrastructure does away with the one-to-one relationship betweeninfrastructure and the application installed, thereby boosting cost efficiency.


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7.2.2 MODERNISATION AND UPGRADE OF PROPERTIES

Poste Italiane SpA allocated 26% of its capital expenditure to the modernisation and upgrade of its property assets. Theseactivities include non-routine maintenance work on residential buildings (the waterproofing of roofs, work on externalfacades, lift repairs, new flooring) and the upgrade and restyling of the real estate used in Poste Italiane’s operations, withpriority given to the Company’s own properties. This takes the form of planned upgrades (including furniture and fittings)and non-routine maintenance designed to make improvements to meet workplace needs and those related to the servic-es provided.Investment also focused on improvements to technology and equipment in order to improve workplace health and safety,with work on electrical and fire prevention equipment, plant and other structural aspects.Finally, following the flooding that hit Liguria and Tuscany in November 2011, after completing urgent work in order to repairmany post offices, work on the design and renovation of damaged properties was completed.

Work on the modernisation and upgrade of properties used in operations regarded the complete restructuring of 83 postoffices and the partial restructuring of a further 520.

7.2.3 POSTAL LOGISTICS

Poste Italiane’s delivery network, which is unique in terms of size and footprint, has enabled the Company to rethink therole of postmen and women who today, thanks to technological developments, are able to provide: basic services (maildelivery, bill payment, telephone topups); more advanced services (the “seguimi”, “aspettami” and “dimmiquando” serv-ices for addressees); third-party services (Equitalia, ISTAT, address verification) and promote the Group’s services (the saleof PosteMobile SIM cards or PosteShop articles).Investment in this area thus focused on expansion of the functions carried out within the scope of the “ElectronicPostman” project, enabling POS payments to be made using debit cards, Visa/Mastercard credit cards with PIN numbersand prepaid cards with PIN numbers, in addition to the Company’s Postepay and Postamat cards, and introducing Postepaytopups and topups for TIM, PosteMobile and H3G mobile phones. In this connection, postmen and women were equippedwith a further 3,054 palmtops with POS at 152 locations.Improvements to the logistics network designed to provide further support for the commercial offering continued, with thecreation of two digital technological units at the Florence and Bari Sorting Centres. These units process the dematerialisa-tion of documents and paper-based mail and are intended to prepare the way for the introduction of new digital services.Last year also saw work on equipping logistics network hubs with warehousing facilities (by the end of 2012 the construc-tion of warehouses had been completed at the Bologna, Novara, Pescara, Rome Fiumicino and Padua hubs) and the relat-ed software platforms. The aim is to provide for the semi-automated storage, archiving, micro logistics and physical pick-ing of documents and objects for logistics purposes.Further initiatives regarded: • the completion of work on the restructuring and refitting of the new Via Affile premises in Rome, which will replace the

Rome Romanina Print Centre; • continued work on replacing obsolete sorting equipment with completion of the retirement of the Milan Peschiera Bor-

romeo Sorting Centre; • continued installation of antennae in order to monitor international quality at logistics network hubs; • extension of the Tracking Service for large accounts, previously only available for Bulk Mail, to include Priority Mail and

Posta Target, and the return of undelivered mail, with the creation of a single platform enabling the Group to track un-recorded mail from the collection stage through to delivery;

• creation of a systems for monitoring operations to be integrated with the new systems and services being rolled out atIntegrated Notification Service Centres.



1038. The Environment


8. THE ENVIRONMENT

Poste Italiane began to adopt a sustainable approach to the environment some years ago. The objective is to limit the envi-ronmental damage caused by pollution through measures ranging from evolution of the corporate fleet of vehicles to ratio-nalisation of the logistics network, the procurement of power from renewable sources to facility management, participa-tion in international postal operators’ programmes for the reduction of greenhouse gas emissions and the dissemination ofa culture of corporate responsibility. Poste Italiane SpA’s approach to environmental sustainability considers the environment to be the ecosystem in which theCompany operates and on which it has an impact in carrying out its everyday activities. The Company’s size and the num-ber of staff employed require an ongoing, everyday commitment throughout the country, focusing on efforts to reduceenergy consumption and protect the environment.In this sense, the “Charter of Environmental Values”, aimed at all people operating at Group companies on a permanentor temporary basis, is designed to raise awareness of the impact that our everyday actions have on the environment. TheCharter is intended to publicise environmental initiatives and promote the participation of individuals in actions designed toreduce the Group’s environmental impact through minor changes to day-to-day behaviour. The Group’s approach to sustainable energy use is the responsibility of Poste Energia SpA, which manages power suppliesfor a number of Group companies. Initiatives designed to support environmental protection policies and reductions in energy consumption continued dur-ing the year. These included the purchase of electricity generated from renewable sources certified by RECS (theRenewable Energy Certificate System) and day-to-day checks on consumption, in order to avoid waste and the con-sumption of electricity during and outside of working hours. In particular, monitoring of electricity consumption wasconducted in accordance with the policy governing temperatures within the Group’s buildings and by installing pres-ence sensors.In terms of transport, Poste Italiane continued with the planned replacement of motor vehicles with the introduction ofEuro3 vehicles, thus reducing consumption and CO2 emissions. In addition, the purchase of over 500 Free Duck electricquadricycles helped Poste Italiane, in November 2012, win the “Sustainable Development Prize for 2012”, awarded by theFondazione per lo Sviluppo Sostenibile and Ecomondo, with the patronage of the Italian President. During the year Poste Italiane continued to work with Enel and the Municipality of Pisa on testing services aimed atencouraging the use of electric vehicles, whilst the Postal ZEV (Postal Zero Emission Vehicle) project came to an end.This project, a natural continuation of the “Green Post” project, revolved around a case study aimed at testing a mini-fleet of 20 technologically innovative vehicles to reduce polluting emissions in urban areas. Perugia, which wasalready the arena for the above-mentioned international project, was chosen as the test venue. The town boastssome of the most innovative initiatives in the urban transport sector and, at the same time, constitutes an excellenttest bed for analysing the performance of new prototypes. The research activities are aimed at taking a further stepforward in the development of a light electric quadricycle, featuring two additional technological innovations: therecovery of kinetic energy during braking, and development of an integrated biofuel cycle to produce electricity forrecharging the vehicles.

Finally, Poste Italiane also continued to play its part in international efforts to improve environmental sustainability. In con-nection with the International Post Corporation (IPC), Poste Italiane is participating in the Environmental Measurement and


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Monitoring System (EMMS), set up to monitor CO2 emissions and contribute to achieving the 20% reduction targeted bythe United Nations by 2020, compared with 2008. The Company also works with PostEurop, the association that supportsEuropean postal operators in their efforts to introduce eco-sustainable development policies, on the application of operat-ing processes that save energy and reduce CO2 emissions, taking part in the “Environment” working group that representsa forum for exchanging best practices and developing eco-sustainable projects.

All of the Poste Italiane Group’s initiatives and the results achieved in connection with economic, social and environmen-tal sustainability are described in the Company’s annual Social Report.



1059. Events after the end of the reporting period


9. EVENTS AFTER THE END OF THE REPORTING PERIOD

There are no material events after 31 December 2012 to report.

Minor events after the end of the reporting period are described in other sections of the Annual Report.


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10. OUTLOOK

The Postal and Business services segment is expected to see a further contraction in demand for traditional postal vol-umes in 2013, reflecting increased use of digital forms of communication and the continuing economic crisis. In responseto this trend, which is affecting all Europe’s postal operators, the Company intends to relaunch its offering of advertisingand business mail services, with new shipping and delivery solutions and initiatives regarding the levels of service provid-ed and improvements to perceived quality.The range of ancillary services will see an expansion of the Posta Easy offering, with the introduction of pre-dispatch serv-ices for parcels. In addition, the geographical coverage of the Chiamami service will be expanded (an ancillary service forregistered and insured mail).In terms of unaddressed mail, 2013 will witness the rollout of new functions for the planning and implementation of adver-tising campaigns, and for the new advanced PostaZone Smart and Premium services, which will enable the Company totarget new high value customer segments. In the business segment, reporting services for the return of undelivered bulk and priority mail will be developed. In addi-tion, the Company intends to enlarge the range of logistics services for the mailing of tracked and untracked mail, contain-ing valuable or non-valuable documents or goods and of pre-defined size, according to progressive weight bands. As regards delivery, in synergy with the various commercial channels, introduction of the technologies needed to per-mit postmen and women equipped with palmtop devices to accept registered mail and receive payment for all typesof bill by payment slip at the customer’s home will be completed. The commercial offering will be supported by workon the logistics network, involving both the continued replacement of obsolete sorting equipment at Sorting Centresand the installation of antennae in order to monitor international quality at logistics network hubs. The new IntegratedNotification Service Operations Centre, created in 2012, to make the services more accessible and customer centred,will also be launched.The Group will continue with work on the establishment of its Customer Care unit for Express Delivery and Parcels, along-side improvements to its product range and initiatives aimed at making services more accessible to customers, above allwith a view to developing e-commerce. In this latter connection, in order to take advantage of the opportunities resultingfrom the development of e-commerce, the Group aims to introduce a new version of the Home Box offering for the Italianmarket to be called Express Box, guaranteeing faster delivery times.The Group’s range of products will be rationalised in 2013 and structured for various market segments, with separatebranding for different service levels; Paccocelere 1 and Paccocelere 3 will be improved for sale as high-end express deliv-ery services for retail clients and SMEs, whilst Paccocelere Maxi and the ancillary Ore 10 service, providing delivery with-in a set time, will be withdrawn from the market. The Postacelere 1 service will also be combined with Paccocelere 1 andthe offering enlarged with the launch of Paccofree, a pre-franked, standard size parcel product.The Export Box offering for business customers sending mail abroad will be further expanded by adding reverse logisticssolutions and with the launch of Export MiniBox, a new product for the shipment of small objects (0-2 kilos).Finally, 2013 will see the Group launch its commercial offerings for cloud versions of a number of existing services (certi-fied electronic mail, remote digital signatures, the electronic storage and management of documents, etc.), and the use ofnew assets in the development of cloud-based networking solutions (offering space on the new-generation virtual serversat Data Centres).


10710. Outlook

The philately programme for 2013 will include issues linked to various themes, with stamps dedicated to the goldsmith’sart as part of the “Made in Italy” series, the Fano Carnival as part of the “Italian folklore” series and Nordic skiing as partof the “Italian sport” series. Commemorative and celebratory issues of particular importance will include stamps markingthe 150th anniversary of the birth of Gabriele d’Annunzio, 700 years since the birth of Giovanni Boccaccio and the 200thanniversary of the birth of Giuseppe Verdi.

As regards Financial services, steps will be taken to attract private current account deposits and retain the related inflowsthrough interest rate promotions. Certain promotions launched in 2012 will be continued for that purpose and new offerssuch as the payment of 3% interest to 30 June 2013 to new current account holders with a balance of between €5 thou-sand and €200 thousand.Collection and payment systems will, in a measure to complete the range of value added bills services, be enhanced bythe introduction of Bollettino Report Gold, which will enable BPIOL remote banking customers to access archived bills col-lected for the past ten years from 2006 and the consequent elimination of paper statements. In a further step to expand the processing of payment slips it is planned to involve large wholesale outlets and AutomobileClub d’Italia franchisees.A new prepaid card will be launched in 2013: Postepay loStudio. It has been developed together with the Ministry ofEducation, Universities and Research. The card, which is intended for high school students, combines the features of thelostudio card (with student discounts for card holders given by partners who have concluded agreements with the Ministry)with prepaid Postapay payment services.An e-Commerce Bill will be developed as part of online acquiring services (e-commerce), which will make it possible tocomplete an online purchase with a direct cash payment before shipment, thus providing a solution for people wanting toshop on line but wishing to avoid web-based payment systems. As regards retail loan products, Prontissimo BancoPosta will be revised in 2013, by making it possible for fees to be com-mensurate with customer risk profiles, in addition to providing a range of flexible options during the term of the loan (alter-ation of amount of instalment, modification of term, etc.). Other new products will include home loans for Poste Italianeemployees and the expansion of the scope of Quinto BancoPosta salary loans. Finally, a new BancoPosta online loan willbe developed. It will be differentiated by features and pricing tailored to the target and may be applied for throughBancoPosta online and BancoPosta Click accounts. Continuing its offerings of recent years, the Postal Savings segment will introduce new products and services: the LibrettoNominativo Ordinario Smart (a savings book for customers looking for good returns and attracted by an advanced product,combined with an electronic card that can be used for online services); and the BFP3x4Fedeltà (interest-bearing postal cer-tificates for people wishing to re-invest the proceeds from postal certificate redemptions in 2013).

The Poste Vita insurance group will continue to exploit marketing and business opportunities in support of customers.This should again provide for a satisfactory inflow of funds in 2013. In any case, the ongoing international economic crisiscould have a major impact on the decisions of policyholders and investors, making it essential for the Group’s insurancecompany to keep a close eye on developments.

With regards to telecommunications, 2013 will see PosteMobile engaged in consolidating the progress made so far, focus-ing on two areas of development: consolidation of the growth of the core business in accordance with the strategy devisedand launched in 2012 and an expansion of the scope of operations.In terms of the company’s core business, PosteMobile will continue the process of transformation from an EnhancedService Provider (ESP) to a Full Mobile Virtual Network Operator (Full MVNO). This will result in a number of advantages,including greater operational flexibility and improved quality control. The company also plans to expand its range of distinc-tive services based on mobile payments, and extend its NFC services to other market segments.

2013 will also see further development of international initiatives, involving postal operators and other companies operat-ing in the sector, with whom Poste Italiane aims to pursue new business opportunities. The newly established Consorzio PatentiViaPoste will be operational, enabling the Group to start delivering the newEuropean driving licences to the public and processing the related data.



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The economic uncertainty that marked the previous year will continue into 2013, leading to an expected fall in GDP, in partreflecting the fact that the economic environment has been affected by a further slowdown in the real economy. Theincrease in downside risk is, in fact, linked to weak internal demand, caused by difficulties in the labour market and thecontraction of disposable income. Despite this, in view of its strategic and commercial initiatives and the expected operating environment, the Companyexpects to maintain the level of earnings achieved in 2012. Achievement of this objective will, however, be conditioned bythe size of any further contraction in the market for postal services, and by the impact of the economic downturn and finan-cial market trends on the performances of the Group’s financial and insurance services.



10911. Other information


11. OTHER INFORMATION

In compliance with the provisions of art. 2364 of the Italian Civil Code, approval of the financial statements for the yearended 31 December 2012 by the General Meeting of Poste Italiane will take place after the end of the term of 120 days,as, moreover, permitted by art. 7 of the Articles of Association and in compliance with the extended term of 180 days fromthe end of the reporting period referred to in the above article. This is to enable preparation of the consolidated financialstatements to be completed.

Related party transactionsWith regard to postal current account services and postal savings deposits, the main transactions entered into by the Groupduring the period were with the shareholder, the Ministry of the Economy and Finance, and with Cassa Depositi e PrestitiSpA.

Details of the related party transactions of the Poste Italiane Group and the Parent Company are provided in note 39 in theconsolidated financial statements and in note 34 in the separate financial statements.

Legislative Decree 196 of 30 June 2003The Company paid significant attention to data protection in 2012, conducting specific risk analyses and assessments,alongside the development of policies, guidelines and procedures, and monitoring and control of the application of the min-imum security measures required by the Data Protection Code, intensifying its risk analysis. In the area of information secu-rity, the Company completed the 2012 Privacy Census. This result in the revision of its Data Protection Planning Document,assessment of the risks to which data is exposed and the determination of the security requirements to be taken intoaccount when planning the related adjustments. The Data Protection Planning Document describes the Company’s overall organisation, its technology infrastructure, andthe distribution of roles and responsibilities within the departments involved in the processing of personal data and in over-seeing the correct application of the minimum security requirements provided for by the above Code. The revision has con-firmed the various sources of regulations within the Company which, in addition to procedures, include notes, instructions,references to the intranet, forms, policies, minutes and other relevant documents.

Statement of reconciliation of profit and equityThe statement of reconciliation of the Parent Company’s profit/(loss) for the year and equity with the consolidated amountsat 31 December 2012, compared with the statement at 31 December 2011, is included in note 16 to the consolidated finan-cial statements.


110

LitigationIn 2011, as part of a local criminal investigation of third parties, the Tax Office in Rome seized accounting and administra-tive documents from Postel SpA related to e-procurement transactions performed in 2010 and, to a lesser extent, in 2011.The investigation did not result in any charges against the company. However, as a precautionary measure, Postel SpA’se-procurement operations were suspended in 2011. In 2012 the company was notified of an investigation pursuant to art.255 of Legislative Decree 74/00, as amended by Law Decree 138/11, converted into Law 148/11. The company has retaineda leading tax law firm to advice on what actions it should take to best safeguard its interests.Finally, in 2012 Postel SpA accepted the findings of a Tax Audit Report prepared by the Guardia di Finanza (Tax Police) afteran audit of its direct and indirect taxes related to 2003-2006, submitting a petition to obtain a reduction in the IRPEG andVAT penalties in November. Provision has been made for these penalties in provisions for risks and charges, with the relat-ed penalties paid in December 2012 and February 2013. The company is currently considering what legal action to take. Inthis regard, it appears reasonable to believe that, albeit with due caution given past outcomes of relevant hearings beforetax commissions, the company feels that it will be able to argue its case effectively.

Tax disputesOn 27 April 2012 the Direzione Regionale del Lazio - Settore, Controlli, Contenzioso e Riscossione - Ufficio GrandiContribuenti (Regional Tax Office for Large Taxpayers) began an audit of the Parent Company’s IRES, IRAP, VAT and with-holding taxes for the 2009 fiscal year. The audit forms part of the normal two-yearly controls of so-called “large taxpayers”required by art. 42 of Law 388 of 23 December 2000. The audit is currently underway.

On 3 July 2012 the Guardia di Finanza - Nucleo Polizia Tributaria Roma - I Gruppo Tutela Entrate - 1° Sezione VerificheComplesse (Tax Police) in Rome commenced a tax audit of SDA Express Courier SpA with respect to direct taxes for the2009 tax year and waste collection taxes for the period 2008-2011. On 12 February 2013 the company received a tax auditreport for 2009. The only finding concerned financial transactions involving SDA Express Courier SpA, Poste Italiane SpAand Consorzio Logistica Pacchi Scrl, though this is unlikely to result in a contingent liability for the company.

In 2009 the Agenzia delle Entrate - Direzione Regionale del Lazio - Ufficio Grandi Contribuenti (Regional Tax Office for LargeTaxpayers ) notified Poste Vita SpA of an alleged violation of the VAT regulations in the 2004 tax year, resulting in fines ofapproximately €2.3 million for the alleged failure to pay VAT on invoices for service commissions. The findings are basedon two separate official tax audit reports made on a commercial partner of Poste Vita SpA in a number of insurance trans-actions in 2004. In 2010 Poste Vita SpA appealed before the Provincial Tax Tribunal of Rome, requesting annulment of thefine. In December 2010 and September 2011, the tax authorities sent notices of two further small fines for the same vio-lation in fiscal years 2005 and 2006. Given that Poste Vita SpA deems the authorities’ findings to be without grounds, thesefines have also been appealed. The appeals are currently pending before the Provincial Tax Tribunal of Rome. The most like-ly outcomes of these disputes have been taken into account in determining the provisions for risks and charges.

In 2008, the Italian tax authorities notified (Banca del Mezzogiorno-MedioCredito Centrale SpA), acquired with effect from1 August 2011, that it intends to contest the company’s tax treatment related to the purchase of its investment inImmobiliare Piemonte Srl in 2003, alleging that the company had avoided taxation by concealing the purchase of proper-ties and omitting to issue an invoice for a taxable amount of €115 million. The case was brought before the Provincial TaxTribunal in Rome on 21 November 2012, which found in favour of BdM-MCC. On 21 March 2013 the tax authorities accept-ed the decision and the case is now closed.Upon conclusion of a general tax audit relating to the 2008 tax year, on 22 December 2011, BdM-MCC received an officialtax audit report contesting the deductibility of €19.6 million in costs, relating to agreements effected in 2008 to settle dis-putes with the Parmalat Group. The report further claims that BdM-MCC underreported its taxable income by €16.2 mil-lion, related to the sale of non-performing loans to a company in the Unicredit Group, to which BdM-MCC belonged at the


55. “Fraudulent declaration via the use of invoices or other documents as evidence of non-existent transactions”.


11111. Other information

time. The bank presented its own opinions and observations on the tax audit report to the Direzione Regionale del Lazio -Agenzia delle Entrate (the tax authorities) in Lazio in February 2012, indicating that the bank had acted properly and in Aprilan exhaustive answer was given to the Questionnaire sent by the tax authorities. Considering that for fiscal year 2008 thebank had elected to participate in the tax consolidation arrangements used by the Unicredit Group, on 19 September 2012the tax authorities served the consolidating entity, Unicredit SpA, and BdM-MCC at the domicile of the consolidating enti-ty, with an assessment notice related to the second of the two alleged violations. Given that responsibility for these eventsand the related conduct rests with the previous owner of the bank, whose lawyers are defending the bank in this case, itis felt that any liabilities arising from such violations cannot, in any way, be attributed to BdM-MCC.

On 17 November 2011 the tax authorities notified Europa Gestioni Immobiliari SpA (EGI) of three notices of assessmentfor the years 2006, 2007 and 2008, resulting in the identification of the same irregularity in each of the three years in theofficial tax audit report for 2008 (dated 16 March 2011). This concerned the application, for the purposes of IRES, of art.11, paragraph 2 of Law 413/9156 to properties of historical and artistic interest owned by EGI and leased by it to third par-ties. This resulted in a demand for payment of IRES of €2.4 million, in addition to a fine of €2.4 million and interest of €0.3million, making a total of €5.1 million. EGI has appealed the notices of assessment, deeming the findings to be without basis in law and fact. On 9 February 2012,EGI appeared at court to file copies of the appeal with the Provincial Tax Tribunal of Rome, where the dispute is currentlypending.

On 13 August 2012 the tax authorities notified Europa Gestioni Immobiliari and Poste Italiane, as jointly and severally liablewith the buyer, REAM (Real Estate Asset Management), a demand for payment of local tax and stamp duty on the sale, in2010, of two portions of a property located in Piazza Cordusio, Milan, levying a fine payable by EGI of €909 thousand.The fine was imposed as the tax authorities deem that registration of the order by consent, contractually the responsibili-ty of the buyer, was late.On 8 October 2012 REAM paid the local tax and stamp duty in full, without paying the above fine and, at the same time,filing an appeal against the fine. As a result, Poste Italiane and EGI have filed a similar appeal, given that they are jointlyand severally liable with the buyer, without prejudice to the contractual obligations of the latter.


56. Article 11, paragraph 2 of Law 413/91 (the “attachment” to the 1992 Budget Law) established that income from properties of historical or artistic inter-est should be determined by applying the lowest of the estimated tariffs for housing in the census district in which the building is located.


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12. BANCOPOSTA RFC MANAGEMENT REVIEW

12.1 BANCOPOSTA RFC’S CORPORATE GOVERNANCE

The resolution, required by paragraphs 17-octies et seq. of art. 2 of Law Decree 225 of 29 December 2010, converted intolaw with amendments by Law 10 of 26 February 2011, to appropriate the capital funds needed for BancoPosta’s opera-tions, was approved at the Extraordinary General Meeting of 14 April 2011.By-laws regulating the organisation, management and control of BancoPosta’s operations were approved at the sameMeeting. The By-laws also established operating and accounting procedures consistent with the ring-fencing ofBancoPosta RFC and the nature of the relationship between BancoPosta RFC and Poste Italiane SpA’s other functions.The formation of the ring-fenced capital was effective from the date the above resolution was filed with the Companies’Register on 2 May 2011, and was implemented subsequent to ascertaining that no objections had been raised by credi-tors. On 2 July 2011 BancoPosta’s assets and liabilities were, for all intents and purposes, unbundled from those of PosteItaliane at that date or at any time in the future. These unbundled assets and liabilities will be subject to the Bank of Italy’sprudential requirements, ensuring stability and sound and prudent management. BancoPosta’s assets, liabilities and con-tractual rights were ring-fenced exclusively for the satisfaction of its obligations arising out of its day to day business, withPoste Italiane’s liability being limited to the ring-fenced capital attributed from retained earnings.BancoPosta’s operations consist of those listed in Presidential Decree 144 of 14 March 2001, as amended, namely: • the collection of savings from the public in accordance with art. 11, paragraph 1 of Legislative Decree 385/1993 of 1

September 1993 - Consolidated Banking Law (Testo Unico Bancario or “TUB”) and all related and consequent activities;• the collection of savings through postal securities and deposits;• payment services including the issuance, administration and sale of prepaid cards and other payment instruments pur-

suant to art. 1, paragraph 2, letter f) numbers 4) and 5), TUB;• foreign exchange brokerage services;• promotion and placement to the public of loans issued by approved banks and financial brokers;• investment and related services pursuant to art. 12, Presidential Decree 144/01.

During the year, following the issue of Legislative Decree 179 of 18 October 2012 regarding “Additional urgent measuresto promote growth in Italy” (converted by Law 221 of 17 December 2012), a number of amendments/additions were intro-duced to Presidential Decree 144 of 14 March 2001. In particular, BancoPosta’s activities now also include the possibilityof:• the establishment of branches in other Member States of the European Union and other countries in addition to engag-

ing in operations permitted in other Member States or countries outside the European Union without the need to es-tablish a branch in such Member State or non EU country;

• the off-premises promotion, distribution and provision of banking and financial products and services57;• the introduction of professional gold trading on own behalf and on behalf of third parties, in accordance with Law 7 of

17 January 2000.

57. The permission to offer customers off-premises products was accompanied by activities to strengthen the regulatory requisites for such operations, par-ticularly personnel training and the implementation of appropriate procedural, information technology and control support.


11312. BancoPosta RFC Management Review

BancoPosta RFC’s organisation and management consists of multiple bodies and officers, which are ranked by their vest-ed powers: the Board of Directors, the Chief Executive Officer, the Head of BancoPosta and the Cross-functionalCommittee.The Board of Directors provides strategic supervision in addition to the exercise of those duties, which pursuant to the lawcannot be delegated:• determination of strategic policy; • adoption and amendment of business and finance plans; • approval of risk management guidelines;• assessment of the adequacy of organisational, administrative and accounting arrangements and approval of internal pro-

cedures and guidelines;• assessment of the suitability, efficiency and effectiveness of the internal control system through evaluation, at least once

a year, of the reports provided by the Compliance, Internal Auditing and Risk Management functions;• appointment of the Head of Compliance;• determination and regular reviews of strategic guidelines and risk management policies regarding money-laundering and

the financing of terrorism.

The Chairman of the Board of Directors performs those functions required of him by the Articles of Association.Normally each month, the Directors dedicate a separate section of their Board meetings to a review of all transactions andmatters of importance to BancoPosta RFC’s operations, performance and outlook.

BancoPosta operations are the responsibility of Poste Italiane’s Chief Executive Officer who has been provided with allpowers needed to implement strategic policies and manage BancoPosta’s operations.The Chief Executive Officer proposes the appointment of a Head of BancoPosta to the Board of Directors with the CEObeing responsible for the delegation and revocation of the requisite powers. Subject to the powers delegated to the Head of BancoPosta, the Chief Executive Officer directs:• BancoPosta to assure the market competitiveness of its banking and financial services through planned growth consis-

tent with corporate strategy and in compliance with the regulatory framework;• other Poste Italiane business and staff functions which, depending on their areas of responsibility, are involved in the

operations of BancoPosta;• the Cross-functional Committee, which has powers to advise and make recommendations and provides the interface

between BancoPosta and other corporate functions involved in BancoPosta’s operations in accordance with their areasof responsibility.

The Chief Executive Officer, in agreement with the Board of Directors and consultation with the Board of StatutoryAuditors, appoints and dismisses the heads of the Risk Management, Internal Auditing and Compliance Functions. Responsibility for the implementation of the strategies approved by the Board of Directors has been delegated by the ChiefExecutive Officer to the Head of BancoPosta, who is also responsible for: • the exercise of all delegated powers as required by the Chief Executive Officer;• the recommendation of matters to be placed on the Cross-functional Committee’s meeting agenda and the relevant cor-

porate functions to be invited in addition to meeting minutes;• the development and review of specific internal procedures on service levels with other corporate units.

The Head of BancoPosta is required to attend meetings of the Board of Directors of Poste Italiane whenever the ChiefExecutive Officer places issues of importance to BancoPosta’s ring-fenced capital on the agenda.

BancoPosta’s operations are regulated by the “BancoPosta Organisational and Operational Guidelines” as agreed by theBoard of Directors with the Board of Statutory Auditors’ concurrence.

The Cross-functional Committee is presided by the Chief Executive Officer. Its permanent members are the Head ofBancoPosta, and other function heads as specifically appointed to provide advice and make recommendations and to coor-



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dinate BancoPosta’s operations with those of other corporate functions. The Committee’s work is guided by separate“BancoPosta Interdivisional Committee Guidelines” which were approved by the Board of Directors on 26 October 2011with the prior consent of the Board of Statutory Auditors. The Committee meets monthly.The BancoPosta Cross-functional Committee Guidelines broadly address:• the Committee’s functions;• the manner of convening meetings and the agenda;• the formalisation of the decisions of Committee meetings;• amendment of the Guidelines.

The Chief Executive Officer is responsible for the implementation of the Committee’s decisions by the relevant PosteItaliane function.The shareholder deliberates the Board of Directors’ proposed profit appropriations, including those for BancoPosta, at theannual General Meeting held for the approval of Poste Italiane’s financial statements.

Poste Italiane’s Board of Statutory Auditors, which was also designated to serve as Supervisory Board in 2012 pursuant toLegislative Decree 231 of 8 June 2001, and the independent auditors retained to audit Poste Italiane’s accounts also pro-vide oversight and audit services to BancoPosta, as required by the relevant guidelines.In particular, the Board of Statutory Auditors, taking into account the particular nature of BancoPosta’s operations andensuring the necessary separation of controls, both formal and otherwise, verifies compliance with the law and the Articlesof Association, adherence to correct governance principles and the adequacy of the organisational structure and adminis-trative and accounting systems and of BancoPosta RFC’s internal control systems. The Board of Statutory Auditors ascertains the overall effectiveness of the internal control system, including its coordina-tion with all relevant departments and units, and provides recommendations for the correction of any weaknesses andirregularities. The Board of Statutory Auditors also oversees the adequacy of the risk management system particularly withrespect to the systems used to determine capital adequacy. Its work on the propriety of operations includes the ascertain-ment and investigation of any operational irregularities, shortcomings of accounting processes and organisational arrange-ments and the follow-up of action taken by the Company to eliminate weaknesses.In addition to using BancoPosta’s control structure (Risk Management, Internal Auditing, Compliance, and thePrevention of Money Laundering), the Board of Statutory Auditors also avails itself of Poste Italiane’s control functions,thus facilitating ongoing dialogue and exchange of information. This close relationship enables the Board to opine on theappointment of the heads of BancoPosta’s control functions and the determination of the essential elements of theinternal control system.

In accordance with Law 259 of 21 March 1958, requiring parliamentary scrutiny of the financial management of organ-isations normally financed by the state, Poste Italiane SpA’s budget and financial management are controlled by theItalian Court of Auditors. The controls entail the ascertainment of the propriety and regularity of management and inter-nal controls.




12.2 BANCOPOSTA’S INTERNAL CONTROL SYSTEM AND RISK MANAGEMENT

12.2.1 INTERNAL CONTROL SYSTEM

The internal control system consists of a body of rules, procedures and organisational structures, which aim to prevent orlimit the consequences of unexpected events, enable the achievement of strategic and operating objectives and compli-ance with the relevant laws and regulations, and ensure the fairness and transparency of internal and external reporting.

The most important aspect of the system is the control environment in which employees work that includes integrity andother corporate ethical values, organisational structure, allocation and exercise of authorities and responsibilities, separa-tion of duties, staff management and incentive policies, staff expertise and, more in general, corporate culture. BancoPosta’s control environment is evidenced by:• the Group Code of Ethics;• implementation of the Legislative Decree 231/01 Organisational Model and related corporate procedures;• organisational structure of BancoPosta as reflected in organisational charts, service orders, organisational notices and

procedures, which determine the work and responsibilities of corporate units;• General Operating Guidelines which, in implementation of the By-laws, identify, and regulate the activities of various Poste

Italiane’s units acting on behalf of BancoPosta in addition to valuing such services;• the system for delegating powers to function heads in accordance with their responsibilities.

As a result of BancoPosta’s separation from Poste Italiane, the Organisation Model requires: • the existence of an interface between BancoPosta internal staff units (e.g., accountancy and control) and those of Poste

Italiane;• establishment of autonomous and independent control functions in compliance with Bank of Italy supervisory require-

ments: Compliance, Risk Management, Anti-Money Laundering and Internal Auditing. The risk assessment techniques,methods, controls and, periodic audit findings are shared amongst control units to promote synergies and take advan-tage of specific skills;

• provision of support by other Poste Italiane functions consistent with the General Operating Guidelines.

BancoPosta’s internal control system also involves other units with varying roles and responsibilities.

The objective of BancoPosta’s Internal Auditing function, which is in compliance with the regulatory requirements con-tained in the Bank of Italy’s Supervisory Instructions on controls to which BancoPosta is subject, is to assess the over-all propriety of controls in terms of the adequacy and efficacy of systems, processes, procedures and arrangements forthe security of BancoPosta’s operations by conducting audits as planned for each year and approved by the Board ofDirectors.

The function’s work in 2012 was based on the audit plan approved by the Board of Directors at its meeting of 23 May 2012,in addition to the findings of Poste Italiane’s Internal Auditing function, as set out in the instructions on interaction and coor-dination contained in the operations schedule of the General Operating Guidelines. The operations schedule was alsorevised in July to strengthen the position of BancoPosta as audit “principal” (regarding the network and IT systems) in itsrelations with Internal Auditing, which provides such services, including the strengthening of the monitoring system andthe imposition of penalties for the failure to achieve expected performance levels.The Internal Auditing function also provides periodic reports to corporate bodies on its findings and to relevant superviso-ry bodies such as the Bank of Italy and the CONSOB.

The risk of BancoPosta’s non-compliance with regulation is controlled by the Compliance function whose work includesthe provision of advisory and support services to operating and business functions with regular reports to senior manage-ment. The process of monitoring compliance is split into three phases:



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• regulatory analysis;• compliance risk assessment;• monitoring and testing.

Monitoring and testing entails ongoing second-level compliance controls for the determination and reporting of precaution-ary action with a follow-up audit to assure that weaknesses have been eliminated.The Compliance function regularly reports to corporate bodies and business units responsible for assuring compliance.The Anti-Money Laundering function is engaged in regulatory analyses, risk assessment and second-level controls of activ-ities exposed to money-laundering and the financing of terrorism whereas the Money-Laundering Reporting function isresponsible for evaluating suspect transactions referred to it by the distribution network and assessing the need to reportthem to the Financial Reporting Unit.Corporate controls over BancoPosta’s operations determine specific responsibility for the implementation of line, or first-level, controls. IT controls are of particular importance in this regard.

12.2.2 RISK MANAGEMENT SYSTEM

Risks and controls

When BancoPosta was initially ring-fenced, capital was legally unbundled from Poste Italiane to meet prudential regulato-ry requirements, creating capital for capital adequacy purposes and for the protection of creditors.The clear identification of risks, to which BancoPosta could be potentially exposed, is a necessary condition for the con-scious assumption and management of risk.The General Operating Guidelines, as implemented through internal operating guidelines, require the development and annu-al revision of a risk map showing all risks inherent in BancoPosta’s operations by product and service. In the event of a loss,the risk map is used to determine responsibility and losses are deducted from transfer payments to the relevant function. Operating losses attributable to factors not included in the risk map are investigated and responsibility determined jointlyby BancoPosta and the function concerned. In the event of disagreement, the matter is referred to BancoPosta’s Cross-functional Committee. Notwithstanding the pending introduction of new prudential requirements for BancoPosta RFC, existing supervisoryauthority risk classifications based on the types of risk, to which BancoPosta RFC is typically exposed in the normal courseof business, are described below:• credit risk (including counterparty risk);• market risk;• concentration risk;• liquidity risk;• operational risk.

Risks are to varying extents measured and controlled by a number of specialist risk monitoring functions employingapproaches and models specific to their relevant area of responsibility, whose assets have differing maturity profiles.

As one of Poste Italiane’s internal control functions, BancoPosta’s Risk Management function is responsible for controllingoperational and financial risks. It consequently provides a detailed evaluation of the risk profile of financial products sold to cus-tomers and provides the operational and business functions involved in product development and placement with advice andsupport. It is, furthermore, engaged in periodic reporting. The work of the Risk Management function relating both to mini-mum capital (first pillar) and evaluation of capital adequacy (second pillar) was devised in preparation for BancoPosta becom-ing subject to the prudential requirements of Basel II. An Internal Capital Adequacy Assessment Process (“ICAAP”)58 was con-

58. “ICAAP” or an Internal Capital Adequacy Assessment Process relates to self-assessment and the adequacy of capital to absorb risk. This process, togeth-er with the Supervisory Review Process or “SREP”, represents the “second pillar” in Basel II.



ducted in 2012 on an experimental basis for the first time specifically for BancoPosta. The reference date for the analyses andfigures, which were combined with projections and scenario analyses, was 31 December 2011. The most important risk category for first pillar capital charges is operational risk, above all if measured using the BasicIndicator (“BIA”) or the Standardised Approaches (“TSA”), since minimum supervisory capital is computed by applyingfixed regulatory capital ratios59 to total interest and fee income (before operating costs) which, for BancoPosta, exceedsfive billion euros a year. Capital charges for credit, counterparty and foreign exchange risks are lower.In addition to the risks listed above, interest rate risk, arising as a result of mismatched interest rate periods for assets (pre-dominantly government bonds and funds held at the Ministry of the Economy and Finance) and liabilities (retail customerand Public Sector postal current accounts), is of importance for second pillar purposes.

Risk Management uses operational risk measurement models consistent with those recommended by the Bank of Italy.The models are based, amongst other things, on the analysis of internal and external historical data on operating lossescombined with business environment analyses and the functions’ own evaluations of their processes relating toBancoPosta’s operations.

BancoPosta’s business is, by its nature, exposed to elements of reputational risk, associated mainly with the distributionof investment products of other institutions such as investment funds, index-linked bonds and insurance policies issued byPoste Vita SpA. In this respect, in July 2008, in accordance with the Markets in Financial Instruments Directive by the EU(Directive 2004/39/EC, “MiFID”), Poste Italiane adopted the “consulting service” model.The crisis of recent years has had profound effects on the performance of all the financial instruments on the market, aboveall on the value of Italian government securities, which account for a large part of BancoPosta’s investments, as well asthe performance of the real estate market and the products related to it.

The formalisation and revision of guidelines and policies governing BancoPosta’s principal significant risks was continuedin 2012, including:• the revision of the “Operational Guidelines for Poste Italiane’s Financial Management”, as approved by the Board of Di-

rectors on 29 February; • the approval of new operational limits at Chief Executive Officer level for financial transactions (Finance Committee

meeting of 4 May 2012); • approval of two new policies by the Board of Directors on 27 June: the “BancoPosta RFC banking book interest rate

risk control and management policy” and the “BancoPosta RFC counterparty and concentration risk control and man-agement policy”;

• revision of “BancoPosta RFC’s operational and management guidelines”, approved by the Board of Directors on 19 Sep-tember 2012, in order to revise the ratings of certain issuers of investment products distributed by BancoPosta to thechanged market environment;

• a new risk policy was developed and distributed, formalising the ICAAP process as approved by the Board of Directorsat its meeting of 20 February 2013.

There was a further European sovereign debt crisis in 2012, which had a significant effect on the prices of the Italian gov-ernment securities in which all retail postal current account deposits are invested, as required by the 2007 Budget Law.The year was divided into three distinct phases: in the first quarter there was an improvement in the performance of Italiangovernment securities, which then sharply deteriorated again in the second quarter, albeit to a lesser extent than in 2011;as a result of the progress made at European level in managing the crisis (particularly the ECB’s intervention) the situationimproved significantly. Similarly, the unrealised losses on securities held in the HTM and AFS portfolios were initially sig-nificantly reduced to then increase again, to then disappear and transform themselves into unrealised gains by the end ofthe year. There was a consequent reduction in the adverse balance on AFS valuation reserves that had exceeded capitalat the end of the preceding year.


59. There is only one ratio for the BIA which is 15%. Three ratios, 12%, 15% and 18%, are used for the TSA depending on the nature of business generat-ing the income.


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The operational exposure to financial risk has been significantly changed by the arrangement in the first quarter of three-year, €5 billion repurchase agreements made possible by the European Central Bank’s long-term refinancing operation,with the proceeds being invested in fixed-rate, inflation-indexed medium to long-term Italian government bonds.The operation was analysed by the Risk Management function prior to the arrangement of the repurchase agreements, inaddition to having been deliberated by the committees concerned (Finance, Financial Risk, and BancoPosta’s Cross-func-tional Committee) and, given its strategic importance, approved by the Board of Directors. The overall effect on risk expo-sure was favourable, particularly with respect to liquidity and interest rate risks, which were considerably reduced. Thetransaction resulted in a relatively modest increase in credit/counterparty risk whereas, albeit still under control, a signifi-cant increase in concentration risk, caused by the application of supervisory requirements, regarding the two repurchaseagreement counterparties (Cassa Depositi e Prestiti and Banca IMI).

Note 37 in Poste Italiane SpA’s financial statements, “BancoPosta RFC, Separate Report”, sets out the details of the vari-ous areas of risk and the methods used for their measurement and prevention.




12.3 BANCOPOSTA RFC FINANCIAL REVIEW

MACROECONOMIC ENVIRONMENT

Financial markets and the spreads on government securities seesawed in 2012, whilst there was a slowdown in the glob-al economy primarily as a result of lower growth in euro zone countries and in emerging markets, with the consequent lossof momentum in international trade. There was a slight recovery at year-end as a result of an upturn in US domesticdemand and emerging countries. The recent dynamism of emerging markets and the agreement reached in the UnitedStates to avoid the “fiscal cliff” led to improved forecasts by analysts for 2013, who see the world economy growing byover 3%, which is ahead of 2012.The recession appeared pronounced in Italy, where the economy markedly slowed, partially as a result of the measurestaken to reduce government deficits, but above all because of the fall in domestic consumption brought about by the ongo-ing weakness of consumer spending and investment. GDP in 2012 fell by over 2% from 2011 levels.As foreshadowed above, performance of the prime financial and capital markets in 2012 was very disjointed, with strongrises in the first part of the year followed by a fall at mid-year under the pressure created by foundering Spanish and Italiancredit institutions, with their greater exposure to the sovereign debt market. 2012 then closed on an upturn. The renewedconfidence of international investors, who resumed their purchases of government securities, had a favourable effect oninterest rates and, consequently, the prices of securities held by BancoPosta. Property markets, however, remain critical,as do the related financial products.In detail, the euro zone benefitted in early 2012 from a series of favourable factors that contributed to the loosening of tightfinancial markets, including the success of the two long-term financing operations arranged by the ECB in December 2011and February 2012. The proceeds provided by European banks (in total more than €1 thousand billion) supported demandfor government securities to such an extent as to result in a general reduction in yields. Political instability in Greece fromthe end of March contributed to uncertainties about the overall management of the euro zone sovereign debt crisis, withspreads on government securities again significantly increasing and the differential between BPTs and Bunds rising to 537basis points by the end of July. The ECB’s new Outright Monetary Transactions (OMT) programme at the end of July wasfor unlimited purchases of government securities with maturities of three years or less for those countries making a for-mal request and agreeing to implement austerity programmes. The OMT programme resulted in a decline in risk aversionby investors and a general reduction of spreads.

THE ITALIAN BANKING SYSTEM

The inflow of funds to banks from Italian residents improved in 2012 (December 2012 up 1.61% on December 2011) as aresult of the relaxation of tensions on the sovereign debt market. The adverse economic environment, however, wasreflected in weak credit demand by enterprises and consumers in addition to a credit squeeze as a result of the deteriora-tion of credit quality.A positive contribution to bank funding was provided by the ECB’s refinancing operations through the net injection ofapproximately €140 billion into the Italian banking system. The cost of funds gradually rose in 2012. The average interestrate paid on customer deposits, bonds and repurchase agreements in December 2012 was 2.08%, compared with 2% atthe end of 2011.Notwithstanding the ECB’s interventions, the volume of bank lending in 2012 gradually contracted, a trend that sharpenedtowards the end of the year. Total loans to Italian residents in December amounted to roughly €1,928 billion, which was1.06% down on December 2011. The average interest charged to individuals and corporates gradually declined in 2012from 4.23% in December 2011 to 3.78% in December 2012.



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Cost and revenue allocationGiven the fact that Poste Italiane is a single legal entity, the Company’s general accounting system maintains its uniformcharacteristics and capabilities. In this context, the general principles governing administrative and accounting aspects ofBancoPosta RFC are as follows: • identification of transactions in Poste Italiane SpA’s general ledgers relating to BancoPosta’s ring-fenced operations which

are then extracted for recording in BancoPosta’s separate ledgers;• allocation to BancoPosta of all relevant revenue and costs. In particular the services rendered by the different functions

of Poste Italiane SpA to BancoPosta RFC are exclusively recorded as payables in BancoPosta’s separate books, in spe-cial accounts only, and subsequently settled;

• settlement of all incoming and outgoing third party payments by the Poste Italiane SpA Finance function; • allocation of income taxes based on BancoPosta’s separate income statement after adjusting for deferred taxation; • reconciliation of BancoPosta’s separate books to Poste Italiane’s general ledger;• BancoPosta’s income, assets and liabilities and cash flows are, in compliance with statutory requirements, separately

reported by Poste Italiane at the end of each year. The separate Report is prepared in accordance with international fi-nancial reporting standards as endorsed for application in the European Union as applied by Poste Italiane and consis-tent, where applicable, with Bank of Italy Circular 262 - Banks’ Financial Statements: Layouts and Preparation.

As explained above, the General Operating Guidelines identify each relevant activity and provide rules for the allocation ofcosts incurred by Poste Italiane SpA divisions for BancoPosta operations. Costs are allocated to BancoPosta by transferpricing as determined with reference to:• market prices for similar services, e.g., the free market comparable price method; or,• cost plus a mark-up, e.g., the cost plus method, when there are no free market prices for the particular services provid-

ed by Poste Italiane functions.

Transfer prices are determined by the application of fixed rates plus a variable component used to reflect the achievementof qualitative/quantitative and performance objectives. These prices are reviewed annually as part of the planning and budg-et process.Finally, the General Operating Guidelines provide for the management of operating losses. As explained in the risk man-agement section, the Guidelines prescribe that any operating losses be deducted from payments made to the relevantPoste Italiane function outside the ring-fence.

Relationships between Poste Italiane and BancoPosta are subdivided into three macro areas in accordance with the serv-ices provided to BancoPosta as shown in the general and internal operating guidelines.

Commercial activitiesCommercial activities include the activities of the Private Customer and Large Account and Public Sector functions andincludes the marketing of BancoPosta products and services to all customer segments.The commercial network is engaged in the sale of BancoPosta products and services in connection with the operationspursuant to Presidential Decree 144 of 14 March 2011, as amended.

Support servicesSupport services include IT (e.g., design, development and implementation of software and systems in support ofBancoPosta), Real Estate (preparation, operation and furnishing of BancoPosta premises, etc.), Finance (management ofthe aggregate cash balances of postal current accounts and related BancoPosta services); Postal and Contact CentreServices (specialist POS support (inbound), back office, promotions (outbound) and sundry.

Staff servicesStaff services include all overheads incurred for the cross support of the coordination and management of BancoPosta byPurchasing, Legal Affairs, Accounting and Control, External Relations, Human Resources and Organisation, and Security & Safety.




The following table includes a summary of the Poste Italiane functions outside the ring-fence that engage in the transac-tions under discussion, reported by different macro-area of activity, with a brief indication of how transfer prices are deter-mined.


Commercial

activities

Support services

Staff services

Function

Sales network


Real Estate

Finance

Postal services

Call Centre



Security & Safety

Legal Affairs

External Relations

Purchasing

Internal Auditing

Allocation key

Fixed component: Cost + mark-up + price capVariable component in accordance with business targetsachieved and service level

Fixed component: Cost + mark-upVariable component in accordance with maintenanceof operating performance

Determined with reference to floorspace, property appraisalsand maintenance costs

Cost + mark-up

Standard rate times number of items handled

Number and type of calls

Actual internal costs; external costs plus a mark-up


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KEY PERFORMANCE INDICATORS

Income

Key income ratios(*)


(€m) to 31 December 2011 31 December 2012

Net interest income 1,063 1,501

Net fee and commission income 2,321 3,498Net income from banking activities 83 153Net interest and other banking income 3,467 5,152

Other operating income/(expense) (13) (17)Operating income 3,454 5,135

Administrative expenses: (2,991) (4,585)of which: Transfer payments (2,879) (4,420)Operating expenses (2,991) (4,585)

Profit from ordinary operations 463 550

Net losses/(recoveries) on impairments of loans and advances 6 (1)Net provisions for risks and charges (12) (2)Profit before tax from continuing operations 457 547

Taxes on income (201) (204)

Net profit for the year 256 343

Net interest income/Net interest and other banking income 31% 29%Recurring income/Net income from banking activities(**) 61% 63%Operating costs/Net interest and other income(***) 87% 89%

(*) The key income ratios normally used reflect the unique nature of BancoPosta RFC and the fact that payments to Poste Italiane in reimbursement of costsare classified as “administrative expenses”. The absolute amounts of the ratios are, consequently, irrelevant and should not be used for marketcomparisons but for analyses over time.

(**) Recurring income means interest and fee income under the Cassa Depositi e Prestiti contract.(***) Cost/income ratio.

For the period 2 May 2011 For the year ended



Financial position


(€m) At 31 December 2011 At 31 December 2012

Total assets 42,480 51,808

of which:Available-for-sale financial assets 13,465 22,456Held-to-maturity financial assets 14,364 14,048Due from customers 9,486 9,821Other assets 5,165 5,483

Liabilities 43,400 50,284

of which:Due to banks and customers 40,822 46,946Other liabilities 2,578 3,338

Equity (920) 1,524

of which:Reserves 1,000 1,256Valuation reserves (2,176) (74)Profit for the year 256 343


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This section provides a summary of the 2012 operating results, financial position and cash flow of BancoPosta RFC.Comparatives are for the period from 2 May 2011, date on which BancoPosta RFC was established, to 31 December2011, the end of the reporting period for the first Separate Report.

RECLASSIFIED INCOME STATEMENT

Although the operating performance for the period was characterised by difficult markets, ordinary operations were prof-itable, with profit for the year of €343 million (€256 million profit earned in the eight months of BancoPosta’s operationsin 2011).In detail, net interest income is €1,501 million (€1,063 million in 2011). It is the net of interest income of €1,783 million(€1,142 million in 2011) earned on interest bearing government securities and deposits at the Ministry of the Economy andFinance, and interest of €253 million paid to current account holders (€67 million in 2011) and €29 million (€12 million in2011) to leading repo counterparty credit institutions. The increase in interest expense was due to the increased cost ofcustomer deposits as a result of promotions during the year.Fee and commission income amounts to €3,541 million (€2,348 million in the eight months of operations of 2011); €1,649million is for operations relating to the agreement with Cassa Depositi e Prestiti (€1,054 million in 2011), €1,159 millionfor bill collection and various payments services (€778 million in 2011) and €733 million (€516 million in 2011) for othercustomer services, including account maintenance fees.Fees and commissions paid amount to €43 million (€27 million in 2011), most of which relates to debit/credit card clear-


Income/(Expense) For the period 2 May 2011 For the year ended(€m) to 31 December 2011 31 December 2012

Interest and similar income 1,142 1,783Interest and similar expenses (79) (282)Net interest income 1,063 1,501

Fee and commission income 2,348 3,541Fee and commission expense (27) (43)Net fee and commission income 2,321 3,498

Dividends and similar income - -Profits/(Losses) on trading 8 103Profit/(Losses) on disposal or repurchase 75 50Net interest and other banking income 3,467 5,152

Net losses/(recoveries) on impairment 6 (1)Net income from banking activities 3,473 5,151

Administrative expenses: (2,991) (4,585)a) personnel expenses (57) (80)b) other administrative expenses (2,934) (4,505)

Net provisions for risks and charges (12) (2)Other operating income/(expense) (13) (17)Operating expenses (3,016) (4,604)

Income/(Loss) before tax from continuing operations 457 547

Taxes on income from continuing operations (201) (204)Income/(Loss) after tax from continuing operations 256 343

Income/(Loss) after tax from discontinued operations - -Profit/(Loss) for the year 256 343



ing services.Banking income for the year amounts to €153 million (€83 million in 2011) primarily due to €103 million earned on discon-tinued60 forward purchases originally classified as hedges and traded during the year. Net income from banking activitiesalso benefitted from profits of €50 million (€75 million in 2011) on the disposal of available-for-sale financial assets and div-idends of €71 thousand (€53 thousand in 2011) received from the investment in MasterCard.The above operations have resulted in net interest and other banking income of €5,152 million (€3,467 million for the eightmonths of operations in 2011).

OPERATING COSTS

Operating costs amount to €4,604 million (€3,016 million in 2011) and largely consist of other administrative expenses(€4,505 million), €4,420 million of which are transfer payments to Poste Italiane in accordance with the General OperatingGuidelines and in application of specific internal guidelines. Other administrative expenses also include the cost toBancoPosta of the commercial network. Personnel expenses of €80 million (€57 million for the eight months of operations in 2011) are for BancoPosta employeesas shown in the table below. As part of its operations and in accordance with the General and attached Internal OperatingGuidelines, BancoPosta is, however, the recipient of services provided by Poste Italiane employees, particularly post officeand Contact Centre personnel.


Operating costs (€m) to 31 December 2011 31 December 2012

Administrative expenses: 2,991 4,585a) personnel expenses 57 80b) other administrative expenses 2,934 4,505

Net provisions for risks and charges 12 2Other operating income/(expense) 13 17

Total operating costs 3,016 4,604

60. “Discontinued” means change in accounting policy from that for the recognition of hedging derivatives (i.e., hedge accounting), as a result of a manage-ment decision or because of the early disposal or prepayment of the hedged or hedging asset or liability and the resultant application of a differentaccounting policy, as required by IFRS.

For the period 2 May 2011 For the year ended


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BANCOPOSTA EMPLOYEES

Net provisions for risks and charges amount to €2 million and include litigation and other operating losses, whereas netimpairments on customer loans and advances amount to €1 million and include overdrawn customer current accounts. As a result of the above, income before tax from continuing operations is €547 million (€457 million for the eight monthsof operations in 2011). Income tax expense for the year amounts to €204 million, resulting in net profit for the year of €343million.


Average number of employees(*)

Workforce 2011 2012

Executives 45 45Middle managers - A1, A2 357 388Levels B, C, D, E, F 1,345 1,324

Total permanent personnel 1,747 1,757

(*) Full-time equivalents. The average number of employees in 2011 relates to the period from 2 May 2011, the date on which BancoPosta RFC wasestablished, to 31 December 2011.



12.3.2 ASSETS, LIABILITIES AND CASH FLOW

RECLASSIFIED STATEMENT OF FINANCIAL POSITION

Cash and cash equivalents (€3,181 million at 31 December 2012 after €2,497 million at 31 December 2011) primarily con-sists of €2,480 million (€2,284 million at 31 December 2011) in cash on hand at post offices and cash in transit servicesderiving from postal current account balances, postal savings products (Interest-Bearing Postal Certificates and PostalSavings Books deposits) not yet deposited with Cassa Depositi e Prestiti, or advances collected from the Italian Treasuryto finance post office operations. This cash may only be used in settlement of these obligations. Current account deposits by Public Sector entities are required to be deposited with the Ministry of the Economy andFinance (the “MEF”). Such amounts are remunerated at a variable interest rate as expressly set out in an agreement of 8May 2009 with the MEF for the provision of treasury services to BancoPosta, as amended by addenda. The most recentaddenda was signed in March 2013, extending the term of the agreement to 31 December 2013.


Assets


Cash and cash equivalents 2,497 3,181Financial assets held for trading 13 -Available-for-sale financial assets 13,465 22,456Held-to-maturity financial assets 14,364 14,048Due from banks 665 593Due from customers 9,486 9,821Hedging derivatives 74 12Tax assets: 1,181 460

a) current - 18b) deferred 1,181 442

Other assets 735 1,237

Total assets 42,480 51,808

Liabilities and equity


Due to banks 2,372 3,484Due to customers 38,450 43,462Financial liabilities held for trading 7 -Hedging derivatives 617 816Tax liabilities: 53 320

a) current 9 10b) deferred 44 310

Other liabilities 1,590 1,900Employee termination benefits 15 19Provisions for risks and charges 296 282Valuation reserves (2,176) (74)Reserves 1,000 1,256Profit/(Loss) for the year 256 343

Total liabilities and equity 42,480 51,808


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The 2007 Budget Law, on the other hand, requires that private customer deposits in postal current accounts be investedin euro zone government securities.The above agreement with the MEF for treasury services also includes a provision that a percentage of funds deriving fromprivate deposits may be placed in a special “Buffer” account at the MEF with the objective of ensuring flexibility withregard to investments in view of daily movements in amounts payable to current account holders. These deposits areremunerated at a variable rate calculated on the basis of the ECB’s Main Refinancing Operations (MRO) rate.

Available-for-sale financial assets amount to €22,456 million at 31 December 2012 (€13,465 million at 31 December 2011).The increase is primarily due to investment in government securities of the proceeds of €5 billion from repurchase agree-ments concluded with Cassa Depositi e Prestiti and San Paolo-IMI. The repurchase agreements were concluded in the con-text of customer and bank deposits in February in conjunction with the ECB’s long-term refinancing operation for the pur-poses of rolling over investments of the cash deriving from securities maturing over the next three years. The residualincrease in available-for-sale financial assets was substantially due to the increase in the fair value of securities in the AFSportfolio in addition to purchases and sales during the year, totalling approximately €1.6 billion.

Real Estate (e.g., use and management of office space for BancoPosta’s operations) and Technology (e.g., design andimplementation of new services, management and maintenance of operations and business software) services are provid-ed to BancoPosta RFC by Poste Italiane SpA. In that regard, capital expenditure was made during the year to increasecapacity and renew technology for business continuity and disaster recovery in addition to numerous investments in elec-tronic money instruments.The provision of these services is regulated by internal operating guidelines and remunerated through the payment byBancoPosta RFC of transfer prices to Poste Italiane’s various functions.




12.4 BANCOPOSTA’S OPERATIONS FOR THE PERIOD

REGULATORY AND MARKET ENVIRONMENT

As explained above, during the year, following the issue of Legislative Decree 179 of 18 October 2012 regarding“Additional urgent measures to promote growth in Italy” (converted by Law 221 of 17 December 2012), a number ofamendments/additions were introduced to Presidential Decree 144 of 14 March 2001. The effect of this new legislationwas to broaden BancoPosta’s operations.

In order to assure compliance with requirements having regard to the transparency of transactions, banking and financialservices, and the propriety of relations between intermediaries and customers, a number of measures were introduced in2012, including the following:• revision and updating of documentation (information leaflets, summary documents, basic information on consumer cred-

it, notices) providing for the transparency of contracts and forms for all BancoPosta products and all products distributedby BancoPosta for other parties (loans, salary loans, home loans, credit cards, POS);

• structural rationalisation of internal procedures at counters in order to properly comply with requirements regarding trans-parency.

Activities continued in 2012 to strengthen processes and controls for the prevention of money laundering (adequate veri-fication, recording of transactions in one IT archive, reporting of potentially suspect transactions).

Steps were also taken to ensure compliance with the so-called “Development” and “Rescue Italy” Decrees. The techni-cal and operational measures were implemented that were needed to assure compliance with regulations relating torestrictions on the use of cash and stamp duty. Steps were also taken to comply with privacy requirements contained inthe Rescue Italy Decree on connection with the transmission of information to the tax authorities.

RELATIONS WITH SUPERVISORY AUTHORITIES

Bank of ItalyIn February 2012 the Bank of Italy began an inspection of the Parent Company in accordance with art. 54 of LegislativeDecree 385/93, with respect to the activities of BancoPosta. The inspection was concluded in August. On 14 December2012 the Company submitted its considerations to the regulator.

During the year Poste Italiane also underwent inspections by the “Department of external relations and general affairs”within the Bank of Italy’s Supervision Unit (“Servizio rapporti esterni e affari generali” dell’Area Vigilanza) to verify the com-pliance of BancoPosta’s activities. The areas reviewed included, among others, anti-money-laundering, the transparency ofcontractual terms and conditions and fair trade issues. The outcome of the inspections was notified to the Company in aletter dated 18 December 2012. The Company submitted its own considerations to the Bank of Italy, in reply to this letter,on 13 March 2013.

PROCEEDINGS PENDING

On 18 April 2012 the Financial Reporting Unit (Unità di Informazione Finanziaria, or UIF) of the Bank of Italy began an inspec-tion of the Company pursuant to article 47, paragraph 1 of Legislative Decree 231/07 relating to the reporting of allegedmoney-laundering transactions. The inspection was completed in October 2012. Following the inspection, the Unit identi-fied six failures to report suspicious transactions, in addition to five such failures uncovered and notified by the FinancePolice in 2012. The Company sent a defence brief to the MEF for every notification received.



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Overall, at 31 December 2012, there are twenty pending proceedings before the MEF, including fourteen for failures toreport suspicious transactions and six in relation to violations of the rules governing limits on the use of cash and bearerinstruments.

Antitrust AuthorityOn 5 November 2012, the Antitrust Authority notified the initiation of proceedings pursuant to art. 27, paragraph 3 ofLegislative Decree 206/05 (the Consumer Code) and art. 6 of the Regulations governing the investigation of unfair com-mercial practices and at the same time demanded information pursuant to art. 12, paragraph 1 of the Regulations regard-ing the PROMO 4% promotion for BancoPosta Più and BancoPosta Click accounts that was made between December2011 and March 2012. In particular, the Authority challenged the manner with which the terms and conditions of theaccounts were advertised. The end of the proceedings is scheduled for 3 June 2013.

COMMERCIAL OFFERING

Major efforts were made in 2012 with respect to private current accounts, partly to attract new deposits and partly to pre-vent the withdrawal of deposits held by that segment of account holders most easily attracted by the forms of remunera-tion offered by the competition. In that connection:• “Promozione 4%“ aimed at new and existing current account holders was launched. It entailed the payment of a gross

interest rate of 4% per annum on at least a €3,000 increase in balance above that at 30 November 2011;• “Opzione 3.50%”, which was a fixed term deposit for new and existing current account holders paying 3.50% gross

per annum on deposits up to €500 thousand made before 15 July 2012 and maintained until 31 December 2012.

Various promotions were developed for SMEs to attract increased balances and facilitate the cross selling of financial prod-ucts. The 2% gross per annum credit interest promotion on increases in BancoPosta in Proprio balances was extendedthroughout 2012. “Opzione 3.50% Affari” was added in November. This is a fixed term deposit on which 3.50% per annumgross is paid on balances between €10 thousand and €500 thousand deposited by 31 December 2012 and maintaineduntil 31 May 2013.Various promotions were held in 2012 for the electronic money segment, including:• the pilot launch of contactless Postepay Maestro debit cards at all Mastercard PayPass61 authorised sales points in Mi-

lan and the surrounding area; • the launch of the online promotion MyPostepay to customise the card design with images uploaded directly from a PC

or selected from a gallery at www.postepay.it; • the launch, in conjunction with the Albanian Post Office, of Postepay Twin Albania62; • the launch of the Postepay Corporate, a prepaid business card for all companies, the Public Sector and local authorities

to manage company expenses. Cards can be issued for family members so that they can have prepaid named cards touse on company business or for other institutions. The card is credited by the company or organisation through the Ban-coPosta Impresa On line (BPIOL) remote banking service;

• the launch of Postepay Carta Roma, developed after the tender process organised by Roma Capitale (the Municipalityof Rome) and designed for residents of Rome in receipt of pensions or other payments and parents with dependentchildren. The card has an IBAN code making it possible for the holder to receive bank transfers, income payments orother payments and makes it possible to take advantage of offers and discounts made available by Roma Capitale au-thorised sellers;

• the introduction of the Mastercard SecureCode and Verified by Visa services affording greater protection for on-line pur-chases from all authorised e-commerce sites. The service entails the creation of a personal password for each card.


61. PayPass is Mastercard’s contactless card. Contactless cards enable their holders to make payments without swiping their card or inserting it into a read-er; it is only necessary to hold the care nearby.

62. The main Postepay Twin Albania is a registered prepaid card which can be used like a Postepay standard card. The second Postepay Twin Albania is abearer, anonymous, prepaid card which can be used like a Postepay New Gift.



Various loyalty campaigns were also organised during the year in conjunction with credit card issuers to promote their useas an everyday payment instrument (the “Titolari&Vincenti” campaign for Classic and Gold cards) and to promote paymentsby instalment (“Commissione Zero” and “Commissione ridotta” campaigns for BancoPosta Più card holders).

A large number of campaigns were run in 2012 in order to promote loan products to private customers, including:• the repricing and redesign of “Prestito BancoPosta” and “Prontissimo BancoPosta Extracash”, the small loan of €1,500

or €3,000 offered at particularly attractive conditions and reserved to customers who already have a BancoPosta orProntissimo BancoPosta loan and have kept up with their repayments;

• the Prontissimo BancoPosta promotion providing special loan conditions to all postal savings books holders; • the marketing, in conjunction with the Banca del Mezzogiorno-MedioCredito Centrale SpA, of Mutuo BancoPosta home

loans to employees and pensioners of the Poste Italiane Group for the purchase or restructuring of a home;• the marketing of Specialcash Postepay micro loans developed in conjunction with the financial partner Compass SpA for

which all Postepay named and prepaid cardholders are eligible. There are three predefined loans: €750 repayable in month-ly instalments over 15 months, €1,000 over 18 months and €1,500 over 24 months by payment slip or direct debit;

• the Quinto BancoPosta salary loan offer which, in conjunction with Compass SpA, entails the payment of one-fifth ofthe wages of permanent government employees who receive their wages by CreditoNet63. That offer was followed bythe Quinto BancoPosta salary loan for Poste Italiane employees in conjunction with Banca del Mezzogiorno-MedioCre-dito Centrale SpA.

In 2012, in addition to the ongoing marketing of Reverse Factoring Pubblica Amministrazione, offered in conjunction withSACE Fct, Prontissimo Affari BancoPosta was introduced. This is a medium-term loan for all on-person firms and individu-als with a VAT registration number.

There was a thorough innovation of all Postal Savings products in 2012 in addition to the several dedicated offerings. Thebusiness and strategic policies, associated with the competitiveness of returns and the close partnership with CassaDepositi e Prestiti, meant that it was possible to rationalise and expand the Interest-bearing Postal Certificates offered. Inaddition to the projects introduced in the first half year (four new certificates: BFP7insieme, BFP3.50, 3 year plus BFP and2 year plus BFP and discontinuation of indexed at maturity BFP and BFPPremia), the BFPFedeltà was launched. The FedeltàCertificate is intended to convert maturing straight thirty year BFP redemptions into new subscriptions. The distribution oftwo equity index-linked BFP (BFP Indicizzato a Scadenza and BFP Premia), on the other hand, has been discontinued, sincethe certificates were no longer of interest to customers.At the end of March the Bonus Interessi promotion, which was originally run at the end of 2011, was re-launched for postalsavings book holders in order to counter competition for deposit accounts. The offer, which was originally planned to endon 31 May, was extended to 30 June 2012 due to its success.

Investment services in 2012 were marked by three fixed rate six-month Unicredit SpA bond placements: Fixed Rate6.10%, Fixed Rate 5.00% and Fixed Rate 5.65%.Poste Italiane also participated in a consortium for the placement of publicly offered Enel SpA and Atlantia SpA bonds andprovided its customers with the ability to subscribe to three new Italian BTP.Finally, in the fourth quarter two bonds placed in 2009, “Credit Suisse 2009/2015, Fixed Rate Plus BancoPosta IV place-ment” and “Barclays 2009/2015 Fixed Rate Plus BancoPosta 4.40%”, were offered to the public by their issuers.

Online servicesAn electronic invoicing service was introduced during the year for BancoPostaImpresa on line account holders. This makesit possible to combine the management of all facets of electronic invoice issuance through the exchange and archiving of


63. CreditoNet is a service provided by the Service Personnel Department of General Administration (DAG) which is part of the Ministry of the Economy andFinance, for government employees to obtain financing from credit institutions and finance companies as quickly and as simply as possible.


132

invoices with the security of digital signatures. The Interbank Corporate Banking platform was also altered to comply withCustomer to Business Interaction (CBI)64 standards with a concomitant increase in the level of security.Home and Corporate Banking services associated with BancoPosta accounts maintained their upwards growth trend withover 1.3 million consumer customer on-line accounts (1.1 million active consumer accounts at the end of 2011) and approx-imately 239 thousand business and Public Sector accounts (223 thousand at the end of 2011). Online customers generated 21 million payment transactions in 2012 (over 18 million in 2011). Bill payments proved to bethe most successful of the classic internet banking services, with approximately 5.6 million bills paid on line (4.9 million in2011) by current account direct debits and the use of credit/Postepay cards; 650 thousand of these using the BancoPostaClick channel. The volumes of other types of payments were also good:• 2.9 million online bank transfers (2.3 million in 2011), including over 640 thousand using the BancoPosta Click channel

(433 thousand in 2011); • 4.6 million telephone top-ups (4.8 million in 2011); • 5 million Postepay top-ups (also 5 million in 2011); and • over 1.5 million post office giro transfers (1.2 million in 2011).

Furthermore, in the financial products online sales segment, there were approximately 65 thousand online subscriptionsto Interest-bearing Postal Certificates (116 thousand in 2011), whereas there were over 2,900 online loan disbursements(2,500 in 2011).


64. The Customer to Business Interaction (CBI) consortium is a screen based bank service allowing for companies of all sizes to work directly by computerwith all banks where accounts are maintained.




Revenue For the year ended

(€m) 31 December 2012

Current accounts 2,924

Payment of bills by payment slip 573Income from investment of customer deposits 1,773Other revenue from current accounts and prepaid cards 578Money transfers(*) 64

Postal savings and investment 1,959

Postal Savings Books and Certificates 1,649Government securities 10Equities and bonds 35Insurance policies 233Investment funds 13Securities Deposits 19Delegated Services 153

Loan products 156

Other products(**) 63

Total BancoPosta revenue 5,319

Remuneration of BancoPosta's cash holdings and other finance income(***) 5

Total BancoPosta revenue from ordinary operations(****) 5,324

(*) This item includes all revenue from domestic and international money orders and inbound and outbound Eurogiros.(**) This item includes revenue from tax collection forms and tax returns, and revenue stamps.(***) Remuneration of BancoPosta's cash holdings is managed through postal current accounts. The investment of balances on private accounts is restricted.(****) Interest income and fee and commission income, only.

Deposits

(€m) At 31 December 2012

Current accounts(*) 41,452

Postal Savings Books(**) 98,778

Interest-bearing Postal Certificates(**) 213,270

(*) Including time deposits, repurchase agreements and Poste Italiane's liquidity.(**) Deposits include accrued interest for the period, calculated on the assumption that all Interest-bearing Postal Certificates arrive at their scheduled maturity

date.

Number of transactions For the year ended

(‘000) 31 December 2012

Payment slips processed 480,718

Domestic postal orders(*) 6,375

International postal orders 2,858

Inbound 1,605Outbound 1,253Pensions and other standing orders 80,761

Tax services 23,846

(*) Includes Vaglia Circolari giro drafts.


BancoPosta RFC’s revenue in 2012 amounts to €5,324 million and consists primarily of current account revenue which, at€2,924 million, is 55% of total revenue, and postal savings revenue (Savings Books and Interest-bearing Certificates)which, at €1,649 million, is 31% of the total.In detail, current account revenue was in large part attributable to interest on the deposit of funds (€1,773 million) and islinked to average current account balances (€41.5 billion), which benefitted from the success of the commercial promo-tions in 2012 and the yields on government securities purchased with the €5 billion proceeds of the repurchase agree-ments entered into with Cassa Depositi e Prestiti and San Paolo IMI (arranged, as explained above, by the European CentralBank as part of its Long Term Refinancing Operations - LTRO). Revenue from the payment of bills by payment slip is €573 million and is correlated to the number of payment slipprocessed (€481 million), whereas other current account and prepaid card-related revenue amounts to €578 million.As explained above, the sale of Interest-bearing Postal Certificates and inflows of Postal Savings Books, the income onwhich is linked to a mechanism agreed with Cassa Depositi e Prestiti SpA65, which reflects the achievement of net savingsinflow targets, contributed €1,649 million to BancoPosta services revenue. Postal Savings Books deposits amount to€98.8 billion at 31 December 2012, whilst outstanding Interest-bearing Postal Certificates amount to €213.3 billion.Revenue from asset and fund management66 totals €310 million and is principally earned on insurance policy sales (€233million). Delegated service revenue amounts to €153 million and includes fees for the payment of INPS (National Social InsuranceInstitute) and those earned on the payment of pensions and salaries for the Ministry of the Economy and Finance. Revenue from the distribution of loan products totals €156 million and relates to personal loans, mortgage loans, over-drafts, salary loans and credit protection.

134


Volumes

(‘000) At 31 December 2012

Number of customer current accounts 5,883

Number of credit cards 460

Number of debit cards 6,623

Number of prepaid cards 9,559

65. The agreement for the three-year period 2011-2013 was signed on 3 August 2011 and subsequently amended on 13 December 2012.66. Asset and fund management includes the distribution of government securities, equities, bonds, insurance policies, mutual investment funds and com-

missions on safe custody accounts.



12.5 EVENTS AFTER THE END OF BANCOPOSTA RFC’S REPORTING PERIOD

There are no material events after 31 December 2012 to report.

Minor events after the end of the reporting period are described in other sections of the Annual Report.

12.6 OUTLOOK FOR BANCOPOSTA RFC

BancoPosta RFC will benefit from steps taken to attract private current account deposits and retain the related inflowsthrough interest rate promotions.Certain promotions launched in 2012 will be continued for that purpose and new offers will be launched such as the pay-ment of 3% interest to 30 June 2013 to new current account holders with a balance of between €5 thousand and €200thousand.Collection and payment systems will, in a measure to complete the range of value added bills services, be enhanced bythe introduction of Bollettino Report Gold, which will enable BPIOL remote banking customers to access archived bills col-lected for the past ten years from 2006 and the consequent elimination of paper statements. In a further step to expand the processing of payment slips, it is planned to involve large wholesale outlets and AutomobileClub d’Italia franchisees.A new prepaid card will be launched in 2013: Postepay loStudio. It has been developed together with the Ministry ofEducation, Universities and Research. The card, which is intended for high school students, combines the features of thelostudio card (with student discounts for card holders given by partners who have concluded agreements with the Ministry)with prepaid Postapay payment services.An e-Commerce Bill will be developed as part of online acquiring services (e-commerce), which will make it possible tocomplete an online purchase with a direct cash payment before shipment, thus providing a solution for people wanting toshop online but wishing to avoid web-based payment systems. As regards retail loan products, Prontissimo BancoPosta will be revised in 2013, by making it possible for fees to be com-mensurate with customer risk profiles, in addition to providing a range of flexible options during the term of the loan (alter-ation of amount of instalment, modification of term, etc.). Other new products will include home loans for Poste Italianeemployees and the expansion of the scope of Quinto BancoPosta salary loans. Finally, a new BancoPosta online loan willbe developed. It will be differentiated by features and pricing tailored to the target and may be applied for throughBancoPosta online and BancoPosta Click accounts. Continuing its offerings of recent years, the Postal Savings segment will introduce new products and services: the LibrettoNominativo Ordinario Smart (a savings book for customers looking for good returns and attracted by an advanced product,combined with an electronic card that can be used for online services); and the BFP3x4Fedeltà (interest-bearing postal cer-tificates for people wishing to re-invest the proceeds from postal certificate redemptions in 2013). Despite signs of recovering in financial markets and a slight improvement in the pricing of sovereign debt securities as aresult of the ECB’s intervention, the outlook for 2013 is for continued economic weakness as a result of a hesitant eco-nomic recovery. These uncertainties combined with difficulties in the labour market and the contraction of disposableincome will have an effect on the dynamic of deposits, which could undergo a slowdown.All of the above mean that although the results for 2013 will be positive, it will be difficult to retain the levels of incomeearned in 2012, due to the reduced savings capacity of Italian consumers.



136

12.7 OTHER INFORMATION ON BANCOPOSTA RFC

Related party transactionsThe principal transactions conducted by BancoPosta RFC regard the Ministry of the Economy and Finance and CassaDepositi e Prestiti, with particular reference to post office savings and other Poste Italiane services. Detailed information on transactions between BancoPosta and its related parties are shown in Part H of note 37 in PosteItaliane SpA’s financial statements.

Supplementary financial statements Poste Italiane SpA’s financial statements include a supplementary statement of financial position, prepared in compliancewith art. 2, paragraph 17-undecies of Law 10, converting Legislative Decree 225 of 29 December 2010, requiring separatedisclosure of BancoPosta’s ring-fenced assets and liabilities.

Intersegment transactionsIntersegment transactions between BancoPosta RFC and Poste Italiane functions, which have not been included, are setout in Part A.1, Section 4 of note 37 in Poste Italiane SpA’s financial statements.



13713. Board of Directors’ proposals to the Shareholder


13. BOARD OF DIRECTORS’ PROPOSALS TO THE SHAREHOLDER

The Board of Directors proposes that the General Meeting:

• approve the financial statements of Poste Italiane SpA for the year ended 31 December 2012, consisting of the state-ment of financial position, the statement of profit or loss, the statement of comprehensive income, the statement ofchanges in Equity, the statement of cash flows and the notes (including the Separate Report on BancoPosta RFC), ac-companied by the Directors’ Report on Operations;

• appropriate profit for the year of €722,245,063 as follows:a) €36,112,253 to the legal reserve;b) €342,662,363 in profit attributable to BancoPosta RFC’s net profit for the year to retained earnings, to be appropriat-

ed to BancoPosta RFC’s equity;c) the remaining €343,470,447 in accordance with the resolutions to be adopted by the General Meeting.

The Board authorises the Chairman and CEO, acting jointly or severally, to make any necessary insubstantial changes andadditions to the above proposals.

In this regard, we wish to draw the reader’s attention to the liquidity needs linked to the Company’s growing cash require-ments in order to finance its operations, given the length of collection periods for accounts receivable from the Italian state.


138


APPENDIX – KEY PERFORMANCE INDICATORSFOR PRINCIPAL POSTE ITALIANE GROUP COMPANIES

The figures shown in the tables below reflect the financial and operational indicators (as deduced from the related report-ing packages) of the principal Group companies prepared in accordance with International Financial Reporting Standards(IFRS) and approved by the boards of directors of the respective companies.

Postel SpA

Increase/(Decrease)

(€000) 2011 2012 Amount %

Revenue from sales and services 267,040 278,407 11,367 4.3Operating profit (29,960) 11,031 40,991 n/sProfit for the period (25,019) 6,027 31,046 n/sInvestment 17,124 15,294 (1,830) (10.7)Equity 125,688 129,825 4,137 3.3Permanent workforce - end of period 1,102 1,089 (13) (1.2)Flexible workforce - average 96 70 (26) (27.1)

The company employed on average 1 person seconded from the Parent Company (4 in 2011).n/s: not significant.

PostelPrint SpA

Increase/(Decrease)

(€000) 2011 2012 Amount %

Revenue from sales and services 115,678 114,680 (998) (0.9)Operating profit (484) 1,680 2,164 n/sProfit for the period (895) 1,073 1,968 n/sInvestment 627 271 (356) (56.8)Equity 36,023 36,909 886 2.5Permanent workforce - end of period 229 226 (3) (1.3)Flexible workforce - average 21 - (21) n/s

The company employed on average 0.3 people seconded from the Parent Company (0 in 2011).n/s: not significant.


139Appendix - Key Performance Indicators for principal Poste Italiane Group companies



Increase/(Decrease)

(€000) 2011 2012 Amount %

Revenue from sales and services 440,755 451,854 11,099 2.5Operating profit (11,273) (64,415) (53,142) n/sProfit for the period (7,619) (50,470) (42,851) n/sInvestment 4,049 4,379 330 8.2Equity 44,894 (6,820) (51,714) n/sPermanent workforce - end of period 1,342 1,402 60 4.5Flexible workforce - average 12 35 23 n/s

The company employed on average 0.5 people seconded from the Parent Company (2 in 2011).n/s: not significant.

Italia Logistica Srl (*)

Increase/(Decrease)

(€000) 2011 2012 Amount %

Revenue from sales and services 91,352 83,145 (8,207) (9.0)Operating profit (3,227) (397) 2,830 (87.7)Profit for the period (2,685) (1,852) 833 (31.0)Investment 2,696 1,176 (1,520) (56.4)Equity 166 406 240 n/sPermanent workforce - end of period 64 55 (9) (14.1)Flexible workforce - average 34 41 7 20.6

(*) Following the acquisition of full control by SDA Express Courier SpA, this company, originally consolidated using proportionate consolidation, has beenconsolidated on a line-by-line basis from 1 October 2012.

n/s: not significant.

Poste Tutela SpA

Increase/(Decrease)

(€000) 2011 2012 Amount %

Revenue from sales and services 85,126 86,370 1,244 1.5Operating profit 1,680 1,654 (26) (1.5)Profit for the period 1,156 1,091 (65) (5.6)Investment 9 18 9 n/sEquity 9,310 10,382 1,072 11.5Permanent workforce - end of period 6 12 6 n/s

The company employed on average 1 person seconded from the Parent Company (2 in 2011).n/s: not significant.


140


BancoPosta Fondi SpA SGR

Increase/(Decrease)

(€000) 2011 2012 Amount %

Fee income 31,500 32,847 1,347 4.3Net fee income 18,891 18,456 (435) (2.3)Profit for the period 8,357 8,683 326 3.9Financial assets (liquidity and securities) 73,245 86,987 13,742 18.8Equity 74,757 84,791 10,034 13.4Permanent workforce - average 40 49 9 22.5

The company employed on average 1 person seconded from the Parent Company (0.1 in 2011).

Postecom SpA

Increase/(Decrease)

(€000) 2011 2012 Amount %

Revenue from sales and services 80,611 112,908 32,297 40.1Operating profit 5,846 8,417 2,571 44.0Profit for the period 4,100 5,120 1,020 24.9Investment 9,134 6,875 (2,259) (24.7)Equity 42,839 47,600 4,761 11.1Permanent workforce - end of period 270 312 42 15.6Flexible workforce - average 4 7 3 75.0

The company employed on average 8 people seconded from the Parent Company (16 in 2011).

Poste Vita SpA (*)

Increase/(Decrease)

(€000) 2011 2012 Amount %

Insurance premium revenue(**) 9,513,878 10,519,178 1,005,300 10.6Profit for the period 131,736 265,485 133,749 n/sFinancial assets 45,507,043 58,040,626 12,533,583 27.5Technical account for life assurance and financial liabilities at fair value 44,291,918 56,729,499 12,437,581 28.1Equity 1,607,118 2,060,082 452,964 28.2Permanent workforce - average 201 227 26 12.9Flexible workforce - average 8 11 3 37.5

The company employed on average 3 people seconded from the Parent Company (3 in 2011).(*) The figures shown have been prepared in accordance with IFRS and therefore may not coincide with those in the financial statements prepared under

Italian GAAP and in accordance with the Italian Civil Code.(**) Insurance premium revenue is reported gross of outward reinsurance premiums.n/s: not significant.


141Appendix - Key Performance Indicators for principal Poste Italiane Group companies


PosteMobile SpA

Increase/(Decrease)

(€000) 2011 2012 Amount %

Revenue from sales and services 288,385 352,008 63,623 22.1Operating profit 26,251 27,854 1,603 6.1Profit for the period 16,568 18,088 1,520 9.2Investment(*) 65,956 34,468 (31,488) (47.7)Equity 61,599 79,100 17,501 28.4Permanent workforce - average 316 322 6 1.9Flexible workforce - average 1 6 5 n/s

The company employed on average 1 person seconded from the Parent Company (2 in 2011).(*) The figure for 2011 includes the contribution of the Parent Company’s Telecommunications unit, consisting of intangible assets and property, plant and

equipment with a total carrying amount of €35,363 thousand.n/s: not significant.

Europa Gestioni Immobiliari SpA

Increase/(Decrease)

(€000) 2011 2012 Amount %

Revenue from sales and services 23,341 18,799 (4,542) (19.5)Operating profit 6,043 701 (5,342) (88.4)Profit for the period 6,371 (498) (6,869) n/sInvestment 1,408 5,001 3,593 n/sEquity 441,997 441,480 (517) (0.1)Permanent workforce - end of period 14 16 2 14.3

The company employed on average 0 people seconded from the Parent Company (1 in 2011).n/s: not significant.

PosteShop SpA

Increase/(Decrease)

(€000) 2011 2012 Amount %

Revenue from sales and services 46,552 33,345 (13,207) (28.4)Operating profit 2,141 159 (1,982) (92.6)Profit for the period 1,284 310 (974) (75.9)Investment 394 879 485 n/sEquity 4,548 4,756 208 4.6Permanent workforce - end of period 34 43 9 26.5Flexible workforce - average - 3 3 n/s

The company employed on average 2 people seconded from the Parent Company (14 in 2011).n/s: not significant.

Banca del Mezzogiorno-MedioCredito Centrale SpA

Increase/(Decrease)

(€000) 2011 2012 Amount %

Net interest income(*) 3,347 13,118 9,771 n/sNet fee and commission income(*) 14,069 31,632 17,563 n/sProfit for the period(*) 699 7,145 6,446 n/sFinancial assets 816,546 862,077 45,531 5.6Equity 139,273 145,569 6,296 4.5Permanent workforce - end of period 183 223 40 21.9Flexible workforce - average 5 11 6 n/s

The company employed on average 3 people seconded from the Parent Company (8 in 2011).(*) The amounts shown for 2011 refer to the period from 1 August 2011 (the date of acquisition of the company) to 31 December 2011.n/s: not significant.


142


GLOSSARY

Business to Business (also B2B): trading between companies.

Business to Consumer (also B2C): online trading between companies and final consumers.

Cash trapping: this involves the insertion of a device into note-dispensing slots that temporarily capture notes inside theATM.

Cloud: this term relates to a collection of technologies that, usually in the form of a service offered to customers by aprovider, enable users to memorise/store and/or process data (via a CPU or software) thanks to the use of web-based toolsand applications.

Distribution centres: physical sites serving their local area, carrying out the basic delivery service, internal handling, sup-port services for the transport network, other external activities not directly linked to distribution and, on occasion, otherhigh-value-added services.

E-government: the computerisation of Public Sector processes, enabling documents to be processed and managed in dig-ital format, by using information and communication technologies to optimise the work of public bodies, and offering cus-tomers (the general public and companies) faster services, as well as new services via, for example, the websites of theGovernment agencies concerned.

Ho.Re.Ca.: the acronym for Hotellerie-Restaurant-Café, indicates enterprises operating in the hotel or food and beveragesectors.

International Post Corporation (IPC): a cooperative specialised in the development of operational and commercial proj-ects for postal services, the objective of which is to improve quality of service.

Mobile device: a small, hand-held computing device, usually a cell phone or a tablet, capable of accessing mobile phonenetworks and thus assuring a connection even when the user is on the move.

Phishing: an attempt to criminally and fraudulently obtain confidential information by masquerading as a trustworthy enti-ty in an electronic communication.

Picking: this is one of the activities carried out as part of warehouse logistics and refers to the process of moving materi-al from its original location to another, which may be an area within the same warehouse or another facility. Picking maybe manual or automated. In the latter case, personnel only select the material, which is then moved by mechanical means.

Reverse Logistics: services typically relating to items which, once delivered, are returned to the sender (e.g., itemsreturned for technical assistance or which must be replaced).


143Glossary


Time To Market: length of time it takes from a product being conceived until its being available for sale.

Universal Postal Union (UPU): a global organisation fostering cooperation amount postal operators, which regulates andharmonises international postal exchange and provides stimulus for development by focusing on the improvement of thequality of service provided to customers.


POSTE ITALIANE GROUPCONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2012 STATEMENTS AND NOTES


144-297 CONSOLIDATE FINANCIAL STATEMENTS 2012:Layout 1 23/09/13 14:35 Pagina 144

ANNUALREPORT2012




146

CONSOLIDATED STATEMENT OF FINANCIAL POSITION 148

CONSOLIDATED STATEMENT OF PROFIT OR LOSS 149

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 150

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 151

CONSOLIDATED STATEMENT OF CASH FLOWS 152

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1531. Introduction 1532. Basis of accounting 1543. Risk management 1754. Operating segments 2045. Property, plant and equipment 2076. Investment property 2107. Intangible assets 2118. Investments accounted for using the equity method 2139. Financial assets 216

10. Inventories 23311. Trade receivables 23312. Other receivables and assets 23913. Cash and deposits attributable to BancoPosta 24114. Cash and cash equivalents 24115. Non-current assets held for sale 24216. Share capital 24317. Shareholder transactions 24418. Earnings per share 24419. Reserves 24420. Technical provisions for insurance business 24621. Provisions for risks and charges 246

CONTENTS



Consolidated financial statements

147

22. Employee termination benefits and pension plans 24823. Financial liabilities 24924. Trade payables 25525. Other liabilities 25626. Revenue from sales and services 25927. Insurance premium revenue 26328. Other income from financial and insurance activities 26429. Other operating income 26430. Cost of goods and services 26531. Net movement in technical provisions for insurance business

and other claims expenses 26832. Other expenses from financial and insurance activities 26933. Personnel expenses 27034. Depreciation, amortisation and impairments 27135. Capitalised costs and expenses 27236. Other operating costs 27237. Finance income/costs 27338. Income tax expense 27439. Related party transactions 28040. Other information 28541. Information on investments 29142. Events after the end of the reporting period 292

ATTESTATION OF THE SEPARATE AND CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012 PURSUANT TO ART. 154-BIS OF LEGISLATIVE DECREE 58/1998 293

BOARD OF STATUTORY AUDITORS’ REPORT 294

INDIPENDENT AUDITORS’ REPORT 295


148

CONSOLIDATED STATEMENT OF FINANCIAL POSITIONat 31 December


ASSETSof whitch of whitch

related party related party transactions transactions

(€000) Note 2012 (note 39) 2011 (note 39)

Non-current assets

Property, plant and equipment [5] 2,650,319 - 2,789,470 -Investment property [6] 135,729 - 149,234 -Intangible assets [7] 523,881 - 557,597 -Investments accounted for using the equity method [8] 9,822 9,822 9,821 9,821Financial assets [9] 88,545,089 615,771 68,461,027 211,926Trade receivables [11] 152,410 - 181,555 -Deferred tax assets [38] 905,479 - 1,730,199 -Other receivables and assets [12] 1,189,861 1,466 728,463 1,466Total 94,112,590 74,607,366

Current assets

Inventories [10] 58,970 - 46,939 -Trade receivables [11] 3,781,362 2,168,087 3,883,464 2,067,481Current tax assets [38] 521,665 - 68,974 -Other receivables and assets [12] 779,656 9,967 684,363 4,167Financial assets [9] 15,602,736 7,512,759 15,271,523 8,164,839Cash and deposits attributable to BancoPosta [13] 3,179,701 - 2,559,994 -Cash and cash equivalents [14] 2,533,323 1,397,125 1,903,455 829,399Total 26,457,413 24,418,712

Non-current assets held for sale [15] 129 - 9,635 -

TOTAL ASSETS 120,570,132 99,035,713

LIABILITIES AND EQUITYof whitch of whitch

related party related party transactions transactions

(€000) Note 2012 (note 39) 2011 (note 39)

Equity

Share capital [16] 1,306,110 - 1,306,110 -Reserves [19] 1,264,143 - (1,096,556) -Retained earnings 3,080,273 - 2,638,648 -Equity attributable to owners of the Parent 5,650,526 2,848,202

Equity attributable to non-controlling interests - - 13 -

Total 5,650,526 2,848,215

Non-current liabilities

Technical provisions for insurance business [20] 56,771,043 - 44,260,432 -Provisions for risks and charges [21] 538,879 56,902 540,010 46,179Employee termination benefits and pension plans [22] 1,440,133 - 1,196,269 -Financial liabilities [23] 6,067,606 2,640,962 1,945,603 227,417Deferred tax liabilities [38] 412,533 - 248,994 -Other liabilities [25] 329,269 6 135,574 6Total 65,559,463 48,326,882

Current liabilities

Provisions for risks and charges [21] 872,801 11,543 1,009,053 8,556Trade payables [24] 1,630,695 198,219 2,016,318 553,348Current tax liabilities [38] 62,762 - 95,037 -Other liabilities [25] 1,703,002 70,512 1,534,144 78,761Financial liabilities [23] 45,090,883 127,759 43,206,064 316,210Total 49,360,143 47,860,616

TOTAL LIABILITIES AND EQUITY 120,570,132 99,035,713


149Consolidated statement of financial position | Consolidated statement of profit or loss

CONSOLIDATED STATEMENT OF PROFIT OR LOSSfor the year ended 31 December


of whitch of whitch related party related party transactions transactions

(€000) Note 2012 (note 39) 2011 (note 39)

Revenue from sales and services [26] 9,932,535 2,640,841 10,119,655 2,660,318Insurance premium revenue [27] 10,530,826 - 9,526,132 -Other income from financial and insurance activities [28] 3,463,605 - 1,876,908 -Other operating income [29] 142,519 3,882 170,787 3,917Total revenue [4] 24,069,485 21,693,482

Cost of goods and services [30] 2,828,117 188,118 2,630,676 147,289Net change in technical provisions for insurance business and other claims expenses [31] 12,987,840 - 9,886,613 -Other expenses from financial and insurance activities [32] 164,388 - 881,965 -Personnel expenses [33] 5,895,089 33,515 5,896,510 29,931

of which non-recurring costs/(income) (82,042) (54,715)Depreciation, amortisation and impairments [34] 648,881 - 543,913 -Capitalised costs and expenses [35] (61,947) - (47,682) -Other operating costs [36] 225,064 6,197 260,034 15,588

Operating profit/(loss) 1,382,053 1,641,453

Finance costs [37] 118,155 14,715 147,673 20,670Finance income [37] 159,094 43,919 159,815 39,806Profit/(Loss) on investments accounted for using the equity method [8] (218) 544

Profit/(Loss) before tax 1,422,774 1,654,139

Income tax expense [38] 668,134 - 807,758 -Income tax for previous years following change in legislation [38] (277,852) - - -

PROFIT FOR THE YEAR 1,032,492 846,381

attributable to owners of the Parent 1,032,492 846,381attributable to non-controlling interests - -

Earnings per share [18] 0.791 0.648

Diluted earnings per share [18] 0.791 0.648


150

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEfor the year ended 31 December


(€000) Note 2012 2011

Profit/(Loss) for the year 1,032,492 846,381

Items to be reclassified in the Statement of profit or loss

Available-for-sale financial assets

Increase/(Decrease) in fair value during the year [19.1] 3,336,192 (2,780,366)

Transfers to profit or loss [19.1] 7,923 (74,239)

Cash flow hedges

Increase/(Decrease) in fair value during the year [19.1] 201,675 (148,116)

Transfers to profit or loss [19.1] (111,627) (70,998)

Taxation of items recognised directly in, or transferred from, equity to be reclassified in the Statement of profit or loss (1,110,647) 996,636

Items not to be reclassified in the Statement of profit or loss

Actuarial gains/(losses) on provisions for employee termination benefits and pension plans [22.1] (280,110) 63,160

Taxation of items recognised directly in, or transferred from, equity not to be reclassified in the Statement of profit or loss 76,426 (17,321)

Total other components of comprehensive income 2,119,832 (2,031,244)

TOTAL COMPREHENSIVE INCOME FOR THE YEAR 3,152,324 (1,184,863)

attributable to owners of the Parent 3,152,324 (1,184,863)

attributable to non-controlling interests - -


151Consolidated statement of comprehensive income | Consolidated statement of changes in equity

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY


EquityReserves Total

Retained equityBancoPosta Cash flow earnings/ attributable Non-

Share Legal RFC Fair value hedge (Accumulated to owners of controlling Total(€000) Note capital reserve reserve reserve reserve losses) the Parent Interest equity

Balance at 1 January 2011 1,306,110 186,991 - (207,795) (37,617) 3,135,376 4,383,065 13 4,383,078

Total comprehensive income for the year - - - (1,928,751) (148,332) 892,220 (1,184,863) - (1,184,863)

Attribution of profit to reserves [19] - 38,948 - - - (38,948) - - -

Dividends paid [17] - - - - - (350,000) (350,000) - (350,000)

Creation of BancoPosta RFC reserve - - 1,000,000 - - (1,000,000) - - -

Balance at 31 December 2011 1,306,110 225,939 1,000,000 (2,136,546) (185,949) 2,638,648 2,848,202 13 2,848,215

Total comprehensive income for the year - - - 2,262,787 60,729 828,808(*) 3,152,324 - 3,152,324

Attribution of profit to reserves [19] - 37,183 - - - (37,183) - - -

Dividends paid [17] - - - - - (350,000) (350,000) - (350,000)

Creation of BancoPosta RFC reserve [19] - - - - - - - - -

Change in scope of consolidation - - - - - - - (13) (13)

Balance at 31 December 2012 1,306,110 263,122 1,000,000 126,241 (125,220) 3,080,273 5,650,526 - 5,650,526

(*) Includes profit for the year of €1,032,492 thousand and actuarial gains on provisions for employee termination benefits of €280,110 thousand, net of therelated current and deferred taxation of €76,426 thousand.


152

CONSOLIDATED STATEMENT OF CASH FLOWSfor the year ended 31 December


(€000) Note 2012 2011

Cash and cash equivalents at beginning of year 1,903,455 1,093,145Profit/(Loss) before tax 1,422,774 1,654,139Depreciation, amortisation and impairments [34] 606,626 543,913Impairment of goodwill/goodwill arising from consolidation [7] 42,255 -Net provisions for risks and charges [21] 281,190 437,889Use of provisions for risks and charges [21] (420,591) (220,064)Provisions for employee termination benefits [22] 733 661Employee termination benefits and pensions paid [22] (96,071) (133,712)Interest expense to financial institutions 48,280 12,583(Gains)/Losses on disposals [29] (256) (32,826)(Gains)/Losses on financial assets/liabilities measured at fair value (1,403,688) 246,184(Income)/Expenses from financial and insurance activities (245,763) (584,183)(Dividends) [37] (108) (81)Dividends received 108 70(Finance income realised) [37] (12,121) (20,831)(Finance income in form of interest) [37] (143,459) (136,195)Interest received 146,883 90,719Interest expense and other finance costs [37] 115,755 143,952Interest paid (74,681) (57,735)Losses and impairments/(Recoveries) on receivables [36] 32,973 4,526Income tax paid [38] (902,323) (777,688)Other changes 7,582 3,258Cash flow generated by operating activities before movements in working capital [a] (593,902) 1,174,579Movements in working capital:(Increase)/Decrease in Inventories [10] 2,863 (2,749)(Increase)/Decrease in Trade receivables 57,989 (69,990)(Increase)/Decrease in Other receivables and assets (239,368) (70,894)Increase/(Decrease) in Trade payables (385,623) 388,094Increase/(Decrease) in Other liabilities 62,056 (196,189)Cash flow generated by /(used in) movements in working capital [b] (502,083) 48,272Increase/(Decrease) in liabilities attributable to financial activities 6,328,667 2,138,465Net cash generated by/(used for) financial assets attributable to financial activities held for trading - (6)Net cash generated by/(used for) available-for-sale financial assets attributable to financial activities (5,744,101) (1,522,634)Net cash generated by/(used for) held-to-maturity financial assets attributable to financial activities 320,326 347,069(Increase)/Decrease in cash and deposits attributable to BancoPosta [13] (619,707) (208,749)(Increase)/Decrease in other assets attributable to financial activities 830,021 (1,327,684)Cash generated by/(used for) assets and liabilities attributable to financial activities [c] 1,115,206 (573,539)Payment of liabilities linked to financial contracts attributable to insurance activities [23] (59,204) (663,031)Net cash generated by/(used for) financial assets at fair value through profit or loss attributable to insurance activities 1,016,439 1,253,071Increase/(Decrease) in net technical provisions for insurance business 7,460,546 5,367,807Net cash generated by/(used for) available-for-sale financial assets attributable to insurance activities [9] (6,666,780) (5,646,929)(Increase)/Decrease in other assets attributable to insurance activities 5,048 (2,472)Cash generated by/(used for) assets and liabilities attributable to insurance activities [d] 1,756,049 308,446Net cash flow from/(for) operating activities [e]=[a+b+c+d] 1,775,270 957,758

- of which related party transactions 2,168,006 (482,405)Investing activities:Property, plant and equipment [5] (257,556) (210,182)Investment property [6] (5,261) (1,223)Intangible assets [7] (219,169) (203,080)Investments [8] (219) (2,608)Other financial assets (33,479) (99,225)Newly consolidated companies less cash - 451,575Disposals:Property, plant and equipment, investment property, intangible assets and assets held for sale 13,617 46,132Investments [8] - -Other financial assets 106,738 98,140Change in scope of consolidation (150) -Net cash flow from /(for) investing activities [f] (395,479) 79,529

- of which related party transactions (6,595) 81,367Proceeds from/(Repayments of) long-term borrowings 85,584 54,105(Increase)/Decrease in loans and receivables 143,771 154,526Increase/(Decrease) in short-term borrowings (629,278) (85,608)Dividends paid [17] (350,000) (350,000)Net cash flow from/(for) financing activities and shareholder transactions [g] (749,923) (226,977)

- of which related party transactions (501,600) (194,874)Net increase/(decrease) in cash [h]=[e+f+g] 629,868 810,310Cash and cash equivalents at end of year [14] 2,533,323 1,903,455Cash and cash equivalents at end of year [14] 2,533,323 1,903,455Cash subject to investment restrictions (1,168,127) -Escrow account held at the Italian Treasury - (323,987)Amounts that cannot be drawn on due to court rulings (25,606) (17,765)Current account overdrafts (14,798) (15,588)Unrestricted net cash and cash equivalents at end of year 1,324,792 1,546,115


153Consolidated statement of cash flows | Notes to the consolidated financial statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1 - INTRODUCTION

Poste Italiane SpA (the “Parent Company”) originated from the conversion of the public entity “Poste Italiane”, under Res-olution 244 of 18 December 1997 passed by the Interministerial Economic Planning Committee. The Parent Company’sregistered office is at Viale Europa 190, Rome (Italy) and it is a wholly owned subsidiary of the Ministry of the Economyand Finance (the “MEF”). The Poste Italiane Group (the “Group”) provides a universal postal service (under a Universal Service Obligation, or “USO”)in Italy, whilst offering integrated communication, logistics, financial and insurance products and services throughout thecountry via its national network of approximately 14,000 post offices. The Group’s operations can be classified into threesegments being Postal and Business services, Financial services and Insurance services, performed by the various busi-ness units and Group companies. Postal and Business services include Mail, Express Delivery, Logistics, Parcels and Phi-lately, in addition to intersegment services. Financial services primarily regard the activities of BancoPosta as listed in art.2 of Presidential Decree 144 of 14 March 2001, and include the collection of all forms of public deposits, the provision ofpayment services, foreign currency trading, the promotion and marketing of loans issued by banks and other authorisedfinancial institutions, and the provision of investment services. Insurance services are provided by the subsidiary Poste Vi-ta SpA, which operates in ministerial life assurance Branches I, III and V, and the subsidiary, Poste Assicura, which oper-ates in ministerial non-life insurance Branches I and II.The Group operates to increase the integration of services and to provide innovative solutions to the public, to corporateclients and to central and local government by exploiting its own distribution channels and the multiple and complemen-tary competencies of its organisational structure.These consolidated financial statements for the year ended 31 December 2012 have been prepared in euro, the curren-cy of the economy in which the Group operates. They consist of the statement of financial position, the statement of prof-it or loss1, the statement of comprehensive income, the statement of changes in equity, the statement of cash flows andthe accompanying notes. All amounts in the consolidated financial statements and the notes are shown in thousands ofeuros, unless otherwise stated.


1. Formerly referred to as the “Income statement”. The name was changed following transposition of the changes introduced by IAS 1 into EU Regula-tion 475 of 5 June 2012.


154


2 - BASIS OF ACCOUNTING

2.1 - BASIS OF PREPARATION

The Poste Italiane Group prepares its consolidated financial statements in accordance with the International Financial Re-porting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”), and adopted by the Euro-pean Union (“EU”) in EC Regulation 1606/2002 of 19 July 2002, and in accordance with Legislative Decree 38 of 20 Feb-ruary 2005, which introduced regulations governing the adoption of IFRS in Italian law.The term IFRS includes all the International Financial Reporting Standards, International Accounting Standards (“IAS”) andinterpretations issued by the International Financial Reporting Interpretations Committee (“IFRIC”, previously known asthe Standing Interpretations Committee or “SIC”), adopted by the European Union and contained in the EU Regulationspublished as of 27 March 2013, the date on which the Board of Directors of Poste Italiane SpA approved these consoli-dated financial statements as part of the Annual Report.Poste Italiane redeemed the €750 million bond listed on the Luxembourg Stock Exchange on 3 July 2012, the bond’s sched-uled maturity date. Poste Italiane SpA has, in any event, renewed its EMTN (European Medium Term Note) programmewith the same stock exchange, thereby permitting the Company to issue new bonds should there be a future need to doso. As a result, the CONSOB regulations contained in Resolution 15519 of 27 July 2006 and in Ruling DEM/6064293 of28 July 2006 have been taken into account for the preparation of this document.The accounting policies adopted, described in notes 2.2 and 2.3, reflect the fact that the Group will remain fully opera-tional in the foreseeable future, in accordance with the going concern assumption, and are consistent with those appliedin the preparation of the consolidated financial statements for the year ended 31 December 2011. The statement of financial position has been prepared on the basis of the current/non-current distinction2. In the statementof profit or loss, expenses are classified according to their nature. The indirect method has been applied in preparation ofthe statement of cash flows3.In line with the past, the statement of financial position, the statement of profit or loss and the statement of cash flowsshow amounts deriving from related party transactions. The statement of profit or loss also shows, where applicable, in-come and expenses deriving from material non-recurring transactions or from non-recurring events in the normal courseof business. Given the diverse nature frequency of transactions conducted by Group companies, many items of incomeand expense of a non-recurring nature may occur with considerable frequency. These items of income and expense areonly presented separately when they are both of an exceptional nature and were generated by a material transaction.In order to allow a consistent comparison with amounts for the year ended 31 December 2011, and in view of the rede-finition of the Group’s operating segments (note 4), certain items in the statement of profit or loss and the statement ofcash flows have been reclassified. At the date of approval of these consolidated financial statements, there is no established practice on which to base in-terpretation and application of newly published, or revised, international accounting standards. The tax authorities have is-sued systematic official interpretations for a number of the tax-related effects of the measures contained in LegislativeDecree 38 of 20 February 2005, Law 244 of 24 December 2007 (the 2008 Budget Law) and the Ministerial Decree of 1April 2009, implementing the 2008 Budget Law, which introduced numerous changes to IRES and IRAP. The MEF Decreeissued on 8 June 2011 contains instructions regarding the coordinated application of EU-endorsed international account-ing standards coming into effect between 1 January 2009 and 31 December 2010, in addition to regulations governingdetermination of the tax bases for IRES and IRAP. This does not, however, cover all aspects and, in view of the fact thatthe Decree has only recently been issued, there are no relevant legal interpretations or specific examples of best prac-tice. The consolidated financial statements have, therefore, been prepared based on the information currently available and

2. Current assets include assets (such as inventories and trade receivables) that are sold, consumed or realised as part of the normal operating cycle evenwhen they are not expected to be realised within twelve months after the reporting period (IAS 1 (Revised), paragraph 68).

3. Under the indirect method, net cash from operating activities is determined by adjusting profit/(loss) for the year to reflect the impact of non-cash items,any deferment or provisions for previous or future operating inflows or outflows, and revenue or cost items linked to cash flows from investing or fi-nancing activities.


155Notes to the consolidated financial statements

taking account of best practice. Any future changes or updated interpretations will be reflected in subsequent reportingperiods, in accordance with the specific procedures provided for by the related standards.

2.2 - BASIS OF CONSOLIDATION

The Poste Italiane Group’s consolidated financial statements include the financial statements of Poste Italiane SpA and ofthe companies over which the Parent Company directly or indirectly exercises control from the date on which control isobtained until the date on which control is no longer held by the Group. Control is exercised via both direct or indirectownership of voting shares, and via the exercise of dominant influence, defined as the power to govern the financial andoperating policies of the entity, including indirectly based on legal agreements, obtaining the related benefits, regardlessof the nature of the equity interest. In determining control, potential voting rights exercisable at the end of the reportingperiod are taken into account.The financial statements used for consolidation purposes have been specifically prepared at 31 December 2012, after ap-propriate adjustment, where necessary, to align accounting policies with those of the Parent Company. Subsidiaries that, in terms of their size or operations, are irrelevant to a true and fair view of the Group’s results of oper-ations and financial position have not been included within the scope of consolidation. Programma Dinamico SpA, a se-curitisation vehicle established in accordance with Law 130 of 30 April 1999, which meets the control definition estab-lished in IAS 27 and SIC 12, is not consolidated as its separate statement of financial position, statement of profit or lossand statement of cash flows are not material. The criteria used for line-by-line consolidation are as follows:• the assets, liabilities, costs and revenue of consolidated entities are accounted for on a line-by-line basis, separating where

applicable the equity and profit/(loss) amounts attributable to non-controlling interests in consolidated equity and consol-idated profit or loss;

• business combinations, in which control over entity is acquired, are accounted for using the acquisition method. The costof acquisition is based on the fair values of the assets given, the liabilities incurred and the equity instruments issuedby the acquirer, plus any directly attributable acquisition costs incurred. Any difference between the cost of acquisitionand the fair values of the assets and liabilities acquired, after a review of their fair value, if positive is recognised as good-will arising from consolidation, or, if negative, recognised in profit or loss;

• acquisitions of non-controlling interests in entities already controlled by the Group are not accounted for as acquisitions,but as equity transactions; in the absence of a relevant accounting standard, the Group recognises any difference be-tween the cost of acquisition and the related share of net assets of the subsidiary in equity;

• significant transactions between companies consolidated on a line-by-line basis and unrealised gains and losses on suchtransactions and the related tax effects are eliminated, as are intercompany payables and receivables, costs and revenue,and finance costs and income;

• gains and losses deriving from the disposal of investments in consolidated companies are recognised in profit or lossbased on the difference between the sale price and the corresponding share of consolidated equity disposed of.

Investments in joint ventures are accounted for using proportionate consolidation, reporting the Group’s share of jointlycontrolled entities’ assets, liabilities, income and expenses on a line-by-line basis in accordance with the Group’s propor-tional interest in the joint venture. Investments in subsidiaries (note 41.2) that are not significant and are not consolidated, and those in companies over whichthe Group exerts significant influence (assumed when the Group holds an interest of between 20% and 50%), referredto as “associates”, are accounted for using the equity method. When the application of the equity method does not in-fluence the Group’s results of operations or financial position, the investment is recognised at cost less any impairmentlosses.The equity method is as follows:• the Group’s share of the entities post-acquisition profits or losses is recognised in profit or loss from the date on which

significant influence or control is obtained until the date on which significant influence or control is no longer exerted bythe Group; provisions are made to cover a company’s losses that exceed the carrying amount of the investment, to the



156

extent that the Group has legal or constructive obligations to cover such losses; changes in the equity of companies ac-counted for using the equity method not related to the profit/(loss) for the year are recognised directly in equity;

• unrealised gains and losses on transactions between the Parent Company/subsidiaries and the company accounted forusing the equity method are eliminated to the extent of the Group’s interest in the associate, unless the unrealised lossprovides evidence of impairment.

The following table shows the number of subsidiaries by method of consolidation and measurement:

The following transactions took place during 2012:• on 1 June 2012 the so-called “Distrato social”, by which the shareholders of Postel do Brasil Ltda, Postel SpA and Ad-

dress software Srl, declared that they had “dissolved” the investee company, was registered. At 30 June 2012, there-fore, the company has been struck of the companies’ register in Brasilia;

• on 28 September Italia Logistica Srl, FS Logistica SpA and SDA Express Courier SpA signed an agreement that cameinto effect on 1 October 2012, on the basis of which Italia Logistica Srl transferred its “FS-Omnia Logistica” unit to FSLogistica SpA. At the same time, SDA Express Courier SpA acquired the remaining 50% of Italia Logistica Srl from FSLogistica SpA. As a result, from 1 October 2012 Italia Logistica Srl is a wholly owned subsidiary of SDA Express Couri-er SpA;

• PatentiViaPoste ScpA was incorporated on 6 December with share capital of €120,000, in order to execute the contractwith the Ministry of Infrastructure and Transport for the centralised printing, distribution and delivery of driving licences.The newly formed company is 69.65% owned by Poste Italiane SpA and 17.21% owned by Postecom SpA, with theremaining shares held by Dedem Automatica Srl and Muhlbauer ID Services GmbH.

On 1 August 2011 Unicredit SpA transferred ownership of its shareholding in MedioCredito Centrale SpA to Poste Ital-iane SpA following execution of the agreement signed on 20 December 2010. The total cost incurred by the Parent Com-pany was €139,978,080, consisting of a provisional price of €136,000,000, paid on the transaction date, and subse-quent final payment of €3,978,080. On 19 December 2011 MedioCredito Centrale SpA changed its name to Banca delMezzogiorno-MedioCredito Centrale SpA (“BdM-MCC”). A comparison of the assets and liabilities accounted for using the accounting policies of the seller and those of the PosteItaliane Group is shown below:


Subsidiaries At 31 December 2012 At 31 December 2011

Consolidated on a line-by-line basis 17 16Consolidated using proportionate consolidation - 1Consolidated using the equity method 7 7

Total subsidiaries 24 24



The Parent Company elected to apply the option granted by paragraphs 45 et seq. of IFRS 3 to complete the valuation ofthe business combination involving MedioCredito Centrale SpA within twelve months of the acquisition date. At the dateof preparation of these financial statements the final difference between the price paid to the seller and the net value atthe acquisition date of the identifiable assets acquired and the identifiable liabilities assumed, measured in accordance withIFRS 3, is €1,757 thousand. This difference, accounted for within intangible assets at 31 December 2011, has now beenreclassified to goodwill (note 7.1). Finally, on 19 July 2012 the Parent Company published an invitation for expressions of interest to acquire its current 100%shareholding in Mistral Air Srl, with the intention of evaluating the offers received. The procedure, which is currently in itsinitial stages, foresees a bid price of €12.8 million and implies no obligation to sell on Poste Italiane SpA’s behalf.A list of subsidiaries consolidated on a line-by-line basis and key information is supplied in note 41.1. Summary informa-tion about investments in associates accounted for using the equity method is provided in notes 8.3 and 41.2.

2.3 - SUMMARY OF SIGNIFICANT ACCOUNTING STANDARDS AND POLICIES

The Poste Italiane Group’s consolidated financial statements have been prepared under the historical cost convention, withthe exception of certain items for which fair value measurement is obligatory. The significant accounting policies and val-uation methodologies applied are described below.

Property, plant and equipment

Property, plant and equipment is stated at acquisition or construction cost, less accumulated depreciation and any accumu-lated impairment losses. The cost includes any directly attributable costs incurred to prepare the asset for its intended use,and the cost of dismantling and removing the asset to be incurred as a result of legal obligations requiring the asset to berestored to its original condition. Borrowing costs incurred for the acquisition or construction of property, plant and equip-ment are recognised as an expense in the period in which they are incurred (with the exception of borrowings costs direct-ly attributable to the acquisition or construction of a qualifying asset, in which case the borrowings costs are capitalised aspart of the cost of that asset). The costs incurred for routine and/or cyclical maintenance and repairs are recognised direct-ly in profit or loss in the year in which they are incurred. The capitalisation of costs attributable to the extension, moderni-


Position under Position under seller’s Poste Group’s

Components of BdM-MCC SpA’s financial position at 1 August 2011 accounting policies accounting policies

Intangible assets to be allocated - 1,757

Property, plant and equipment 232 232Intangible assets 12 12Deferred tax assets 6,771 7,831Other non-current assets 68,874 68,874Current assets 689,964 687,532Assets acquired 765,853 764,481

Deferred tax liabilities 13 330Non-current financial liabilities 582,661 582,661Other non-current liabilities 7,659 7,067Current liabilities 35,311 36,202Liabilities assumed 625,644 626,260

Equity acquired 140,209 138,221


158

sation or improvement of assets owned by the Group or held under lease is carried out to the extent that they qualify forseparate recognition as an asset or as a component of an asset, applying the component approach, which states that eachcomponent with a different useful life and value is recognised separately. The original cost is depreciated on a straight-linebasis from the date the asset is available and ready for use, based on the asset’s expected useful life.The useful life and residual value of property, plant and equipment are reviewed annually and adjusted, where necessary,at the end of each year. Land is not depreciated. When a depreciable asset consists of separately identifiable components,with useful lives that are significantly different from those of the other components of the asset, each component is de-preciated separately, in accordance with component approach, over a period that does not, exceed the life of the princi-pal asset. The Group has estimated the following useful lives for the various categories of property, plant and equipment:

Property assets and the related fixed plant and machinery located on land held under concession or sub-concession, whichis to be returned free of charge to the grantor at the end of the concession term, are accounted for, based on the natureof the asset, within property, plant and equipment and depreciated on a straight-line basis over the shorter of the usefullife of the asset and the residual concession term.Gains and losses deriving from the disposal or retirement of an asset are calculated as the difference between the dis-posal proceeds and the net carrying amount of the asset retired or sold, and are recognised in profit or loss in the periodin which the transaction occurs.

Investment property

Investment property relates to land or buildings held with a view to earn rentals or for capital appreciation or both, there-fore generating cash flows that are largely independent of other assets. The same accounting treatment is applied to in-vestment property and property, plant and equipment.

Intangible assets

An intangible asset is an identifiable non-monetary asset without physical substance, which is controllable and capable ofgenerating future economic benefits. Intangible assets are recognised at cost, including any directly attributable costs re-quired to prepare the asset for its intended use, less accumulated amortisation, where applicable, and any accumulatedimpairment losses. Borrowings costs are capitalised as part of the cost of the asset only if directly attributable to the pur-


Category Years

Buildings 25 - 33Structural improvements to own assets 20Plant 3 - 10Electronic stations 6Light constructions 10Equipment 5 - 8Furniture and fittings 5 - 8Electrical and electronic office equipment 3 - 10Motor vehicles 4 - 10Automobiles 4Leasehold improvements estimated lease term(*)

Other assets 3 - 10(*) Or the useful life of the improvement if shorter than the estimated lease term.



chase or development of an intangible asset; otherwise, they are recognised as an expense in the period in which theyare incurred. Amortisation is applied from the date the asset is ready for use, systematically over the remaining useful life of the as-set, or its estimated useful life.

Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the identifiable as-sets and liabilities of the company or business acquired, at the date of acquisition. Goodwill attributable to investmentsaccounted for using the equity method is included in the carrying amount of the equity investment. Goodwill is not amor-tised on a systematic basis, but is tested periodically for impairment. This test is performed with reference to the cashgenerating unit (“CGU”) to which the goodwill is attributable. An impairment loss is recognised in profit or loss for theamount by which the net carrying amount of the asset exceeds its recoverable amount. The recoverable amount is thehigher of an asset’s fair value less costs to sell and value in use, calculated as the present value of the future cash flowsexpected to be derived from the cash generating unit and from its disposal at the end of its useful life. Value in use is de-termined based on the method described below in “Impairment of assets”. Impairment losses on goodwill cannot be sub-sequently reversed. When the impairment resulting from the test is higher than the carrying amount of the goodwill attributed to the cash gen-erating unit, the residual amount is attributed to the assets included in the cash generating unit in proportion to their car-rying amount. The minimum attributable amount is the higher of:• the related fair value of the asset less costs to sell;• the related value in use, as defined above.

Industrial patents, intellectual property rights, licences and similar rightsThe costs of acquiring industrial patents, intellectual property rights, licences and similar rights are capitalised. Amortisa-tion is applied on a straight-line basis, in order to allocate the purchase cost over the shorter of the expected useful lifeand the related contract term from the date Group has the right to use the asset.

SoftwareCosts associated with developing or maintaining software programmes are recognised in profit or loss in the period in whichthey are incurred. Costs that are directly associated with the production of identifiable and unique software products con-trolled by the Group, and that generate economic benefits beyond one year, are recognised as intangible assets. Directlyattributable costs, which are identifiable and measurable, include the cost of staff involved in software development andan appropriate portion of the relevant overheads. Amortisation is calculated on the basis of the estimated useful life ofthe software, which is usually three years. Software specially developed for use in the provision of mobile telecommuni-cations services is amortised over a period of seven years.

Leased assets

Assets held under finance leases, where the risks and rewards of ownership are substantially transferred to the les-see, are recognised at fair value or, if lower, at the present value of the minimum lease payments. The correspondingliability, recognised by the lessor is the equal to the principal amount of future lease payments, is recognised as a fi-nancial liability. Depreciation is calculated on a straight-line basis, based on the useful lives of the various categoriesof asset, as estimates using the same procedures previously described for property, plant and equipment and intan-gible assets.



160


Leases where the lessor retains substantially all the risks and rewards of ownership are classified as operating leases.Payments made under operating leases are recognised in profit or loss on a straight-line basis over the lease term.

Impairment of assets

At the end of each reporting period, property, plant, equipment and intangible assets with finite and indefinite lives areanalysed to assess whether there is any indication that an asset may be impaired. If any indication exists, the Group es-timates the recoverable amount of the asset in order to determine the impairment loss to be recognised in profit or loss.The recoverable amount is the higher of an asset’s fair value less costs to sell, and value in use, represented by the pres-ent value of the future cash flows expected to be derived from the asset. In calculating value in use, future cash flow es-timates are discounted using a rate that reflects current market assessments of the time value of money compared tothe period of the investment and the risks specific to the asset. The realisable value of assets that do not generate sep-arate cash flows is determined with reference to the CGU to which the asset belongs. An impairment loss is recognisedfor the amount by which the net carrying amount of the asset, or the CGU to which it belongs, exceeds its recoverableamount. When the impairment indicators no longer exist, the carrying amount of the asset is reinstated, with the excep-tion of goodwill, and the reversal recognised in profit or loss. The reversal must not exceed the carrying amount thatwould have been determined had no impairment loss been recognised and depreciation or amortisation been charged.

Financial instruments

Financial instruments include financial assets and liabilities that are classified on initial recognition at fair value based onthe business purpose for which they were acquired for. Purchases and sales of financial instruments are recognised foreach category of financial instrument on the date on which the Group commits to purchase or sell the asset (trade dateor transaction date), or, in the case of the insurance transactions and BancoPosta’s operations, at the settlement date4.For BancoPosta operations the settlement almost always coincides with the transaction date.Changes in fair value between the transaction date and the settlement date are recognised in the consolidated financialstatements.

Financial assetsOn initial recognition, financial assets are classified in one of the following four categories and valued as follows:

• Financial assets at fair value through profit or loss

This category includes: (a) financial assets held for trading, (b) those that qualify for designation at fair value through prof-it or loss on initial recognition, or for which the option to measure at fair value can be exercised, and (c) derivative instru-ments, with the exception of the effective portion of those designated as cash flow hedges. Financial assets in this cat-egory are accounted for at fair value and changes during the period of ownership are recognised in profit or loss. Finan-cial instruments in this category are classified as short-term if they are held for trading or if they are expected to berealised within twelve months of the end of the reporting period. Derivative instruments are recognised as assets or lia-bilities depending on whether the fair value is positive or negative. Fair value gains and losses on outstanding transactionswith the same counterparty are offset, where contractually permitted.

• Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in anactive market, and primarily regard amounts due from customers, including trade receivables. They are included in cur-

4. This is possible for transactions carried out on organised markets (“regular way”).



rent assets, except for those with maturities greater than twelve months after the end of the reporting period, which areclassified as non-current assets. These assets are carried at amortised cost5 using the effective interest method. If thereis objective evidence of impairment, the asset is impaired to the estimated future cash flows. The resulting impairmentloss is recognised in profit or loss. If in subsequent periods the conditions which led to the impairment no longer exist,the carrying amount of the asset is reinstated on the basis of the value that would have resulted from application of theamortised cost method. The estimation procedure adopted in determining provisions for doubtful debts, or operating rev-enue to be suspended in the provision, primarily reflects the identification and measurement of elements resulting in spe-cific reductions in the value of individually significant assets. Financial assets with similar risk profiles are subsequentlymeasured collectively, taking account, among other things, of the age of the receivable, the nature of the counterparty,past experience of losses and collections on similar positions and information on the related markets.

• Held-to-maturity financial assets

Held-to-maturity financial assets are non-derivative financial assets with fixed or determinable payments and maturities thatthe Group has a positive intention and ability to hold to maturity. These assets are carried at amortised cost using the ef-fective interest method, adjusted to reflect any impairment loss. The same policies as described in relation to loans andreceivables are applied if there is impairment.

• Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial instruments that are either designated in this category or notattributable to any of the other categories described above. These financial instruments are recognised at fair value andany resulting fair value gains or losses are recognised in an equity reserve. This reserve is only reclassified to profit or losswhen the financial asset is effectively disposed of (or extinguished) or, in the event of accumulated losses, when there isevidence that the impairment recognised in equity cannot be recovered. Solely in the case of debt securities, if the fairvalue subsequently increases as the objective result of an event that took place after the impairment loss was recognisedin profit or loss, the value of the financial instrument is reinstated and the reversal recognised in profit or loss. The recog-nition of returns on debt securities under the amortised cost method takes place through profit or loss, as do the effectsof movements in exchange rates, whilst movements in exchange rates relating to available-for-sale equity instruments arerecognised in a specific equity reserve. The classification of an asset as current or non-current depends on the strategicchoice regarding how long to hold the asset and its effective negotiability. As a result, financial instruments expected tobe realised within twelve months of the end of the reporting period are classified as current assets.

Financial assets are derecognised when the Group no longer has a contractual right to receive cash flows from the invest-ment or when it has substantially transferred all the related risks and rewards and control.

Financial liabilitiesFinancial liabilities, including borrowings, trade payables and other payment obligations, are carried at amortised cost us-ing the effective interest method. If there is a change in the expected cash flows and they can be reliably estimated, thevalue of borrowings is recalculated to reflect the change on the basis of the present value of estimated future cash flowsand the internal rate of return initially applied. Financial liabilities are classified as current liabilities, unless the Group hasan unconditional right to defer settlement of the liability for at least twelve months after the end of the reporting period.Financial liabilities related to investment contracts issued by the subsidiary, Poste Vita SpA, are accounted for at fair val-ue through profit or loss.


5. The amortised cost of a financial asset or liability means the amount recognised initially, less principal repayments and plus or minus accumulated amor-tisation, using the effective interest method, of the difference between the initial amount and the maturity amount, after reductions for impairment andinsolvency. The effective interest rate is the rate that exactly discounts contractual (or expected) future cash payments or receipts over the expectedlife of the asset or liability to its initial carrying amount. Calculation of amortised cost must also include external costs and income directly attributableto the asset or liability on initial recognition.


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Financial liabilities are derecognised on settlement or when the Group has substantially transferred all the risks and re-wards related to the instrument.

Derivative financial instrumentsDerivatives are initially recognised at fair value on the date the derivative contract is executed and, if they do not qualifyfor hedge accounting treatment, gains and losses arising from changes in fair value are accounted for in profit or loss forthe period.If, on the other hand, derivative financial instruments qualify for hedge accounting, gains and losses arising from changesin fair value after initial recognition are accounted for in accordance with the specific policies described below.The Group documents the relationship between each hedging instrument and the hedged item, as well as its risk man-agement objective, the strategy for undertaking the hedge transaction and the methods used to assess effectiveness. As-sessment of whether the hedging derivative is effective takes place both at inception of the hedge and throughout theterm of the hedge.

• Fair value hedges

When the hedge is related to recognised assets or liabilities, or an unrecognised firm commitment6, the changes in fairvalue of both the hedging instrument and the hedged item are recognised in profit or loss. When the hedging transactionis not fully effective, resulting in differences between the above changes, the ineffective portion represents a loss or gainrecognised separately in profit or loss for the period. IAS 39 allows for the designation of a cash amount, made up by a group of financial assets and liabilities (or portions there-of) as the hedged item in such a way that a group of derivative instruments may be used to reduce exposure to fair val-ue interest rate risk (a so-called macro hedge). Macro hedges cannot be used for net amounts deriving from differencesbetween assets and liabilities. Like micro hedges, macro hedges are deemed highly effective if, at their inception and through-out the term of the hedge, changes in the fair value of the cash amount are offset by changes in the fair value of thehedges, and if the effective results fall within the interval required by IAS 39.

• Cash flow hedges

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges7 af-ter initial recognition are recognised in a specific equity reserve (Cash flow hedge reserve). A hedging transaction is gen-erally considered highly effective if, both at inception of the hedge and on an ongoing basis, changes in the expected fu-ture cash flows of the hedged item are substantially offset by changes in the fair value of the hedging instrument. Amountsaccumulated in equity are reclassified to profit or loss in the period in which the hedged item affects profit or loss.In the case of hedges associated with a highly probable forecast transaction (such as the purchase of fixed income debtsecurities), the reserve is reclassified to profit or loss in the period or in the periods in which the asset or liability, subse-quently accounted for and connected to the above transaction, will affect profit or loss (for example, an adjustment to thereturn on the security).If the hedging transaction is not fully effective, the gain or loss arising from a change in fair value relating to the ineffec-tive portion is recognised in profit or loss for the period.If, during the life of the derivative, the forecast hedged transaction is no longer expected to occur, the related gains andlosses accumulated in the cash flow hedge reserve are immediately reclassified to profit or loss for the period. When ahedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, the related gainsand losses accumulated in the cash flow hedge reserve at that time remain in equity and are recognised in profit or lossat the same time as the original underlying transaction.

6. Fair value hedge: a hedge of the exposure to a change in fair value of a recognised asset or liability or of an unrecognised firm commitment attributa-ble to a particular risk, and that could have an impact on profit or loss.

7. A hedge of the exposure to the variability of cash flows attributable to a particular risk associated with an asset or liability or with a highly probable fore-cast transaction, and that could have an impact on profit or loss.



Determining the fair value of financial instrumentsThe fair value of financial instruments traded in active markets is based on quoted market prices at the end of the report-ing period. The fair value of financial instruments that are not traded on an active market is based on prices quoted by ex-ternal dealers and on valuation techniques primarily based on objective financial variables, as well as by taking account,where possible, of prices in recent transactions and quoted market prices for substantially similar instruments.

Own use exemptionIn certain cases, the standards establishing the principles for the recognition and measurement of financial instrumentsare also applied to derivative contracts to buy or sell non-financial items that are settled net in cash or in another financialinstrument, with the exception of contracts entered into, and that continue to be held, for the purpose of the receipt ordelivery of a non-financial item in accordance with the entity’s expected purchase, sale or usage requirements (the ownuse exemption). This exemption applies to the recognition and measurement of forward electricity contracts entered in-to by the subsidiary Poste Energia SpA, if the following conditions have been met:• the contract involves the physical supply of a commodity;• the entity has not entered into an offsetting contract;• the transaction must be entered into in accordance with expected purchase and/or sale or usage requirements.

In the event of application of the own use exemption, the commitments assumed by the Group are reported in the sec-tion “Other information”, in these financial statements.

Income tax expense

Current income tax expense (IRES and IRAP) is based on the best estimate of taxable profit for the period and the relat-ed regulations, applying the rates in force. The impact of the reforms recently introduced by Law Decree 201 of 6 De-cember 2011, which permit companies, from 2012, to deduct IRAP paid on personnel expenses in full from the IRES taxbase, and to apply for a refund of the IRES overpaid in previous years, has been assessed on a prudent basis, taking in-to account the absence of consistent interpretations and specific best practice. Deferred tax assets and liabilities are cal-culated on all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts, us-ing tax rates that are expected to apply when the related deferred tax assets are realised or the deferred tax liabilities aresettled. Deferred tax assets and liabilities are not recognised if the temporary differences derive from investments in sub-sidiaries, where the timing of the reversal of the temporary difference is controlled by the Group and it is probable thatthe temporary difference will not reverse in the foreseeable future. In accordance with IAS 12, deferred tax liabilities arenot recognised on goodwill deriving from a business combination.Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against whichthe temporary differences can be utilised.Current and deferred taxes are recognised in profit or loss, with the exception of taxes charged or credited directly to eq-uity, in which case the tax effect is recognised directly in equity. Current and deferred tax assets and liabilities are offset when they are applied by the same tax authority to the same tax-paying entity, which has the legally exercisable right to offset the amounts recognised, and the entity has the intention ofexercising this right. As a result tax liabilities accruing in interim periods that are shorter than the tax year are not offsetagainst the matching assets deriving from withholding tax or advances paid. The Group’s tax expense and its accountingtreatment reflect the effects deriving from the Poste Italiane SpA consolidated tax return, for which the Group has adopt-ed a tax consolidation arrangement, which it has elected to apply in accordance with the related law together with thesubsidiaries Poste Vita SpA, SDA Express Courier SpA and Mistral Air Srl. The tax consolidation arrangement is governedby Group regulations based on the principles of neutrality and equality of treatment, which are intended to ensure thatthe companies included in the tax consolidation are in no way penalised as a result. Consolidated tax expense is deter-mined on the basis of the tax expense or tax losses for the period for each company included in the consolidation, takingaccount of any withholding tax or advances paid. Other taxes not related to income are included in other operating costs.



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Inventories

Inventories are valued at the lower of cost and net realisable value. The cost of interchangeable assets and goods for re-sale is calculated using the weighted average cost method. In the case of non-interchangeable assets, cost is measuredon the basis of the specific cost of the asset at the time of purchase.The value of the inventories is adjusted, if necessary, by provisions for obsolete or slow moving stock. When the circum-stances that previously led to recognition of the above provisions no longer exist, or when there is a clear indication of anincrease in the net realisable value, the provisions are fully or partly reversed, so that the new carrying amount is the low-er of cost and net realisable value at the end of the reporting period.Assets are not recognised in the statement of financial position when the Group has incurred an expense that, based onthe best information available at the date of preparation of the financial statements, it is deemed unlikely to generate eco-nomic benefits for the Group after the end of the reporting period. In the case of properties held for sale, cost is represented by the fair value of each asset at the date of acquisition, plusany directly attributable transaction costs, whilst the net realisable value is based on the estimated sale price under nor-mal market conditions, less direct costs to sell.Long-term contract work is measured using the percentage of completion method, using cost to cost accounting8.

Green Certificates (Emission Allowances)

Green Certificates (or Emission Allowances) are a means of reducing greenhouse gas emissions, introduced into Italianand European legislation by the Kyoto Protocol with the aim of improving the technologies used in the production of en-ergy and in industrial processes. The European Emissions Trading Scheme, which works on the basis of the cap and trade principle, has capped annualgreenhouse gas emissions at European level. This corresponds to the issue, free of charge, of a set number of emissionallowances by the competent national authorities. During the year, depending on the effective volume of greenhouse gasemissions produced with respect to the above cap, each company has the option of selling or purchasing emission al-lowances on the market. In compliance with the requirements of the OIC (the Italian accounting standards setter) regarding “Greenhouse gas emis-sions allowances”, in addition to best practice for the principal IAS adopters, the accounting treatment is as follows.The issue, free of charge, of emission allowances involves a commitment to produce, in the relevant year, a quantity ofgreenhouse gas emissions in proportion to the emission allowances received: this commitment is accounted for in thememorandum accounts based on the fair value of the emission allowances at the time of allocation. At the end of theyear the commitment is reduced or derecognised in proportion to the greenhouse gas emissions effectively produced.The purchase and sale of emission allowances are accounted for in profit or loss in the year in which the transaction oc-curs. Any surplus emission allowances deriving from purchases are accounted for in closing inventory at the lower of costand net realisable value. Any surplus emission allowances allocated free of charge are not accounted for in closing inven-tory. In the event of a shortfall in emission allowances the resulting charge and the matching liability are accounted for atthe end of the year at fair value.

Cash and deposits attributable to BancoPosta

Cash and securities held at post offices, and bank deposits attributable to the operations of BancoPosta, are accountedfor separately from cash and cash equivalents as they derive from deposits subject to investment restrictions, or from ad-

8. This method is based on the ratio of costs incurred as of a given date divided by the estimated total project cost. The resulting percentage is then ap-plied to estimated total revenue, obtaining the value to be attributed to the contract work completed and accrued revenue at the given date.



vances from the Italian Treasury to ensure that post offices can operate. This cash cannot be used for purposes other thanto extinguish obligations deriving from the above transactions.

Cash and cash equivalents

Cash and cash equivalents refer to cash in hand, deposits held at call with banks, amounts that at 31 December 2012 theParent Company has temporarily deposited with the MEF and other highly liquid short-term investments with original ma-turities of ninety days or less. Current account overdrafts are accounted for in current liabilities.

Non-current assets held for sale

This category refers to non-current assets or assets included in disposal groups where the carrying amount is to be re-covered primarily through a sale transaction rather than through continued use. Assets held for sale are accounted for atthe lower of the net carrying amount and fair value less costs to sell. When a depreciable asset is reclassified in this cat-egory, the depreciation process is halted at the date of the reclassification.

Equity

Share capitalThe share capital is represented by the Parent Company’s subscribed and paid-up capital. Incremental costs directly at-tributable to the issue of new shares are recognised as a reduction of the share capital, net of any deferred tax effect.

ReservesReserves relate to capital or revenue reserves. They include the BancoPosta ring fenced capital (thereafter “Banco-Posta RFC”) reserve, representing the initial attribution of equity attributed to BancoPosta RFC, the Parent Compa-ny’s legal reserve, the fair value reserve, relating to items recognised at fair value through equity, and the cash flowhedge reserve, deriving from recognition of the effective portion of hedging instruments outstanding at the end ofthe reporting period.

Retained earningsRetained earnings relate to the portion of profit for the period and for previous periods which was not distributed or tak-en to reserves or used to cover losses, and actuarial gains and losses deriving from the calculation of the liability for em-ployee termination benefits. This item also includes transfers from other equity reserves, when they have been releasedfrom the restrictions to which they were subjected.

Insurance contracts

Insurance contracts are classified and measured as insurance contracts or finance contracts, based on their prevalent fea-tures. Contracts issued by Poste Vita SpA primarily relate to life assurance. In 2007 Poste Vita SpA started selling acci-dent and medical insurance, whilst Poste Assicura SpA began operating in the non-life sector in 2010.The Group applies the following basis for classification and measurement of these contracts:

Insurance contractsInsurance products include Branch I and V life assurance policies, in addition to index-linked policies that qualify as insur-ance contracts. These products are accounted for as follows:



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• insurance premiums are accounted for when the policies are written, are recognised as income and classified in rev-enue; they include annual or single premiums accruing during the period and deriving from insurance contracts outstand-ing at the end of the reporting period, net of cancellations;

• technical provisions are made in respect of earned premiums to cover obligations to policyholders; the provisions arecalculated on an analytical basis for each contract using the prospective method, based on actuarial assumptions appro-priate to cover all outstanding obligations. Changes in technical provisions and the cost of claims are recognised as ex-penses in profit or loss.

Contracts for separately managed accounts with discretionary participation featuresInstead of being classified as financial contracts, contracts for separately managed accounts with discretionary participa-tion features9 are, in compliance with the requirements of IFRS 4, accounted for in accordance with the rules for insur-ance contracts. As a result:• premiums, changes in technical provisions and the cost of claims are recognised in the same way as the insurance con-

tracts described above; • portions of unrealised gains and losses attributable to policyholders are assigned to them and recognised in technical

provisions (deferred liabilities payable to policyholders) under the shadow accounting method (IFRS 4.30).

The calculation technique used in applying the shadow accounting method is based on the prospective yield on each sep-arately managed account, considering a hypothetical realisation of unrealised gains and losses over a period which is con-sistent with the characteristics of the assets and liabilities held in the portfolio. The analysis of the portion to be recog-nised in the specific deferred tax liability also takes into account, for each separately managed account, the contractualobligations, the level of guaranteed minimum returns and any financial guarantees provided.

Investment contracts not linked to separately managed accountsInvestment contracts not linked to separately managed accounts, and which include a portion of “linked” contracts, areaccounted for in accordance with IAS 39, as follows:• technical provisions are recognised as financial liabilities and are measured at fair value, whilst the related financial in-

struments are accounted for as assets;• premiums and changes in technical provisions are not recognised in income, only fees and commissions are recorded

as revenue, and cost components, represented by commissions and other charges, recognised in profit or loss. IAS 18and IAS 39 require revenue and costs associated with the contracts to be allocated over the contract term, based onthe service supplied.

Provisions for risks and charges

Provisions for risks and charges are recorded to cover losses that are either probable or certain to be incurred, for which,however, there is an uncertainty as to the amount or as to the date on which they will occur.Provisions for risks and charges are made when the Group has a present (legal or constructive) obligation as a resultof a past event, and it is probable that an outflow of resources will be required to settle the obligation. Provisions aremeasured on the basis of management’s best estimate of the use of resources required to settle the obligation. Thevalue of the liability is discounted at a rate that reflects current market values and takes into account the risks specif-ic to the liability.Risks that may only possibly give rise to an outflow of resources are reported in a specific section of the notes on con-tingent assets and liabilities and no provisions are made.

9. A contractual right of investors to receive returns on the assets under management.



In rare cases, where disclosure of some or all of the information regarding the risks in question can be expected to prej-udice seriously the Group’s position in a dispute or in ongoing negotiations with third parties, the Group exercises the op-tion granted by the relevant accounting standards to provide limited disclosure.

Employee benefits

Post-employment benefits are of two types: defined contribution plans and defined benefit plans. Under defined contri-bution plans the contributions payable are recognised in profit or loss when incurred, measured at the payable amount.Under defined benefit plans, given that the benefit to be paid can only be quantified after the termination of employment,the related impact on profit or loss and the statement of financial position is recognised on the basis of actuarial calcula-tions, in accordance with IAS 19.

Post-employment benefits: defined benefit plansDefined benefit plans include employee termination benefits payable to employees in accordance with art. 2120 of theItalian Civil Code.• For all companies with at least 50 employees, covered by the reform of supplementary pension provision, from 1 Jan-

uary 2007 vesting employee termination benefits must be paid into a supplementary pension fund or into a Treasury Fundset up by INPS. Accordingly the company’s defined benefit liability is applicable only to the provisions made up to 31December 200610.

• In the case of companies with less than 50 employees, to which the reform of supplementary pension provision doesnot apply, vested employee termination benefits continue to represent a defined benefit liability for the company.

The amount to be paid upon termination of employment (TFR) in the future is projected and discounted using the project-ed unit credit method to account for the time value of money prior to the liability being settled. The liability recognised inthe financial statements is based on calculations performed by independent actuaries.The calculation takes account of termination benefits accrued for the period of service to date and is based on actuarialassumptions. These primarily regard the use of interest rates, with a maturity consistent with the expected maturity forthe liability, and employee turnover. In the case of companies with at least 50 employees, as the company is not liablefor employee termination benefits accruing after 31 December 200610, the actuarial calculation of employee terminationbenefits no longer takes account of future rises in salary. Actuarial gains and losses are recognised at the end of each re-porting period, directly in equity, based on the difference between the carrying amount of the liability and the present val-ue of the Group’s obligations at the end of the period, due to changes in the actuarial assumptions. Defined benefit plans also include supplementary pension plans guaranteeing members and their surviving spouses a pen-sion in addition to those managed by INPS to the extent and according to the conditions provided for in specific regula-tions covered by the collective labour contract and legislation. Initial recognition and subsequent measurement is consis-tent with the valuation of the TFR described above. Measurement of the liability recognised in the financial statements isbased on calculations performed by independent actuaries.

Termination benefits and incentive schemes: defined contribution plansThe benefits payable to staff on termination of employment are recognised as liabilities when a Group company is demon-strably committed to terminating the employment of an employee or group of employees before the normal retirementdate, or to offer termination benefits to the employee or group of employees to encourage voluntary redundancy. The abovebenefits are recognised immediately in personnel expenses given that they are not capable of generating future econom-ic benefits for the Group.


10. Where, following entry into effect of the new legislation, the employee has not exercised any option regarding the investment of vested employee ter-mination benefits, the Group has remained liable to pay the benefits until 30 June 2007, or until the date, between 1 January 2007 and 30 June 2007,on which the employee exercised a specific option. Where no option was exercised, from 1 July 2007 vested employee termination benefits have beenpaid into a supplementary pension fund.


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Other long-term employee benefits Other long-term employee benefits consist of benefits not payable within twelve months of the end of the reporting pe-riod, during which the employees provided their services. Generally, there is not the same degree of uncertainty regard-ing the measurement of other long-term employee benefits as there is in relation to post-employment benefits. As a re-sult, IAS 19 permits use of a simplified method of accounting: the net change in the value of the liability during the re-porting period is recognised in full in profit or loss. Measurement of the other long-term employee benefits liability isrecognised in the financial statements based on calculations performed by independent actuaries.

Translation of items denominated in currencies other than the euro

Transactions in currencies other than the euro are translated to euro using the exchange rates prevailing at the date of thetransaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from the transla-tion at closing exchange rates of monetary assets and liabilities denominated in currencies other than the euro are recog-nised in profit or loss.

Revenue recognition

Revenue is recognised at the fair value of the consideration received, net of rebates and discounts, and in accordance withthe accruals basis of accounting. Revenue from the rendering of services is recognised when it can be reliably measured onthe basis of the stage of completion of the service provided. Revenue from activities carried out in favour of or on behalf ofthe state and Public Sector entities is recognised on the basis of the amount effectively accrued, with reference to the lawsand agreements in force, taking account, in any event, of the instructions contained in legislation regarding the public finances.The return on the current account deposits held by the MEF is determined using the effective interest method and is recog-nised as revenue based on its characteristics. The same classification is applied to income from euro area governmentsecurities, in which deposits paid into accounts by private customers are invested. Revenue from the sale of goods is recog-nised when the significant risks and rewards of ownership of the goods have been transferred to the buyer.

Government grants

Government grants are recognised once they have been formally allocated to the Group from the public entity concernedand only if, based on the information available at the end of the year, there is reasonable assurance that the project towhich the grant relates will be effectively carried out and completed in accordance with the conditions attached to thegrant. Government grants are recognised in profit or loss as other operating income as follows: grants related to incomein full; grants related to property, plant and equipment over the useful life of the asset to which the grants refer startingfrom the entry into service of the itself.

Finance income and costs

Finance income and costs are recognised on an accruals basis based on the effective interest method, i.e. using an inter-est rate that exactly discounts all the cash flows of the related instrument.

Dividends

Dividends are recognised as finance income when the right to receive payment is established, which generally corre-sponds with approval of the distribution by the General Meeting of the investee company.





Earnings per share

BasicBasic earnings per share is calculated by dividing the Group’s profit for the year by the weighted average number of Par-ent Company ordinary shares in issue during the year.

DilutedAt the date of preparation of these financial statements no financial instruments have been issued which have potential-ly dilutive characteristics11.

Related parties

Related parties within the Group refer to Poste Italiane SpA’s direct and indirect subsidiaries and associates. Related par-ties external to the Group relate to the parent, the MEF, entities, including joint ventures, controlled by the MEF, and as-sociates of such entities. The Group’s key management personnel are also classified as related parties. The state and Public Sector entities other than the MEF are not classified as related parties. Related party transactions donot include those deriving from financial assets and liabilities represented by instruments traded on organised markets.

Accounting standards and interpretations applicable from 1 January 2012

IFRS 7 - “Financial Instruments: Disclosures - Transfers of Financial Assets”, adopted by EU Regulation 1205/2011, wasapplicable from 1 January 2012. The disclosures required by this amendment are provided below in note 3, “Risk man-agement”.Amendments to IAS 1 - “Presentation of Financial Statements: Presentation of Other Comprehensive Income”, adoptedby EU Regulation 475/2012, were effective from 1 July 2012. The amendments provide two alternatives for the presen-tation of components of comprehensive income:• in a single statement consisting of two separate sections, with the first, ”Profit/(Loss) for the year”, followed by the

section “Other components of comprehensive income”; or• in two separate statements, with the “Statement of profit or loss” immediately preceding the “Statement of compre-

hensive income”.

In both cases, items in the section relating to “Other components of comprehensive income” must be grouped in orderto distinguish between those that will subsequently be reclassified to profit or loss and those that will not. These compo-nents may be presented net of or before tax. The Poste Italiane Group has elected to present two separate statements: the “Statement of profit or loss” and the“Statement of comprehensive income”. In the latter statement the items are grouped in order to distinguish between thosethat will subsequently be reclassified to profit or loss and those that will not. These components are presented beforetax. Finally, EU Regulation 1256/2012 of 29 December 2012 has adopted, among other things, the amendment to IFRS 7 - “Fi-nancial Instruments: Disclosures - Offsetting Financial Assets and Financial Liabilities”, retroactively abolishing section 13- Derecognition from 1 July 2011.

11. Diluted earnings per share is calculated by taking account of the dilutive effect of all the instruments potentially convertible into ordinary shares issuedby the Parent Company. The calculation is based on the ratio of profit attributable to the Parent Company, adjusted to take account of any costs or in-come deriving from the conversion, net of any tax effect, and the weighted average number of shares outstanding, assuming conversion of all dilutivepotential ordinary shares.


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New accounting standards and interpretations not yet effective

At the date of approval of these consolidated financial statements, the IASB has issued the following accounting standards,interpretations and amendments applicable from 1 January 2013:• IAS 19 - “Employee benefits” amended by EU Regulation 475/2012;• IAS 12 -“Income Taxes - Deferred Tax: Recovery of Underlying Assets” amended by EU Regulation 1255/2012;• IFRS 1 - “First-time Adoption of International Financial Reporting Standards - Severe Hyperinflation and Removal of Fixed

Dates for First-Time Adopters” amended by EU Regulation 1255/2012;• IFRS 13 - “Fair Value Measurement” adopted by EU Regulation 1255/2012;• IFRIC 20 - “Stripping Costs in the Production Phase of a Surface Mine” adopted by EU Regulation 1255/2012;• IFRS 7 - “Financial Instruments: Disclosures - Offsetting Financial Assets and Financial Liabilities” adopted by EU Reg-

ulation 1256/2012;• IFRS 1 - “First-time Adoption of International Financial Reporting Standards - Government Loans” adopted by EU Reg-

ulation 183/2013.

The following accounting standards, interpretations and amendments are, on the other hand, applicable from 1 January2014:• IAS 27 - “Separate Financial Statements” adopted by EU Regulation 1254/2012;• IAS 28 - “Investments in Associates and Joint Ventures” adopted by EU Regulation 1254/2012;• IFRS 10 - “Consolidated Financial Statements” adopted by EU Regulation 1254/2012;• IFRS 11 - “Joint Arrangements” adopted by EU Regulation 1254/2012;• IFRS 12 - “Disclosure of Interests in Other Entities” adopted by EU Regulation 1254/2012;• IAS 32 - “Financial Instruments: Presentation - Offsetting Financial Assets and Financial Liabilities” adopted by EU Reg-

ulation 1256/2012.

The potential impact on the Poste Italiane Group’s financial reporting of the accounting standards, amendments and inter-pretations due to come into effect is currently being assessed.Finally, at the date of approval of these consolidated financial statements, the IASB has issued the following accountingstandards, interpretations and amendments, which have yet to be endorsed by the European Union and which, in certaincases, are still at the consultation stage. These include the following:• IFRS 9 - “Financial Instruments”, as part of the review of the existing IAS 39; • a number of Exposure Drafts, also as part of the review of the existing IAS 39, have been issued regarding “Amortised

Cost and Impairment, Fair Value Option for Financial Liabilities and Hedge Accounting”;• Exposure Draft “Improvements to IFRS” as part of the annual programme of general improvements and review of IFRS; • Exposure Draft “Transition Guidance” regarding the introduction of amendments to IFRS 10, IFRS 11 and IFRS 12;• Exposure Draft “Investment Companies”; • Exposure Draft “Measurement of Non-financial Liabilities” as part of the review of the existing IAS 37 regarding the recog-

nition and measurement of provisions, contingent liabilities and contingent assets;• Exposure Draft “Revenue from Contracts with Customers” as part of the review of the existing IAS 11 and IAS 18, re-

garding revenue recognition;• Exposure Draft “Insurance Contracts” as part of the review of the existing IFRS 4, regarding the accounting treatment

of insurance contracts;• Exposure Draft “Leases” as part of the review of the existing IAS 17, regarding the accounting treatment of leases;• Interpretation on “Levies Charged by Public Authorities on Entities that Operate in a Specific Market”;• Interpretation on ” Put Options Written on Non-Controlling Interests”;• Exposure Draft “IAS 28 - Equity Method: Share of Other Net Asset Changes”;• Exposure Draft “IAS 16 - Property, Plant and Equipment” and “IAS 38 - Intangible Assets - Clarification of Acceptable

Methods of Depreciation and Impairment”;• Exposure Draft “IFRS 10 - Consolidated Financial Statements” and “IAS 28 - Investments in Associates and Joint Ven-

tures: Sale of Contribution of Assets between an Investor and its Associate or Joint Venture”;




• Exposure Draft “IFRS 11 - Joint Arrangements: Acquisition of an Interest in a Joint Operation”;• Exposure Draft “IAS 36 - Recoverable Amount Disclosures for Non-Financial Assets”.

The potential impact on the Poste Italiane Group’s financial reporting of the accounting standards, amendments and inter-pretations due to come into effect is currently being assessed.

2.4 - USE OF ESTIMATES

Preparation of the consolidated financial statements requires the application of accounting standards and methods thatare at times based on complex judgements and estimates, based on historical experience, and assumptions that are con-sidered reasonable and realistic under the circumstances. Use of these estimates and assumptions affects the amountsreported in the financial statements, including the statement of financial position, the statement of profit or loss, the state-ment of comprehensive income and the statement of cash flows, and the accompanying notes. The actual amounts ofitems for which the above estimates and assumptions have been applied may differ from those reported in previous fi-nancial statements, due to uncertainties which characterise the assumptions and the conditions on which estimates arebased. The estimates and assumptions are periodically reviewed and the impact of any changes is reflected in the finan-cial statements for the period in which the estimated is revised if the revision only influences the current period, or alsoin future periods if the revision influences the current and future periods. This section provides a description of accounting treatments that require the use of subjective estimates and for which achange in the conditions underlying the assumptions used could have a material impact on the Group’s consolidated fi-nancial statements.

Current tax assets relating to previous years

Law Decree 201 of 6 December 2011 permits companies to deduct IRAP paid on personnel expenses in full from theIRES tax base from 2012, and to apply for a refund of the IRES overpaid in previous years, in accordance with the proce-dure established by the tax authorities in the ruling issued on 17 December 2012. In compliance with this procedure, whichrequires applications to be submitted electronically on pre-established dates (so-called “click days”), in March 2013 PosteItaliane and the other relevant entities in the Group applied for a refund of the overpaid tax for periods of assessment thatremain open. In the 2012 financial statements the Group has recognised tax income of €278 million assessed on a pru-dent basis and taking into account the absence of consistent interpretations of the new legislation. The future availabilityof further clarification of interpretation of the law and specific operational instructions could result in a review of the taxasset in question with a potentially significant positive impact on the operating results for future years.

Revenue and receivables due from the State

Revenue from activities carried out in favour of or on behalf of the State and Public Sector entities is recognised on thebasis of the amount effectively accrued, with reference to the laws and agreements in force, taking account, in any event,of the instructions contained in legislation regarding the public finances.Whilst awaiting the conclusion of negotiations regarding the Contratto di Programma (Planning Agreement) for 2012-2014,determination of the compensation partially covering the cost of the universal service for 2012 has been based on the samesubsidy cap used in the Contratto di Programma (Planning Agreement) for 2009-2011. The cost incurred by Poste ItalianeSpA was calculated using the new “net avoided cost” method, introduced by EU Directive 2008/6/EC and transposed in-to Italian law by Legislative Decree 58 of 31 March 201112.


12. This method defines the cost incurred as the difference between the net operating cost incurred by a designated universal service provider when sub-ject to universal service obligations and the net operating cost without such obligations. Application of the method requires a series of assumptions inorder to construct the hypothetical postal operator without obligations, on which to base assessment of the related net cost/profit.


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The model developed by Poste Italiane SpA is currently being assessed by AGCom (the Italian communications au-thority) as part of a specific investigation and only after completion of this process will it be possible to confirm thecost calculated by the Company. The amount of compensation, estimated to be €350 million, is in any event signifi-cantly lower than the actual cost incurred, whether calculated using the new method or by applying the method pre-viously in force. Whilst awaiting renewal of agreements between Poste Italiane SpA and the Tax Authorities that expired in 2007, in 2012the Parent Company continued to provide the related services. Revenue recognition is based on the tariffs established inthe previous agreements and which it is reasonable to expect will be confirmed in the new agreement, or on the lowertariffs derived from the recent negotiations with the relevant Public Sector entity. At 31 December 2012 receivables due to the Parent Company from the MEF and the Cabinet Office amounted to approx-imately €1.35 billion. This amount consists of: • receivables of over €645 million in the form of universal service compensation, including €350 million for 2012, which

can only be collected once the Contratto di Programma (Planning Agreement) for 2012-2014 has been formalised, and€9 million for 2005, which was cut following the budget laws for 2007 and 2008;

• receivables of approximately €251 million in the form of publisher tariff subsidies. Of this amount, approximately €203million in subsidies for the years from 2001 to 2007 are to be received in instalments in accordance with a specific Cab-inet Office Decree, which has established that collection is to take place on a straight-line basis between 2010 and2016. These receivables have been accounted for at present value. A further sum of approximately €9 million for 2009and 2010 has not yet been funded by the state budget;

• further receivables of approximately €451 million due from the MEF, in relation to payment of interest on the ParentCompany’s mandatory deposits with the MEF, for the provision of treasury services, for the distribution of euro convert-ers and for electoral subsidies. No provision has been made in the state budget for approximately €75 million of theseitems, and payment of approximately €8 million has been suspended whilst awaiting specific measures.

Based on the above, of the total amount receivable, with a nominal value of over €1.35 billion, in the case of approximate-ly €101 million either no provision has been made in the state budget or there is no legislation establishing the proce-dures for the payment to the Company, whilst the collection of approximately €553 million is deferred or suspended. Given the length of time these receivables have been outstanding, Poste Italiane SpA has to manage working capital, witha negative impact on cash flow. Given that it is not currently possible to forecast when and how the receivables will bepaid by the various Public Sector entities, without prejudice to the Parent Company’s full entitlement and related rights,provisions for doubtful debts due from the MEF, at 31 December 2012, reflect the best estimate based on the circum-stances and the financial impact of the above situation.In the past, changes to the relevant legislation have been introduced after the end of the reporting period, resulting in changesto estimates and influencing profit or loss. The above circumstances mean that management cannot exclude the possi-bility that, as a result of future legislation or the negotiations currently underway, the operating results for reporting peri-ods after the year ended 31 December 2012 will reflect changes to these estimates.


The Group makes provisions for probable liabilities deriving from disputes with staff, suppliers, third parties and, in gen-eral, for liabilities deriving from present obligations. These provisions cover the liabilities that could result from legal ac-tion relating to labour disputes over fixed-term contracts. In the course of the disputes in question, the plaintiffs have al-so at times attempted to make claims for the Parent Company’s liquidity, and an estimate of the liabilities linked to thisfactor is included in the calculation of the related provisions.Determination of the provisions involves the use of estimates based on current knowledge of factors that may changeover time, potentially resulting in outcomes that may be significantly different from those taken into account when prepar-ing the consolidated financial statements.





Goodwill and measurement of assets that have indefinite useful lives

In measuring the value of these assets, the current economic and financial crisis, which has resulted in highly volatile mar-kets and great uncertainty with regard to economic projections, makes it difficult to produce forecasts that can, withoutany uncertainty, be defined as reliable.

Goodwill and Goodwill arising from consolidationGoodwill and Goodwill arising from consolidation are tested annually to assess whether or not they have suffered any im-pairment to be recognised in profit or loss. The test involves the allocation of goodwill to the various cash generating unitsand the subsequent measurement of the related fair value. If the resulting fair value is lower than the carrying amount ofthe cash generating unit, it is necessary to reduce the value of goodwill allocated to the unit. The allocation of goodwillto cash generating units and the measurement of their fair value involve the use of estimates based on factors that maychange over time, affecting the analyses performed.The impairment tests required by the related accounting standards have been conducted in order to identify any evidenceof impairment, where applicable. The tests carried out at 31 December 2012 were based on projections contained in thethree-year plans for the relevant cash generating units (Group companies or their subsidiaries) for the period 2013-201513,and on economic forecasts for future reporting periods. In the case of Mistral Air Srl, the test also took into account anumber of factors arising in late 2012, which have resulted in elements of uncertainty regarding the reliability of previousguidance. Data from the last year of the plan have been used to project cash flows for subsequent years over an indefi-nite time, and the resulting value was then discounted using the Discounted Cash Flow (DCF) method. For the determi-nation of value in use, NOPLAT (Net operating profit less adjusted taxes) was capitalised using an appropriate growth rateand discounted using the related WACC (Weighted average cost of capital). An assumed growth rate of 1% was used inthe tests carried out at 31 December 2012.

Valuation of fixed-assetsNon-current assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amountmay not be recoverable, requiring the use of subjective judgements based on information available within the Group and inthe market, and on historical experience. When impairment is recognised, value of the impairment is calculated using appro-priate measurement techniques. The identification of impairment indicators, and the estimates used in the calculation of im-pairment, are linked to factors that may change over time, with a resulting impact on the measurements performed. The cur-rent economic and financial crisis, which has resulted in highly volatile markets and great uncertainty with regard to econom-ic projections, makes it is difficult to produce forecasts that can, without any uncertainty, be defined as reliable.In this context, given the ongoing crisis in the property market, Poste Italiane SpA has recently embarked on a plan to up-date estimates of the market value of its property assets, with the aim of verifying the significance of any indicators ofimpairment. Whilst awaiting completion of this process, which is due to take place after the end of the reporting periodunder review, the Group has prudently taken into account the ongoing volatility of property prices and the related impacton the value in use of certain properties, should such properties no longer be used in operations in future. At 31 Decem-ber 2012 the fair value of the Parent Company’s properties used in operations was, however, significantly higher than theircarrying amount. In reviewing the net carrying amount of land and buildings used in operations, the Parent Company al-so took account of any indications that these assets may be impaired. With particular reference to properties used as postoffices and Sorting Centres, Poste Italiane SpA’s service obligation was taken into account, contemplating the inseparabil-ity of the cash flows generated by the large number of properties that provide this service, which the Group is requiredto operate throughout the country regardless of the expected profitability of each location. The unique nature of the op-erating processes involved and the substantial overlap between postal and financial activities within the same outlets, rep-resented by post offices, were also considered. On this basis, the value in use of land and buildings used in operationsis relatively unaffected by changes in the commercial value of the properties concerned and, under particular market con-

13. 2013-2017 for the company SDA Express Courier SpA.


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ditions, certain properties may have values that are significantly higher than their market value, without this having anyimpact on the Parent Company’s cash flows or results.

Depreciation and amortisation of property, plant and equipment and intangible assets

The cost of these assets is depreciated or amortised on a straight-line basis over the estimated useful life of the asset.The useful life is determined at the time of acquisition and is based on historical experience of similar investments, mar-ket conditions and expectations regarding future events that may have an impact, such as technological developments.The actual useful life may, therefore, differ from the estimated useful life. Changes in technology and industry, in disman-tling costs and in the recoverable amount of assets are reviewed annually in order to update their residual useful lives.This periodic update may lead to changes in the depreciation or amortisation period and thus in charges for depreciationor amortisation in the current and in future years.In the case of assets located on land held under concession or sub-concession, on expiry of the concession term, orwhilst awaiting confirmation of renewal, any additional depreciation of assets to be returned free of charge at the end ofthe concession term is calculated on the basis of the probable residual duration of the right to use the assets to providepublic services, estimated on the basis of the framework agreements entered into with the Public Sector entity, the sta-tus of negotiations with the grantors and past experience.

Deferred tax assets

The recognition of deferred tax assets is based on the expectation of taxable income in future years. Assessments of ex-pected taxable income depend on factors which may change over time, impacting on the valuation of the deferred tax as-sets in the statement of financial position.

Provision for doubtful debts

The provision for doubtful debts reflects the estimated losses on receivables, which, in the case of receivables due formPublic Sector entities, considers the legislation restricting public spending. Provisions for expected losses reflect the es-timated credit risk associated with historical experience of similar receivables, an analysis of past due items (current andhistorical), losses and collections and the monitoring of the current and future economic conditions in the related markets.Net provisions for doubtful debts are accounted for in profit or loss under other operating costs, or, if relating to receiv-ables accrued during the year, by deferring the related revenue.

Fair value of unquoted financial instruments

The fair value of financial instruments that are not traded on an active market is based on prices quoted by external deal-ers or on internal valuation techniques which estimate the transaction price on the measurement date in an arm’s lengthexchange motivated by normal business considerations. The valuation models are primarily based on market variables, con-sidering, where possible, the prices in recent transactions and quoted market prices for substantially similar instruments,and of any related credit risk.

Technical provisions for insurance business

The measurement of technical provisions for the insurance business is based on the calculations performed by actuariesemployed by Poste Vita SpA, which are regularly verified by independent external actuaries. In order to verify the adequa-




cy of the provisions, the liability adequacy tests (LATs), which measure the ability of future cash flows from the insurancecontracts to cover liabilities towards the policyholders, are periodically performed. The LAT test is conducted on the ba-sis of the present value of future cash flows, obtained by projecting expected future cash flows from the existing portfo-lio at the end of the reporting period, based on appropriate assumptions regarding the cause of termination (death, sur-render, redemption, reduction) and the performance of claims expenses. If necessary, technical provisions are topped upand the related cost charged to profit or loss.

Employee termination benefits

The calculation of employee termination benefits is conducted by independent actuaries, considering vested termination ben-efits for the period of service to date and actuarial assumptions of a demographic, economic and financial nature. These as-sumptions, which are based on the Group’s experience and relevant best practices, are subject to periodic reviews.

3 - RISK MANAGEMENT

Definition and optimisation of the Poste Italiane Group’s financial structure, over the short and medium/long term, and man-agement of the related cash flows is the responsibility of the Parent Company’s Finance function, acting in accordancewith the general guidelines established by governance bodies. Management of the Group’s financial transactions and of the associated risks is primarily attributable to the operations ofthe Parent Company and the insurance company, Poste Vita SpA.

Poste Italiane SpAParent Company financial transactions primarily relate to BancoPosta’s operations and transactions involved in assets fi-nancing and liquidity investment. BancoPosta’s operations are governed by Presidential Decree 144/2001. From 2 May 2011BancoPosta has a RFC reserve, as approved by the General Meeting of 14 April 2011, to comply with Bank of Italy’s pru-dential requirements and protect creditors, in accordance with art. 2 (paragraphs 17-octies to 17-duodecies) of the so-called“Milleproroghe” Decree, converted into Law 10 of 26 February 2011. BancoPosta RFC was provided with a legally sepa-rate reserve of €1 billion provided by Poste Italiane SpA’s retained earnings. BancoPosta RFC’s operations consist in themanagement of liquidity generated by postal current accounts deposits, carried out in the name of BancoPosta but sub-ject to statutory restrictions, and collections and payments on behalf of third parties.

The funds deriving from postal current account deposits by private customers are invested in euro zone government se-curities, whilst deposits by Public Sector entities are deposited with the MEF. During 2012 BancoPosta was engaged inthe following: reinvestment of the funds deriving from maturing government securities; the trading of securities designedto progressively match the maturity profile of the portfolio with the investment model adopted by the Parent Company in2010; and in the arrangement of two repo loans, totalling €5 billion, entered into with two first ranking financial institu-tions, as promoted by the European Central Bank in February 2012, with the loan proceeds subsequently invested in fixedrate Italian government securities in order to anticipate the renewal of investments maturing over the next three years.The maturity profile is based, among other things, on a leading market operator’s statistical/econometric model that re-flects the interest rates and maturities typical of postal current accounts. The model is also used as the basis for invest-ment policies in order to limit exposure to interest rate risk and liquidity risks by foreseeing deviations caused by the needto combine the exigencies of risk management with those of improving returns which are dependent on movements inthe market yield curve.

Operations not covered by BancoPosta RFC, primarily relate to the management of the Parent Company’s own liquidity,carried out in accordance with investment guidelines approved by the Board of Directors, which require the Parent Com-



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pany to invest in instruments such as government securities, high-quality corporate or bank bonds and term bank de-posits. Liquidity is also deposited in postal current accounts, with the resulting deposits subject to the same requirementsapplied to the investment in deposits by private current account holders.

Poste Vita SpAFinancial instruments held by the insurance company, Poste Vita SpA, primarily relate to investments designed to coverits contractual obligations, to policyholders, on traditional profit life policies and index-linked and unit-linked policies. Oth-er investments in financial instruments regard investment of the insurance company’s free capital.

Traditional life policies, classified under Branch I, include products whose benefits are revaluated based on the return gen-erated through the management of separate pools of financial assets, with certain autonomy, in accounting terms, fromthe rest of the company’s assets (so-called separately managed accounts). On these products, the company provides aminimum rate of return payable upon maturity of the policy. It follows that the impact of financial risk on investment per-formance can be absorbed in full or in part by the insurance provisions based on the level and structure of the guaranteedminimum returns and the profit-sharing mechanisms of the “separate portfolio” for the policyholder. The company deter-mines the sustainability of minimum returns through periodic analyses using an internal financial-actuarial model which sim-ulates, for each separate portfolio, the change in value of the financial assets and the expected returns under a “centralscenario” (based on current financial and commercial assumptions) and under stress and other scenarios based on differ-ent sets of assumptions.

Some Branch I products sold in 2012 entail guaranteed revaluations linked to a specific asset (so-called capitalisation con-tracts). The assets are comprised of securities issued by Cassa Depositi e Prestiti and government securities. Returns areonly indexed for the initial years of a product’s term. Subsequent to the second or third year, returns are indexed, as areother Branch I products, to separate pools of assets. The financial risk of capitalisation products is fully covered by insur-ance liabilities except for default by the issuer which is borne by the insurer.

Index-linked and unit-linked products, relating to Branch III insurance products, regard policies with premium invested instructured financial instruments, Italian government securities, warrants and mutual investment funds. For this type of prod-uct, issued prior to the introduction of ISVAP Regulation 32 of 11 June 2009, the company does not guarantee capital ora minimum return and, as such, the associated financial risks are borne almost entirely by the customer. However, in thecase of policies issued after the introduction of the regulation, the company assumes sole liability for solvency risk asso-ciated with the instruments in which premiums are invested. The company continuously monitors changes in the risk pro-file of individual products, focusing especially on the risk linked to the insolvency of issuers.

Financial risk managementWithin this context, the objectives of a balanced financial management and monitoring of the main risk/return profiles arecarried out by organisational structures operating separately and independently. In addition, specific processes are in placegoverning the assumption, management and control of financial risks, including the progressive introduction of appropri-ate information systems. From an organisational viewpoint, the model consists of:• a Finance Committee, which oversees Poste Italiane SpA’s financial strategy, based on indicators referring to internal

planning and the external economic/financial cycle. The Committee meets at least on a quarterly basis and is a special-ist body that advises on the analysis and identification of investment and disinvestment opportunities;

• an Investment Committee established at the Group’s insurance company, Poste Vita SpA, and which, based on analy-ses by the relevant functions, provides advice to senior management on the development, implementation and over-sight of investment strategy;

• a Risk Measurement and Control function carried out by appropriate functions established within the Parent Companyand the subsidiaries, providing financial and insurance services (BancoPosta Fondi SGR SpA, BdM-MCC SpA and PosteVita SpA), and operating on the basis of the organisational separation of risk assessment from risk management activi-ties. Results of these activities are examined by the relevant advisory committees, which are responsible for carryingout an integrated assessment of the main risk profiles;




• BancoPosta RFC’s Cross-functional Committee, set up under the BancoPosta RFC By-laws and headed by the ParentCompany’s CEO. Other permanent members are the Head of BancoPosta and the heads of the functions within PosteItaliane SpA primarily involved with Bancoposta. The Committee provides advice, makes recommendations and coordi-nates BancoPosta’s operations with those of other Poste Italiane functions. As a rule the Committee meets once amonth to examine, at the proposal of the Head of BancoPosta, key issues relating to the management and performanceof the ring-fenced capital. Poste Italiane SpA’s CEO then takes the necessary actions based on the work of the Com-mittee, supported by the relevant functions.

The risk environment is defined on the basis of the framework established by IFRS 7 - “Financial Instruments: Disclosures”,which distinguishes between four main types of risk (a non-exhaustive classification):• market risk;• credit risk;• liquidity risk;• cash flow interest rate risk.

Market risk relates to: • price risk: the risk that the value of a financial instrument fluctuates as a result of market price movements, deriving

from factors specific to the individual instrument or the issuer, and factors that influence all instruments traded on themarket;

• foreign exchange risk: the risk that the value of a financial instrument fluctuates as a result of movements in exchangerates for currencies other than the functional currency;

• fair value interest rate risk: the risk that the value of a financial instrument fluctuates as a result of movements in mar-ket interest rates.

Sovereign risk became a major component of market risk from 2011, due to the importance of the impact of the spreadsapplicable to government securities on the fair value of euro zone government securities, which reflects the market’s per-ception of the credit rating of sovereign issuers. The impact of the performance of spreads on the fair value of the secu-rities held by the Group at 31 December 2012 is described in the note on Sovereign Risk.

In constructing the Risk Model adopted in order to monitor credit, liquidity and interest rate risks, the Group has also tak-en into account the regulations provided by the Bank of Italy’s prudential supervisory standards, despite the fact that Ban-coPosta RFC is not yet required to apply such standards, whilst waiting for specific instructions.



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MARKET RISK

Price risk

Market risk relates to financial assets that the Group has classified as “Available-for-sale” (AFS) or “Held for trading” andcertain derivative financial instruments where changes in value are recognised in profit or loss. The following sensitivityanalysis relates to the principal positions potentially exposed to fluctuations in value, excluding certain minor items nottraded on an active market. The amounts accounted for in the financial statements at 31 December 2011 and 31 Decem-ber 2012 were subjected to a stress test, based on historical volatility from the respective periods, considered represen-tative of potential market movements.

The principal financial assets subject to price risk and the results of the analysis are shown in the following table.

3.1 - Market risk - Price


Effect on liabilitiestowards Equity

Change in value policyholders Pre-tax profit reserves

Date of reference of the analysis Position +Vol -Vol +Vol -Vol +Vol -Vol +Vol -Vol

2011 effects

Available-for-sale financial assets 2,330,102 189,439 (189,439) 180,234 (180,234) - - 9,205 (9,205)Equity instruments 28,135 10,231 (10,231) 1,687 (1,687) - - 8,544 (8,544)Other investments 2,301,967 179,208 (179,208) 178,547 (178,547) - - 661 (661)

Financial assets at fair value through profit or loss 5,577,626 326,844 (326,844) 325,835 (325,835) 1,011 (1,011) - -

Structured bonds 4,874,775 291,098 (291,098) 290,150 (290,150) 949 (949) - -Other investments 702,851 35,746 (35,746) 35,685 (35,685) 62 (62) - -

Derivative financial instruments 68,390 16,160 (16,160) 16,161 (16,161) (1) 1 - -Fair value through profit or loss 69,344 16,205 (16,205) 16,205 (16,205) - - - -Fair value through profit or loss (liab.) (954) (45) 45 (44) 44 (1) 1 - -

Variability at 31 December 2011 7,976,118 532,443 (532,443) 522,230 (522,230) 1,010 (1,010) 9,205 (9,205)

2012 effects

Available-for-sale financial assets 1,099,227 84,087 (84,087) 76,823 (76,823) - - 7,264 (7,264)Equity instruments 33,761 8,305 (8,305) 1,595 (1,595) - - 6,710 (6,710)Other investments 1,065,466 75,782 (75,782) 75,228 (75,228) - - 554 (554)

Financial assets at fair valuethrough profit or loss 3,811,030 193,091 (193,091) 192,662 (192,662) 430 (430) - -

Structured bonds 3,102,351 165,912 (165,912) 165,520 (165,520) 392 (392) - -Other investments 708,679 27,179 (27,179) 27,142 (27,142) 38 (38) - -

Derivative financial instruments 118,146 26,087 (26,087) 26,087 (26,087) - - - -Fair value through profit or loss 118,146 26,087 (26,087) 26,087 (26,087) - - - -Fair value through profit or loss (liab.) - - - - - - - - -

Variability at 31 December 2012 5,028,403 303,265 (303,265) 295,572 (295,572) 430 (430) 7,264 (7,264)



Available-for-sale financial assets Available-for-sale financial assets mainly refer to the Parent Company’s investments in equity instruments and Poste VitaSpA’s position in other investments, represented by equity mutual investment funds.

Investments in equity instruments consist of the Parent Company’s investments in 75,628 Mastercard Incorporated classB shares with a fair value of €28,019 thousand (compared with 75,628 shares with a fair value of €21,682 thousand at31 December 2011), and in 11,144 Visa Incorporated class C shares, with a fair value of €1,216 thousand (11,144 shares,with a fair value of €870 thousand at 31 December 2011). Poste Vita SpA’s separate Branch I portfolios hold shares to-talling €4,526 thousand (compared with €5,583 thousand at December 31, 2011). The shares held by the Parent Compa-ny are not traded on a regulated stock exchange but, in the event of their sale, are convertible into an equal number ofclass A shares, which are traded on the New York Stock Exchange. For sensitivity analysis purposes, the value of theseshares was associated with the corresponding class A shares, taking into account the volatility of the shares traded onthe NYSE.

Other investments included units of mutual investment funds held by Poste Vita SpA – amounting to €1,061,221 thou-sand (€2,298,275 thousand at 31 December 2011), to meet its obligations to policyholders under the separately managedBranch I portfolio – and units of mutual investment funds held by the Parent Company, amounting to €4,245 thousand(€3,692 thousand at 31 December 2011).

With regard to the instruments held by Poste Vita SpA, any changes in fair value at the above dates are fully reflected inthe liability to policyholders as a result of application of the shadow accounting method. The calculation technique usedby the Group in applying this method, starting from 2011, is based on the prospective yield on each separately managedaccount, considering an assumed realisation of unrealised gains and losses over a period of time that matches the assetsand liabilities held in the portfolio (note 2.3 on “Insurance contracts”).

Financial assets recognised at fair value through profit or loss This item reflects investments held by Poste Vita SpA (note 9.14), which are used nearly entirely to cover Branch III in-dex-linked and unit-linked policies, whose risks, except as otherwise contemplated by the abovementioned ISVAP Regu-lation 32/2009, are borne by policyholders.

Derivative financial instruments The positive balance of the derivative financial instruments relates to warrants acquired to cover the benefits associatedwith the Branch III policies (as specified in greater detail in note 9.17). At 31 December 2012, there were no forward pur-chases of warrants.

Foreign exchange risk

Sensitivity analysis of the items subject to foreign exchange risk was based on the most significant positions, assuminga stress scenario determined by the levels of exchange rate volatility applicable to each foreign currency position consid-ered to be material. It was decided to apply an exchange rate movement based on volatility during the year, which wasconsidered to be representative of potential market movements. The results of the analysis are reported below.

Financial assetsAt 31 December 2012 this item primarily refers to equity instruments held by the Parent Company (note 3.1) denominat-ed in US dollars.



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Trade receivables/payables due from and to overseas counterparties The most significant net position (approximately 98% of the reported foreign exchange exposure) is denominated in SDRs(Special Drawing Rights), a synthetic currency determined by the weighted average of the exchange rates of four majorcurrencies (the euro, US dollar, British pound, Japanese yen) used worldwide to settle commercial positions among postaloperators. At 31 December 2012 this position has a negative balance of €2,022 thousand (a positive balance of €368 thou-sand at 31 December 2011).


Effect on liabilitiestowards Pre-tax Equity

policyholders profit reservesPosition in Position in +Vol -Vol +Vol -Vol +Vol -Vol

Date of reference of the analysis USD/000 EUR/000 260 days 260 days 260 days 260 days 260 days 260 days

2011 effects

Available-for-sale financial assets 29,180 22,552 - - - - 2,501 (2,501)Equity instruments 29,180 22,552 - - - - 2,501 (2,501)

Variability at 31 December 2011 29,180 22,552 - - - - 2,501 (2,501)

2012 effects

Available-for-sale financial assets 38,573 29,235 - - - - 2,520 (2,520)Equity instruments 38,573 29,235 - - - - 2,520 (2,520)

Variability at 31 December 2012 38,573 29,235 - - - - 2,520 (2,520)

3.2 - Market risk - US dollar

3.3 - Market risk - SDRs

Pre-tax EquityChange in value profit reserves

Position in Position in +Vol -Vol +Vol -Vol +Vol -VolDate of reference of the analysis SDRs/000 EUR/000 260 days 260 days 260 days 260 days 260 days 260 days

2011 effects

Current assets in SDRs 66,872 79,347 4,343 (4,343) 4,343 (4,343) - -Current liabilities in SDRs (66,562) (78,979) (4,323) 4,323 (4,323) 4,323 - -

Variability at 31 December 2011 310 368 20 (20) 20 (20) - -

2012 effects

Current assets in SDRs 68,019 79,233 2,945 (2,945) 2,945 (2,945) - -Current liabilities in SDRs (69,755) (81,255) (3,020) 3,020 (3,020) 3,020 - -

Variability at 31 December 2012 (1,736) (2,022) (75) 75 (75) 75 - -



Fair value interest rate risk

This refers to the effects of changes in interest rates on the price of fixed income and fixed rate securities held by theParent Company, mainly in relation to BancoPosta RFC, Poste Vita SpA and BdM-MCC SpA.

In line with previous years, the following interest rate sensitivity analysis was based on changes in fair value with a par-allel shift in the forward yield curve of +/- 100 bps. The measures of sensitivity shown in the following analysis do, how-ever, offer a basic point of reference, useful in assessing potential changes in fair value in the event of greater movementsin interest rates.

Details of fair value interest rate risk are shown below and broken down as follows:a. Financial services, primarily regarding the financial instruments attributable to BancoPosta RFC and BdM-MCC SpA;b. Insurance services, regarding the financial instruments of the insurance company, Poste Vita SpA, and its subsidiary,

Poste Assicura;c. Postal and Business services, including all the Group’s other financial instruments.


Effect on liabilitiestowards Equity

policyholders Pre-tax profit reservesDate of reference of the analysis Nominal value Fair value +100bps -100bps +100bps -100bps +100bps -100bps

2011 effects

Available-for-sale financial assets(1) 53,181,799 47,722,022 (1,496,323) 1,655,535 - - (947,831) 968,058Fixed-income instruments 53,181,799 47,722,022 (1,496,323) 1,655,535 - - (947,831) 968,058

Financial assets at FV through profit or loss 5,572,909 4,063,829 (205,769) 205,814 - - - -Fixed-income instruments 5,572,909 4,063,829 (205,769) 205,814 - - - -

Derivative financial instruments 2,102,200 (33,090) (10,049) 10,049 (25,934) 26,803 (32,852) 35,247Cash flow hedges (liabilities) 800,000 (31,281) - - - - (32,852) 35,247Fair value through profit or loss (liabilities) 1,302,200 (1,809) (10,049) 10,049 (25,934) 26,803 - -

Variability at 31 December 2011 60,856,908 51,752,761 (1,712,141) 1,871,398 (25,934) 26,803 (980,683) 1,003,305

2012 effects

Available-for-sale financial assets(1) 67,231,021 70,390,611 (2,113,546) 2,441,687 - - (1,308,794) 1,158,240Fixed-income instruments 67,221,878 69,283,663 (2,008,200) 2,336,341 - - (1,308,794) 1,158,240Other investments 9,143 1,106,948 (105,346) 105,346 - - - -

Financial assets at FV through profit or loss 7,129,012 6,152,553 (275,690) 274,869 - - - -Fixed-income instruments 7,129,012 6,152,553 (275,690) 274,869 - - - -

Derivative financial instrumets 800,000 12,157 - - - - (16,225) 1,667Cash flow hedges (liabilities) 800,000 12,157 - - - - (16,225) 1,667Fair value through profit or loss (liabilities) - - - - - - - -

Variability at 31 December 2012 75,160,033 76,555,321 (2,389,236) 2,716,556 - - (1,325,019) 1,159,907

(1) The effects are only measured for components of the portfolio not covered by fair value hedges.

3.4 - Market risk - Fair value interest rate risk


182

a. Financial services

Available-for-sale financial assetsBancoPosta RFC’s investments consist of Held-to-maturity financial assets (HTM) and Available-for-sale financial assets (AFS).Due to the fact that HTM assets are initially recognised at fair value and subsequently measured at amortised cost, changesin fair value have no effect on profit or loss. For AFS assets, on the other hand, which are measured at fair value, changesin fair value are taken to a separate equity reserve which, consequently, must be continually monitored for gains and loss-es on measurement. The sensitivity analysis shown above is for AFS financial assets.At 31 December 2012, these consist of available-for-sale financial assets of BancoPosta RFC with a total fair value of€22,426,616 thousand and, for the remainder, investments attributable to BdM-MCC SpA and BancoPosta Fondi SpASGR, with a total fair value of €602,006 thousand (note 9.10).BancoPosta RFC’s AFS financial assets include:• Fixed rate Italian government securities (ordinary BTPs) with a par value of €15,092,100 thousand (€12,221,800 thou-

sand at 31 December 2011).• Inflation-linked Italian government bonds (BTP€i) purchased in 2012 and having a par value €2,800,000 thousand, which

are not hedged. These bonds provide a fixed rate of return calculated on their nominal value, as revalued on the basisof the rate of inflation since they were issued. This feature makes for a modified duration of unhedged inflation-linkedbonds, which measures price sensitivity to changes only in interest rates, greater than the modified duration of fixedrate bonds with the same tenor (e.g. BTPs).

• Variable rate securities swapped into fixed rate through cash flow hedges. The latter are inflation linked BTPs (BTP€i)with a par value of €2,583,750 thousand (€2,583,750 thousand at 31 December 2011).



policyholders profit reservesDate of reference of the analysis Nominal value Fair value +100bps -100bps +100bps -100bps +100bps -100bps

2011 effects

Available-for-sale financial assets 16,329,913 13,962,003 - - - - (616,592) 633,187Fixed income instruments 16,329,913 13,962,003 - - - - (616,592) 633,187

Derivative financial instruments 1,850,000 (25,370) - - (25,648) 26,517 (32,852) 35,247Cash flow hedges (liabilities) 800,000 (31,281) - - - - (32,852) 35,247Fair value through profit or loss (liabilities) 1,050,000 5,911 - - (25,648) 26,517 - -

Variability at 31 December 2011 18,179,913 13,936,633 - - (25,648) 26,517 (649,444) 668,434

2012 effects

Available-for-sale financial assets 22,055,960 23,028,622 - - - - (1,149,239) 1,000,130Fixed income instruments 22,055,960 23,028,622 - - - - (1,149,239) 1,000,130

Derivative financial instruments 800,000 12,157 - - - - (16,225) 1,667Cash flow hedges (liabilities) 800,000 12,157 - - - - (16,225) 1,667Fair value through profit or loss (liabilities) - - - - - - - -

Variability at 31 December 2012 22,855,960 23,040,779 - - - - (1,165,464) 1,001,797




• variable rate CCTeus (variable rate Italian treasury certificates indexed to Euribor + spread 1.00%) issued by the ItalianGovernment, with a par value of €1 billion, an amount unchanged from 31 December 2011, which are not subject tothe risk in question14.

The portion of the fixed rate portfolio relating to ordinary BTPs was partially hedged against fair value interest rate riskthrough asset swaps designated as fair value hedges: • BTPs with a nominal value of €500,000 thousand were hedged against interest rate risk through IRSs designated as fair

value hedges, which took effect immediately;• 2023 and 2025 BTPs with a nominal value of €400,000 thousand were partially hedged through IRSs designated as fair

value hedges with a forward start in 2016; • 2026, 2034 and 2040 BTPs with a nominal value of €2,800,000 thousand were partially hedged through IRSs designat-

ed as fair value hedges with forward starts in 2015, 2016 and 2020, respectively.

Hedging transactions are described in note 9.11.

The duration of BancoPosta’s AFS financial assets is 6.28 (at 31 December 2011 the duration of the securities portfoliowas 6.21), partially raising the sensitivity of the fair value of the portfolio to changes in interest rates.

The balance also includes fixed income euro zone government securities with a fair value of €602,006 thousand, com-pared with a nominal value of €580,110 thousand (€519,986 thousand and €524,363 thousand, respectively, at 31 De-cember 2011), primarily held by BdM-MCC SpA and BancoPosta Fondi SpA SGR.

Derivative financial instrumentsAt 31 December 2012 changes in interest rate risk affect fair value on forward purchases of securities carried out by theParent Company with a nominal value of €800,000 thousand (so-called cash flow hedges of forecast transactions).


14. In July 2012, following changed market conditions and to stabilise the benefit of the cash flow hedging strategy, the Parent Company unwound earlyasset swaps used to lock in a fixed interest rate for a portion of the €950,000 thousand invested in CCTeus. As a result of the transaction, the positivebalance of the cash flow hedge reserve, which reflects the increase in the value of the asset swaps, will be released to profit or loss throughout theremaining life of these securities, thereby boosting their return.


184

b. Insurance services

Available-for-sale financial assetsThe financial assets exposed to the risk in question include:• fixed income instruments with a fair value of €42,402,566 thousand, compared with a nominal value of €41,351,918

thousand (€31,054,487 thousand and €33,825,311 thousand, respectively, at 31 December 2011). They include: - investments held almost entirely by Poste Vita SpA, amounting to €37,670,851 thousand (€29,270,741 thousand at

31 December 2011), which cover this company’s Branch I contractual obligations;- investments of €2,796,180 thousand covering products funding a specific set of assets;- investments of €1,872,107 thousand (€1,736,816 thousand at 31 December 2011) relate to Poste Vita’s free capital;- securities held by Poste Assicura SpA with a fair value of €63,428 thousand;

• unhedged Inflation-linked BTPs held by the Poste Vita group, having a nominal value of €1,513,850 thousand and a fairvalue of €1,593,333 thousand (€335,000 thousand and €289,430 thousand, respectively, at 31 December 2011); of thisamount BTPs with a nominal value of €90,000 thousand and a fair value of €94,438 thousand relate to Poste Vita’s freecapital (€20,000 thousand and €17,280 thousand, respectively, at 31 December 2011);

• other investments, including units of mutual funds with a fair value of €1,106,948 thousand, covering liabilities towardspolicyholders in relation to separately managed Branch I accounts.




2011 effects

Available-for-sale financial instruments 36,351,886 33,331,073 (1,496,323) 1,655,535 - - (71,110) 74,453Fixed income instruments 36,351,886 33,331,073 (1,496,323) 1,655,535 - - (71,110) 74,453

Financial assets at fair valuethrough profit or loss 5,572,909 4,063,829 (205,769) 205,814 - - - -

Fixed income instruments 5,572,909 4,063,829 (205,769) 205,814 - - - -

Derivative financial instruments 252,200 (7,720) (10,049) 10,049 (286) 286 - -Fair value through profit or loss (liabilities) 252,200 (7,720) (10,049) 10,049 (286) 286 - -

Variability at 31 December 2011 42,176,995 37,387,182 (1,712,141) 1,871,398 (286) 286 (71,110) 74,453

2012 effects

Available-for-sale financial instruments 44,675,061 46,859,152 (2,113,546) 2,441,687 - - (154,687) 155,758Fixed income instruments 44,665,918 45,752,204 (2,008,200) 2,336,341 - - (154,687) 155,758Other investments 9,143 1,106,948 (105,346) 105,346 - - - -

Financial assets at fair valuethrough profit or loss 7,129,012 6,152,553 (275,690) 274,869 - - - -

Fixed income instruments 7,129,012 6,152,553 (275,690) 274,869 - - - -

Derivative financial instruments - - - - - - - -Fair value through profit or loss (liabilities) - - - - - - - -

Variability at 31 December 2012 51,804,073 53,011,705 (2,389,236) 2,716,556 - - (154,687) 155,758




A portion of the variable rate portfolio with a fair value of €1,756,305 thousand, compared with a nominal value of€1,800,150 thousand, has not been taken into account for the purposes of this analysis.

Financial assets at fair value through profit or lossThe fair value interest rate risk concerns a portion of the fixed rate investments of Poste Vita SpA, totalling €6,023,534thousand (€3,901,804 thousand at 31 December 2011). These consist of investments with a fair value of €5,794,017 thou-sand, relating to coupon stripped15 BTPs (€3,837,934 thousand at 31 December 2011) covering obligations associatedwith Branch III insurance products, and with a fair value of €229,517 thousand (€63,870 thousand at 31 December 2011)and corporate bonds covering Branch I contractual obligations.

A portion of the variable rate portfolio with a fair value of €129.019 thousand, compared with a nominal value of €139,724thousand, has not been taken into account for the purposes of this analysis.

c. Postal and Business services

Available-for-sale financial assetsRisks related to available-for-sale financial assets regard investments held by the Parent Company with a nominal value of€125,000 thousand and a fair value of €129,362 thousand, out of total investments with a nominal value of €500,000thousand and a fair value of €502,837 thousand, including €375,000 thousand hedged in 2010 against changes in theirfair value by entering into an asset swaps designated as fair value hedges.

Sovereign risk

The global financial system has been affected by significant tensions and ongoing financial market turbulence and volatil-ity since 2011, with Italy particularly exposed. From July 2012 spreads between German bunds and government bondsissued by many other European countries, including Italy, have been falling, as the spreads on ten-year bonds dropped to321 bps at 31 December 2012 (527 bps at 31 December 2011).



policyholder profit reservesDate of reference of the analysis Nominal value Fair value +100bps -100bps +100bps -100bps +100bps -100bps

2011 effects

Available-for-sale instruments 500,000 428,945 - - - - (5,134) 5,423Fixed income instruments 500,000 428,945 - - - - (5,134) 5,423

Variability at 31 December 2011 500,000 428,945 - - - - (5,134) 5,423

2012 effects

Available-for-sale instruments 500,000 502,837 - - - - (4,868) 2,352Fixed income instruments 500,000 502,837 - - - - (4,868) 2,352

Variability at 31 December 2012 500,000 502,837 - - - - (4,868) 2,352


15. Coupon stripping consists in detaching the interest payment coupons from a note or bond. Coupon stripping transforms each government security in-to a series of zero-coupon bonds. Each component may be traded separately.


186

The progressive improvement in Italy’s credit rating in the year ended 31 December 2012 had a positive impact on the priceof Italian government securities, generating substantial positive changes in the fair value of those classified as available-for-sale (AFS) by the Group. The portion of these positive changes that did not go to increase the liabilities towards policyhold-ers was recognised in the fair value reserve in equity, net of tax. In particular, at 31 December 2012 the fair value reserve re-lated to the Group’s portfolio was a positive €126 million (a negative balance of €2,137 million at 31 December 2011).

It is noted that the value of the portfolio of Italian government bonds is much more sensitive to the credit risk associat-ed with the Italian Republic than to changes in so-called risk-free interest rates. This is due, in part, to the fact that changesin credit spreads also affect the value of variable rate bonds and, especially, to the fact that, unlike pure interest rate risk,no hedging policy is in place to protect against credit risk. This means that, in the event of increases in interest rates at-tributable to the swap component, unrealised losses on fixed rate bonds are offset by an increase in the value of hedg-ing IRSs (a fair value hedge strategy). If interest rates rise as a result of a wider credit spread for the Italian Republic, loss-es on government bonds are not offset by movements in the opposite direction of other exposures.

The table below shows a sensitivity analysis for both the Parent Company’s and the Poste Vita group’s bond portfolios.The sensitivity to the spread has been calculated by applying a shift of +/- 100 bps to the risk factor that affects the dif-ferent types of bonds held represented by the yield curve of Italian government bonds. A floor of zero was set for theshift of -100 bps to avoid negative returns for shorter-term maturities.

Poste Italiane SpA



Date of reference of the analysis Nominal value Fair value +100bps -100bps +100bps -100bps +100bps -100bps

2011 effects

Financial assets attributable to BancoPosta 17,655,550 13,416,648 (1,115,056) 1,267,280 (25,648) 26,517 (1,089,407) 1,240,763

Available-for-sale financial assetsFixed income instruments 15,805,550 13,442,018 (1,056,555) 1,205,516 - - (1,056,555) 1,205,516

Derivative financial instrumentsCash flow hedges (liabilities) 800,000 (31,281) (32,852) 35,247 - - (32,852) 35,247Fair value through profit or loss 1,050,000 5,911 (25,648) 26,517 (25,648) 26,517 - -

Financial assets 500,000 428,945 (27,747) 30,064 - - (27,747) 30,064

Available-for-sale financial assetsFixed income instruments 500,000 428,945 (27,747) 30,064 - - (27,747) 30,064

Variability at 31 December 2011 18,155,550 13,845,593 (1,142,803) 1,297,344 (25,648) 26,517 (1,117,154) 1,270,827

2012 effects

Financial assets attributable to BancoPosta 22,275,850 22,438,773 (1,717,179) 1,934,709 - - (1,717,179) 1,934,709

Available-for-sale financial assetsFixed income instruments 21,475,850 22,426,616 (1,700,954) 1,917,415 - - (1,700,954) 1,917,415

Derivative financial instrumentsCash flow hedges 800,000 12,157 (16,225) 17,294 - - (16,225) 17,294Fair value through profit or loss - - - - - - - -

Financial assets 500,000 502,837 (29,970) 32,219 - - (29,970) 32,219

Available-for-sale financial assetsFixed income instruments 500,000 502,837 (29,970) 32,219 - - (29,970) 32,219


3.8 - Market risk - Effect of credit spread on fair value



Poste Vita group

In addition to using the above sensitivity analysis, Poste Italiane SpA monitors credit risk by calculating its maximum po-tential losses, through an estimate of Value at Risk (VaR) on statistical bases, over a 3-day time horizon and at a 99% con-fidence level. Risk analysis performed through VaR takes into account the historical variability of the risk (spread) in ques-tion, in addition to modelling parallel shifts of the yield curve. The table below shows the VaR analysis performed on theParent Company’s and Poste Vita group’s portfolios16.


16. VaR analysis for Poste Italiane SpAThe Parent Company monitors the market risk for available-for-sale financial instruments and derivative financial instruments also by calculating their max-imum potential losses, through an estimate of the Value at Risk (VaR) on statistical bases, over a 3-day time horizon and at a 99% confidence level. VaRanalysis makes it possible to consider the combined effects of the different risk factors considered, particularly the effect of the interest rate risk on fairvalue and country risk. BancoPosta’s financial assets At 31 December 2012, the maximum potential losses for available-for-sale financial instruments amounted to €559,802 thousand (€807,091 thousandat 31 December 2011) while for financial derivative instruments, in relation to forward purchases, they amounted to €5,799 thousand (€29,353 thou-sand at 31 December 2011). The decrease in VaR with respect to 31 December 2011 was due to the lower volatility of the risk factors considered (thespread risk in particular). Financial assets At 31 December 2012, VaR, as calculated on the basis of the above parameters, considering the existing fair value hedges, reflected maximum poten-tial losses of €11,147 thousand (€26,600 thousand at 31 December 2011) for available-for-sale financial instruments. Also for this portfolio, Value atRisk fell as a result of the country risk volatility during the year.



2011 effects

Available-for-sale financial instrumentsFixed income instruments 36,351,886 33,331,075 (1,547,935) 1,707,147 - - (334,958) 338,301

Financial assets at fair value through profit or lossFixed-income instruments 5,572,909 4,063,830 (219,810) 219,855 - - - -

Derivative financial instrumentsForward purchases stripped BTPs (liabilities) 252,200 (7,720) (10,049) 10,049 (286) 286 - -

Variability at 31 December 2011 42,176,995 37,387,185 (1,777,794) 1,937,051 (286) 286 (334,958) 338,301

2012 effects

Available-for-sale financial instrumentsFixed income instruments 44,665,918 45,752,204 (2,008,200) 2,336,341 - - (154,687) 155,758Other investments 9,143 1,106,948 (105,346) 105,346 - - - -

Financial assets at fair value through profit or lossFixed income instruments 7,129,012 6,152,553 (280,272) 279,452 - - - -

Derivative financial instrumentsForward purchases stripped BTPs (liabilities) - - - - - - - -

Variability at 31 December 2012 51,804,073 53,011,705 (2,393,818) 2,721,139 - - (154,687) 155,758



188

Poste Italiane SpA


Date of reference of the analysis Nominal value Fair value SpreadVaR

2011 effects

Financial assets attributable to BancoPosta 17,655,550 13,416,648 919,475

Available-for-sale financial assetsFixed income instruments 15,805,550 13,442,018 870,269

Derivative financial instrumentsCash flow hedges (liabilities) 800,000 (31,281) 16,041Fair value through profit or loss 1,050,000 5,911 14,623

Financial assets 500,000 428,945 26,208

Available-for-sale financial assetsFixed income instruments 500,000 428,945 26,208

Variability at 31 December 2011 18,155,550 13,845,593 941,296

2012 effects

Financial assets attributable to BancoPosta 22,275,850 22,438,773 608,467

Available-for-sale financial assetsFixed income instruments 21,475,850 22,426,616 604,220

Derivative financial instrumentsCash flow hedges 800,000 12,157 6,054Fair value through profit or loss - - -

Financial assets 500,000 502,837 10,861

Available-for-sale financial assetsFixed income instruments 500,000 502,837 10,861


3.10 - Market risk - Effect of credit spread on VaR



Poste Vita group

CREDIT RISK

Credit risk refers to the risk that a debtor might default. This risk is managed as follows:• minimum rating requirements for issuers/counterparties, based on the type of instrument; • concentration limits per issuer/counterparty; • monitoring of changes in the ratings of counterparties.

Since 2011 the macroeconomic events that had an impact on the risk-return profiles of the Group’s financial assets werethe debt crises in certain peripheral EU countries (Greece, Ireland, Portugal and Spain), which caused spreads on Euro-pean government securities to widen, with a particular impact on those related to Italy’s sovereign risk, and continuinguncertainty related to the banking sector. In the second half of 2011, and for part of 2012, a significant number of ratingsdowngrades by the leading agencies resulted in a progressive deterioration in the weighted average rating of the Group’sexposures, which, for investments other than Italian government bonds, has fallen from A at 31 December 2011 to A- at31 December 2012.



2011 effects

Available-for-sale financial instruments 36,351,886 33,331,073 2,171,833Government bonds 30,731,071 27,963,491 2,163,069Corporate Investment Grade bonds 5,472,920 5,249,388 22,996Corporate High Yield bonds 147,895 118,193 745

Financial instruments at FV through profit or loss 5,572,909 4,063,830 273,512Government bonds 5,308,333 3,837,935 272,815Corporate Investment Grade bonds 222,274 184,987 1,633Corporate High Yield bonds 42,302 40,907 383

Derivative financial instruments 252,200 (7,720) 13,889Government bonds (forward purchases) 252,200 (7,720) 13,889

Variability at 31 December 2011 42,176,995 37,387,182 2,459,232

2012 effects

Available-for-sale financial instruments 44,675,061 46,859,152 1,138,572Government bonds 38,098,352 39,893,801 1,131,683Corporate Investment Grade bonds 6,423,234 6,818,460 14,613Corporate High Yield bonds 153,475 146,891 654

Financial instruments at FV through profit or loss 7,129,012 6,152,553 122,774Government bonds 6,776,974 5,794,017 121,887Corporate Investment Grade bonds 296,812 303,461 1,720Corporate High Yield bonds 55,226 55,075 240

Derivative financial instruments - - -Government bonds (forward purchases) - - -

Variability at 31 December 2012 51,804,073 53,011,705 1,261,346



190

The nature of Poste Italiane SpA’s operations, and in particular BancoPosta’s investment activities, exposes it to a sub-stantial degree of concentration in respect of the Italian state, linked essentially to deposits with the MEF and the portfo-lio invested entirely in Italian government securities.

Communication DEM/11070007 of 28 July 2011, implementing Document 2011/266 published by the European Securi-ties and Markets Authority (ESMA) and later amendments, has introduced new requirements regarding sovereign debt dis-closures that listed issuers with investments in national and euro area government securities and IFRS-compliant compa-nies must include in their annual and interim financial statements. Sovereign debt includes bonds issued by, and loansprovided to, central and local governments and government bodies. Information on the Group’s sovereign debt exposureis provided below, including the nominal value, carrying amount and fair value of each type of portfolio.


At 31 December 2012 At 31 December 2011

Nominal Carrying Fair Nominal Carrying FairItem value Amount Value value Amount value

Italy 79,133,238 79,922,092 80,389,873 66,502,162 59,526,257 58,337,082

Held-to-maturity financial assets 13,902,650 14,048,068 14,515,849 14,237,650 14,363,893 13,174,718Available-for-sale financial assets 58,453,614 60,080,007 60,080,007 46,956,179 41,324,428 41,324,428Financial assets at fair value through profit or loss 6,776,974 5,794,017 5,794,017 5,308,333 3,837,935 3,837,935

Austria 200,925 208,402 208,402 213,625 224,486 224,486

Held-to-maturity financial assets - - - - - -Available-for-sale financial assets 200,925 208,402 208,402 213,625 224,486 224,486Financial assets at fair value through profit or loss - - - - - -

Belgium 75,060 85,467 85,467 75,060 78,874 78,874


France 189,480 228,902 228,902 94,030 105,199 105,199


Germany 39,590 49,266 49,266 35,590 43,285 43,285


Netherlands - - - 25,000 26,152 26,152

Held-to-maturity financial assets - - - - - -Available-for-sale financial assets - - - 25,000 26,152 26,152Financial assets at fair value through profit or loss - - - - - -

Spain 42,200 40,901 40,901 322,200 315,408 315,408


Total 79,680,493 80,535,030 81,002,811 67,267,667 60,319,661 59,130,486

3.12 - Exposure to sovereign debt



It is worthy of note that Poste Vita SpA holds fixed rate corporate bonds issued by certain Spanish and Irish companiesthat are classified as available-for-sale financial assets, having a total nominal value of €537,050 thousand and a fair val-ue of €563,465 thousand (€510,100 thousand and €478,341 thousand, respectively, at 31 December 2011). Out of thetotal nominal value, bonds of €508,650 thousand (a fair value of €539,879 thousand) are used to cover Branch I policy-holders, while bonds of €28,400 thousand (a fair value of €23,586 thousand) are allocated to free capital.

The relevant credit exposure is shown below for each category of financial instrument. The ratings reported in the tablehave been assigned by Moody’s.

Outstanding positions at 31 December 2012 are described in note 9.


Balance at 31 December 2012 Balance at 31 December 2011

from Aaa from A1 from Ba1 from Aaa from A1 from Ba1 Item to Aa3 to Baa3 to Not rated Total to Aa3 to Baa3 to Not rated Total

Loans and receivables 111,351 7,602,866 689,027 8,403,244 303,199 8,541,240 498,458 9,342,897

Loans - 42,756 138,117 180,873 - 34,429 39,603 74,032

Receivables - 391,170 13,769 404,939 - 492,344 22,342 514,686

BancoPosta receivables 111,351 7,168,940 537,141 7,817,432 303,199 8,014,467 436,513 8,754,179

Held-to-maturityfinancial assets - 14,048,068 - 14,048,068 - 14,363,893 - 14,363,893

Fixed income instruments - 14,048,068 - 14,048,068 - 14,363,893 - 14,363,893

Available-for-sale financial assets 1,704,046 67,432,725 146,892 69,283,663 2,372,170 45,279,478 164,839 47,816,487

Credit instruments Posta Vita Branch | 1,632,105 39,241,764 146,560 41,020,429 2,260,141 28,869,329 162,839 31,292,309

Credit instruments Posta Vita free capital 71,941 4,591,354 332 4,663,627 22,029 1,967,506 2,000 1,991,535

BancoPosta credit instruments - 22,426,616 - 22,426,616 - 13,442,018 - 13,442,018

Other instruments and deposits - 1,172,991 - 1,172,991 90,000 1,000,625 - 1,090,625

Financial assets at FV through profit or loss 385,359 8,814,470 55,075 9,254,904 444,824 8,226,960 266,820 8,938,604

Credit instruments Posta Vita Branch I - 303,461 55,075 358,536 - 184,987 40,907 225,894

Credit instruments Posta Vita Branch III 384,397 8,505,202 - 8,889,599 443,935 8,036,658 154,814 8,635,407

Credit instruments Posta Vita free capital 962 5,807 - 6,769 889 5,315 71,099 77,303

Derivative financial instruments - 237,647 6 237,653 119,626 112,448 215 232,289

Cash flow hedges - 12,157 - 12,157 46,333 27,237 27 73,597

Fair value hedges - 107,344 - 107,344 1,607 74,709 - 76,316

Fair value through profit or loss - 118,146 6 118,152 71,686 10,502 188 82,376

Total 2,200,756 98,135,776 891,000 101,227,532 3,239,819 76,524,019 930,332 80,694,170

3.13 - Credit risk - Financial assets


192


Loans and receivablesLoans and receivables include €7,095,828 thousand (€8,346,380 thousand at 31 December 2011) related to receivablesdue from the MEF, held by the Parent Company, of which €5,416,414 thousand (€7,060,499 thousand at 31 December2011) in postal current account deposits of Public Sector entities placed with the MEF, €1,325,394 thousand (€793,537thousand at 31 December 2011) in receivables arising from the placement of deposits with, minus advances received from,the MEF (note 9.3) and €354,020 thousand (€492,344 thousand at 31 December 2011) relating to the residual principalto be repaid on loans accounted for in liabilities, which in accordance with the laws that authorised the relevant loans areto be repaid by the MEF (note 9.18).

Held-to-maturity financial assetsHeld-to-maturity financial assets refer to securities held by the Parent Company and attributable to BancoPosta RFC (note9.10).

Available-for-sale financial assetsAvailable-for-sale financial assets refer to instruments held by BancoPosta RFC and Poste Vita SpA. Poste Vita SpA’s in-struments refer to financial assets to cover Branch I policyholders and the company’s free capital. Other securities and deposits primarily include fixed income securities held by the Parent Company, with a fair value of€502,837 thousand (note 9.20) and securities held by BdM-MCC, with a fair value of €524,190 thousand.In terms of credit risk, no account has been taken of equity instruments or equity funds, whose credit risk is reflected inchanges in their fair value (price risk).

Financial instruments at fair value through profit or lossFinancial instruments at fair value through profit or loss consist of financial instruments designed to cover Poste Vita SpAcontractual obligations associated with Branch III insurance policies (note 9.14).

Derivative financial instrumentsDerivative financial instruments primarily include:• the fair value, totalling €12,157 thousand (€73,570 thousand at 31 December 2011), of cash flow hedges attributable

to BancoPosta RFC (note 9.11); • the fair value, totalling €107,344 thousand (€76,316 thousand at 31 December 2011), of five interest rate swaps hedg-

ing interest rate risk on the bonds issued by BdM-MCC SpA (note 9.12); • the fair value, totalling €118,146 thousand (€69,344 thousand at 31 December 2011) of warrants entered into by Poste

Vita SpA (note 9.15).

Credit risk arising from derivative transactions is mitigated through rating and group/counterparty concentration limits. Inrelation to BancoPosta RFC and BdM-MCC SpA, interest rate and asset swap contracts are guaranteed by collateral pro-vided by specific Credit Support Annexes17. Exposure is quantified and monitored using the current value method, in ac-cordance with the Bank of Italy’s prudential supervisory instructions.

17. At 31 December 2011 BancoPosta’s derivative counterparties all have investment grade ratings. The accreting asset swaps on long-term BTP€i wereentered into to minimise collateral requirements. These accreting asset swaps, entered into to hedge against interest rate risk, make it possible to re-duce the payments to be made periodically to the counterparty under the CSA contracts.



Trade receivables

The nature of the Group’s customers, the structure of revenue and the method of collection limit the risk of default on tradereceivables. Reference should be made to the paragraph of note 2.4 dealing with “Revenue and receivables due from the State”.All receivables are subject to specific monitoring and reporting procedures to support credit collection activities.

Other receivables and assets

LIQUIDITY RISK

Liquidity risk is the risk that an entity may have difficulties in raising sufficient funds, at market conditions, to meet its ob-ligations deriving from financial instruments. Liquidity risk may derive from the inability to sell financial assets quickly atan amount close to fair value or the need to raise funds on excessively onerous terms or, in extreme cases, the inabilityto borrow on the market. The Group applies a financial policy that aims to minimise this type of risk as follows:• diversification of the various forms of short-term and long-term borrowings and counterparties;• availability of relevant lines of credit in terms of amounts and the number of banks;


At 31 December 2012 At 31 December 2011Carrying Specific Carrying Specific

Item amount impairment amount impairment

Private customers 1,028,924 (157,361) 1,029,979 (154,109)Due from MEF 1,039,348 (61,948) 1,665,322 (82,712)Public sector 707,149 (83,089) 1,008,805 (74,464)Cassa Depositi e Prestiti 927,490 (20,556) 129,050 (20,556)Overseas postal operators 213,939 (257) 211,912 (423)Due from subsidiaries, joint ventures and associates 16,690 - 19,890 -Prepayments 232 - 61 -

Total 3,933,772 4,065,019

of which past due 706,500 734,833

3.14 - Credit risk - Trade receivables

3.15 - Credit risk - Other receivables and assets



Tax assets 980,074 - 816,963 -Receivables due from staff under fixed-term contracts settlement 311,755 (2,189) 298,641 (2,189)Receivables due from third parties for stamp duties 378,301 - 6,430 -Other receivables 253,906 (55,171) 253,987 (53,517)Technical provisions for claims attributable to reinsurers 27,948 - 17,917 -Accrued income and prepaid expenses from trading transactions 17,533 - 18,888 -

Total 1,969,517 1,412,826



194

• gradual and consistent distribution of the maturities of medium/long-term borrowings;• adoption of analysis models designed to monitor the maturities of assets and liabilities.

Liabilities Expected cash flows for financial liabilities at the date of the financial statements, broken down by maturity, are shownbelow. Repayments of principal at nominal value are increased by interest payments calculated, where applicable, on thebasis of the yield curve applicable at 31 December 2012. In the following table the commitments of Poste Vita SpA andPoste Assicura SpA are shown in the item “Flows from Poste Vita group’s policies”.

AssetsAssets at 31 December 2012, broken down by maturity, are shown below at nominal value and increased, where appli-cable, by interest receivable. The item “Investments in securities and other investments” primarily includes financial in-struments held by BancoPosta RFC and the Group’s insurance companies.


3.16 - Liquidity risk - Liabilities

At 31 December 2012 At 31 December 2011Within 12 Between 1 Over 5 Within 12 Between 1 Over 5

Item months and 5 years years Total months and 5 years years Total

Flows from Poste Vitagroup’s policies 5,510,475 26,497,411 46,523,887 78,531,773 5,649,052 28,908,943 34,727,681 69,285,676

Postal current accounts 14,485,368 9,343,353 18,261,594 42,090,315 13,974,371 8,984,124 15,053,590 38,012,085

Borrowings

Bonds 170,379 163,841 717,927 1,052,147 803,006 249,838 667,953 1,720,797

Amounts due to Cassa Depositi e Prestiti for loans 118,217 121,910 - 240,127 320,743 240,127 - 560,870

Financial institution borrowing 2,416,322 4,348,814 415,010 7,180,146 2,456,348 282,796 209,784 2,948,928

Other borrowing 7,817 12,758 223 20,798 26,039 9,474 6,440 41,953

Derivative financial instruments 801,149 - - 801,149 770,889 - - 770,889

Other financial liabilities 2,468,712 664 - 2,469,376 2,462,497 719 - 2,463,216

Trade payables 1,630,695 - - 1,630,695 2,016,318 - - 2,016,318

Other liabilities 1,704,291 292,083 47,524 2,043,898 1,536,850 94,062 51,786 1,682,698

Total liabilities 29,313,425 40,780,834 65,966,165 136,060,424 30,016,113 38,770,083 50,717,234 119,503,430

3.17 - Liquidity risk - Assets

At 31 December 2012 At 31 December 2011Within 12 Between 1 Over 5 Within 12 Between 1 Over 5

Item months and 5 years years Total months and 5 years years Total

Financial assets 17,040,263 41,098,984 71,817,750 129,956,997 18,420,914 37,390,021 61,963,070 117,774,005

Loans and receivables 8,184,156 191,689 84,999 8,460,844 9,101,422 248,696 20,013 9,370,131

Investments in securities and other investments 8,856,107 40,907,295 71,732,751 121,496,153 9,319,492 37,141,325 61,943,057 108,403,874

Trade receivables 3,778,462 155,310 - 3,933,772 3,883,464 181,555 - 4,065,019

Other receivables and assets 779,656 1,115,558 132,717 2,027,931 684,363 649,454 112,006 1,445,823

Receivables under fixed-term employment agreements 87,106 150,346 132,717 370,169 82,316 155,233 112,006 349,555

Other 692,550 965,212 - 1,657,762 602,047 494,221 - 1,096,268

Cash and deposits attributable to BancoPosta 3,179,701 - - 3,179,701 2,559,994 - - 2,559,994

Cash and cash equivalents 2,533,323 - - 2,533,323 1,903,455 - - 1,903,455

Total assets 27,311,405 42,369,852 71,950,467 141,631,724 27,452,190 38,221,030 62,075,076 127,748,296



At 31 December 2012 liquidity risk mainly related to the investment of customers’ current account deposits and invest-ments linked to Branch I policies issued by Poste Vita SpA.

BANCOPOSTA RFCIn terms of BancoPosta’s specific operations, the liquidity risk regards the investment of current account deposits in eurozone government securities. The potential risk derives from a mismatch between the maturities of investments in securitiesand those of liabilities, represented by current accounts where the funds are available on demand, thus compromising theCompany’s ability to meet its obligations to current account holders. This potential mismatch between assets and liabilitiesis monitored via comparison of the maturity schedule for assets with the statistical model of the performance of current ac-count deposits, in accordance with the various likely maturity schedules and assuming the progressive total withdrawal ofdeposits over a period of thirty years for private customers and within five years for Public Sector customers.

At 31 December 2012 the maturities of investments in euro area government securities and the portfolio replication mod-el approved by the Board of Directors in April 2010 were largely matched, whilst the average duration of the investmentsas a whole went from 5.39 at 31 December 2011 to 5.50 at 31 December 2012.

In addition, for the proper evaluation of the liquidity risk faced by BancoPosta RFC, it should be borne in mind that, un-less they are restricted, investments in euro area government securities are highly liquid assets and can be used as col-lateral in repurchase agreements to obtain short-term financing.

For the purposes of liquidity risk analysis at 31 December 2012, the timing of withdrawals from postal current accounts(with a carrying amount of €39,884,679 thousand, as shown in note 23.1) was based on the amortisation schedule deriv-ing from the application of the statistical model developed in order to model the behaviour of current account holders.

Average demand deposits by private customers, with specific regard to the retail component, which is typically more sta-ble, have risen compared to 31 December 2011. Poste Italiane SpA continues to closely monitor the deposit base.Moreover, from 2010 new short-term funding arrangements have been introduced via the matched sale and repurchase of BTPs,with the aim of optimising profitability and funding temporary cash withdrawals from demand deposits. In addition, in connec-tion with the refinancing operation initiated by the European Central Bank in February 2012, the Parent Company entered intotwo long-term refinancing operations of €2.5 billion each, with maturities of up to 3 years, using the proceeds to buy Italian gov-ernment bonds with the same nominal amount and matching maturities, with a view to anticipating the rollover of bonds matur-ing in the next three years. The first loan is expected to be repaid in a balloon payment in February 2015, with the option of ear-ly repayment every month starting from the second year of the loan, whilst the second loan will be repaid in three successiveinstalments of €0.8 billion, €0.8 billion and €0.9 billion in September 2013, August 2014 and February 2015, respectively.

POSTE VITA SPAIn order to analyse its liquidity risk profile, Poste Vita SpA uses asset/liability management (ALM) to effectively manageassets in relation to its obligations to policyholders, whilst also developing projections of the effects deriving from finan-cial market shocks (asset dynamics) and of the behaviour of policyholders (liability dynamics). At 31 December 2012 lia-bilities attributable to Branch I policies have an average maturity of 9.88 years, compared with an average duration of thematching assets of 5.61 years (approximately 8.03 and 4.98 years, respectively, at 31 December 2011). The financial in-struments intended to cover the technical provisions for Branch III have maturities that match those of the liabilities.

CASH FLOW INTEREST RATE RISK

Cash flow interest rate risk refers to the uncertainty over future cash flows following fluctuations in market interest rates.It may be caused by a mismatch – in terms of type of rate, indexation method and term to maturity – between financialassets and liabilities that tend to last until contractual and/or expected maturity (the banking book), and which, as such,generates an impact on the interest margin, which is thus reflected in the operating results for future periods.



196

At 31 December 2011 and 31 December 2012, sensitivity to cash flow interest rate risk relating to variable rate invest-ments, or transactions rendered thus by fair value hedges, is summarised in the table below, and calculated to reflect changesresulting from a parallel shift in the forward yield curve (+/- 100 bps). A floor of 0 (zero) was set for the shift of -100 bpsto avoid negative returns for shorter-term maturities.

Financial assets At 31 December 2012 the risk primarily relates to the investment of the funds, with a nominal value of €5,416,414 thou-sand, deriving from the current account deposits of Public Sector entities, which must be deposited with the MEF. Since


Effect of liabilitiestowards Pre-tax Equity Total

Nominal policyholders profit reserves equityDate of reference of the analysis position +100bps -100bps +100bps -100bps +100bps -100bps +100bps -100bps

2011 effects

Financial assetsAmounts due from MEF 7,060,499 - - 70,605 (70,605) - - 70,605 (70,605)Loans/Other financial receivables 553,584 - - 5,536 (3,652) - - 5,536 (3,652)Fixed income instruments 3,329,149 21,240 (21,240) 12,051 (12,051) - - 12,051 (12,051)Other investments 93,550 - - 936 (936) - - 936 (936)


Bank deposits 90,610 - - 906 (457) - - 906 (457)

Cash and cash equivalentsDeposits with MEF 829,399 - - 8,294 (8,294) - - 8,294 (8,294)Bank deposits 739,110 - - 7,391 (356) - - 7,391 (356)

Financial liabilitiesBonds (537,601) - - (5,376) 5,376 - - (5,376) 5,376Borrowings (Financial institutions borrowings) (271,511) - - (2,715) 2,715 - - (2,715) 2,715Borrowings (overdrafts) (15,588) - - (155) 128 - - (155) 128Borrowings (from subsidiaries) (550) - - (6) 6 - - (6) 6Other financial liabilities (80,504) - - (805) 561 - - (805) 561

Variability at 31 December 2011 11,790,147 21,240 (21,240) 96,662 (87,565) - - 96,662 (87,565)

2012 effects

Financial assetsAmounts due from MEF 5,416,414 - - 54,164 (54,164) - - 54,164 (54,164)Loans/Other financial receivables 696,631 - - 6,967 (2,149) - - 6,967 (2,149)Fixed income instruments 3,957,090 16,836 (4,798) 21,313 (19,558) - - 21,313 (19,558)Other investments - - - - - - - - -


Bank deposits 11,421 - - 114 (1) - - 114 (1)

Cash and cash equivalentsDeposits with MEF 1,397,125 - - 13,971 (10,478) - - 13,971 (10,478)Bank deposits 1,115,023 - - 11,150 (10,123) - - 11,150 (10,123)

Financial liabilitiesBonds (568,309) - - (5,683) 3,460 - - (5,683) 3,460Borrowings (Financial institutions borrowings) (5,256,475) - - (52,565) 52,520 - - (52,565) 52,520Borrowings (overdrafts) (14,792) - - (148) 123 - - (148) 123Borrowings (from subsidiaries) (551) - - (6) 6 - - (6) 6Other financial liabilities (103,234) - - (1,032) 194 - - (1,032) 194

Variability at 31 December 2012 6,650,343 16,836 (4,798) 48,246 (40,170) - - 48,246 (40,170)

3.18 - Cash flow interest rate risk



1 January 2008 these investments earn interest at a variable rate, calculated on the basis of a basket of government se-curities and money market indexes, as set out in the agreement between the MEF and Poste Italiane SpA. The mentionedagreement, which was renewed on 10 April 2012 with a Ministerial Decree, expired on 31 December 2012 and it is cur-rently being renewed to 31 December 2014. In addition, cash flow interest rate risk regards a portion of the securities portfolio with a total nominal value of €3,957,090thousand, including €1,939,874 thousand in financial instruments held by the Poste Vita group primarily to cover contrac-tual obligations deriving from Branch I and III policies, and €1,875,000 thousand in financial instruments held by the Par-ent Company, represented by variable rate investments, or investments rendered thus by hedging derivatives. The bal-ance is made up by instruments held by BdM-MCC SpA and BancoPosta Fondi SpA SGR. The effects of the risk on the cash flows related to the investments of the Branch I policies of Posta Vita are reflectedentirely in the liabilities towards policyholders, in keeping with the minimum rate of return guaranteed to policyholders,taking account of the method used to calculate the portion of unrealised gains and losses attributable to policyholders (shad-ow accounting). With reference to the variable or indexed cash flows designed to generate a return on the index-linked or unit-linkedBranch III policies issued until the entry into effect of ISVAP Regulation 32/2009, considering the peculiar composition ofsuch investments, consisting of structured bonds yielding returns linked closely to bond and equity markets, any effectof changes in interest rates on cash flows is reflected in the liabilities towards policyholders (technical provisions). Sensi-tivity to changes in interest rates generates a reputational risk that can affect the company’s business, in connection withpolicyholders’ expectations, as described in note 3.

CashThis item includes amounts deposited with the MEF and held in the so-called buffer account, which, from 1 December2011, earn interest based on the Main Refinancing Operations (MRO) rate18.

Financial liabilitiesVariable rate financial liabilities are described in note 23. At 31 December 2012 these included the two three-year loansfor a total of €5 billion described in the paragraph on liquidity risk, which carry an interest rate equal to the variable REFIrate19 plus a spread negotiated with the lending banks.

CASH FLOW INFLATION RISK

This reflects the uncertainty related to future cash flows due to changes in the rate of inflation. At 31 December 2012, the men-tioned risk related to the unhedged inflation-linked BTPs described in the note on fair value interest rate risk, with a total nomi-nal value of €4,314 million, of which €2,800 million held by the Parent Company and €1,514 million held by the Poste Vita group.


Effect of futureChanges liabilities towards Pre-tax Equity

Fair in value policyholders profit reserves

Date of reference of the analysis Nominal value value +100bps -100bps +100bps -100bps +100bps -100bps +100bps -100bps

2012 effects


Fixed income instruments 4,313,850 4,591,930 4,081 (4,079) 3,656 (3,674) 425 (405) - -

Variability at 31 December 2012 4,313,850 4,591,930 4,081 (4,079) 3,656 (3,674) 425 (405) - -

3.19 - Cash flow inflation risk

18. The minimum rate applied by the European Central Bank in its most recent main refinancing operation or the uniform rate, should the ECB apply sucha rate in these operations.

19. The ECB’s interest rate is the so-called REFI rate (known also as “rate for the main refinancing operations”) which reflects the variable interest rate thatbanks pay when they borrow from the ECB.


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DETERMINATION OF FAIR VALUE

Financial instruments recognised at fair value in these financial statements are classified below on the basis of a hierar-chy reflecting the significance of the sources used in determining fair value. The fair value hierarchy comprises the fol-lowing levels:• Level 1: quoted prices in active markets for identical assets or liabilities;• Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly

(as prices) or indirectly (derived from prices);• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).


3.20 - Fair value hierarchy

At 31 December 2012 At 31 December 2011Item Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total

Financial assets 57,295,851 21,462,325 2,938,337 81,696,513 42,862,034 14,107,527 3,056,201 60,025,762

AFS financial assets 57,206,478 12,059,141 2,229,658 71,495,277 42,804,045 4,994,623 2,353,350 50,152,018

Equity instruments 4,526 29,235 5,439 39,200 5,583 22,552 5,429 33,564

Fixed income instruments 57,197,707 12,029,906 56,050 69,283,663 42,794,770 4,877,605 49,646 47,722,021

Other investments 4,245 - 2,168,169 2,172,414 3,692 94,466 2,298,275 2,396,433

Financial assets at fair value through profit or loss 89,373 9,165,531 708,679 9,963,583 57,989 8,880,615 702,851 9,641,455

Fixed income instruments 89,373 6,063,180 - 6,152,553 57,989 4,005,840 - 4,063,829

Structured bonds - 3,102,351 - 3,102,351 - 4,874,775 - 4,874,775

Other investments - - 708,679 708,679 - - 702,851 702,851

Derivative financial instruments - 237,653 - 237,653 - 232,289 - 232,289

Total financial assets at fair value 57,295,851 21,462,325 2,938,337 81,696,513 42,862,034 14,107,527 3,056,201 60,025,762

Financial liabilities - (856,354) - (856,354) - (701,979) - (701,979)

Financial liabilities at fair value - - - - - (59,204) - (59,204)

Derivative financial instruments - (856,354) - (856,354) - (642,775) - (642,775)

Total financial liabilities at fair value - (856,354) - (856,354) - (701,979) - (701,979)



At 31 December 2012 available-for-sale financial assets, measured at Level 3 fair value, primarily consist of Poste Vita SpA’sinvestments in mutual investment funds, totalling €2,168,169 thousand, to cover its obligations to policyholders in respectof separately managed Branch I accounts, and €56,050 thousand in bonds to cover Branch I policies. The remaining por-tion refers to investments in equity instruments, totalling €5,439 thousand.

At 31 December 2012 financial instruments at fair value through profit or loss, measured at Level 3 fair value, consist ofPoste Vita SpA’s investments in mutual investment funds, totalling €708,679 thousand, to cover obligations in respect ofBranch III unit-linked policies (note 9.14).

TRANSFER OF FINANCIAL ASSETS THAT ARE NOT DERECOGNISED

The amendments to IFRS 7 introduced by EU Regulation 1205/2011 of 22 November 2011 require additional disclosuresin case an entity transfers financial assets that are not derecognised or that are not derecognised in their entirety (contin-uing involvement).


3.21 - Movements in financial instruments at fair value (Level 3)

Financial assets

Fair value DerivativeAvailable- through financial

Item for-sale profit or loss instruments Total

Opening balance at 1 January 2011 2,455,140 742,465 132 3,197,737

Purchases/Issues 91,085 38,029 - 129,114Sales/Extinguishment of initial accruals (19,534) (76,270) - (95,804)Redemptions (9,614) - - (9,614)Movements in fair value through profit or loss - (1,626) - (1,626)Movements in fair value through equity (145,111) - - (145,111)Transfers to profit or loss - - - -Gains/Losses in profit or loss due to sales - 253 - 253Transfers to Level 3 - - - -Transfers to other levels - - - -Movements in amortised cost (18,616) - - (18,616)Other movements (including accruals at the end of the period) - - (132) (132)

Closing balance at 31 December 2011 2,353,350 702,851 - 3,056,201

Purchases/Issues 432,952 39,974 - 472,926Sales/Extinguishment of initial accruals (692,476) (80,133) - (772,609)Redemptions - - - -Movements in fair value through profit or loss - 45,071 - 45,071Movements in fair value through equity 212,717 - - 212,717Transfers to profit or loss - - - -Gains/Losses in profit or loss due to sales (76,885) 916 - (75,969)Transfers to Level 3 - - - -Transfers to other levels - - - -Movements in amortised cost - - - -Other movements (including accruals at the end of the period) - - - -

Closing balance at 31 December 2012 2,229,658 708,679 - 2,938,337


200

At 31 December 2012 these amendments concerned the repurchase agreements entered into by the Parent Companywith primary financial intermediaries with a total nominal value of €6,006 million (note 23.3). Of this total nominal amount:• €5,000 million refers to the two three-year borrowings by BancoPosta RFC described in the previous paragraph on liq-

uidity risk, which carry an interest rate equal to the REFI rate plus a spread agreed with the lending institutions. The pro-ceeds from these two loans were invested in government bonds with a nominal value of €5,000 million, including€2,450 million in ordinary BTPs and €2,550 million in inflation-linked BTP designed to replace BTPs maturing in the nextthree years;

• €517 million refers to other repurchase agreement transactions by BancoPosta;• €489 million relates to transactions carried out in connection with the cash management activities by the Parent Com-

pany’s Postal and Business services segment.

The transactions in question have been conducted through margin accounts (making margin calls provided for by specif-ic Global Master Repurchase Agreements); credit balances in the margin accounts earn interest tied to the Euro OverNightIndex Average (Eonia)20.Pursuant to the above amendments to IFRS 7, the table below summarises the described transactions, showing the fi-nancial assets transferred that are not derecognised and the associated liabilities.

The financial liabilities in question were measured at fair value by discounting to present value the expected cash flowsat the interest rates placed along the Eonia curve (reference for REPO transactions) prevailing on 28 December 2012 (lastcalculation for the year).

OTHER RISKS

Operational riskOperational risk refers to the risk of losses resulting from inadequate or failed internal processes, people and systems, orfrom external events. This category of risk includes losses resulting from fraud, human error, business disruption, systemsfailures, breach of contracts and natural disasters. Operational risk includes legal risk, but not strategic and reputationalrisks.To protect the Group from this form of risk, in line with the prudential supervisory requirements, issued by the Bank ofItaly in December 2006, and adopted by Poste Italiane SpA as benchmarks, the Parent Company has formalised andagreed a methodological and organisational framework to identify, measure and manage the operating risk related to theproducts/processes of BancoPosta and the asset management company, BancoPosta Fondi SpA SGR.The framework described, based on an integrated (qualitative and quantitative) measurement model made it possible, inthe meantime, to monitor risk and to manage it on an increasingly informed basis.


At 31 December 2012

Nominal Carrying Item value amount Fair value

Held-to-maturity financial assets 6,246,310 6,282,443 6,563,438

Available-for-sale financial assets 500,000 502,837 502,837

Financial liabilities arising from REPO (6,006,112) (6,054,686) (6,098,268)

Total 740,198 730,594 968,007

3.22 - Transfer of financial assets that are not derecognised

20. Average interest rate which a selected number of European banks charge each other for one-day loans.



BdM-MCC SpA has adopted the base method for reporting its capital adequacy and, for 2012, gathered information about op-erating losses to conduct scenario analyses, so as to have the information needed to manage risk, for operational purposes. The areas of activity that could potentially generate losses due to operational risks in 2012 were: • with regard to BancoPosta, the processes and infrastructure used in classifying product lines;• with regard to BdM-MCC SpA, the processes and infrastructure linked to the management of public funds.

Systematic measurement, in relation to BancoPosta, of the mapped risks has enabled the Group to prioritise mitigationinitiatives and the related attribution of responsibilities to the competent functions of Poste Italiane in order to reduce anyfuture impact.

In 2011 and the first half of 2012 the insurers, Poste Vita SpA and Poste Assicura SpA, drew up and finalised their ownframework for identifying, assessing and managing operational risks. The adopted approach reflects the specific nature ofthe processes and operational risk events typical of an insurance company. The process of assessing operational risk ex-posure involves both qualitative and quantitative analysis and is conducted through a structured process of identifying andassessing potential risks in terms of frequency, impact and mitigation. The overall risk exposure is modest thanks to theadoption of organisational measures and mitigating controls of gross risk. The most significant event regards errors in theexecution of processes.

Insurance risksInsurance risks arise with the stipulation of insurance contracts and the terms and conditions contained therein (technicalbases adopted, premium calculation, terms and conditions of cash surrender, etc.).

The risks to which Poste Vita SpA is exposed primarily relate to separately managed accounts in the Branch I categorysold by the company and, as it is typical in the insurance business, deriving from the guaranteed minimum returns on in-vestment to be paid to policyholders, and the potential impact on the financial statements of the measurement of the as-sets in which the technical provisions are invested.

In strictly technical terms, mortality is one of the main risk factors in life insurance, i.e. any risk associated with the un-certainty of a policyholder’s life expectancy. Significant attention is paid in selling pure life insurance policies, an areawhere procedures set underwriting limits to the capital and the age of the policyholder. In terms of “pure life” insuredamounts the Group’s insurance companies transfer their risks to reinsurers in keeping with the nature of the products soldand conservation levels adequate to the companies’ capital structure. The main life reinsurers of the Group are charac-terised by substantial financial strength.

For products with the capital sum subject to positive risk, such as term life insurance, this risk has negative consequencesif the frequency of death exceeds the death probabilities realistically calculated (second order technical bases). For products with the capital sum subject to negative risk, such as annuities, there are negative consequences whendeath frequencies are lower than the death probabilities realistically calculated. Nevertheless, at 31 December 2012 the mortality risk, also due to the effects of reinsurance, is limited for the companyand mainly concerns:• repayment of the premiums paid, in case of the death of holders of Branch III index-linked and unit-linked policies, and

the minimum guaranteed capital in case of death, as required by the contracts for separate portfolio products;• repayment of the insured capital for term life insurance policies.

As to pricing risk, i.e. the risk of incurring losses due to the inadequate premiums charged for the insurance products sold,it may arise due to: • inappropriate selection of the technical basis; • incorrect assessment of the options embedded in the product;• incorrect evaluation of the factors used to calculate the expense loads.



202


As Posta Vita’s mixed and whole-life policies have mostly cash value build-up features, accumulating in accordance witha technical rate of zero, the technical basis adopted does not affect premium calculation (and/or the insured capital). Infact, there is no pricing risk associated with the choice of technical basis in Poste Vita’s portfolio. The options embedded in the policies held in portfolio include: • Surrender option;• Guaranteed minimum return option;• Annuity conversion option.

For nearly all the products in the portfolio there are no surrender penalties. The surrender risk only becomes significant,however, in the event of mass surrenders which, on the basis of historical evidence, have a low probability of occurrence.The contractually guaranteed minimum return is typically21 1.5% or, with reference to more recent products, 1%. In anycase, the minimum return is guaranteed per non-consolidated event22, thus showing a very low risk significance comparedwith the returns generated to date by the separately managed portfolios, as determined by the asset-liability managementanalyses performed by the company, which make it possible to manage the risks taken on by the group on a quantitativebasis, fostering a reduction of profit volatility and an optimal investment allocation. Poste Assicura SpA, which began operating in the non-life sector in April 2010, is exposed to the following insurance risks:• Underwriting risk: the risk deriving from the conclusion of insurance contracts, associated with the events insured, the

processes followed when pricing and selecting risks, and unfavourable claims trends compared with previous estimates.This risk can be divided into the following categories:- Pricing risk: the risk linked to the company’s pricing of its policies and dependent on the assumptions used in order to

calculate premiums. If prices are based on inadequate assumptions, the insurer may be exposed to the risk of beingunable to meet its contractual obligations to policyholders. These risks include those related to disability-morbility risk,or the risk associated with the payment of benefits or claims for illness and/or injury. This category includes the riskthat the premiums charged are not sufficient to cover the costs effectively in the management of the contract and therisks linked to excessive growth in operations associated with poor selection of risks or the absence of resources suf-ficient to keep up with the pace of growth;

- Provisioning risk: referring to the risk that technical provisions are not sufficient to meet obligations to policyholders.This insufficiency may be due to incorrect estimates by the company and/or changes in the general environment.

• Catastrophe risk: the risk that extreme and exceptional events have a negative impact that has not been taken into ac-count when pricing the policies;

• Anti-selection risk: this relates to the company’s unwillingness to insure an event not classified as future, uncertain anddamaging.

Given the fact that the insurance business is at the start-up stage, and in view of the expected growth of the portfolioand the different degrees of risk associated with the products distributed, the company has adopted a highly prudent ap-proach to reinsurance. It has entered into pro rata reinsurance treaties with major reinsurance providers, establishing theamounts to be ceded based on the specific type and size of the risk to be assumed, backed up by excess-loss or stop-loss treaties to cover risks of a certain size (such as accident policies or so-called catastrophe risks). In addition, when defin-ing the guarantees offered, the assumption of specific types of risk has been mitigated by limiting the size of payouts inthe event of certain specific types of claim.

Reputational riskThe Group’s business is by its nature exposed to elements of reputational risk, associated mainly with the placement ofinvestment products issued by third-party credit institutions, such as real estate mutual funds and index-linked bonds, and/orinsurance policies issued by Poste Vita SpA.

21. There are residual portions of the portfolio with different characteristics in terms of guaranteed minimums (a capital guarantee alone, a guaranteed min-imum of 1% per consolidated event).

22. In case of death, surrender and expiration.



In this respect, in July 2008, in accordance with the Markets in Financial Instruments Directive by the EU (Directive2004/39/EC, “MiFID”), the Parent Company has adopted the “consulting service” model.As mentioned above in these notes, the crisis of recent years has had profound effects on the performance of all the fi-nancial instruments on the market, above all on the value of Italian government securities, which account for a large partof the Group’s investments, as well as the performance of the real estate market and the products related to it. Even thoughthe Group has developed over time prudential policies in the customers’ best interests, entailing the selection of domes-tic and foreign issuers solely with investment grade ratings, the situation has prompted even closer scrutiny at Group lev-el, so as to ensure full awareness of the performance of the products placed and the risks for customers.

OTHER INFORMATION

With regard to Group cash flows management, a centralised treasury management system enables the automatic elimi-nation of co-existing large debit and credit balances attributable to individual companies, offering the Group advantages interms of improved liquidity and a reduction in the related risk. The system includes four main subsidiaries, and makes use,with regard to the banking activities, of zero balance cash pooling. In this way cash flows between the current accountsof subsidiaries and the Parent Company are transferred on a daily basis.

The Group’s financial structure at 31 December 2012 is solid and balanced, and adequately protected from liquidity or re-financing risks. Overall borrowings are primarily medium/long term, except for drawdowns on short-term lines of creditand repurchase agreements. The bond of €750 million issued by the Parent Company was repaid at maturity, that is on3 July 2012.

At 31 December 2012 the following credit facilities were available:• committed lines of €550 million;• uncommitted lines of credit of €680 million, of which €350 million in short-term borrowings, €200 million in advances

against trade receivables and €130 million in short-term loans, overdrafts or unsecured guarantees; • overdraft facilities of €108 million, of which €15 million has been used;• unsecured guarantee facilities with a value of approximately €191 million (with €68 million available to the Parent Com-

pany), of which guarantees with a value of €162 million have been used on behalf of companies of the Poste ItalianeGroup in favour of third parties (note 40.5).

At 31 December 2012 €300 million in uncommitted lines of credit has been drawn down in the form of short-term bor-rowings (note 23.3).

The existing committed and uncommitted lines of credit and medium/long-term borrowings are adequate to meet expect-ed financing requirements.



204

4 - OPERATING SEGMENTS

In response to the legislation enacted on 26 February 2011, described in note 2, the Parent Company has ring-fenced cap-ital in relation to BancoPosta’s operations, as governed by Presidential Decree 144 of 14 March 2001. Accordingly, thepresentation and measurement methods for segment reporting purposes have been revised.

The new identified operating segments are: Postal and Business services, Financial services and Insurance services. The“Postal and Business services” operating segment includes Mail, Express Courier, Logistics and Parcels, the distributionand sale of stamps and the activities carried out by the various units of the Parent Company for the other Segments inwhich the Group operates. The “Financial services” operating segment covers the collection of public deposits on behalfof Cassa Depositi e Prestiti and the management of postal current accounts and related services, the payment of pen-sions, the transfer of funds via postal order, collection services on behalf of third parties carried out by BancoPosta RFC,the management of public funds by Banca del Mezzogiorno-MedioCredito Centrale SpA and the promotion of mutual in-vestment funds by BancoPosta Fondi SpA SGR. The “Insurance services” segment regards the sale of life insuranceproducts in Branches I, III and V, and the recently launched sale of non-life insurance. The remaining “Other services” seg-ment refers to activities that, based on the specifications of IFRS 8 - Operating Segments, are not significant in relationto the Group’s operations. This segment includes the remaining services carried out by Poste Italiane SpA and those con-ducted by certain Group companies, including PosteMobile SpA, a mobile virtual network operator, and the activities ofConsorzio per i Servizi di Telefonia Mobile ScpA.

The Postal and Business services segment also earns revenue from the services provided by the various Poste ItalianeSpA functions to BancoPosta RFC. In this regard, separate General Operating Guidelines have been developed and ap-proved by Poste Italiane SpA’s Board of Directors which, in implementation of BancoPosta RFC’s By-laws, identify the serv-ices provided by Poste Italiane SpA functions to BancoPosta and determines the manner in which they are remunerated.Costs are allocated to BancoPosta by transfer pricing as determined with reference to:• market prices for similar services, (e.g., the free market comparable price method); or,• cost plus a mark-up, (e.g., the cost plus method), when market prices are not available for the particular type of serv-

ices provided by Poste Italiane SpA. Costs are determined by the allocation of the total costs incurred using the sameprocess applied for the universal postal service purposes in the related regulatory accounting records, which are sub-ject to independent audit. The mark-up is determined taking into account the market prices of BancoPosta’s principalservices.

The resulting transfer prices are reviewed annually as part of the planning and budget process.The result for each segment is based on operating profit/(loss). All income components reported for operating segmentsare measured using the same accounting policies applied in the preparation of these consolidated financial statements.





(€m) Postal and AdjustmentsBusiness Financial Insurance Other Unallocated and

For the year ended 31 December 2012 services services services services items eliminations Total

External revenue 4,657 5,312 13,833 267 - - 24,069Intersegment revenue 4,512 250 1 85 - (4,848) -Total revenue 9,169 5,562 13,834 352 - (4,848) 24,069

Amortisation, depreciation and impairments (614) (2) (3) (30) - - (649)Non-cash expenses (41) (3) (7,726) (1) - - (7,771)Total non-cash expenses (655) (5) (7,729) (31) - - (8,420)

Operating profit/(loss) 416 565 371 28 - 2(*) 1,382

Finance income/(costs) - - - - 43 (2)(*) 41Profit/(Loss) on investments accounted for using the equity method - - - - - - -Income tax expense (390) - (390)

Profit/(Loss) for the year 1,032

Assets 6,584 50,658 56,081 214 7,855 (822) 120,570

Liabilities 5,098 50,417 56,904 228 2,992 (720) 114,919

Other information

Capital expenditure 436 3 9 34 - - 482

Investments accounted for using the equity method 10 - - - - - 10

(*) Elimination of the costs incurred by Poste Italiane SpA for interest paid to consolidated subsidiaries (recognised by the latter in finance income).

(€m) Postal and AdjustmentsBusiness Financial Insurance Other Unallocated and

For the year ended 31 December 2011 services services services services items eliminations Total

External revenue 5,161 5,033 11,278 221 - - 21,693Intersegment revenue 4,412 277 0 68 - (4,757) 0Total revenue 9,573 5,310 11,278 289 - (4,757) 21,693

Depreciation, amortisation and impairments (521) (0) (1) (22) - - (544)Non-cash expenses (173) (23) (5,337) (3) - - (5,536)Total non-cash expenses (694) (23) (5,338) (25) - - (6,080)

Operating profit/(loss) 834 580 199 26 - 2(*) 1,641

Finance income/(costs) - - - - 14 (2)(*) 12Profit/(Loss) on investments accounted for using the equity method 1 - - - - - 1Income tax expense (808) - (808)

Profit/(Loss) for the year 846

Assets 7,481 40,996 44,132 209 6,818 (600) 99,036

Liabilities 5,394 43,977 44,430 181 2,992 (787) 96,187

Other information

Capital expenditure 378 5 3 31 - - 416

Investments accounted for using the equity method 10 - - - - - 10(*) Elimination of the costs incurred by Poste Italiane SpA for interest paid to consolidated subsidiaries (recognised by the latter in finance income).


206

Disclosure about geographical segments, based on the geographical areas in which the various Group companies arebased or the location of its customers is not material. At 31 December 2012 all entities consolidated on a line-by-line ba-sis are based in Italy, as is the majority of their client base, whilst revenue from foreign clients does not represent a sig-nificant percentage of total revenue.

Assets are those employed by the segment in conducting its ordinary activities or that may be allocated to the segmentbased on its activities.

Unallocated assets consist of cash of €1,632 million (€1,560 million at 31 December 2011), non-current financial assetsof €3,502 million (€2,225 million at 31 December 2011), deferred tax assets of €905 million (€1,730 million at 31 De-cember 2011), prepaid taxes of €980 million (€817 million at 31 December 2011), current financial assets of €313 mil-lion (€417 million at 31 December 2011), and current tax assets of €522 million (€69 million at 31 December 2011).

Unallocated liabilities consist of current financial liabilities of €1,211 million (€1,575 million at 31 December 2011), non-current financial liabilities of €566 million (€699 million at 31 December 2011), deferred tax liabilities of €413 million(€249 million at 31 December 2011), taxes payable of €739 million (€374 million at 31 December 2011) and current taxliabilities of €63 million (€95 million at 31 December 2011).




5 - PROPERTY, PLANT AND EQUIPMENT

The following table shows movements in property, plant and equipment in 2011 and 2012:


Industrial Assets underProperty and construction

used in Plant and commercial Leasehold Other and Land operations machinery equipment improvements assets prepayments Total

Balance at 1 January 2011Cost 74,652 2,717,568 2,148,453 304,041 283,696 1,344,839 97,632 6,970,881Accumulated depreciation - (1,047,958) (1,506,136) (244,102) (88,249) (1,098,745) - (3,985,190)Accumulated impairments (103) (15,247) (12,692) (770) (35) (60) - (28,907)

Carrying amount 74,549 1,654,363 629,625 59,169 195,412 246,034 97,632 2,956,784

Movements during the yearPurchases 1,376 23,281 55,078 7,524 27,424 53,178 42,321 210,182Adjustments 237 - - - - - - 237Reclassifications (231) 5,374 20,575 414 13,425 26,053 (69,186) (3,576)Disposals (51) (2,283) (1,289) (58) (363) (193) (86) (4,323)Change in scope of consolidation - - 87 - - 144 - 231Depreciation - (100,082) (135,331) (13,664) (30,332) (86,992) - (366,401)Impairments - (2,716) (45) - (866) (37) - (3,664)

Total movements 1,331 (76,426) (60,925) (5,784) 9,288 (7,847) (26,951) (167,314)

Balance at 31 December 2011Cost 75,983 2,738,133 2,161,070 309,788 322,437 1,416,413 70,681 7,094,505Accumulated depreciation - (1,142,650) (1,580,491) (255,633) (117,695) (1,178,129) - (4,274,598)Accumulated impairments (103) (17,546) (11,879) (770) (42) (97) - (30,437)

Carrying amount 75,880 1,577,937 568,700 53,385 204,700 238,187 70,681 2,789,470

Movements during the yearPurchases 1,563 28,641 59,074 6,323 25,279 83,240 53,436 257,556Adjustments(1) - 122 - - - - - 122Reclassifications(2) (533) 16,627 15,606 33 5,752 18,270 (57,189) (1,434)Disposals(3) (50) (36) (463) (430) (1,610) (193) (38) (2,820)Change in scope of consolidation(4) - 317 263 3 - 1,613 - 2,196Depreciation - (101,277) (127,822) (12,599) (29,825) (89,269) - (360,792)Impairments - (32,452) (437) - (430) (660) - (33,979)

Total movements 980 (88,058) (53,779) (6,670) (834) 13,001 (3,791) (139,151)

Balance at 31 December 2012Cost 76,874 2,781,736 2,204,389 312,963 350,814 1,473,050 66,890 7,266,716Accumulated depreciation - (1,242,601) (1,679,459) (265,478) (146,477) (1,221,105) - (4,555,120)Accumulated impairments (14) (49,256) (10,009) (770) (471) (757) - (61,277)

Carrying amount 76,860 1,489,879 514,921 46,715 203,866 251,188 66,890 2,650,319

Adjustments(1)

Cost - 122 - - - 148 - 270Accumulated depreciation - - - - - (148) - (148)

Total - 122 - - - - - 122

Reclassifications(2)

Cost (622) 13,952 17,348 26 5,757 18,310 (57,189) (2,418)Accumulated depreciation - 1,933 (1,742) 7 (5) (40) - 153Accumulated impairments 89 742 - - - - - 831

Total (533) 16,627 15,606 33 5,752 18,270 (57,189) (1,434)

Disposals(3)

Cost (50) (202) (33,706) (3,064) (2,659) (48,501) (38) (88,220)Accumulated depreciation - 166 30,936 2,634 1,048 48,308 - 83,092Accumulated impairments - - 2,307 - 1 - - 2,308

Total (50) (36) (463) (430) (1,610) (193) (38) (2,820)

Change in scope of consolidation(4)

Cost - 1,090 603 (110) - 3,440 - 5,023Accumulated depreciation - (773) (340) 113 - (1,827) - (2,827)

Total - 317 263 3 - 1,613 - 2,196

5.1 - Movements in property, plant and equipment


208

At 31 December 2012 property, plant and equipment includes assets belonging to the Parent Company located on landheld under concession or sub-concession, which are to be handed over free of charge at the end of the concession term,amounting to €136,282 thousand (€149,223 thousand at 31 December 2011).

The main movements during 2012 are described below.

Purchases of €257,556 thousand, of which €8,180 thousand relate to capitalised costs and expenses, primarily relate to:• €28,641 thousand relating to properties used in operations, regarding extraordinary maintenance of post offices, mail

sorting offices and local head offices around the country; • €59,074 thousand relating to plant, with the most significant purchases of plant and equipment made by the Parent Com-

pany, of which €36,784 thousand relates to plant and equipment related to buildings, €8,643 thousand relates to theinstallation and extraordinary maintenance of video surveillance systems, €6,687 thousand to the installation of ATMsand €1,568 thousand relates to the purchase of sorting equipment used at Sorting Centres. The total also includes thepurchases of the Postel group, amounting to €759 thousand and primarily relating to printing and enveloping plant andequipment;

• €6,323 thousand for purchases of industrial and commercial equipment, relating primarily to the purchase of various frontand back office equipment for post offices (€3,969 thousand) and security equipment for post office access and for thedeposit of cash and sundry documents (€1,687 thousand);

• €25,279 thousand invested in leasehold improvements, relating almost entirely to upgrades of plant (€16,090 thousand)and structural improvements (€9,154 thousand) to properties held under lease, by the Parent Company;

• €83,240 thousand relating to other assets, the most significant items of which relate to the Parent Company: for which€29,115 thousand was for the purchase of new computer hardware for post offices and head offices and the consoli-dation of storage systems, €7,200 thousand was for the purchase of furniture and fittings in connection with the newlayouts for post offices, and €2,490 thousand was for the purchase of security equipment to allow the secure deliveryof web services. The total also includes purchases made by PosteMobile SpA, totalling €8,822 thousand, relating main-ly to hardware components for a fixed line network;

• €53,436 thousand relating to assets under construction, primarily referring to the Parent Company’s investments inprogress, of which €16,737 thousand relates to the purchase of computer hardware and other equipment not yet in use,€10,345 thousand relates to the restyling of post offices, €4,880 thousand relates to the renovation of central facilitiesand peripheral offices, €3,205 thousand to the purchase of ATMs to be installed, €2,466 thousand to works on primarysorting centres, €2,432 thousand relates to the reorganisation of package logistics and €2,012 thousand to the instal-lation of energy efficient equipment.

Impairments for the year concern certain facilities used in operations for which account was taken, prudentially, of the ef-fects of the persisting volatility on their value in use, land held under concession or sub-concession for which, whilstawaiting confirmation of renewal, the concession term has expired (note 2.4 - Use of estimates) and damaged assets fol-lowing the flood and the earthquake that occurred in 2012. Reclassifications from assets under construction, totalling €57,189 thousand, relate primarily to the acquisition cost of as-sets that became available and ready for use during the year. In particular, these assets regard the rollout of hardware heldin storage and completion of the process of restyling leased and owned properties.Disposals, amounting to €2,820 thousand, primarily relate to the release of the facilities held under lease for which, in thepast, leasehold improvements were capitalised.




The following table shows a breakdown by category of property, plant and equipment held under finance leases, show-ing the carrying amounts at 31 December 2012 and 2011:

Title to plant and equipment was acquired on expiration of the related finance leases.



Accumulated Carrying Accumulated CarryingItem Cost depreciation amount Cost depreciation amount

Buildings 17,043 (5,367) 11,676 17,043 (4,856) 12,187Plant and equipment - - - 65,294 (65,167) 127Other assets 6,885 (4,993) 1,892 6,885 (4,067) 2,818

Total 23,928 (10,360) 13,568 89,222 (74,090) 15,132

5.2 - Property, plant and equipment held under finance leases


210

6 - INVESTMENT PROPERTY

Investment property primarily relates to properties owned by the subsidiary EGI SpA, residential accommodation previ-ously used by post office directors and former service accommodation owned by Poste Italiane SpA in accordance withLaw 560 of 24 December 1993. The following movements in investment property took place in 2012 and 2011:

The fair value of investment property at 31 December 2012 amounts to €277 million. This value includes approximately€205 million representing the market prices of investment property, based on independent valuations, and €72 millionrepresenting the sale price applicable to the Parent Company’s former service accommodation in accordance with Law560 of 24 December 1993.The reclassification occurred during the year includes €14,894 thousand in property owned by EGI SpA which, followingchanges in the Company’s strategy regarding its use, has now been reclassified to inventories. This reclassification waspartially offset by the reclassification of buildings owned by this company, which are no longer used by the Group, to In-vestment property. Most of the properties included in this category are subject to lease agreements classifiable as operating leases, giventhat the Group retains substantially all the risks and rewards of ownership of the properties. Under the relevant agree-ments, tenants usually have the right to break off the lease with six-month notice. Given the resulting lack of certainty,the expected revenue flows from these leases are not referred to in these notes.


2012 2011

Balance at 1 January

Cost 235,388 247,198Accumulated depreciation (83,754) (80,819)Accumulated impairments (2,400) (3,434)

Carrying amount 149,234 162,945

Movements during the year

Purchases 5,261 1,223Reclassifications(1) (7,085) (13)Disposals(2) (3,618) (7,710)Depreciation (7,934) (8,012)Reversal of impairments (impairments) (129) 801

Total movements (13,505) (13,711)

Balance at 31 December




Cost (6,369) (24)Accumulated depreciation (162) 11Accumulated impairments (554) -

Total (7,085) (13)

Disposals(2)

Cost (5,771) (13,009)Accumulated depreciation 1,360 5,066Accumulated impairments 793 233

Total (3,618) (7,710)

6.1 - Movements in investment property



7 - INTANGIBLE ASSETS

The following table shows movements in intangible assets in 2011 and 2012:


Industrial patentsintellectual property rights, concessions, Assets underlicenses, trademarks construction

and similar rights and advances Goodwill Other Total

Balance at 1 January 2011

Cost 1,354,514 160,439 106,103 129,202 1,750,258Accumulated amortisation and impairments (1,094,725) (99) (15,552) (118,524) (1,228,900)

Carrying amount 259,789 160,340 90,551 10,678 521,358


Purchases 101,293 97,032 1,757 4,755 204,837Adjustments - - - - -Reclassifications 95,895 (98,005) - 1,458 (652)Transfers and disposals (1,057) (28) - - (1,085)Change in the scope of consolidation - - - 12 12Amortisation and impairments (160,757) - - (6,116) (166,873)

Total movements 35,374 (1,001) 1,757 109 36,239

Balance at 31 December 2011


Carrying amount 295,163 159,339 92,308 10,787 557,597


Purchases 69,571 144,160 - 5,438 219,169Reclassifications(1) 118,549 (121,267) - 2,663 (55)Transfers and disposals(2) (1,837) (1,747) - (275) (3,859)Change in the scope of consolidation(3) 373 - (3,296) - (2,923)Amortisation and impairments (196,125) - (42,255) (7,668) (246,048)

Total movements (9,469) 21,146 (45,551) 158 (33,716)



Carrying amount 285,694 180,485 46,757 10,945 523,881


Cost 118,549 (121,267) - 2,663 (55)Accumulated amortisation - - - - -

Total 118,549 (121,267) - 2,663 (55)

Transfers and disposals(2)

Cost (2,333) (1,747) - (275) (4,355)Accumulated amortisation 496 - - - 496

Total (1,837) (1,747) - (275) (3,859)

Change in the scope of consolidation(3)

Cost 1,874 - (4,246) - (2,372)Accumulated amortisation and impairments (1,501) - 950 - (551)

Total 373 - (3,296) - (2,923)

7.1 - Movements in intangible assets


212

Investment in intangible assets during 2012 amounted to €219,169 thousand, of which €53,767 thousand relates to in-ternally developed software.Purchases of industrial patents, intellectual property rights, concessions licences, trademarks and similar rights total€69,571 thousand and relate primarily to:• €54,413 thousand before amortisation for the year for the purchase and entry into service of new software programmes

as a result of the acquisition of software licences;• €9,529 thousand relating to the fair value of new developments of the software component for the ICT platform used

in the provision of mobile telecommunication services by PosteMobile SpA, purchased under a finance lease.

Assets under construction includes uncompleted investment by the Parent Company, primarily regarding the developmentfor software relating to the infrastructure platform (€70,861 thousand), the postal products platform (€39,147 thousand)and the platform related to BancoPosta services (€25,803 thousand) and for the re-engineering of reporting processes andother staff functions (€18,876 thousand).

During the year, the Group effected reclassifications from intangible assets under construction to industrial patents, intel-lectual property rights, concessions licences, trademarks and similar rights, amounting to €118,549 thousand, reflectingthe completion and commissioning of software and the evolution of existing software.

The following table shows the carrying amount of intangible assets purchased under finance leases as at 31 December2012 and 31 December 2011:

In 2007 PosteMobile SpA signed a contract for the supply of the hardware and software platform to be used in the pro-vision of mobile telecommunication services. The contract, which provides for payment of a set-up fee and a series of an-nual fees, has been accounted for as a finance lease. It was initially due to expire on 31 December 2014, but has beenextended until 31 December 2016 under an Amendment signed in 2011 by PosteMobile SpA and the supplier. At 31 De-cember 2012 the software component has a carrying amount of €31,329 thousand, and the hardware component is ac-counted for in other assets, as property, plant and equipment (note 5), at a carrying amount of €1,840 thousand.

In 2009 Italia Logistica Srl agreed to lease three lines of business until March 2013, the value of which has been account-ed for as a finance lease (IAS - 17 Leases, and IFRIC 4 - Determining whether an Arrangement contains a Lease). At 31December 2012 the carrying amount of the intangible asset recognised is €613 thousand.

Goodwill, net of amortisation as shown in the following table, primarily derives from acquisitions and subsequent merg-ers of companies carried out by the subsidiaries Postel SpA and PostelPrint SpA, after until 1 January 2004. This item al-so includes goodwill arising from consolidation, generated by the process of eliminating the value of investments consol-idated on a line-by-line basis, and represents differences between the acquisition price and the fair value of the assets ac-quired and liabilities assumed.



Accumulated Carrying Accumulated CarryingItem Cost amortisation amount Cost amortisation amount

Industrial patents and intellectual property rights, concessions, licences, trademarks and similar rights 71,003 (39,061) 31,942 61,502 (24,772) 36,730

Total 71,003 (39,061) 31,942 61,502 (24,772) 36,730

7.2 - Intangible assets held under finance leases



Goodwill has been tested for impairment in accordance with the relevant accounting standards. Based on the informationavailable and the impairment tests conducted, it was necessary to recognise impairment losses on the goodwill relatedto SDA Express Courier SpA (€37,321 thousand) and Mistral Air Srl (€4,934 thousand). The goodwill related to Italia Lo-gistica Srl was part of the “FS-Omnia Logistica” unit, which was sold to FS Logistica SpA in 2012 (note 2.2).

Goodwill of €1,757 thousand refers to the difference between the price paid to Unicredit SpA and the fair value at thedate of acquisition of BdM-MCC SpA’s identifiable assets acquired and identifiable liabilities assumed (note 2.2).The de-crease of €3,296 thousand is due to Italia Logistica Srl’s disposal of the “FS-Omnia Logistica” business unit (note 2.2).

8 - INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Investments accounted for using the equity method includes the following:


Name Balance at 31 December 2012 Balance at 31 December 2011

Postel SpA 45,000 45,000Italia Logistica Srl - 3,296Mistral Air Srl - 4,934SDA Express Courier SpA - 37,321BdM-MCC SpA 1,757 1,757

Total 46,757 92,308

7.3 - Goodwill

Item Balance at 31 December 2012 Balance at 31 December 2011

Investments in subsidiaries 4,435 4,947Investments in joint ventures 34 34Investments in associates 5,353 4,840

Total 9,822 9,821

8.1 - Investments


214

Movements in investments accounted for using the equity method during 2011 and 2012 are as follows:


Changes AdjustmentsBalance at in the Accounted Balance at 1 Janaury Additions/ scope of for using the Dividend 31 December

Investments 2011 (Reductions) consolidation equity method adjustments 2011

In subsidiaries

Address Software Srl 97 - - 40 - 137Docutel SpA 1,201 - - 62 - 1,263Kipoint SpA(1) 555 500 - 167 - 1,222Poste Tributi ScpA 2,325 - - - - 2,325Postel do Brasil Ltda - 58 - (58) - -

Total subsidiaries 4,178 558 - 211 - 4,947

In joint ventures

Uptime SpA(2) 34 - - - - 34

Total joint ventures 34 - - - - 34

In associates

Docugest SpA(2) 1,781 2,058 - 491 - 4,330Consorzio ANAC in liquidation 10 (10) - - - -Telma-Sapienza Scarl(2) 649 - - (158) - 491Other SDA group associates(3) 19 - - - - 19

Total associates 2,459 2,048 - 333 - 4,840

Total 6,671 2,606 - 544 - 9,821

(1) Measurement using the equity method refers to the alignment of the value of the investment to equity as reported at 31 December 2010.(2) Measurement using the equity method refers to the financial statements for the year ended 31 December 2011, the latest available.(3) The other SDA Express Courier associates are: Epiemme srl dormant, G.T.E. Transport Srl in liquidation, I.C.S. Srl, International Speedy Srl in liquidation,

MDG Express Srl, Speedy Express Courier Srl, S.T.E. Srl, T.W.S. Express Courier Srl.

8.2 - Movements in investments accounted for using the equity method



PatentiViaPoste ScpA was established on 6 December with share capital of €120,000, in order to execute the contractwith the Ministry of Infrastructure and Transport for the centralised printing, distribution and delivery of driving licences.The newly formed company is 69.65% owned by Poste Italiane SpA and 17.21% owned by Postecom SpA, with the re-maining shares held by Dedem Automatica Srl and Muhlbauer ID Services GmbH.

On 8 June 2012 SDA Express Courier SpA participated, in proportion to its 28.57% equity interest, in coverage of the loss-es reported by Uptime SpA, amounting to €80 thousand, and in the write-off and replenishment of the company’s sharecapital, amounting to approximately €35 thousand.

On 1 March 2012, following the entry of an additional investor, the Parent Company’s interest in Telma-Sapienza Scarl wasreduced from 32.18% to 30.20%.


Changes AdjustmentsBalance at in the Accounted Balance at 1 Janaury Additions/ scope of for using the Dividend 31 December

Investments 2012 (Reductions) consolidation equity method adjustments 2012

In subsidiaries

Address Software Srl 137 - - (11) - 126Docutel SpA 1,263 - - 114 - 1,377Kipoint SpA(1) 1,222 - - (719) - 503PatentiViaPoste ScpA - 104 - - - 104Poste Tributi ScpA 2,325 - - - - 2,325

Total subsidiaries 4,947 104 - (616) - 4,435

In joint ventures

Uptime SpA(2) 34 115 - (115) - 34

Total joint ventures 34 115 - (115) - 34

In associates

Docugest SpA(2) 4,330 - - 527 - 4,857Telma-Sapienza Scarl(2) 491 - - (4) - 487Other SDA group associates(3) 19 - - (10) - 9

Total associates 4,840 - - 513 - 5,353

Total 9,821 219 - (218) - 9,822

(1) Measurement using the equity method refers to the alignment of the value of the investment to equity as reported at 31 December 2012(2) Measurement using the equity method refers to the financial statements for the year ended 31 December 2011, the latest available.(3) The other SDA Express Courier associates are: Epiemme Srl dormant, G.T.E. Transport Srl in liquidation, I.C.S. Srl, International Speedy Srl in liquidation,

MDG Express Srl, Speedy Express Courier Srl, S.T.E. Srl, T.W.S. Express Courier Srl.

8.3 - Movements in investments accounted for using the equity method


216

9 - FINANCIAL ASSETS

The following table provides a breakdown of financial assets break down at 31 December 2012 and 2011:

The following table provides details of financial assets distinguished as follows:• Financial services, relating primarily to the financial assets of BancoPosta RFC

23, the subsidiary BancoPosta Fondi SpA

SGR and BdM-MCC SpA;• Insurance services, including the financial assets of Poste Vita SpA and its subsidiary, Poste Assicura SpA;• Postal and Business services, representing all the other financial assets of the Group.



Non-current Current Non-current CurrentItem assets assets Total assets assets TotalLoans and receivables 233,497 8,169,747 8,403,244 242,511 9,100,384 9,342,895

Held-to-maturity financial assets 11,807,059 2,241,009 14,048,068 13,616,562 747,331 14,363,893

Available-for-sale financial assets 66,591,102 4,904,175 71,495,277 44,842,507 5,309,511 50,152,018

Financial assets at fair value through profit or loss 9,704,674 258,909 9,963,583 9,555,977 85,478 9,641,455

Derivative financial instruments 208,757 28,896 237,653 203,470 28,819 232,289

Total 88,545,089 15,602,736 104,147,825 68,461,027 15,271,523 83,732,550

9.1 - Financial assets


Non-current Current Non-current CurrentItem assets assets Total assets assets Total

Financial services 33,986,854 11,236,832 45,223,686 26,475,466 10,863,035 37,338,501

Loans and receivables 113,444 7,884,693 7,998,137 26,863 8,800,155 8,827,018

Held-to-maturity financial assets 11,807,059 2,241,009 14,048,068 13,616,562 747,331 14,363,893


Derivative financial instruments 90,611 28,896 119,507 134,126 28,792 162,918

Insurance services 53,935,831 4,071,472 58,007,303 41,341,432 4,010,021 45,351,453

Loans and receivables - 675 675 - 5,723 5,723


Financial assets at fair value through profit or loss 9,704,674 258,909 9,963,583 9,555,977 85,478 9,641,455

Derivative financial instruments 118,146 - 118,146 69,344 - 69,344

Postal and Business services 622,404 294,432 916,836 644,129 398,467 1,042,596

Loans and receivables 120,053 284,379 404,432 215,648 294,506 510,154

Available-for-sale financial assets 502,351 10,053 512,404 428,481 103,934 532,415

Derivative financial instruments - - - - 27 27

Total 88,545,089 15,602,736 104,147,825 68,461,027 15,271,523 83,732,550

9.2 - Financial assets by operating segment

23. The operations in question regard the financial services provided by the Company pursuant to Presidential Decree 144/2001, which from 2 May 2011 are at-tributable to the ring-fenced capital, and which relate to the management of postal current accounts deposits, carried out in the name of BancoPosta but sub-ject to statutory restrictions on the investment of the liquidity in compliance with the applicable legislation, and the management of collections and paymentson behalf of third parties. These include the collection of postal savings (savings books and savings certificates), carried out on behalf of Cassa Depositi ePrestiti and the MEF, and services delegated by Public Sector entities. These transactions involve the use of cash advances from the Italian Treasury and therecognition of receivables awaiting financial settlement. The specific agreement with the MEF requires BancoPosta to provide daily statements of all cashflows, with a delay of two bank working day with respect to the transaction date. The agreement in question, which was signed on 8 May 2009 – and ex-tended as supplemented with additional clauses in September 2011, February 2012 and March 2013, – was renewed until 31 December 2013.



FINANCIAL SERVICES

LOANS AND RECEIVABLES

The following table provides a breakdown of Financial services loans and receivables as follows:

LOANS

The balance, which relates to BdM-MCC SpA, consists mainly of: • €118,846 thousand in loans to corporate customers generated by the bank’s new operations;• €21,197 thousand in loans granted to public entities and non-financial companies, as part of the development financing

provided under the Agreement with Cassa Depositi e Prestiti; • €17,186 thousand in loans and financing granted through the Parent Company’s sales network, in connection with BdM-

MCC SpA’s new operations; • €159 thousand to adjust the value of development loans following their conversion to fixed rate instruments as a result

of fair value hedges with a nominal value of €5,033 thousand, as described in note 9.12.

RECEIVABLES

This item relates almost entirely to receivables of BancoPosta RFC.

Amounts deposited with the MEFAs provided for in the specific agreement with the MEF, which is currently being renewed24, these deposits relate to theinvestment of public customers’ current account deposits with the MEF and earn a variable rate of return, calculated ona basket of government bonds and money market indices, in line with the European Commission’s Decision of 16 July2008.

Compared to 31 December 2011, following the different payment methods for the new form of property tax (IMU), thebalance of this item does not reflect the funds credited to the postal current accounts of local authorities, unlike the fundsgenerated by payment of the old property tax (ICI).




Loans 113,444 67,288 180,732 26,863 45,960 72,823Receivables - 7,817,405 7,817,405 - 8,754,195 8,754,195

Amounts deposited with MEF - 5,416,414 5,416,414 - 7,060,499 7,060,499MEF on behalf of Italian Treasury - 1,325,394 1,325,394 - 793,537 793,537Other financial receivables - 1,075,597 1,075,597 - 900,159 900,159

Total 113,444 7,884,693 7,998,137 26,863 8,800,155 8,827,018

9.3 - Loans and receivables

24. The agreement in question, which was renewed on 10 April 2012 by Ministerial Decree, expired on 31 December 2012 and is currently being reneweduntil 31 December 2014.


218

MEF on behalf of the Italian Treasury

Balance of cash flows for advances

The balance of cash flows for advances represents the net amount receivable as a result of transfers of deposits and ex-cess liquidity, less advances from the MEF to meet the cash requirements of BancoPosta.

Balance of cash flows from the management of postal savingsThis item represents the balance of deposits less withdrawals during the last two days of the period and cleared early inthe following period. The balance at 31 December 2012 consists of €318,427 thousand payable to Cassa Depositi e Presti-ti (€434,939 thousand at 31 December 2011), net of an amount of €139,749 thousand receivable from the MEF for out-flows on its behalf (€76,701 thousand at 31 December 2011).

Amounts payable due to theftThe Parent Company is liable to the MEF on behalf of the Italian Treasury for losses resulting from theft and fraud. Thisliability derives from cash withdrawals from the Treasury to make up for the losses resulting from these criminal acts, inorder to ensure that post offices can continue to operate. Changes in this liability during the period are as follows:




Balance of cash flows for advances - 1,699,094 1,699,094 - 1,439,513 1,439,513Balance of cash flows from managementof postal savings - (178,678) (178,678) - (358,238) (358,238)Amounts payable due to theft - (159,708) (159,708) - (160,224) (160,224)Amounts payable for operational risks - (35,314) (35,314) - (127,514) (127,514)

Total - 1,325,394 1,325,394 - 793,537 793,537

9.4 - MEF on behalf of the Italian Treasury



Net advances - 1,700,950 1,700,950 - 1,445,858 1,445,858MEF postal current accounts and other payables - (673,149) (673,149) - (680,713) (680,713)Ministry of Justice - Orders for payment - 697 697 - (3,024) (3,024)MEF - State pensions - 670,596 670,596 - 677,392 677,392

Total - 1,699,094 1,699,094 - 1,439,513 1,439,513

9.5 - Balance of cash flows for advances



During 2012 the Parent Company made repayments of €4,004 thousand to the Treasury for thefts that took place up to31 December 2011 and repayments of €2,328 thousand for thefts during the first half of 2012. A further €1,093 thou-sand was repaid following rulings by the Italian Court of Auditors in respect of thefts occurring up to 31 December 1993.

Amounts payable for operational risks These payables regard the portion of advances obtained to fund the operations of BancoPosta, relating to advances fromthe MEF for transactions for which there were insufficient funds, and for which reversal is certain or probable. Changesin these payables are as follows:

Other financial receivables


Note 2012 2011

Balance at 1 January 160,224 160,499

Amounts payable for thefts during the year [36.1] 6,909 6,778Repayments made (7,425) (7,053)

Balance at 31 December 159,708 160,224

9.6 - Movements in amounts payable due to theft

2012 2011


New payables for operational risks 2,272 9,462Operational risks that did not occur (2,860) (1,337)

(588) 8,125Repayments made (95,226) -Reclassifications from provisions for disputes 3,614 4,981Balance at 31 December 35,314 127,514

9.7 - Movements in amounts payable to the Italian Trasury for operational risks

Item Balance at 31 Dec 2012 Balance at 31 Dec 2011

Guarantee deposits 517,265 503,880Other amounts to be charged to customers 246,417 39,884Cheques drawn on third parties to be debited to customer accounts 148,333 233,407BancoPosta ATM withdrawals to be debited to customer accounts 134,616 70,379Items awaiting settlement with the banking system 22,060 39,057Other receivables 6,906 13,552

Total 1,075,597 900,159

9.8 - Other financial receivables


220

Guarantee deposits, totalling €517,265 thousand, relate to sums provided to counterparties of asset swap transactions(with collateral provided by specific Credit Support Annexes) as part of the Parent Company’s cash flow and fair value hedg-ing policy.Other amounts to be charged to customers primarily regard:• cheques and other post office securities settled through the clearing house, totalling €112,099 thousand (€3,475 thou-

sand at 31 December 2011);• the use of debit cards issued by BancoPosta, totalling €103,214 thousand (€11,139 thousand at 31 December 2011); • amounts due from commercial partners, totalling €27,549 thousand (€21,689 thousand at 31 December 2011), for the

collection of Postepay top-ups (prepayments) and payments of bills by payment slip.

The increase in “Other amounts to be charged to customers” on the comparable amount at 31 December 2011 was main-ly due to the settlement of transactions occurring on 31 December 2012, a day where the interbank market was closed,in early 2013. Items awaiting settlement with the banking system relate to debit card payments made at post offices, totalling €19,998thousand (€37,026 thousand at 31 December 2011) and Poste Italiane SpA ATM withdrawals using third-party debit cards,totalling €2,062 thousand (€2,031 thousand at 31 December 2011).

INVESTIMENTS IN SECURITIES AND EQUITY INSTRUMENTS

The following table shows a breakdown of investments in securities and equity instruments:

Investments in securities

Investments in securities relates to investments in fixed income euro area government securities with a nominal value of€35,958,610 thousand, and Italian government securities held primarily by BancoPosta and to a lesser extent by BdM-MCC SpA and BancoPosta Fondi SpA SGR.

With reference to BancoPosta RFC, in compliance with the 2007 Budget Law, from 2007 the Company is required to in-vest the funds raised from deposits paid into postal current accounts by private customers in euro area government se-curities. As a result, the composition of this portfolio aims to replicate the financial structure of deposits paid into postalcurrent accounts by private customers. Trend analysis for forecasting and prudential purposes is based on an appropriatestatistical model developed for Poste Italiane SpA by a leading market operator. An Asset & Liability Management systemhas been developed to manage the relationship between customer deposits and investments.



Non-current Current Non-current CurrentItem Note assets assets Total assets assets Total

Held-to-maturity financial assets 11,807,059 2,241,009 14,048,068 13,616,562 747,331 14,363,893Fixed income instruments [9.10] 11,807,059 2,241,009 14,048,068 13,616,562 747,331 14,363,893

Available-for-sale financial assets 21,975,740 1,082,234 23,057,974 12,697,915 1,286,757 13,984,672Fixed income instruments [9.10] 21,946,388 1,082,234 23,028,622 12,675,246 1,286,757 13,962,003Equity instruments 29,352 - 29,352 22,669 - 22,669

Total 33,782,799 3,323,243 37,106,042 26,314,477 2,034,088 28,348,565

9.9 - Investments in securities and equity instruments



Movements in investments in securities in 2011 and 2012 are as follows:

In connection with the refinancing operation initiated by the European Central Bank in February 2012, BancoPosta enteredinto two three-year repurchase agreements with two different financial institutions, totalling €5 billion. The proceeds wereused to buy Italian government bonds with a total nominal value of €5.000 million (€2,450 million in ordinary BTPs and€2,550 million in inflation-linked BTPs, classified as AFS), with a view to anticipating the renewal of bonds maturing in thenext three years.At 31 December 2012 the fair value of the held-to-maturity portfolio, accounted for at amortised cost, is €14,515,849 thou-sand (including €220,480 thousand in accrued daily interest payments). Securities held by the Parent Company with a nominal value of €6,485,299 thousand are encumbered as follows:• €6,246,310 used as collateral for repurchase agreements entered into through to 31 December 2012;• €238,989 thousand used as collateral for asset swaps (with collateral provided by specific Credit Support Annexes) as

part of the cash flow and fair value hedging policy and repurchase agreements (collateral provided for by specific Glob-al Master Repurchase Agreements).

The fair value of the available-for-sale portfolio is €23,028,622 thousand. The overall fair value gain of €3,215,740 thou-sand for the period is recognised in the relevant equity reserve (€3,002,359 thousand), relating to the portion of the port-folio not hedged by fair value hedges, and through profit or loss (€213,381 thousand) in relation to the hedged portion.


HTM AFS FVPL Total

Nominal Carrying Nominal Carrying Nominal Fair Nominal CarryingSecurities value amount value amount value value value amount

Balance at 31 December 2010 14,509,650 14,768,213 14,571,850 14,590,005 - - 29,081,500 29,358,218

Purchases 1,300,000 1,225,677 6,401,200 6,285,549 - - 7,701,200 7,511,226

Sales (50,000) (50,576) (3,838,500) (3,824,282) - - (3,888,500) (3,874,858)

Redemptions (1,522,000) (1,522,000) (810,000) (810,000) - - (2,332,000) (2,332,000)

Transfers to equity - (44,557) - (114,252) - - - (158,809)

Increase/(Decrease) in accrued income - (14,103) - 8,841 - - - (5,262)

Change in amortised cost - 1,239 - 23,242 - - - 24,481

Fair value changes through profit or loss - - - 407,960 - - - 407,960

Fair value changes through equity - - - (2,610,542) - - - (2,610,542)

Change in the scope of consolidation - - 5,363 5,482 - - 5,363 5,482


Purchases 185,000 199,674 8,967,000 9,027,622 3,275,000 3,240,395 12,427,000 12,467,691

Sales - - (2,123,200) (2,165,768) (3,275,000) (3,240,395) (5,398,200) (5,406,163)

Redemptions (520,000) (520,000) (1,117,753) (1,117,753) - - (1,637,753) (1,637,753)

Transfers to equity - - - 25,386 - - - 25,386

Increase/(Decrease) in accrued income - (3,189) - 34,769 - - - 31,580

Change in amortised cost - 7,690 - 46,623 - - - 54,313

Fair value changes through profit or loss - - - 213,381 - - - 213,381

Fair value changes through equity - - - 3,002,359 - - - 3,002,359


9.10 - Movements in investments securities


222

Investments in equity instruments

These investments are attributable to the BancoPosta RFC reserve and primarily include €28,019 thousand relating to thefair value of 75,628 class B shares in Mastercard Incorporated (75,628 shares with a fair value of €21,682 thousand at 31December 2011). These equity instruments are not quoted on a regulated market but may be converted into an equal num-ber of class A shares, which are listed on the New York Stock Exchange, if disposal is desired. Fair value gains during the period amount to €6,683 thousand and have been recognised in the relevant equity reserve(note 19.1).

DERIVATIVE FINANCIAL INSTRUMENTS

At 31 December 2012 derivative financial instruments attributable to the Financial services segment, amounting to €119,507thousand, include €12,157 thousand attributable to BancoPosta RFC and €107,350 thousand to BdM-MCC SpA. The fol-lowing table shows a breakdown of outstanding transactions attributable to BancoPosta RFC and BdM-MCC SpA at 31December 2012.

Derivative instruments attributable to BancoPosta RFC


9.11 - Movements in derivative financial instruments

Cash flow hedges Fair value hedges FVPL

Forward purchases Asset swaps Asset swaps Forward purchases Forward sales Totalnominal fair value nominal fair value nominal fair value nominal fair value nominal fair value nominal fair value

Balance at 1 January 2011 720,000 (13,700) 2,073,750 (7,340) 2,950,000 18,744 - - - - 5,743,750 (2,296)

Increases/(Decreases)(*) 3,190,000 (79,933) 1,710,000 (68,177) 750,000 (417,249) - - - - 5,650,000 (565,359)

Discontinued CFHs (1,050,000) (5,911) - - - - 1,050,000 5,911 - - - -

Gains/(Losses) through profit or loss(**) - - - (450) - (552) - - - - - (1,002)

Transactions settled(***) (2,060,000) 68,263 (250,000) (46,588) - 9,513 - - - - (2,310,000) 31,188

Balance at 31 December 2011 800,000 (31,281) 3,533,750 (122,555) 3,700,000 (389,544) 1,050,000 5,911 - - 9,083,750 (537,469)

Increases/(Decreases)(*) 1,625,000 121,303 - 80,400 - (225,547) - 60,535 2,225,000 (6,520) 3,850,000 30,171

Discontinued CFHs (575,000) (47,858) - - - - 575,000 47,858 - - - -

Gains/(Losses) through profit or loss(**) - - - (368) - (592) - - - - - (960)

Transactions settled(***) (1,050,000) (30,007) (950,000) (169,476) - 11,566 (1,625,000) (114,304) (2,225,000) 6,520 (5,850,000) (295,701)

Balance at 31 December 2012 800,000 12,157 2,583,750 (211,999) 3,700,000 (604,117) - - - - 7,083,750 (803,959)

of which:Derivative assets 800,000 12,157 - - - - - - - - 800,000 12,157

Derivative liabilities - - 2,583,750 (211,999) 3,700,000 (604,117) - - - - 6,283,750 (816,116)(*) Increases/(Decreases) refer to the nominal value of new transactions and changes in the fair value of the overall portfolio during the period.(**) Gains and losses through profit or loss refer to any ineffective components of hedges, recognised in other income and other expenses from financial

and insurance activities.(***) Transactions settled include forward transactions settled, accrued differentials and the extinguishment of asset swaps linked to securities sold.



In the year under review, in accordance with its cash flow hedge policy, the Parent Company entered into the followingtransactions:• the settlement of forward purchases outstanding at 31 December 2011 with a nominal value of €800,000 thousand;• the execution of new forward purchase agreements with a nominal value of €1,050,000 thousand (cash flow hedges

of forecast transactions), of which €250,000 thousand were settled as at 31 December 2012;• additional forward purchases with a nominal value of €575,000 thousand (cash flow hedges of forecast transactions)

and subsequent reclassification of these transactions to derivative financial instruments at fair value through profit or loss,following early extinguishment and resulting discontinuation25 of the hedges in the year under review.

The effective portion of these instruments recorded an overall fair value gain of €201,703 thousand during the year, whichis reflected in the cash flow hedge reserve.Following changed market conditions, and to stabilise the benefits of cash flow hedges, in July 2012 the Parent Compa-ny extinguished early €950 million in asset swaps originally entered into to hedge the variable returns on CCTeus. As aresult of this, the balance of the cash flow hedge reserve, determined by the cumulative increase in value of the extin-guished asset swaps, will be released to profit or loss during the remaining life of the CCTeus originally hedged, therebyraising their return. As a result of fluctuations in market rates, the fair value hedges in place, which are held to limit the price volatility of cer-tain available-for-sale fixed rate instruments, saw their effective portion record a negative change of €225,547 thousand,whilst the hedged securities (note 9.10) have recorded a fair value gain of €213,381 thousand, with the difference of €12,166thousand due to paid or accruing differentials. Finally, with regard to derivative financial instruments measured at fair value through profit or loss, the Parent Company: • settled forward purchases with a total nominal value of €1,625,000 thousand associated with the discontinuation of cash

flow hedges in 2011 and 2012 through forward sales of the same amount;• entered into and settled securities purchase and resale transactions totalling €600,000 thousand.

These transactions had a net positive effect of €101,916 thousand on profit or loss for the year.

Derivative instruments attributable to BdM-MCC SpA


25. Discontinuation of the application of hedge accounting following a decision by management, or due to the early sale or extinguishment of the hedgedor hedging instrument, and the consequent application of a different accounting treatment, as required by the relevant IFRS.

2012 2011

Fair value Fair valueCash flow Fair value through profit Cash flow Fair value through profit

hedges hedges or loss Total hedges hedges or loss Total

Balance at 1 January - 75,816 - 75,816 - - - -

Change in scope of consolidation - - - - - 41,413 - 41,413Increases/(Decreases) - 36,872 - 36,872 - 32,327 - 32,327Gains/(Losses) through profit or loss - 99 - 99 - - - -Transactions settled - (5,602) - (5,602) - 2,076 - 2,076

Balance at 31 December - 107,185 - 107,185 - 75,816 - 75,816

of which:Derivative assets - 107,344 6 107,350 - 76,316 188 76,504Derivative liabilities - (159) (6) (165) - (500) (188) (688)



224

The fair value gain of €107,344 thousand for derivatives designated as fair value hedges refers to the value of five inter-est rate swap contracts used to hedge bonds issued by BdM-MCC SpA (note 23.1), with a nominal value of €333,044thousand. These instruments recorded a net fair value gain of €36,933 thousand during the year, whilst the hedged bondsrecorded a fair value loss of €30,036 thousand. The difference of €6,897 thousand is due to the differentials for the pe-riod, which are recognised through profit or loss.Moreover, at 31 December 2012, there were two additional interest rate swaps treated as derivatives designated as fairvalue hedges, which recorded a net fair value loss of €159 thousand, used to hedge existing loans with a nominal valueof €5,033 thousand. These instruments recorded a net fair value loss of €61 thousand during the period, whilst thehedged fixed rate loans recorded a fair value gain of €342 thousand. The difference of €403 thousand is due to the dif-ferentials for the period, which are recognised through profit or loss.The derivative financial instruments measured at fair value through profit or loss refer to two CAP options, including oneseparated from the floored top side bond issue and classified in trading derivatives, and the other of the same amountand type also separated from the derivate hedging the bonds.

INSURANCE SERVICES

RECEIVABLES

Receivables of €675 thousand (€5,723 thousand at 31 December 2011) relate to subscription of and payment for unitsof Poste Vita SpA mutual investment funds.

AVAILABLE-FOR-SALE FINANCIAL ASSETS

Movements in available-for-sale financial assets in 2011 and 2012 are as follows:


Equity Fixed income Otherinstruments instruments investments Total

Balance at 1 January 2011 6,417 29,984,716 2,388,540 32,379,673

Additions/Disbursements 3,605 11,482,041 83,375 11,569,021Fair value gains and losses through equity (1,756) (2,815,774) (165,087) (2,982,617)Fair value gains and losses through profit or loss 223 (4,305) - (4,082)Transfers to the income statement 38 16,636 - 16,674Changes in amortised cost - 91,120 - 91,120Accrued income - 487,234 - 487,234Sales/Settlements of accrued income (2,944) (5,910,595) (8,553) (5,922,092)

Balance at 31 January 2011 5,583 33,331,073 2,298,275 35,634,931

Additions/Disbursements - 18,333,387 432,941 18,766,328Fair value gains and losses through equity (3) 4,916,828 139,443 5,056,268Fair value gains and losses through profit or loss (331) 143,364 (76,620) 66,413Transfers to the income statement 553 206,479 61,880 268,912Changes in amortised cost - 150,749 - 150,749Accrued income - 80,846 - 80,846Sales/Settlements of accrued income (1,276) (11,410,522) (687,750) (12,099,548)

Balance at 31 December 2012 4,526 45,752,204 2,168,169 47,924,899

9.13 - Movements in available-for-sale financial assets



The Group recorded fair value gains of €5,056,268 thousand in relation to its available-for-sale financial assets, as follows:• net gains of €5,050,764 thousand deriving from the measurement of securities held by Poste Vita SpA, of which

€4,773,721 thousand was transferred to policyholders, with a contra-entry made in technical provisions in accordancewith the shadow accounting method;

• net gains on the measurement of securities held by Poste Assicura SpA, totalling €5,504 thousand.

The above changes in fair value of available-for-sale financial assets during 2012 had a net positive impact on the relevantequity reserve of €282,547 thousand (note 19.1).

Equity instruments

Equity instruments relate to the investments held by Poste Vita SpA, totalling €4,526 thousand (€5,583 thousand at 31December 2011) covering Branch I products related to separately managed accounts, of which 72% is invested in utili-ties, telecommunications and energy stocks.

Fixed income instruments

Fixed income instruments relate primarily to investments held by Poste Vita SpA, totalling €45,684,056 thousand(€33,283,844 thousand at 31 December 2011), including listed instruments with a nominal value of €39,543,494 thou-sand, issued by European governments and European blue-chip companies, and unlisted instruments with a nominal val-ue of €5,056,124 thousand. These instruments are mainly intended to cover separately managed funds where, under theshadow method of accounting applied, unrealised gains and losses are entirely transferred to policyholders and recognisedin technical provisions. The remaining amount is used to fund specific assets related to Branch I policies and the insur-ance company’s investment of free capital. Unlisted fixed income instruments comprise specific bonds issued in a privateplacement by Cassa Depositi e Prestiti SpA, with a fair value of €1,023,123 thousand (nominal amount of €1,068,000 thou-sand), acquired to match Branch I policies placed in the first half of 2012.

The balance is represented by the fair value of fixed income instruments, totalling €68,148 thousand, held by Poste As-sicura SpA.

Other investments

Other investments relates to units of mutual investment funds of €2,168,169 thousand (€2,298,275 thousand at 31 De-cember 2011), of which €2,142,869 thousand consists of bond funds and €25,300 thousand relates to real estate funds,subscribed to by Poste Vita SpA and allocated to the insurance company’s separately managed accounts.



226

FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

Movements in financial instruments at fair value through profit or loss were as follows in 2011 and 2012:

Financial instruments classified as at fair value through profit or loss are held by the subsidiary Poste Vita SpA and are re-lated to:• fixed income securities amounting to €6,152,553 thousand (€4,063,829 thousand at 31 December 2011), consisting of

€5,794,017 thousand in coupon stripped BTPs acquired to cover the contractual obligations arising on Branch III insur-ance policies; the balance of €358,536 thousand is primarily made up of corporate bonds issued by blue-chip compa-nies and primarily linked to separately managed accounts;

• structured bonds amounting to €3,102,351 thousand (€4,874,775 thousand at 31 December 2011) relating to invest-ments whose returns are linked to a particular market index, primarily designed to cover the insurance obligations to theholders of Branch III index-linked policies; the instruments issued by the securitisation vehicle, Programma Dinamico SpA,with a fair value of €284,350 thousand at 31 December 2011, were repaid in full during the year under review; the de-crease compared with the start of the year is due entirely to the sales of financial instruments to fund the payment ofclaims on Branch III policies;

• other investments amounting to €708,679 thousand (€702,851 thousand at 31 December 2011) relating to units of mu-tual investment funds primarily acquired to cover contractual obligations to the holders of Branch III unit-linked policies.


Fixed income Structured Otherinstruments bonds investments Total

Balance at 1 January 2011 3,668,330 6,787,051 742,465 11,197,846

Purchases/Disbursements 1,037,508 1,897,353 38,030 2,972,891Fair value gains and losses through profit or loss (244,107) (33) (1,373) (245,513)Accrued income 2,955 - - 2,955Sales/Settlement of accrued income (400,857) (3,809,596) (76,271) (4,286,724)

Balance at 31 December 2011 4,063,829 4,874,775 702,851 9,641,455

Purchases/Disbursements 6,845,729 - - 6,845,729Fair value gains and losses through profit or loss 943,696 414,005 45,987 1,403,688Accrued income 1,094 - - 1,094Sales/Settlement of accrued income (5,701,795) (2,186,429) (40,159) (7,928,383)

Balance at 31 December 2012 6,152,553 3,102,351 708,679 9,963,583

9.14 - Movements in financial instruments at fair value through profit or loss




At 31 December 2012 outstanding transactions primarily regard warrants executed by Poste Vita to cover contractual ob-ligations deriving from Branch III policies. Movements in derivative financial instruments accounted for at fair value throughprofit or loss in 2011 and 2012 are as follows:

The year under review saw the settlement of the following forward purchases completed in 2011: • 7 forward coupon stripped BTP purchases with a total nominal value of €252.2 million, covering contractual obligations

deriving from the Branch III “6Speciale” policy;• settlement of Index Linked Warrant forwards with a nominal value of €200 million, covering the index-linked compo-

nent of returns on the Branch III “6Speciale” policy.

In addition, in the year under review the following forward purchases were executed and settled:


US dollar Forward currency purchase of Forwardforward Government purchase of

sales bonds warrants Warrants Total

Balance at 31 December 2010 13 - - 105,555 105,568

Purchases 2,210 - - 60,762 62,972

Fair value gains and losses 24 76,821 7,957 (93,895) (9,093)

Transactions settled (2,247) (84,541) (8,911) (3,078) (98,777)

Balance at 31 December 2011 - (7,720) (954) 69,344 60,670

Purchases - 16,952 14,572 34,691 66,215

Fair value gains and losses - 15,963 436 14,111 30,510

Transactions settled - (25,195) (14,054) - (39,249)

Balance at 31 December 2012 - - - 118,146 118,146

of which:

Derivative assets - - - 118,146 118,146Derivative liabilities - - - - -

9.15 - Movements in financial assets at fair value through profit or loss

Nominal value of forward purchases

Branch III policies BTP Stripped Warrants

6Avanti 200,000 200,0006Sereno 200,000 200,000Primula 200,000 200,000Top5 250,000 250,000Top5 edizione II 250,000 250,000Branch I policies BTP/OAT Stripped BTPs

Pronta Crescita New 225,000 -Pronta Crescita Sprint - 515,000Pronta Crescita Sprint edizione II - 330,000

Total 1,325,000 1,945,000

9.16 - Forward purchases of financial instruments


228

At 31 December 2012 and 2011 the Group’s position in warrants is represented by financial instruments with a total nom-inal value of €6,057 million and a fair value of €118,146 thousand, as follows:

The year under review saw the partial extinguishment of warrants designed to cover the index-linked component of re-turns on the Branch III “Alba” and “Terra” policies for nominal amounts of approximately €13 and €30 million, respec-tively, which exceeded the Company’s liabilities; this extinguishment resulted in a loss on disposal of €103 thousand.


At 31 December 2012 At 31 December 2011Policy Nominal value Fair value Nominal value Fair valueAlba 787,244 9,250 800,000 6,160Terra 1,470,319 13,836 1,500,000 14,430Quarzo 1,381,407 13,194 1,381,407 9,395Titanium 721,107 18,302 721,107 14,062Arco 200,000 15,120 200,000 12,860Prisma 197,421 13,683 197,421 12,4376Speciale 200,000 1,5846Avanti 200,000 1,3526Sereno 200,000 8,410Primula 200,000 7,690Top5 250,000 6,325Top5 edizione II 250,000 9,400

Total 6,057,498 118,146 4,799,935 69,344

9.17 - Warrants



POSTAL AND BUSINESS SERVICES


LOANS

Loans of €141 thousand refer to the balance in the mutual cash management system existing between Postel SpA andthe subsidiary, Address Software Srl, accounted for using the equity method.

RECEIVABLES

Receivables, almost entirely attributable to the Parent Company, break down as follows:

At 31 December 2012 the fair value of receivables, amounting to €354,020 thousand, due from the MEF, for the repay-ment of loans accounted for as liabilities, is €360,347 thousand. At 31 December 2011 the fair value of this receivablewas €477,201 thousand compared to the carrying amount of €482,711 thousand. The carrying amount of other receiv-ables in this category approximates to fair value.Receivables due from the MEF, amounting to €354,020 thousand, regard the residual principal to be repaid on loans ac-counted for in liabilities, and which, in accordance with the laws that authorised the relevant loans, are to be repaid bythe MEF. This receivable is represented by the amortised cost26 of a receivable with a nominal value of €368,605 thou-sand, which is expected to be collected by 2016. During 2012 the Parent Company collected receivables with a nominalvalue of €143,771 thousand and estimated accrued finance income on the present value of the receivables to be €15,079thousand. On the basis of the laws referred to below, these receivables are non-interest-bearing as they relate to loans for whichonly the principal is to be repaid by the government, with the exception of the loan linked to Law 887/8427.



Non-current Current Non-current Currentassets assets Total assets assets Total

Due from MEF 107,052 246,968 354,020 202,809 289,535 492,344repayment of loans accounted for in liabilities 107,052 246,968 354,020 202,809 279,902 482,711repayment of interest for 2010 on loan Law 887/84 - - - - 9,633 9,633

Purchases of service accommodation 12,999 - 12,999 12,839 - 12,839Other 2 37,746 37,748 - 4,441 4,441Provisions for doubtful debts - (476) (476) - (677) (677)

Total 120,053 284,238 404,291 215,648 293,299 508,947

9.18 - Receivables

26. The amortised cost of the non-interest bearing receivable in question was calculated on the basis of the present value obtained using the risk-free in-terest rate applicable at the date from which the incorporation of Poste Italiane SpA took effect (1 January 1998). The receivable is thus increased eachyear by the amount of interest accrued and reduced by any amounts collected.

27. Interest was originally to be paid on this loan, but payments were suspended between 2001 and 2006, as a result of changes to the government’s budg-et. Interest accrued to 31 December 2011 was, instead, paid to Poste Italiane SpA from 2007.


230

The nominal value of these receivables is as follows:

These receivables represent repayments of loans formerly disbursed by Cassa Depositi e Prestiti, in accordance with theabove laws, to the former Post and Telecommunications Office in order to fund investments between 1975 and 1993. Onconversion of the former Public Entity into a joint-stock company, the accounts payable to Cassa Depositi e Prestiti (theprovider of the loans) and the accounts receivable from the MEF, to which the relevant laws assigned the burden of re-payment, were posted in the accounts. Poste Italiane SpA is liable for interest expense through to full repayment of theloans. The difference of €142,188 thousand between the nominal value of the receivable and the nominal value of thedebt of €226,417 thousand (note 23.2), corresponding to its amortised cost, was due to the repayment of the principalinstalment that matured in 2012 and not yet collected.

Other receivables amounting to €37,748 thousand, include mainly:• guarantee deposits, totalling €37,150 thousand, accounted for in current assets, in favour of counterparties with whom

the Company has entered into asset swaps (with collateral provided by specific Credit Support Annexes), in connectionwith the fair value hedging policies adopted;

• €476 thousand due from a counterparty declared bankrupt in 2008 and written off in the same year, resulting from ear-ly extinguishment of two interest rate swaps in accordance with the related contracts terms.


Available-for-sale financial assets, held primarily by the Parent Company, break down as follows:


Legislation Nominal value of receivable

Law 227/75 mechanisation of postal service 13,214Law 39/82 subsequent changes to postal service 202,333Law 887/84 151,705Law 41/86 1,353

Total 368,605


Equity instruments 5,322 5,312Fixed income instruments 502,837 428,945

Fiduciary deposits - 94,466Mutual funds 4,245 3,692

Other investments 4,245 98,158Total 512,404 532,415

9.19 - Available-for-sale financial assets



Movements during the year are as follows:

Equity instruments

Equity instruments relate to the Parent Company’s 15% interest in Innovazione e Progetti ScpA, which is in liquidation.The carrying amount of €4,500 thousand represents the historical cost of investment, the value of which is unchangedwith respect to the previous year.


This item, amounting to €502,837 thousand, regards investments in BTPs with a total nominal value of €500,000 thou-sand, which is unchanged with respect to 31 December 2011. Of these, instruments with a value of €375,000 thousandhave been hedged using asset swaps designated as fair value hedges, as described in the following note. All these se-curities are encumbered investments used as collateral for repurchase agreements (note 23.3).

Other investments

This item relates to units of equity mutual investment funds with a fair value of €4,245 thousand (€3,692 thousand at 31December 2011).

On 5 July 2012 the deposit established in 2002 by the Parent Company expired and its balance of €93,550 thousand wasduly collected.


2012 2011

Equity Fixed income Other Equity Fixed income OtherNote instruments instruments investments Total instruments instruments investments Total

Balance at 1 January 5,312 428,945 98,158 532,415 7,365 471,791 95,928 575,084

Purchases/Disbursements 10 - - 10 - 99,225 - 99,225Fair value gains and losses through equity [19.1] - 44,555 48 44,603 - (75,979) 2,089 (73,890)Fair value gains and losses through profit and loss - 28,973 - 28,973 - 33,115 - 33,115Changes in amortised cost - 333 - 333 - (354) - (354)Accrued income - 5,807 - 5,807 - 5,776 411 6,187Sales/Redemptions/Settlement of accrued income - (5,776) (93,961) (99,737) (2,053) (104,629) (270) (106,952)

Balance at 31 December 5,322 502,837 4,245 512,404 5,312 428,945 98,158 532,415



232


Movements in derivative assets and liabilities are as follows:

Derivative financial instruments used in cash flow hedges

February 2012 saw the expiration of two currency forwards executed in March 2007 by Mistral Air Srl in order to hedgethe foreign exchange risk in US dollars, relating to fees payable to suppliers for the lease of two aircraft.

Derivative financial instruments used in fair value hedges

At 31 December 2012 the fair value28 of the outstanding derivative financial instruments used in fair value hedges repre-sents a loss of €40,074 thousand consisting of nine asset swaps used as fair value hedges in 2010 to protect the valueof BTPs with a nominal value of €375 million against movements in interest rates. These instruments have enabled theParent Company to sell the fixed rate on the BTPs of 3.75% and purchase a variable rate.


2012 2011

Fair value Fair valuethrough through

Cash flow Fair value profit Cash flow Fair value profithedges hedges or loss Total hedges hedges or loss Total

Balance at 1 January 27 (9,531) - (9,504) 119 22,933 - 23,052

Increases/(Decreases) (28) (34,348) - (34,376) (6) (37,191) - (37,197)Gains/(Losses) through profit or loss 6 7 - 13 (122) 10 - (112)Transactions settled (5) 3,798 - 3,793 36 4,717 - 4,753

Balance at 31 December - (40,074) - (40,074) 27 (9,531) - (9,504)

of which:Derivative assets - - - - 27 - - 27Derivative liabilities - (40,074) - (40,074) - (9,531) - (9,531)


28. The fair value of these derivative instruments is based on the present value of expected cash flows deriving from the differentials to be exchanged.



10 - INVENTORIES

Net inventories break down as follows:

Properties held for sale include the portion of EGI SpA’s real estate portfolio to be sold, whose fair value at 31 December2012 amounts to approximately €103 million. The carrying amount has risen due to the combined effects of the changeof intended use of some properties, which were previously classified as investment property, accounting for an increaseof €14,894 thousand, and impairments on certain properties entered in inventories, net of increases due to work performed,which accounted for a decrease of €456 thousand. Work in progress, semi-finished and finished goods and goods for resale mainly relate to the value of goods to be sold byPosteShop SpA, primarily held at post offices, and stationary and forms used in the Postel group’s e-procurement activi-ties as well as goods owned by the Parent Company on sale in post offices. Raw, ancillary and consumable materials primarily include the materials used by the Postel group for printing and envelop-ing, and the SIM cards and scratch cards used by PosteMobile SpA, primarily held at post offices.

11 - TRADE RECEIVABLES

Trade receivables break down as follows:


Balance at Increase/ Balance at31 December 2011 (Decrease) Reclassification 31 December 2012

Properties held for sale 11,384 (456) 14,894 25,822Work in progress, semi-finished and finished good and goods for resale 23,083 (3,149) - 19,934Raw, ancillary and consumable materials 12,472 742 - 13,214

Total 46,939 (2,863) 14,894 58,970

10.1 - Inventories



Customers 152,410 2,725,092 2,877,502 181,555 2,198,191 2,379,746MEF - 1,039,348 1,039,348 - 1,665,322 1,665,322Subsidiaries - 8,823 8,823 - 6,652 6,652Associates - 7,802 7,802 - 8,932 8,932Joint ventures - 65 65 - 4,306 4,306Prepayments to suppliers - 232 232 - 61 61

Total 152,410 3,781,362 3,933,772 181,555 3,883,464 4,065,019

11.1 - Trade receivables


234

RECEIVABLES DUE FROM CUSTOMERS

The following table provides a breakdown of trade receivables due from customers:

CASSA DEPOSITI E PRESTITI

This item consists of €927,490 thousand in fees and commissions for BancoPosta’s deposit-taking activities for the year,a sum that was collected in full in January 2013 and, for the reminder, of fees and commissions for previous years.

MINISTRIES AND PUBLIC SECTOR ENTITIES

These receivables primarily relate to amounts due from the following entities:• Presidenza del Consiglio dei Ministri - Dipartimento dell’Editoria (Cabinet Office - Publishing department): €233,997

thousand due to the Parent Company, with a nominal value of €250,809 thousand, relating to publisher tariff sub-sidies for the years from 2001 to 2010. The receivable is accounted for at its present value, in accordance withthe relevant standards and information available, to take account of the time it is expected to take to collect theamount; accordingly, €135,589 thousand (with a nominal value of €152,401 thousand) is classified in non-currentassets;

• Istituto Nazionale per la Previdenza Sociale (INPS, the National Institute of Social Security): €76,920 thousand ofwhich €61,335 thousand due for the payment of pensions by BancoPosta and attributable entirely to the year un-der review;




Ministries and Public Sector entities 148,559 709,655 858,214 176,941 960,305 1,137,246

Cassa Depositi e Prestiti - 948,046 948,046 - 149,606 149,606

Unfranked mail delivered on behalf of third parties and other value added services 23,114 363,666 386,780 24,614 432,099 456,713

Overseas counterparties - 217,495 217,495 - 219,007 219,007

Parcel Express Courier and express parcel services - 176,322 176,322 - 165,591 165,591

Overdrawn current accounts - 125,875 125,875 - 126,645 126,645

Amounts due for other BancoPosta services - 95,702 95,702 - 98,480 98,480

Amounts due for management of government subsidies - 44,316 44,316 - 52,919 52,919

Use of telegraphic services - 31,991 31,991 - 40,253 40,253

Property management - 8,626 8,626 - 9,906 9,906

Other trade receivables 3,338 405,140 408,478 - 314,629 314,629

Provisions for doubtful debts (22,601) (401,742) (424,343) (20,000) (371,249) (391,249)

Total 152,410 2,725,092 2,877,502 181,555 2,198,191 2,379,746

11.2 - Receivables due from customers



• Ministero dello Sviluppo Economico (Ministry for Economic Development): €61,442 thousand due to the Parent Com-pany, including €60,870 thousand as reimbursement of the costs associated with the management of property, vehi-cles and security, of which €3,212 thousand relates to the amount accrued during the year;

• Equitalia group: €44,957 thousand due to the Parent Company, including €42,089 thousand for the notification of taxassessments;

• Roma Capitale (Municipality of Rome): €44,440 thousand due to the Parent Company, primarily in relation to the deliv-ery of administrative notices;

• Ministero della Giustizia (Ministry of Justice): €43,968 thousand payable to the Parent Company, primarily for the deliv-ery of administrative notices (€21,754 thousand) and for the payment service provided by BancoPosta for legal systemexpenses (€19,137 thousand);

• Comune di Milano (Municipality of Milan): €43,759 thousand due to the Parent Company, primarily for the delivery ofadministrative notices;

• Tax authorities: €42,327 thousand due to the Parent Company, mainly arising from the delivery of unfranked mail (€18,859thousand), integrated management of the correspondence (€7,830 thousand), the payment of tax refunds (€7,395) andthe collection of government taxes (€2,787 thousand);

• Istituto Nazionale di Statistica (Italian office for national statistics): €38,578 thousand regarding the printing, envelopingand delivery of the package for the 2011 national census;

• Regione Lazio (Lazio Regional Authority): €24,141 thousand due to the Parent Company, primarily for the delivery of ad-ministrative notices;

• Ministero dell’Interno (Ministry of Internal Affairs): €19,976 thousand due to the Parent Company, including €13,895 thou-sand for integrated notification services and €6,066 thousand as payment for the franking of mail on credit;

• Sundry regional authorities and ministries: €12,970 thousand in medium-and long-term receivables due to BdM-MCCSpA regarding the management of public funds.

UNFRANKED MAIL DELIVERED ON BEHALF OF THIRD PARTIES AND OTHERADDED VALUE SERVICES

This item includes €263,461 thousand deriving from the bulk mail services and other added value services, and €123,319thousand in receivables deriving from the delivery of unfranked mail on behalf of third parties.

OVERSEAS COUNTERPARTIES

This item includes €217,108 thousand for postal services carried out by the Parent Company for overseas postal opera-tors, and €387 thousand relating to international telegraphic services.

PARCEL, EXPRESS COURIER AND EXPRESS PARCEL SERVICES

These receivables refer to services provided by SDA Express Courier SpA, and to the mailing of parcels by the Par-ent Company.

OVERDRAWN CURRENT ACCOUNTS

These are amounts due to BancoPosta for temporarily overdrawn current accounts largely due to recurring bank charges,including accumulated sums that BancoPosta is in the process of recovering, which have largely been written down.



236

AMOUNTS DUE FOR OTHER BANCOPOSTA SERVICES

This item relates to amounts due on insurance and banking services, personal loans, overdrafts and mortgages sold onbehalf of third parties, totalling €68,530 thousand.

AMOUNTS DUE FOR THE MANAGEMENT OF GOVERNMENT SUBSIDIES

This item relates to the services provided by BdM-MCC SpA in managing government subsidies.

USE OF TELEGRAPHIC SERVICES

These receivables arise on telegrams ordered by telephone (€20,021 thousand) and other telegraphic services (€11,970thousand).

OTHER TRADE RECEIVABLES

This item includes:• receivables deriving from unfranked mail on own behalf (€101,922 thousand);• receivables related to Posta Target services (€30,537 thousand);• receivables related to the Posta Service service (€16,711 thousand);• receivables generated by the Posta Easy service (€15,119 thousand).

PROVISIONS FOR DOUBTFUL DEBTS

Movements in provisions for doubtful debts are as follows:

Provisions regarding amounts due from Public Sector entities regard amounts that may be partially unrecoverable as a re-sult of legislation restricting public spending, delays in payment and problems at debtor entities. Provisions for doubtfuldebts relating to private customers include €108,394 thousand attributable to BancoPosta’s operations, mainly to covernumerous individually immaterial amounts due from overdrawn current account holders.


Change in Change inBalance at Provisions/ Deferred the scope of Balance at Provisions/ Deferred the scope of Balance at

Item 1 Jan 2011 (Reversals) revenues Uses consolidation 31 Dec 2011 (Reversals) revenues Uses consolidation 31 Dec 2012

Overseas postal operators 10,167 (3,072) - - - 7,095 (3,539) - - - 3,556

Public Sector entities 153,064 (18,052) 3,212 - 2,473 140,697 16,278 3,212 (102) - 160,085

Private customers 224,621 9,554 502 (3,393) - 231,284 26,314 - (11,461) (1,350) 244,787

387,852 (11,570) 3,714 (3,393) 2,473 379,076 39,053 3,212 (11,563) (1,350) 408,428

Interest on late payments 7,549 6,241 - (1,617) - 12,173 7,941 - (4,199) - 15,915

Total 395,401 (5,329) 3,714 (5,010) 2,473 391,249 46,994 3,212 (15,762) (1,350) 424,343

11.3 - Movements in provisions for doubtful debts



RECEIVABLES DUE FROM THE MEF

This item relates to trade receivables due to the Parent Company from the Ministry of the Economy and Finance, as a re-sult of commercial transactions. The following table shows a breakdown:

Universal Service subsidies include €349,888 thousand accrued for the year under review, €250,092 thousand for the bal-ance of the payment due under the 2009-2011 Contratto di Programma (Planning Agreement) and €12,011 thousand, €24,640thousand and €8,663 thousand for payments due in relation to 2008, 2006 and 2005, respectively. In December 2012,following the decision of the European Commission on the compatibility with EU regulations on state aid of the Contrat-to di Programma for 2009-2011, total payments received amounted to €519,461 thousand and the payment of €323,987thousand made by the MEF in December 2011 – which had been recorded in “Liabilities for advance payments received”– was released. In addition, in February 2013, total payments received under the Contratto di Programma for 2009-2011amounted to €200,362 thousand. The remuneration of BancoPosta current account deposits refers entirely to amounts accruing in 2012 and largely relatesto the deposit of funds deriving from accounts opened by Public Sector entities.Electoral subsidies include €9,782 thousand accrued in 2012, with the remainder attributable to previous years. At 31 De-cember 2012 the repayment of the majority of these receivables were funded only in part in the state budget.Payments for delegated services relate to fees for treasury services performed by BancoPosta on behalf of the state inaccordance with a special agreement with the MEF. €28,350 thousand relates to amounts accruing in 2012, whilst thebalance of €7,972 thousand relates to amounts due for 2008 and 2007.Payment due for the distribution of euro coins refers to the supply and delivery of euro converters, performed on behalfof the Presidenza del Consiglio dei Ministri (Cabinet Office). At 31 December 2012 these receivables have not been fund-ed by the state budget.



Universal Service compensation 645,294 1,211,432Remuneration of current accounts 249,040 326,467Publisher tariff and electoral subsidies 159,924 161,067Payment for delegated services 36,322 36,322Payment for distribution of euro coins 6,026 6,026Other 4,690 6,720Provisions for doubtful debts due from the MEF (61,948) (82,712)

Total 1,039,348 1,665,322

11.4 - Receivables due from the MEF

Balance at Provisions/ Deferred Balance at Provisions/ Deferred Balance at1 Jan 2011 (Reversals) revenues Uses 31 Dec 2011 (Reversals) revenues Uses 31 Dec 2012

Provisions for doubtful debts 72,855 9,857 - - 82,712 (9,045) - (11,719) 61,948

11.5 - Movements in provisions for doubtful debts due from the MEF


238

Provisions for doubtful debts due from the MEF take account of the potential impact of legislation and other policies re-garding the government’s management of the public finances, which could affect the collectability of the receivables atthe time of recognition. The provisions reflect the best estimate of unrecoverable amounts in view of the fact that thesereceivables have not been funded by the state budget. In 2012 a part of these provisions was released to profit or lossincome due to the likely collection of items considered originally to be doubtful.

RECEIVABLES DUE FROM SUBSIDIARIES

Trade receivables due from subsidiaries accounted for using the equity method are as follows:

RECEIVABLES DUE FROM ASSOCIATES

These receivables amount to €7,802 thousand (€8,932 thousand at 31 December 2011) and relate primariy to amountsdue from Docugest SpA.

RECEIVABLES DUE FROM JOINT VENTURES

These receivables amount to €65 thousand (€4,306 thousand at 31 December 2011). The balance includes the portionof a receivable due from Italia Logistrica Srl not accounted for using the proportionate method of consolidation.



Poste Tributi ScpA 8,245 5,089Docutel SpA 371 987Kipoint SpA 104 419Address Software Srl 103 157

Total 8,823 6,652

11.6 - Receivables due from subsidiaries



12 - OTHER RECEIVABLES AND ASSETS

Prepaid taxes of €980,074 thousand include €731,391 thousand paid in advance by Poste Vita SpA for the financial years2007-2012, withholding and substitute tax paid on capital gains on life policies29 and advances paid to the tax authoritiesby the Parent Company, of which €209,615 thousand relates to stamp duty to be paid in virtual form in 2013, and €24,320thousand to withholding tax on interest paid to current account holders for 2012.Amounts due from staff under fixed-term contracts settlements consist of salaries to be recovered following the agree-ments of 13 January 2006, 10 July 2008, 27 July 2010 and 18 May 2012 between Poste Italiane SpA and the trade unions,regarding the re-employment by court order of staff previously employed on fixed-term contracts. As illustrated in the fol-lowing table, at 31 December 2012 these receivables relate to the present value of amounts due from staff and the for-mer pension fund, IPOST, and INPS, with a present value totalling €313,944 thousand. Amounts due from staff and theamount due from INPS for pension contributions related to the agreement of 18 May 2012 are recoverable in the form ofvariable instalments, the last of which is due in 2038. Under an agreement reached with the former IPOST on 23 Decem-ber 2009, contributions relating to the agreements of 2006 and 2008 are to be recovered in equal half yearly payments,the last of which is due in 2014.




Prepaid taxes 729,477 250,597 980,074 483,767 333,196 816,963

Receivable from fixed-term contract settlements 225,917 88,027 313,944 217,717 83,113 300,830

Amounts due from account holders for stamp duty paid on their behalf 196,308 181,993 378,301 - 6,430 6,430

Amounts that cannot be drawn due to court rulings - 85,528 85,528 - 99,179 99,179

Amounts due from social security agencies and pension funds (excluding fixed-term contracts settlements) - 90,153 90,153 - 90,288 90,288

Technical provisions attributable to reinsurers 27,948 - 27,948 17,917 - 17,917

Accrued income and prepaid expenses from trading transactions 1,637 15,896 17,533 - 18,888 18,888

Other amounts due from subsidiaries - 322 322 - 168 168

Other amounts due from associates - 44 44 - - -

Sundry receivables 9,842 123,188 133,030 10,454 107,415 117,869

Provisions for doubtful debts due from others (1,268) (56,092) (57,360) (1,392) (54,314) (55,706)

Total 1,189,861 779,656 1,969,517 728,463 684,363 1,412,826

12.1 - Other receivables and assets

29. Of the total amount, €266,380 thousand, assessed on the basis of provisions at 31 December 2012, has yet to be paid and is accounted for in “Othertaxes payable” (note 25.4).


240

Stamp duty receivable from third parties, totalling €378,301 thousand, consists of: • €181,993 thousand in stamp duty attributable to the holders of postal savings books that the Parent Company collects

virtually, in accordance with the laws;• €196,308 thousand in stamp duty attributable to holders of interest-bearing postal savings certificates and Branches III and

V policies for the year ended 31 December 2012, introduced by article 19 of Law Decree 201/2011 converted as amendedby Law 214/2011 in the manner provided for by the MEF Decree of 24 May 201230. For this last item, the correspondingamount was entered in “Other taxes payable” (note 25.4), until expiration or early extinguishment of the interest-bearing postalsavings certificates or the insurance policies, the date on which the tax will be paid to the tax authorities.

Amounts that cannot be drawn on due to court rulings include €72,449 thousand in amounts seized and not assigned tocreditors in the process of recovery and €13,079 thousand in amounts stolen from the Parent Company in December 2007as a result of an attempted fraud and currently deposited with an overseas bank, which may only be recovered once thelegal formalities are completed.



Non-current Current Nominal Non-current Current NominalItem assets assets Total value assets assets Total value

Receivablesdue from staff under agreement of 2006(1) 13,050 8,279 21,329 23,613 20,281 14,017 34,298 37,710due from staff under agreement of 2008(2) 89,956 22,540 112,496 129,364 106,288 23,629 129,917 151,719due from staff under agreement of 2010(3) 56,553 12,573 69,126 90,821 64,484 17,781 82,265 106,943due from staff under agreement of 2012(4) 46,005 14,886 60,891 75,911 - - - -due from former IPOST(5) 13,530 27,686 41,216 41,529 26,664 27,686 54,350 55,372due from INPS(6) 6,823 2,063 8,886 11,120 - - - -

Total 225,917 88,027 313,944 217,717 83,113 300,830

(1) Discounted on the basis of the forward interest rate curve for government securities in issue at 30 June 2006.(2) Discounted on the basis of the forward interest rate curve for government securities in issue at 31 December 2008 in the case of individual agreements

entered into in 2008, and on the basis of the forward interest rate curve for government securities in issue at 30 June 2009 for individual agreements en-tered into in the first half of 2009.

(3) Discounted on the basis of the forward interest rate curve for government securities in issue at 31 December 2010 in the case of individual agreementsentered into in 2010, and on the basis of the forward interest rate curve for government securities in issue at 30 June 2011 for individual agreements en-tered into in the first half of 2011.

(4) Discounted on the basis of the forward interest rate curve for government securities in issue at 31 December 2012.(5) Discounted on the basis of the forward interest rate curve for government securities in issue at 31 December 2009.(6) Discounted on the basis of the forward interest rate curve for government securities in issue at 31 December 2012.

12.2 - Receivables from fixed-term contracts settlements

Change in Change inBalance at Net the scope of Balance at Net the scope of Balance at

Item 1 Jan 2011 provisions Uses consolidation 31 Dec 2011 provisions Uses consolidation 31 Dec 2012

Public Sector entities for sundry services 10,467 (380) - 267 10,354 (6,857) (293) - 3,204

Receivables from fixed-term contracts settlements 2,189 - - - 2,189 - - - 2,189

Other receivables 39,390 6,593 (2,820) - 43,163 9,814 (1,010) - 51,967

Total 52,046 6,213 (2,820) 267 55,706 2,957 (1,303) - 57,360

12.3 - Movements in provisions for doubtful debts due from others

30. Ministerial Decree of 24 May 2012: Manner of implementation of paragraphs from 1 to 3 of article 19 of Law Decree 201 of 6 December 2001, on stampduty on current accounts and financial products (Official Gazette 127 of 1 June 2012).



13 - CASH AND DEPOSITS ATTRIBUTABLE TO BANCOPOSTA

Cash at post offices, relating exclusively to BancoPosta RFC, regards cash deposits on postal current accounts, postalsavings products (interest-bearing postal certificates and post office savings books) or advances obtained from theTreasury to fund post office operations. This cash may only be used in settlement of these obligations. Cash and cashequivalents in hand are held at post offices (€898,004 thousand) and companies that provide cash transportation serv-ices whilst awaiting transfer to the Italian Treasury (€1,576,208 thousand). Bank deposits relate to BancoPosta RFC‘soperations and include amounts deposited in an account with the Bank of Italy to be used in interbank settlements, to-talling €693,270 thousand.

14 - CASH AND CASH EQUIVALENTS

This item breaks down as follows:

BANK DEPOSITS AND AMOUNTS HELD AT THE ITALIAN TREASURY

Bank deposits include €25,606 thousand that cannot be drawn on due to court rulings regarding various disputes. In De-cember 2012, following the decision of the European Commission on the compatibility with EU regulations on State aidof the Contratto di Programma (Planning Agreement) for 2009-2011, the deposit of €323,987 thousand established withthe MEF in December 2011 was released.



Cash and cash equivalents in hand 2,474,212 2,263,847Cheques 798 320Bank deposits 704,691 295,827

Total 3,179,701 2,559,994

13.1 - Cash and deposits attributable to BancoPosta


Bank deposits and amounts held at the Italian Treasury 1,125,614 1,063,097Deposits with the MEF 1,397,125 829,399Cash and cash equivalents in hand 10,584 10,959

Total 2,533,323 1,903,455

14.1 - Cash and cash equivalents


242

DEPOSITS WITH THE MEF

The Parent Company’s cash deposited in postal current accounts is subject to the same investment requirements as thedeposits of BancoPosta’s private current account holders. In the agreement with the MEF regarding treasury services car-ried out by BancoPosta, which was renewed in March 2013 and is valid until 31 December 2013 (note 9.1), a portion ofprivate current account deposits may be deposited in a specific account held at the MEF (the “Buffer Account”), with theobjective of ensuring flexibility with regard to investments in view of daily movements in amounts payable to current ac-count holders. These deposits are remunerated at a variable rate calculated on the basis of the ECB’s Main RefinancingOperations (MRO) rate. At 31 December 2012 the cash balance available in the Buffer Account with the MEF refers tocustomer deposits subject to investment requirements but not yet invested.

15 - NON-CURRENT ASSETS HELD FOR SALE


These assets refer to industrial buildings for which the related sales process has been completed at a total price of over €283thousand. Recognition of this item has not resulted in changes in profit or loss. At 31 December 2012 the buildings original-ly held for sale, for which no sale materialised after the preliminary agreement, were reclassified to non-current assets.


2012 2011


Cost 16,752 9,753Accumulated depreciation (6,652) (3,706)Impairments (465) (465)



Reclassifications of non-current assets(1) (6,320) 4,241Disposals(2) (3,186) (188)Reclassification from provisions for other risks and charges - -

Total movements (9,506) 4,053


Cost 225 16,752Accumulated depreciation (96) (6,652)Impairments - (465)

Carrying amount 129 9,635


Cost (12,244) 7,293Accumulated depreciation 5,459 (3,052)Impairments 465 -

Total (6,320) 4,241

Disposals(2)

Cost (4,283) (294)Accumulated depreciation 1,097 106

Total (3,186) (188)

15.1 - Non-current assets held for sale



16 - SHARE CAPITAL

The share capital consists of 1,306,110,000 ordinary shares with a par value of €1 each owned by the MEF, the sole share-holder. At 31 December 2012 all the shares in issue are fully subscribed and paid up. No preference shares have been issuedand the Parent Company does not hold treasury shares.The following table shows a reconciliation of the Parent Company’s equity and profit/ (loss) for the year with the consoli-dated amounts:


Changes Changes Equity at in equity Profit/(Loss) Equity at in equity Profit/(Loss) Equity at

31 Dec 2012 2012 for 2012 31 Dec 2011 2011 for 2011 1 Jan 2011

Financial statements of

Poste Italiane SpA 4,312,870 1,588,812 722,245 2,001,813 (2,309,951) 698,539 3,613,225

Undistributed profit/(loss) of investee companies 1,232,210 - 257,832 974,378 - 134,661 839,717

Investments accounted for using the equity method 1,038 - (218) 1,256 - 542 714

Balance of FV and CHF reserves of investee companies 76,648 186,557 - (109,909) (72,010) - (37,899)

Actuarial gains and losses on staff termination benefits of investee companies (3,641) (5,537) - 1,896 717 - 1,179Fees to be amortised attributable to Poste Vita SpA and Poste Assicura SpA(*) (18,563) - (6,066) (12,497) - (9,474) (3,023)

Effects of contributions and transfers of business units between Group companies:

SDA Express Courier SpA 2,269 - 31,131 (28,862) - 2,158 (31,020)

EGI SpA (62,924) - 1,212 (64,136) - 1,661 (65,797)

Postel SpA 16,097 - 307 15,790 - 28,627 (12,837)

PosteShop SpA 664 - - 664 - - 664

Effects of intercompany transactions (11,316) - - (11,316) - (9,423) (1,893)

Elimination of adjustments to value of consolidated companies 222,372 - 61,440 160,932 - 10,519 150,413

Amortisation until1 January 2004/Impairment of goodwill arising from consolidation (126,673) - (42,255) (84,418) - - (84,418)

Effects of tax consolidation arrangement 1,020 - 1,020 - - (6,208) 6,208

Other consolidation adjustments 8,455 - 5,844 2,611 - (5,221) 7,832

Equity attributable to owners

of the Parent 5,650,526 1,769,832 1,032,492 2,848,202 (2,381,244) 846,381 4,383,065

Non-controlling interestsexcluding profit/(loss) - (13) - 13 - - 13

Non-controlling interests in profit/(loss) - - - - - - -

Non-controlling interests in equity - (13) - 13 - - 13

Total consolidated equity 5,650,526 1,769,819 1,032,492 2,848,215 (2,381,244) 846,381 4,383,078

(*) This adjustment relates to deferment of fees payable for the distribution by Poste Vita SpA of certain Life products and by Poste Assicura SpA of Non-life products. As distribution takes place via Poste Italiane SpA’s network, the deferment is eliminated.

16.1 - Reconciliation of equity


244

17 - SHAREHOLDER TRANSACTIONS

The General Meeting of shareholders held on 6 June 2012 approved the payment of dividends totalling €350,000 thou-sand in November, based on a dividend per share of €0.27.

18 - EARNINGS PER SHARE

The calculation of basic and diluted earnings per share (EPS) is based on the Group’s profit for the year. The denominatorused in the calculation of both basic and diluted EPS is represented by the number of the Parent Company’s shares in is-sue, given that no financial instruments with potentially dilutive effects have been issued at 31 December 2012 or 31 De-cember 2011.

19 - RESERVES

Reserves break down as follows:


BancoPosta Cash flowLegal RFC Fair value hedge

reserve reserve reserve reserve Total

Balance at 1 January 2011 186,991 - (207,795) (37,617) (58,421)

Increases/(Decreases) in fair value during the year - - (2,780,366) (148,116) (2,928,482)Tax effect of changes in fair value - - 905,062 47,920 952,982Transfers to profit or loss - - (74,239) (70,998) (145,237)Tax effect of transfers to profit or loss - - 20,792 22,862 43,654

Gains/(Losses) recognised in equity - - (1,928,751) (148,332) (2,077,083)Attribution of remaining profit for 2010 38,948 - - - 38,948Creation of BancoPosta RFC reserve - 1,000,000 - - 1,000,000

Balance at 31 December 2011 225,939 1,000,000 (2,136,546) (185,949) (1,096,556)

Increases/(Decreases) in fair value during the year - - 3,336,192 201,675 3,537,867Tax effect of changes in fair value - - (1,076,665) (65,115) (1,141,780)Transfers to profit or loss - - 7,923 (111,627) (103,704)Tax effect of transfers to profit or loss - - (4,663) 35,796 31,133

Gains/(Losses) recognised in Equity - - 2,262,787 60,729 2,323,516Attribution of remaining profit for 2011 37,183 - - - 37,183Creation of BancoPosta RFC reserve - - - - -

Balance at 31 December 2012 263,122 1,000,000 126,241 (125,220) 1,264,143

19.1 - Reserves



BANCOPOSTA RFC RESERVE

As required by Law31, in order to identify ring-fenced capital for the purposes of applying the Bank of Italy’s prudential re-quirements to BancoPosta’s operations and for the protection of creditors, at the General Meeting held on 14 April 2011Poste Italiane SpA’s shareholder approved the creation of ring-fenced capital to be used exclusively in relation to Banco-Posta’s operations (BancoPosta Ring-fenced Capital or BancoPosta RFC), as governed by Presidential Decree 144/2001,and established the assets and contractual rights to be included in the ring-fence as well as By-laws governing its organ-isation, management and control (note 2.2). BancoPosta RFC was provided originally with an initial reserve of €1 billionthrough the attribution of Poste Italiane SpA’s retained earnings.

FAIR VALUE RESERVE

The Fair value reserve regards changes in the fair value of available-for-sale financial assets, for which, during 2012, fairvalue gains totalling €3,336,192 thousand included:• €3,009,042 thousand regarding the net fair value gain on available-for-sale financial assets attributable to the Group’s Fi-

nancial services segment, consisting of €3,002,359 thousand in gains on securities and €6,683 thousand in gains onequity instruments (note 9.10);

• €282,547 thousand regarding the net fair value gain on available-for-sale financial assets attributable to the Group’s In-surance services segment, as described in note 9.13;

• €44,603 thousand regarding the net fair value gain on available-for-sale financial assets attributable to the Group’s Postaland Business services segment as described in note 9.20.

CASH FLOW HEDGE RESERVE

The Cash flow hedge reserve, which relates to the Parent Company, reflects changes in the fair value of the effective por-tion of cash flow hedges outstanding. In 2012 net fair value gains of €201,675 thousand were attributable to:• a net gain of €201,703 thousand on the value of BancoPosta’s derivative financial instruments, as described in note 9.11;• a loss of €28 thousand on the value of derivative financial instruments, as described in note 9.21.


31. Art. 2, paragraphs 17-octies et seq. of Law 10 of 26 February 2011 converting Law Decree 225 of 29 December 2010.


246

20 - TECHNICAL PROVISIONS FOR INSURANCE BUSINESS

These provisions refer to the contractual obligations of the subsidiaries Poste Vita SpA and Poste Assicura SpA, in re-spect of their policyholders, inclusive of deferred liabilities resulting from application of the shadow accounting method,as follows:

Details of movements in technical provisions for the insurance business and other claims expenses are provided in note 31.1.The reserve for deferred liabilities due to policyholders includes portions of gains and losses attributable to policyholdersunder the shadow accounting method (note 2.3); the value of the provisions reflects the attribution to policyholders, in ac-cordance with the relevant accounting standards, of unrealised profits and losses on available-for-sale financial assets at31 December 2012 (note 9.13) and, to a lesser extent, on financial instruments at fair value through profit or loss.

21 - PROVISIONS FOR RISKS AND CHARGES

Movements in provisions for risks and charges are as follows:



Mathematical provisions 45,063,389 37,830,568Outstanding claims provisions 204,395 341,987Technical provisions where investment risk is transferred to policyholders 9,640,057 9,483,264Other provisions 1,820,138 (3,425,482)

for operating costs 84,230 89,111for deferred liabilities to policyholders 1,735,908 (3,514,593)

Technical provisions for claims 43,064 30,095

Total 56,771,043 44,260,432

20.1 - Technical provisions for insurance business

Released Change inBalance at Finance to profit the scope of Balance at

Item 31 Dec 2010 Provisions cost or loss Uses consolidation 31 Dec 2011

Provisions for non-recurring charges 251,195 24,733 - (21,271) (12,277) - 242,380Provisions for disputes with third parties 235,024 150,377 932 (21,449) (21,566) 155 343,473Provisions for disputes with staff(1) 472,722 141,623 - (19,886) (123,568) 371 471,262Provisions for personnel expenses 166,702 361,320 - (106,218) (60,484) - 361,320Provisions to the solidarity fund 58,706 - - (58,706) - - -Provisions for expired and statute barred postal savings certificates 19,579 - (1,316) (5,409) (505) - 12,349Provisions for taxation/social security contributions(2) 11,337 1,179 11 (241) (1) - 12,285Other provisions 111,733 5,930 34 (14,093) (1,663) 4,053 105,994

Total 1,326,998 685,162 (339) (247,273) (220,064) 4,579 1,549,063

Overall analysis of provisions:- non-current portion 451,572 540,010- current portion 875,426 1,009,053

1,326,998 1,549,063

(1) Net provisions of €109,796 thousand for personnel expenses and €11,941 thousand for service costs (legal assistance).(2) Including €300 thousand in taxation for the period.

21.1 - Movements in provisions for risk and charges (2011)



Provisions for non-recurring charges relate to operational risks arising on the Group’s financial and insurance services. Inthe case of operational risks linked to BancoPosta’s operations, the liabilities includes those arising from the reconstruc-tion of operating ledger entries at the time of Poste Italiane SpA’s incorporation, liabilities deriving from the provision ofdelegated services for social security agencies, fraud, compensation and adjustments to income for previous years andestimated risks for costs and charges to be incurred as a result of seizures of accounts held with BancoPosta. Provisionsfor the year of €18,066 thousand primarily regard the latter two types of liability. Uses of €21,903 thousand refer to lia-bilities identified or settled during the year. The release of €18,963 thousand to profit or loss reflects the non-occurrenceof liabilities identified in the past. Provisions are based on the present value of the identified liabilities.Provisions for disputes with third parties regard the present value of expected liabilities deriving from different types oflegal and out-of-court dispute with suppliers and third parties, the related legal expenses, and penalties and indemnitiespayable to customers. Provisions for the year of €108,852 thousand reflect the estimated value of new liabilities meas-ured on the basis of expected outcomes. A reduction of €49,452 thousand relates to the non-occurrence of liabilities iden-tified in the past, whilst a reduction of €37,271 thousand regards the value of disputes settled. Provisions for disputes with staff regard liabilities that may arise following labour litigation and disputes of various type.Net uses of €16,578 thousand, net of provisions for legal expenses, relate to an update of the estimate of the liabilitiesand the related legal expenses, taking account of both the overall value of negative outcomes in terms of litigation, andthe application of Law 183 of 4 November 2010 (“Collegato lavoro”), which has introduced a cap on current and futurecompensation payable to an employee in the event of “court-imposed conversion” of a fixed-term contract. Uses of€100,901 thousand include amounts used to cover the cost of settling disputes, including €26,300 thousand in the formof asset seizures by the Parent Company’s creditors. Provisions for personnel expenses are made to cover expected liabilities arising in relation to the cost of labour. They haveincreased by €131,558 thousand to reflect the estimated value of new liabilities and decreased as a result of the non-oc-currence of liabilities identified in the past (€67,529 thousand) and the value of disputes settled (€248,050 thousand). Provisions for restructuring charges reflect the estimated costs to be incurred by the Parent Company for early retirementincentives, under the current redundancy scheme for employees leaving the Company by 31 December 2014.


Released Change inBalance at Finance to profit the scope of Balance at

Item 31 Dec 2011 Provisions cost or loss Uses consolidation 31 Dec 2012

Provisions for non-recurring changes 242,380 18,066 - (18,963) (21,903) - 219,580Provisions for disputes with third parties 343,473 108,852 1,569 (49,452) (37,271) (19) 367,152Provisions for disputes with staff(1) 471,262 125,120 - (141,698) (100,901) - 353,783Provisions for personnel expenses 361,320 131,558 - (67,529) (248,050) - 177,299Provisions for restructuring charges - 190,000 - - - - 190,000Provisions for expired and statute barred postal savings certificates 12,349 - 509 - (201) - 12,657Provisions for taxation/social security contributions(2) 12,285 3,360 13 - (411) - 15,247Other provisions 105,994 7,076 - (25,200) (11,854) (54) 75,962

Total 1,549,063 584,032 2,091 (302,842) (420,591) (73) 1,411,680

Overall analysis of provisions:- non-current portion 540,010 538,879- current portion 1,009,053 872,801

1,549,063 1,411,680

(1) Net provisions of €28,613 thousand for personnel expenses and €12,035 thousand for service costs (legal assistance).(2) Including €70 thosuand in taxation for the period.

21.2 - Movements in provisions for risk and changes (2012)


248

Provisions for expired and statute barred postal savings certificates held by BancoPosta have been made to cover the costof redeeming certificates relating to specific issues, the value of which was recognised in revenue in profit or loss in theyears in which the certificates became invalid. The provisions were made in response to the Parent Company’s decisionto redeem such certificates even if expired and statute barred. At 31 December 2012 the provisions represent the pres-ent value of total liabilities, based on a nominal value of €21,764 thousand, expected to be progressively settled by 2043. Provisions for taxation/social security contributions have been made to cover potential future tax liabilities. Other provisions cover probable liabilities of various type, including: estimated liabilities deriving from the risk that specif-ic legal actions to be undertaken in order to reverse seizures of the Parent Company’s assets may be unable to recoverthe related amounts; claims for rent arrears on properties used free of charge by the Parent Company, and claims for pay-ment of accrued interest expense due to certain suppliers. The decrease in provisions during 2012 was due to the reclas-sification of liabilities for seizures to provisions for disputes with staff.

22 - EMPLOYEE TERMINATION BENEFITS AND PENSION PLANS

Following the reform of supplementary pension provision, from 1 January 2007 companies with over 50 employees mustpay vested employee termination benefits into a supplementary pension fund or into a Treasury Fund set up by INPS (shouldthe employee have exercised the specific option provided for by the new legislation). These benefits qualify as a defined con-tribution plan and thus represent an expense to be recognised at nominal value in personnel expenses. In the case of theseGroup companies, employee termination benefits vesting up to 31 December 2006 remain with the company and continueto represent accumulated liabilities qualifying as a defined benefit plan, for which actuarial calculation is necessary. A similartreatment is applied to vested employee termination benefits at Group companies with less than 50 employees.

Pension plans refer entirely to BdM-MCC.

The following movements in employee termination benefits took place in 2012 and 2011:

The current service cost is recognised in personnel expenses (note 33.1), whilst the interest component is recognised infinance costs (note 37.2).

During 2012 net uses of provisions for employee termination benefits amounted to €96,072 thousand, of which €90,982thousand relates to benefits paid and €5,090 thousand to substitute tax.


2012 2011

Employee Employee termination Pension termination Pension

benefits plans Total benefits plans Total

Balance at 1 January 1,192,570 3,699 1,196,269 1,323,481 - 1,323,481

Change in the scope of consolidation 1,129 - 1,129 3,192 3,875 7,067Current service cost 733 - 733 661 - 661Interest component 57,806 158 57,964 63,863 71 63,934Effect of actuarial gains/(losses) 279,914 196 280,110 (63,116) (44) (63,160)Uses for the year (95,675) (397) (96,072) (133,509) (203) (133,712)Reduction due to fixed-term contractssettlement of 2010 - - - (2,002) - (2,002)

Balance at 31 December 1,436,477 3,656 1,440,133 1,192,570 3,699 1,196,269

22.1 - Movements in provisions for employee termination benefits and pension plans



The main actuarial assumptions applied in calculating employee termination benefits are as follows:

The applicable discount rate, which was relatively decoupled from movements in the spreads applicable to Italian govern-ment securities, was determined using the same criteria used at 31 December 2011. The effects of the reduction of thediscount rate during the year are reflected in the actuarial losses incurred.

23 - FINANCIAL LIABILITIES


PAYABLES DERIVING FROM POSTAL CURRENT ACCOUNTS

Payables deriving from postal current accounts represent BancoPosta’s direct deposits, and include interest accrued at 31December 2012, which was settled with customers in January 2013.



Non-current Current Non-current CurrentItem liabilities liabilities Total liabilities liabilities Total

Payables deriving from postal current accounts - 39,920,303 39,920,303 - 37,144,907 37,144,907Financial liabilities at fair value - - - 59,204 - 59,204Borrowings 5,203,205 2,709,259 7,912,464 1,282,360 3,559,216 4,841,576

Bonds 470,556 164,691 635,247 585,347 780,272 1,365,619Amounts due to Cassa Depositi e Prestiti for loans 116,975 109,442 226,417 226,417 306,305 532,722Financial institutions borrowings 4,604,325 2,427,793 7,032,118 456,475 2,447,504 2,903,979Other borrowings 11,349 7,333 18,682 14,121 25,135 39,256

Derivative financial instruments 863,741 (7,387) 856,354 603,327 39,448 642,775Cash flow hedges 228,436 (16,437) 211,999 210,650 16,756 227,406Fair value hedges 635,305 9,044 644,349 392,489 7,085 399,574Fair value through profit or loss - 6 6 188 15,607 15,795

Financial liabilities due to subsidiaries - 551 551 - 550 550Other financial liabilities 660 2,468,157 2,468,817 712 2,461,943 2,462,655

Total 6,067,606 45,090,883 51,158,489 1,945,603 43,206,064 45,151,667

23.1 - Financial liabilities

2012 2011

Discount rate 2.69% 4.60%Average staff turnover32 (summary data) 0.65% 0.93%

32. Frequency of early termination of employment due to resignations and dismissals.


250

FINANCIAL LIABILITIES AT FAIR VALUE

Financial liabilities at fair value through profit or loss, which relate to investment contracts issued by the insurance com-pany, Poste Vita SpA, were repaid in full in 2012.

BORROWINGS

Other than the guarantees described in the following notes, borrowings are unsecured and are not subject to financialcovenants, which would require Group companies to comply with financial ratios or maintain a certain rating.

Bonds

Bonds are comprised of six bonds issued by BdM-MCC SpA between 1998 and 2001, listed on the MOT. These bondscarry variable rates or simulate variable rate bonds through the use of fair value hedges (note 9.12), have a nominal valueof €642,314 thousand and outstanding principal at the end of the period of €548,049 thousand. As a result of the abovementioned fair value hedges, at 31 December 2012 the carrying amount of the bonds reflects a fair value adjustment of€78,972 thousand. The total fair value of these bonds at 31 December 2012 was €541,431 thousand.The bonds with a nominal value of €750 million, issued in 2002 by the Parent Company and listed on the LuxembourgStock Exchange, were redeemed in full at maturity in July 2012.

AMOUNTS DUE TO CASSA DEPOSITI E PRESTITI FOR LOANS

This item refers to fixed rate loans issued to the Parent Company by Cassa Depositi e Prestiti. The laws authorising thefinancing also establish the methods of repayment, as shown below:

The fair value of the loans is €235,381 thousand (€533,136 thousand at 31 December 2011).

The outstanding principal assigned by law to the Ministry of the Economy and Finance is offset by a receivable, recog-nised as a financial asset due from the MEF. Collection of this receivable is based on the repayment schedules for theloans (note 9.18).


Loans to be repaid Loans with principal Loans with principalin full by to be repaid and interest to be Total

Legislation Poste Italiane by MEF repaid by MEF(1) loans

Law 227/75 (service accommodation) - 8,612 - 8,612

Law 39/82 (subsequent changes to postal service) - 118,654 - 118,654

Law 887/84 - - 98,119 98,119

Law 41/86 - 1,032 - 1,032

Total - 128,298 98,119 226,417

(1) From 2001, the interest portion was derecognised from the state budget and charged instead to Poste Italiane SpA’s profit or loss. From 2006 interestwas attributed to the Company.

23.2 - Datail of loans



Financial institutions borrowings

This item primarily relates to the Parent Company and breaks down as follows:

Financial institutions borrowings are subject to standard negative pledge clauses.

Outstanding liabilities for repurchase agreements at 31 December 2012 amount to €6,054,686 thousand and relate to con-tracts with a nominal value of €6,006,112 thousand, entered into by the Parent Company with major financial institutions.These liabilities consist of:• €2,524,694 thousand (of which €24,694 thousand in accrued interest) related to the three-year loan obtained in Febru-

ary 2012 from Banca IMI SpA – of which more in note 9.10 and in the paragraph devoted to liquidity risk in note 3 – ata spread negotiated with the lenders over the REFI rate33;

• €2,523,542 thousand (of which €23,542 thousand in accrued interest) related to the loan obtained in February 2012 fromCassa Depositi e Prestiti – and repayable in instalments, i.e. €807,533 thousand on 4 September 2013, €807,533 thou-sand on 6 August 2014, and €908,476 thousand on 26 February 2015, of which more in note 9.10 and in the paragraphdevoted to liquidity risk in note 3 – at a spread negotiated with the lenders over the REFI rate;

• €517,586 thousand (of which €44 thousand in accrued interest) related to ordinary funding by BancoPosta RFC via re-purchase agreement transactions with primary financial institutions, in order to optimise the match between investmentand short-term movements in current account deposits by BancoPosta’s private customers;

• €488,864 thousand related to transactions carried out by the Parent Company’s Postal and Business services segmentwith the aim of maximising returns and meeting short-term liquidity requirements.

At 31 December 2012 the fair value of repurchase agreements amounts to €6,098,268 thousand.

The carrying amounts of the other financial liabilities approximate to their fair value.

Drawdowns on the Group’s total committed and uncommitted lines of credit amount to €315 thousand, out of a total of€1,338 thousand. These lines of credit are unsecured.




Repurchase agreements 4,200,000 1,854,686 6,054,686 - 2,364,138 2,364,138Variable rate loan from DEPFA Bank maturing 30 September 2013 - 250,000 250,000 250,000 - 250,000EIB fixed rate loan maturing 11 April 2018 200,000 - 200,000 200,000 - 200,000EIB fixed rate loan maturing 23 March 2019 200,000 - 200,000 - - -EIB variable rate loan maturing 2017 4,325 5,169 9,494 6,475 15,036 21,511Short-term borrowings - 300,000 300,000 - 50,000 50,000Current account overdrafts - 14,792 14,792 - 15,588 15,588Accrued interest expense - 3,146 3,146 - 2,742 2,742

Total 4,604,325 2,427,793 7,032,118 456,475 2,447,504 2,903,979

23.3 - Financial institution borrowings

33. The REFI rate (also known as the “rate for refinancing operations”) is the ECB’s key interest rate, reflecting the variable rate banks are required to paywhen they borrow from the ECB.


252

Other borrowings

This item consists in: • €4,327 thousand relating to a loan granted to BdM-MCC SpA by Cassa Depositi e Prestiti SpA. Also in this case, in the

event of default, the loan from BdM-MCC SpA is assigned to Cassa Depositi e Prestiti SpA, the ultimate debtor;• €13,552 thousand regarding the outstanding principal due under fixed asset finance lease agreements, which have a

purchase option at the end of the lease term, as broken down below:


Movements in derivative financial instruments during 2012 are described in note 9.

FINANCIAL LIABILITIES DUE TO SUBSIDIARIES

These liabilities relate to intercompany current accounts paying interest at market rates with subsidiaries accounted forusing the equity method.

OTHER FINANCIAL LIABILITIES

Other financial liabilities primarily relate to BancoPosta’s operations.


At 31 December 2012

Installments from 1 Jan Item 2013 until expiration Interest Present value

Properties used in operations 11,181 1,569 9,612Other assets 43 3 40Industrial patents, intellectual property rights, concessions, licences, trademarks and similar rights 4,387 487 3,900

Total 15,611 2,059 13,552

23.4 - Reconcilation of total future payments and their present value

At 31 December 2012

Item within 12 months 1-5 years after 5 years Total

Properties used in operations 907 8,705 - 9,612Other assets 11 29 - 40Industrial patents, intellectual property rights, concessions, licences, trademarks and similar rights 1,729 2,171 - 3,900

Total 2,647 10,905 - 13,552

23.5 - Term to maturity of finance lease liabilities



Amounts due on prepaid cards relate to amounts due to Postepay (€735,209 thousand) and Pensione (€8,005 thousand)cardholders. Amounts due on domestic and international money transfers represent the exposure to third parties for:• domestic postal orders totalling €335,229 thousand (€378,269 thousand at 31 December 2011);• domestic and international transfers totalling €396,482 thousand (€410,955 thousand at 31 December 2011);• Moneygram transfers totalling €27 thousand (€2,418 thousand at 31 December 2011).

Cashed cheques represent the exposure to customers for cheques paid into post office savings books but not yetcredited. Endorsed checks represent the exposure to customers for endorsed checks in circulation.Tax collection and road tax payables relate to amounts due to collection agents, the tax authorities and regional authori-ties for payments made by customers.Amounts to be credited to customers largely relate to:• amounts to be paid to the beneficiaries of direct debits, totalling €40,392 thousand;• amounts in the process of payment in relation to maturing insurance policies issued by Poste Vita SpA, totalling

€11,066 thousand, and units of UCIs (Collective Investment Undertaking) issued by BancoPosta SGR SpA, totalling€800 thousand;

• amounts to be paid for BancoPosta promotions, totalling €5,896 thousand;• payments of bills by payment slip in the process of being credited to beneficiaries’ accounts, totalling €5,567 thousand.

Amounts payable for guarantee deposits include €87,860 thousand paid to BdM-MCC SpA from interest rate swap coun-terparties (collateral provided by specific Credit Support Annexes), entered into for fair value hedging purposes and €15,374thousand received by the Parent Company from counterparties with which it has entered into repo transactions for fixedincome securities (collateral provided by specific Global Master Repurchase Agreements). The item “Other amounts payable to third parties” refers mainly to payments to be made to third parties due to endorsedcheques issued. Payables deriving from items in process include amounts available to customers in relation to payments made on behalfof public entities and other BancoPosta operations.Other financial liabilities include €13,373 thousand payable by Poste Vita SpA in accordance with Law 166/2008, whichincluded insurance companies within the scope of legislation governing dormant accounts, including the requirement topay the value of any dormant policies into the specific fund established by the MEF.




Prepaid cards - 743,214 743,214 - 724,539 724,539Domestic and international money transfers - 731,738 731,738 - 791,642 791,642Cashed cheques - 335,869 335,869 - 300,574 300,574Endorsed cheques - 172,968 172,968 - 211,694 211,694Tax collection and road tax - 122,727 122,727 - 102,388 102,388Amounts to be credited to customers - 113,972 113,972 - 114,296 114,296Guarantee deposits - 103,234 103,234 - 80,504 80,504Other amounts payable to third parties - 56,480 56,480 - 59,354 59,354Payables for items in process - 40,170 40,170 - 53,598 53,598Other 660 47,785 48,445 712 23,354 24,066

Total 660 2,468,157 2,468,817 712 2,461,943 2,462,655

23.6 - Other financial liabilities


254

ANALYSIS OF NET DEBT/(FUNDS)

The Group’s net debt/(funds) at 31 December 2012 and 31 December 2011 is as follows.

Cash and cash equivalents includes € 1,168,127 thousand in customer deposits which are required to be invested andhave not yet been invested, and a total of €25,606 thousand restricted pending court rulings regarding various disputes.


of which ) of whichBalance at 31 related Balance at 31 related

Item Note December 2012 parties December 2011) parties)

Financial liabilities [23.1] 51,158,489 45,151,667

Postal current account deposits 39,920,303 511 37,144,907 880Financial liabilities designated at fair value - - 59,204 -Bonds 635,247 - 1,365,619 -Loans from Cassa Depositi e Prestiti 226,417 226,417 532,722 532,722Financial institutions borrowings 7,032,118 2,523,542 2,903,979 -Other borrowings 18,682 - 39,256 -Derivative financial instruments 856,354 - 642,775 -Other financial liabilities 2,469,368 18,251 2,463,205 10,026

Technical provisions for insurance business [20.1] 56,771,043 - 44,260,432 -

Financial assets [9.1] (104,147,825) (83,732,550)

Loans and receivables (8,403,244) (8,128,530) (9,342,897) (8,376,765)Held-to-maturity financial assets (14,048,068) - (14,363,892) -Available-for-sale financial assets (71,495,277) - (50,152,016) -Financial instruments designated at fair value through profit or loss (9,963,583) - (9,641,455) -Derivative financial instruments (237,653) - (232,290) -

Technical provisions for claims attributable to reinsurers [12.1] (27,948) - (17,917) -

Net financial liabilities/(assets) 3,753,759 5,661,632

Cash and deposits attributable to BancoPosta [13.1] (3,179,701) - (2,559,994) -Cash and cash equivalents [14.1] (2,533,323) (1,397,125) (1,903,455) (829,399)

Net debt/(funds) (1,959,265) 1,198,183

23.7 - Net debt/(funds)



24 - TRADE PAYABLES

The following table provides a breakdown of trade payables:

AMOUNTS DUE TO SUPPLIERS

PREPAYMENTS AND ADVANCES FROM CUSTOMERS

Prepayments and advances from customers relates to amounts received from customers as prepayment for the follow-ing services to be rendered:



Amounts due to suppliers 1,392,753 1,431,136Prepayments and advances from customers 212,161 547,225Other trade payables 13,746 15,805Amounts due to subidiaries 5,397 6,551Amounts due to associates 4,399 4,418Amounts due to joint ventures 2,239 11,183

Total 1,630,695 2,016,318

24.1 - Trade payables


Italian suppliers 1,247,583 1,276,498Overseas suppliers 17,610 11,385Overseas counterparties(1) 127,560 143,253

Total 1,392,753 1,431,136

(1) The amount due to overseas counterparties regards fees payable to overseas postal operators and companies in return for postal and telegraphicservices received.

24.2 - Amounts due to suppliers


Advances from MEF (note 11.4) - 323,987Prepayments from overseas correspondents 87,023 92,697Automated franking 81,608 86,412Unfranked mail 17,281 26,294Postage-paid mailing services 9,478 9,038Other services 16,771 8,797

Total 212,161 547,225

24.3 - Prepayment and advances from customers


256

AMOUNTS DUE TO SUBSIDIARIES

Amounts due to subsidiaries relates to amounts due to subsidiaries accounted for using the equity method, as shown inthe following table:

AMOUNTS DUE TO ASSOCIATES

Amounts payable to associates, totalling €4,399 thousand (€4,418 thousand at 31 December 2011), include amounts dueto Docugest SpA.

AMOUNTS DUE TO JOINT VENTURES

This item amounts to €2,239 thousand (€11,183 thousand at 31 December 2011), relating primarily to Uptime SpA. The changewas due to Italia Logistrica Srl, which was originally accounted for using the proportionate method of consolidation and now,following the acquisition of full control by SDA Express Courier SpA, is accounted for on a line-by-line basis.

25 - OTHER LIABILITIES

The following table provides a breakdown of other liabilities:



Address Software Srl 1,534 1,541Docutel SpA 1,592 2,321Poste Tributi ScpA 1,803 1,897Kipoint SpA 468 792

Total 5,397 6,551

24.4 - Amount due to subsidiaries



Amounts due to staff - 631,225 631,225 - 622,310 622,310Social security payables 48,963 396,775 445,738 51,628 385,929 437,557Other tax liabilities 196,308 543,182 739,490 - 373,613 373,613Amounts due to the MEF - 12,140 12,140 - 12,140 12,140Other amounts due to joint ventures - - - - 20 20Other amounts due to associates 6 - 6 6 - 6Other amounts due to subsidiaries - 4 4 - 4 4Sundry payables 65,735 74,431 140,166 77,446 95,799 173,245Accrued expenses and deferred income from trading 18,257 45,245 63,502 6,494 44,329 50,823

Total 329,269 1,703,002 2,032,271 135,574 1,534,144 1,669,718

25.1 - Other liabilities



AMOUNTS DUE TO STAFF

Amounts due to staff relate primarily to amounts accrued and not paid at 31 December 2012, as follows:

SOCIAL SECURITY PAYABLES


Amounts due to the former pension fund, IPOST, relate to pension and social security contributions due to the instituteon behalf of the Group’s employees, calculated on salaries paid and accrued as of 31 December 2012, as reported in amountspayable to staff.Amounts due to the Istituto Nazionale per la Previdenza Sociale (INPS, the National Institute of Social Security) primarilyrelate to amounts accrued for, and not yet paid at 31 December 2012, relating to employee termination benefits to bepaid into the agency’s Treasury fund.Amounts due to the Istituto Nazionale per l’Assicurazione contro gli Infortuni sul Lavoro (INAIL, the National Occupation-al Injury Compensation Authority) relate to injury compensation paid to employees of the Parent Company for injuries oc-curring up to 31 December 1998. This original amount of the payable was €82,633 thousand and is repayable over a pe-riod of thirty years from 31 December 1999, in accordance with an amortisation schedule considering fixed annual instal-ments and an annual interest rate of 2.5%.Amounts payable to pension funds relate to sums due to FondoPoste and other pension funds following the decision bycertain Group employees to join a supplementary fund.



Fourteenth month salaries 241,926 235,393Incentives 173,684 177,441Accrued vacation pay 71,159 81,691Other amounts due to staff 144,456 127,785

Total 631,225 622,310

25.2 - Amounts due to staff



Former IPOST - 258,081 258,081 - 246,811 246,811INPS 81 49,416 49,497 87 49,521 49,608INAIL 48,882 2,734 51,616 51,541 2,742 54,283Pension funds - 73,672 73,672 - 68,184 68,184Amounts due to the Solidarity Fund - 773 773 - 2,748 2,748Other agencies - 12,099 12,099 - 15,923 15,923

Total 48,963 396,775 445,738 51,628 385,929 437,557

25.3 - Social security payables


258

OTHER TAX LIABILITIES

Other tax liabilities break down as follows:

Tax due on insurance provisions relates to Poste Vita SpA and is described in note 12.1.Stamp duty is payable to the tax authorities as duty collected virtually after the adjustment made in 2013 pursuant to note3-bis of art. 13 of the Tariffs provided for by Presidential Decree 642/1972. The non-current portion of the stamp duty re-lates to the amount accrued on interest-bearing postal savings certificates outstanding and on Branch III and V insurancepolicies pursuant to the new law referred to in note 12 (“Other receivables and assets”). Withholding tax on employees’ and consultants’ salaries relates to amounts paid to the tax authorities by Group compa-nies in January and February 2013.Withholding tax due on postal current accounts refers to amounts withheld by BancoPosta on interest accrued during theyear on current accounts.

AMOUNTS DUE TO THE MEF

Amounts due to the MEF, amounting to €12,140 thousand, relate to pensions paid by the Ministry to former employeesof Poste Italiane SpA for the period 1 January 1994 to 31 July 1994.

SUNDRY PAYABLES




Non-current Current Non current CurrentItem liabilities liabilities Total liabilities liabilities Total

Tax due on insurance provisions - 266,380 266,380 - 162,191 162,191Stamp duty payable 196,308 40,612 236,920 - 14,160 14,160Withholding tax on employees’ and consultants’ salaries - 127,251 127,251 - 104,584 104,584Withholding tax on postal current accounts - 44,154 44,154 - 24,320 24,320VAT payable - 25,628 25,628 - 25,952 25,952Substitute tax - 8,954 8,954 - 19,934 19,934Other taxes due - 30,203 30,203 - 22,472 22,472

Total 196,308 543,182 739,490 - 373,613 373,613

25.4 - Other tax liabilities



Sundry payables attributable to BancoPosta 55,065 21,517 76,582 65,581 17,833 83,414Guarantee deposits 8,236 648 8,884 10,315 2,221 12,536Other payables 2,434 52,266 54,700 1,550 75,745 77,295

Total 65,735 74,431 140,166 77,446 95,799 173,245

25.5 - Sundry payables



Sundry payables attributable to BancoPosta’s operations primarily relate to transactions effected in previous years in theprocess of settlement.Guarantee deposits primarily relate to amounts collected from the Parent Company’s customers as a guarantee of pay-ment for services (postage-paid mailing services, the use of post office boxes, lease contracts, telegraphic service con-tracts, etc.). Other payables include €5,779 thousand relating to the collection of receivables transferred from BdM-MCC SpA to Uni-credit SpA.

ACCRUED EXPENSES AND DEFERRED INCOME FROM TRADING TRANSACTIONS

The nature and composition of accrued expenses and deferred income from trading transactions is as follows:

Deferred income comprises:• €21,382 thousand in prepaid telephone traffic sold as of 31 December 2012 by PosteMobile SpA and not yet used by

customers; • €12,448 thousand in grants approved by the competent public authorities in favour of the Parent Company, whose

matching costs have not been incurred yet; • €7,395 thousand in fees on Postamat cards collected in advance by the Parent Company;• €5,671 thousand (of which €5,356 thousand relates to income to be recognised after 2012) relating to the Parent Com-

pany’s advance collection of the rental on a thirty-year lease of a pneumatic postal structure in Rome;• €6,981 thousand relating to income to be recognised in future years as a result of the Gran Premio BancoPosta loyalty

programme, which grants award credits to customers to reward loyalty. Recognition of the related revenue is deferreduntil the Company has fulfilled its obligations to deliver awards to customers or, if the award credits must be used with-in a limited period of time, until the credits are no longer valid, in accordance with IFRIC 13.

26 - REVENUE FROM SALES AND SERVICES

Revenue from sales and services, amounting to €9,932,535 thousand, breaks down as follows:




Accrued expenses - 4,628 4,628 - 4,872 4,872Deferred income 18,257 40,617 58,874 6,494 39,457 45,951

Total 18,257 45,245 63,502 6,494 44,329 50,823

25.6 - Accured expenses and deferred income

Item For the year ended 31 December 2012 For the year ended 31 December 2011

Postal and Business services 4,533,058 5,004,408Financial services 5,144,805 4,906,145Other sales of goods and services 254,672 209,102

Total 9,932,535 10,119,655

26.1 - Revenue from sales and services


260

POSTAL AND BUSINESS SERVICES

Revenue from Postal and Business services breaks down as follows:

Unfranked mail relates to revenue from the mailing of correspondence by clients from the post office network, includingthose conducted using the Bulk Mail formula.Automated franking by third parties or at post offices relates entirely to the Parent Company, and includes revenue fromthe mailing of correspondence franked by customers or at post offices using a franking machine.Stamps relates to the sale of stamps through post offices and authorised outlets, and sales of stamps used for frankingon credit.Express parcel and express courier services relate to services provided by the subsidiary, SDA Express Courier SpA.Integrated services relate entirely to Poste Italiane SpA, from the delivery of administrative notices and fines, amountingto €214,657 thousand, the integrated notification service for legal process carried out on behalf of UNEP (Notifications,Enforcements and Complaints Offices), totalling €28,629 thousand, and revenue deriving from the agreement with thetax authorities regarding bulk and registered services, amounting to €2,212 thousand. Postage-paid mailing services, relating exclusively to the Parent Company, include revenue from the delivery of publica-tions and mail-order goods on behalf of publishers who benefit from preferential rates, as provided for by Law 46 of 27February 2004, which converted Law Decree 353 of 24 December 2003.Overseas mail and parcels relates to revenue from the international exchange of mails and parcels performed by PosteItaliane SpA.


For the year ended For the year ended Item 31 December 2012 31 December 2011

Unfranked mail 1,466,928 1,587,865Automated franking by third parties and at post office 1,054,629 1,183,571Stamps 336,981 416,656Express parcel and express courier service 327,376 310,722Integrated services 245,498 279,595Postage-paid mailing services 167,642 161,930Overseas mail and parcels 112,295 117,438Telegrams and online services 51,430 55,240Electronic document management and e-procurement services 43,787 53,420Innovative services 42,345 49,513Logistics services 33,079 29,777Census services 17,837 91,690Other postal services 78,721 74,003

Total revenue from Postal services 3,978,548 4,411,420

Air shipping services 70,165 72,940PosteShop sales 32,591 45,652Rentals 20,087 20,929Disposals of assets held for sale - 2,650Other commercial services 72,006 70,411

Total revenue from Business services 194,849 212,582

Total market revenue 4,173,397 4,624,002

Universal Service compensation 349,888 357,101Electoral subsidies(1) 9,773 23,305

Total 4,533,058 5,004,408

(1) Subsidies for tariffs discounted in accordance with the law.

26.2 - Revenue from Postal and Business services



Telegrams and online services primarily relate to the telegram service provided by the Parent Company by phone or atpost offices, and amounting to €27,377 thousand and €9,656 thousand, respectively.Revenue from electronic document management and e-procurement services refer exclusively to Postel SpA and relateto the distribution and supply of stationery, forms and printed documents. Innovative services revenue relates to Postel SpA and includes €14,121 thousand from the door-to-door service, €13,547thousand from direct mailing services, €9,273 thousand from commercial printing and €5,404 thousand from other “addedvalue” services.Logistics services refer entirely to Italia Logistica Srl. Revenue from air shipping services refer to the subsidiary Mistral Air Srl. PosteShop sales relates primarily to revenue from sales of products held in shops, product catalogue sales and sales ofscratch cards. Rentals, amounting to €20,087 thousand, include: • €13,059 thousand in rentals from investment property;• €4,619 thousand in rentals from commercial property;• €2,409 thousand in charges to tenants for expenses and ancillary costs related to rented properties.

Disposals of assets held for sale, absent in 2012, reflected proceeds from property sales by EGI SpA. Other commercial services included revenue generated from applications for residence permits and clearances (€34,707thousand), call centre services (€4,799 thousand) and ancillary franking and packaging services (€2,172 thousand). Universal Service compensation relates to amounts paid by the MEF to cover the costs of fulfilling the USO, which theParent Company continued to render in 2012, pending renewal of the Contratto di Programma (Planning Agreement) forthe three-year period 2012-2014 by Poste Italiane SpA, the MEF and the Ministry for Economic Development. Revenueof €349,888 thousand was recognised by applying the pre-existing subsidy cap mechanism, on the basis of the best es-timate of the likely compensation that can be reasonably expected under current negotiations. Electoral subsidies relate to amounts paid by the state to cover reductions and preferential prices granted to election can-didates under Law 515/93. This amount has been budgeted for only in part by the MEF.

FINANCIAL SERVICES

Revenue from Financial services – which relate mainly to services rendered, in connection with the Parent Company’s Ban-coPosta RFC, by BdM-MCC SpA and by BancoPosta Fondi SpA SGR – breaks down as follows:



Income from investment of postal current account deposits 1,773,297 1,628,775Fees for collection of postal savings deposits 1,649,115 1,504,050Commissions on payment of bills by payment slip 572,591 594,794Other revenues from current account services 478,553 480,701Income from delegated services 152,907 179,244Distribution of loan products 150,133 157,681Fees for issue and use of prepaid cards 97,557 95,796Money transfers 63,785 70,735Fees fo the management of public funds and other income from investment 52,155 21,867Commissions from securities trading 44,883 89,048Mutual fund management fees 26,414 27,284Securities custody 19,649 21,437Other products and services 63,766 34,733

Total 5,144,805 4,906,145

26.3 - Revenue from Financial services


262

Income from investment of postal current account deposits breaks down as follows:

Income from investments in securities

Interest income on securities derives from the investment of deposits paid into postal current accounts by private cus-tomers and from the repurchase agreement transaction described in note 23.3. The total includes the impact of the inter-est rate hedge described in note 9.11.

Income from deposits held with the MEF

Remuneration of postal current account deposits represents accrued interest for the year on amounts deposited by Pub-lic Sector entities and, to a lesser extent, returns on amounts deposited in the so-called Buffer account with the MEF, asdescribed in note 14. The variable rate used to calculate remuneration of the above deposits and the rate used to calcu-late interest on the Buffer account are those provided for in the specific agreements with the MEF, which are currentlybeing renewed.

Net remuneration of own liquidity recognised in finance income and costs

Net remuneration of own liquidity recognised in finance income and costs (note 14) is shown separately in finance incomeand costs (note 37.1), unlike income from the investment of third-party deposits by BancoPosta.

Fees for the collection of postal savings deposits

Fees for the collection of postal savings deposits relate to the remuneration for the provision of postal savings certificatesissue and redemption of and payments into and withdrawals from savings books. This service is provided by Poste Ital-iane SpA on behalf of Cassa Depositi e Prestiti under the Agreement of 3 August 2011, covering the three-year period2011-2013, as amended on 13 December 2012.Other revenue from current account services primarily relates to charges on current accounts, amounting to €185,816thousand, fees on amounts collected and on statements of account sent to large customers, amounting to €117,652thousand, annual fees on debit cards, amounting to €61,134 thousand, and related transactions, amounting to €62,181thousand.


Item 2012 2011

Income from investments in securities 1,520,373 1,316,621Interest income on held-to-maturity financial assets 598,816 605,147Interest income on available-for-sale financial assets 869,581 659,802Interest income on securities held for trading 544 -Interest income on asset swaps of available-for-sale financial assets 51,432 51,672

Income from deposits held with the MEF 256,659 332,900Remuneration of current account deposits (deposited with the MEF) 256,659 332,900

Net remuneration of own liquidity recognised in finance income and costs (3,735) (20,746)

Total 1,773,297 1,628,775

26.4 - Income from investment of postal current accounts deposits



Income from delegated services primarily regards amounts received by the Parent Company for the payment of pensionspaid by INPS (€81,570 thousand), and for the provision of treasury services on the basis of the agreement between PosteItaliane SpA and the MEF (€57,320 thousand).Revenue from the distribution of loan products relate to commissions received by the Parent Company on the placementof personal loans and mortgages on behalf of third parties (€150,133 thousand).Revenue from money transfers primarily includes commissions collected on domestic money orders (€39,367 thousand),Moneygram transfers (€15,216 thousand) and Eurogiros (€4,363 thousand).Revenue generated by the management of public funds is entirely attributable to BdM-MCC SpA and also includes incomeand interest on loans.Commissions from securities trading relate to income from the placement of corporate and government bonds in the pri-mary market (€36,354 thousand), and proceeds from the execution of purchase and sell orders on the secondary marketon behalf of customers (€8,529 thousand).

OTHER SALES OF GOODS AND SERVICES

Other sales of goods and services relate to income of €254,672 thousand generated by PosteMobile SpA for mobile te-lephony services, which are not directly attributable to the specific Postal and Business, Financial and Insurance servicessegments.

27 - INSURANCE PREMIUM REVENUE



Life premiums(*) 10,504,310 9,503,328Branch I 9,379,953 8,120,475Branch III 1,097,808 1,308,102Branch V 26,549 74,751

Non-life premiums(*) 26,516 22,804

Total 10,530,826 9,526,132

(*) Insurance premium revenue is reported net of outward reinsurance premiums.

27.1 - Insurance premium revenue


264

28 - OTHER INCOME FROM FINANCIAL AND INSURANCE ACTIVITIES

29 - OTHER OPERATING INCOME

Other operating income relates to the following:



Income from financial assets at fair value through profit or loss 1,571,374 398,383Interest 296,657 275,378Fair value gains 1,023,604 73,916Realised gains 251,113 49,089

Income from available-for-sale financial assets 1,874,227 1,467,380Interest 1,663,728 1,293,373Realised gains 210,499 174,007

Income from held-to-maturity financial assets - 170Realised gains - 170

Income from cash flow hedges 7 30Fair value gains 7 30

Income from fair value hedges 23 37Fair value gains 23 37

Foreign exchange gains 2,080 2,269Unrealised gains 97 370Realised gains 1,983 1,899

Other income 15,894 8,639

Total 3,463,605 1,876,908

28.1 - Other income from financial and insurance activities


Increases to estimates of previous years 90,558 80,499Recoveries of contract expenses and other recoveries 18,700 22,046Gains on disposals 4,006 34,003Grants 3,721 2,340Recovery of cost of seconded staff 2,041 1,909Other income 23,493 29,990

Total 142,519 170,787

29.1 - Other operating income



GAINS ON DISPOSALS

30 - COST OF GOODS AND SERVICES

The following table provides a breakdown of the cost of goods and services:



Gains on disposal of property and land used in operations 1,583 22,506Gains on disposal of investment property 1,946 6,166Gains on disposal of other operating assets 477 5,331

Total 4,006 34,003

For the purposes of reconciliation with the statement of cash flows, in 2012 this item amounts to €256 thousand (€32,826 thousand for 2011), after loss-es of €3,750 thousand (losses of €1,177 thousand in 2011) (note 36.1).

29.2 - Gains on disposals


Services 1,945,327 1,922,676

Lease expense 379,119 371,528

Raw, ancillary and consumable materials and goods for resale 221,414 225,123

Interest expense 282,257 111,349

Total 2,828,117 2,630,676

30.1 - Cost of goods and services


266

SERVICES

The following table provides a breakdown of services as follows:

Details of the remuneration paid to the Statutory Auditors are provided below:



Transport of mail, parcels and forms 472,126 473,960Routine maintenance and technical assistance 278,539 262,733Outsourcing fees and external service charges 178,619 169,215Personnel services 171,510 160,716Energy and water 148,387 135,692Mobile telecommunication services for customers 116,773 100,309Transport of cash 94,250 95,917Telecommunications and data transmission 70,304 72,248Printing and enveloping services 68,352 94,095Mail, telegraph and telex 66,090 77,759Cleaning, waste disposal and security 63,334 63,533Credit and debit card fees and charges 53,651 49,934Consultants’ fees and legal expenses 41,971 50,571Advertising and promotions 40,627 38,229Airport costs 28,285 25,441Agent commissions and other 27,037 27,557Insurance premiums 19,397 19,015Asset management fees 1,799 1,816Remuneration of Statutory Auditors 1,756 1,740Securities custody and management fees 1,579 1,573Other 941 623

Total 1,945,327 1,922,676

30.2 - Services


Remuneration 1,494 1,454Expenses 262 286

Total 1,756 1,740

30.3 - Remuneration of Statutory Auditors



LEASE EXPENSE

The following table provides a breakdown of lease expense, as follows:

Real estate leases relate almost entirely to the buildings from which the Group operates (post offices, Delivery LogisticsCentres and Sorting Centres). Under the relevant lease agreements, rents are increased annually on the basis of the priceindex published by the Istituto Nazionale di Statistica (ISTAT, the Italian Office for National Statistics). Lease terms are gen-erally six years, renewable for a further six. Renewal is assured from the clause stating that the lessor “waives the op-tion of refusing renewal on expiry of the first term”, by which the lessor, once the agreement has been signed, cannotrefuse to renew the lease, except in cases of force majeure. Poste Italiane SpA has the right to withdraw from the con-tract at any time, giving six months notice, in accordance with the standard lease contract.

RAW, ANCILLARY AND CONSUMABLE MATERIALS AND GOODS FOR RESALE

The following table provides a breakdown of raw, ancillary and consumable materials and goods for resale:



Real estate leases and ancillary costs 200,117 191,387Vehicle leases 85,923 85,155Equipment hire and software licences 61,306 56,008Other lease expense 31,773 38,978

Total 379,119 371,528

30.4 - Lease expense

For the year ended For the year ended Item Note 31 December 2012 31 December 2011

Consumables and goods for resale 93,165 109,719Fuels and lubricants 90,726 80,519Printing of postage and revenue stamps 13,541 15,169Printed matter, stationery and advertising material 18,483 20,342SIM cards and scratch cards 2,435 1,866Change in inventories of work in progress, semi-finished and finished goods and goods for resale [10.1] 3,149 (1,952)Change in inventories of raw, ancillary and consumable materials [10.1] (742) (1,336)Change in property held for sale [10.1] 456 539Other 201 257

Total 221,414 225,123

30.5 - Raw, ancillary and consumable materials and goods for resale


268

INTEREST EXPENSE

This item refers to interest paid on customer deposits held by BancoPosta, amounting to €223,183 thousand for 2012, in-terest paid on repurchase agreements, totalling €52,274 thousand, and interest paid by BdM-MCC SpA for its funding. Nointerest is paid on ordinary postal current accounts. Interest payable on “BancoPostaClick” and “BancoPostaPiù” accountsvaries from 0.25% to 2%. Special terms and conditions are applied to certain accounts to reward customer loyalty.

31 - NET MOVEMENT IN TECHNICAL PROVISIONS FOR INSURANCEBUSINESS AND OTHER CLAIMS EXPENSES

The net movement in technical provisions for the insurance business and other claims expenses primarily includes:• claims paid, policies redeemed and the related expenses incurred by Poste Vita SpA during the period, totalling €5,530,214

thousand;• the change in mathematical provisions, totalling €7,340,237 thousand, reflecting increased obligations to policyholders;• the change in technical provisions where investment risk is transferred to policyholders (so-called class D), totalling

€156,793 thousand.



Claims paid 5,530,214 4,529,740Movement in outstanding claim provisions (137,592) 9,457Movement in mathematical provisions 7,340,237 5,832,760Movement in Other technical provisions 90,486 30,880Movement in technical provisions where investment risk is transferred to policyholders 156,793 (520,638)Claim expenses and movement in other provisions - Non-life 7,702 4,414

Total 12,987,840 9,886,613

31.1 - Net movement in technical provisions for insurance business and other claims expenses



32 - OTHER EXPENSES FROM FINANCIAL AND INSURANCE ACTIVITIES

Other expenses from financial and insurance activities primarily relate to: €12,408 thousand in payments made by PosteVita SpA in accordance with Law 166/2008, which extended the application of the regulations governing dormant accountsto insurance companies, including the requirement to pay the value of any dormant policies into the specific fund estab-lished by the MEF. These charges are offset by a matching reduction in the change in technical provisions.



Expenses from financial instruments through profit or loss 18,772 766,654Unrealised losses 17,017 714,928Realised losses 1,755 51,726

Expenses from available-for-sale financial instruments 112,213 51,739Realised losses 112,213 51,739

Expenses from cash flow hedges 376 480Fair value losses 376 480

Change in fair value of financial liabilities - 671Expenses from fair value hedges 706 589

Fair value losses 706 589Realised losses - -

Foreign exchange losses 340 449Unrealised losses 151 5Realised losses 189 444

Other expenses 31,981 61,383

Total 164,388 881,965

32.1 - Other expenses from financial and insurance activities


270

33 - PERSONNEL EXPENSES

Personnel expenses include the cost of staff seconded to other organisations. The recovery of such expenses, determinedby the relevant chargebacks, is posted to other operating income. Personnel expenses break down as follows:

Details of the remuneration and expenses paid to Directors are provided below:

Expenses relating to employee termination benefits are described in note 22.

Net provisions for disputes with staff and provisions to restructuring charges are described in note 21.2.Cost recoveries primarily regard revised estimates for previous years.Income from the fixed-term contract settlements and settlements with agency staff have resulted from the terms of theagreement reached on 18 May 2012 between Poste Italiane SpA and the trade unions, regarding the re-employment bycourt order of staff previously employed by the Parent Company on fixed-term contracts, or the mandatory hiring of per-sonnel originally employed as agency staff. The agreement enabled the Company to enter into individual agreements with3,097 staff employed at 18 May 2012 by virtue of a provisional court order. Under the individual agreements, each signa-tory elected not to enforce the legal and financial aspects of the court order requiring their re-employment and approxi-mately 2,720 employees agreed to return, without interest, in variable instalments the remuneration paid for periods not



Wages and salaries 4,258,410 4,302,849Social security contributions 1,179,875 1,201,343Provisions for employee termination benefits: current service cost [22.1] 733 661Provisions for employee termination benefits: supplementary pensionfunds and INPS 269,552 262,258Agency Staff 8,434 7,242Remuneration and expenses paid to Directors 3,808 3,760Redundancy payments 207,629 287,183Net provisions (reversals) for disputes with staff [21.2] (28,613) 109,796Provisions to the solidarity fund [21.2] - (58,706)Provisions for restructuring charges [21.2] 190,000 -Other staff costs/(cost recoveries) (112,697) (165,161)Total expenses 5,977,131 5,951,225

Income from fixed-term contract settlements (82,042) (54,715)

Total 5,895,089 5,896,510

33.1 - Personnel expenses



Total 3,808 3,760

33.2 - Remuneration and expenses paid to Directors



worked and which the Company had already charged to profit or loss in previous years. These amounts total approximate-ly €99 million; the present value of this amount, €82,042 thousand, has been recognised in profit or loss for the year. Thepresent value was calculated on the basis of the expected cash flows deriving from collection of the amounts due underthe individual agreements (based on the forward yield curve for government securities at 31 December 2012).

The following table shows the Group’s average and year-end headcounts by category:

Taking account of staff on flexible contracts, the average number of full-time equivalent staff in 2012 is 146,542 (148,453in 2011).

34 - DEPRECIATION, AMORTISATION AND IMPAIRMENTS

Depreciation, amortisation and impairments break down as follows:

Impairment losses related to goodwill and goodwill arising from consolidation are described in note 7.3.


Average workforce Year-end workforce

Level 2012 2011 31 Dec 2012 31 Dec 2011

Executives 747 734 764 712Middle managers 15,107 14,853 15,284 14,829Operational staff 124,246 126,470 123,434 123,889Back-office staff 4,346 4,367 3,494 4,048

Total permanent workforce(*) 144,446 146,424 142,976 143,478

(*) Figures expressed in full-time equivalent terms.

33.3 - Workforce data


Property, plant and equipment 360,792 366,401Properties used in operations 101,277 100,082Plant and machinery 127,822 135,331Industrial and commercial equipment 12,599 13,664Leasehold improvements 29,825 30,332Other assets 89,269 86,992

Impairments/Recoveries/Adjustments of property, plant and equipment 33,978 3,428Depreciation of investment property 7,934 8,012Impairment/recoveries/adjustments of investment property 129 (801)Amortisation and impairments of intangible assets 203,793 166,873

Industrial patents and intellectual property rights,concessions, licenses, trademarks and similar rights 196,125 160,757Other 7,668 6,116

Impairment of goodwill/Goodwill arising from consolidation 42,255 -

Total 648,881 543,913

34.1 - Depreciation, amortisation and impairments


272

35 - CAPITALISED COSTS AND EXPENSES

Capitalised costs and expenses break down as follows:

36 - OTHER OPERATING COSTS

Other operating costs break down as follows:



Property, plant and equipment [5] 8,180 4,697Intangible assets [7] 53,767 42,985

Totale 61,947 47,682

35.1 - Capitalised costs and expenses


Net provisions and losses on doubtful debts (uses of provisions) 32,973 4,526Provisions for receivables due from customers [11.3] 39,053 (11,570)Provisions for receivables due from MEF [11.5] (9,045) 9,857Provisions for sundry receivables [12.3] 2,957 6,213Losses on receivables 8 26

Operational risk events 23,922 25,185Thefts during the year [9.6] 6,909 6,778Reversal of BancoPosta assets, net of recoveries 2,193 8,125Other operating losses of BancoPosta 14,820 10,282

Net provisions for risks and charges made/(used) 40,379 118,818for disputes with third parties [21.2] 59,400 128,928for non-recurring charges [21.2] (897) 3,462for expired and statute barred postal savings certificates [21.2] - (5,409)for other risks liabilities and charges [21.2] (18,124) (8,163)

Losses(1) 3,750 1,177Municipal property tax, urban waste tax and other taxes and duties(2) 70,318 50,719Revised estimates and assessments for previous years 16,170 20,835Other recurring expenses 37,552 38,774

Total 225,064 260,034

(1) Includes €1,795 thousand in losses on disposal of gaming assets by the subsidiary, PosteMobile SpA. (2) This item reflects €3,290 thousand in net provisions (€638 thousand used in 2011) for taxation/social security contributions (note 21.2).

36.1 - Other operating costs



37 - FINANCE INCOME/COSTS

Income from financial instruments relates to assets other than those in which deposits collected by BancoPosta and/orthe insurance business are invested.

FINANCE INCOME



Income from available-for-sale financial assets 101,018 84,476Interest(1) 94,165 67,639Accrued differentials on fair value hedges(1) (5,376) (4,075)Realised gains 12,121 20,831Dividends 108 81

Income from financial assets through profit or loss(1) 2,830 1,633

Other finance income(1) 51,840 70,998Interest from the MEF(2) 7,525 108Remuneration of Poste Italiane liquidity 3,735 20,746Interest on bank current accounts 4,660 4,819Finance income on discounting receivables(3) 34,278 43,119Overdue interest 7,677 7,489Impairment of amounts due as overdue interest (7,604) (6,241)Income from subsidiaries 38 28Other 1,531 930

Foreign exchange gains 3,406 2,708

Total 159,094 159,815

(1) For the purposes of reconciliation with the statement of cash flows, for 2012 these items amount to €143,459 thousand (€136,195 thousand in 2011). (2) Interest income from the MEF regards interest accrued on the loan under Law 887/84 to cover the interest expense arising from the loans provided by

Cassa Depositi e Prestiti (described in note 9.18). (3) Finance income on discounted receivables includes: €15,079 thousand in accrued interest on the amount due from the MEF (note 9.18), €9,447 thou-

sand in interest on amounts due for the publisher tariff subsidies described in note 11.2, and €9,752 thousand in interest on amounts due from staff andthe former IPOST under the fixed-term contract settlements of 2006, 2008 and 2010 (note 12.2).

37.1 - Finance income


274

FINANCE COSTS

38 - INCOME TAX EXPENSE

The effective tax rate for 2012 is 27.43%, as resulting from the total of the IRES tax rate (27.93%) and the IRAP tax rate(19.03%), net of the extraordinary effects of the recognition of the refund of taxes paid in previous years, totalling €277,852thousand (down 19.53%).



Finance costs on financial liabilities 50,535 74,583on bonds 19,534 39,067on loans from Cassa Depositi e Prestiti 14,329 19,903on financial institutions borrowings 16,367 13,426on other borrowings 195 1,907paid to MEF 109 152on derivative financial instruments - 123on amounts payable to subsidiaries 1 5

Finance costs on sundry financial assets 1,402 2,134Realised losses on available-for-sale financial assets 1,169 1,113Impairment losses on available-for-sale financial assets - 442Realised losses on financial instruments at fair value through profit or loss 233 579

Finance costs on provisions for employee termination benefitsand pension plans [22.1] 57,964 63,934Finance costs on provisions for risks [21.2] 2,091 (339)Other finance costs 3,763 3,640Foreign exchange losses(1) 2,400 3,721

Total 118,155 147,673

(1) For the purposes of reconciliation with the statement of cash flows, for 2012 finance costs, before foreign exchange losses, amount to €115,755 thou-sand (€143,952 thousand in 2011).

37.2 - Finance costs

For the year ended 31 December 2012 For the year ended 31 December 2011

Item IRES IRAP Total IRES IRAP Total

Current tax expense 494,596 298,380 792,976 515,010 303,772 818,782Deferred tax income 30,895 151 31,046 (26,211) (4,341) (30,552)Deferred tax expense (128,100) (27,788) (155,888) 8,304 11,224 19,528

Total 397,391 270,743 668,134 497,103 310,655 807,758

Income tax for previous years

following change in legislation (277,852) - (277,852) - - -

38.1 - Income tax expense




38.2 - Reconcilation between theoretical tax charge at statutory rate and effective tax charge for IRES

2012 2011

Item IRES % rate IRES % rate

Profit before tax 1,422,774 1,654,139Theoretical tax charge 391,263 27.5% 454,888 27.5%Effects of increase /(decreases) on theoretical tax charge

Exempt gains on financial assets (1,286) -0.09% (7,772) -0.47%Non-deductible contingent liabilities 8,396 0.59% 10,092 0.61%Net provisions for risks and charges and impairments of receivables 21,463 1.51% 34,174 2.07%Non-deductible taxes 8,411 0.59% 5,212 0.32%Realignment of tax bases and carrying amounts and taxation for previous years (1,107) -0.08% (10,404) -0.63%Technical provisions for insurance business 28,272 1.99% 22,483 1.36%Deduction from IRES of IRAP on personnel expenses (56,899) -4.00% - 0.00%Other (1,123) -0.08% (11,570) -0.70%

Effective tax charge 397,391 27.93% 497,103 30.05%

Refund of IRES for previous years following change in legislation (277,852) -19.53%

38.3 - Reconcilation between theoretical tax charge at statutory rate and effective tax charge for IRAP

2012 2011

Item IRAP % rate IRAP % rate

Profit before tax 1,422,774 1,654,139Theoretical tax charge 75,636 5.32% 83,216 5.03%Effect of increases/(decreases) on theoretical tax charge

Non-deductible personnel expenses 197,749 13.90% 206,944 12.51%Non-deductible contingent liabilities 1,359 0.10% 14,616 0.88%Net provisions for risks and charges and impairments of receivables 2,000 0.14% 6,797 0.41%Non-deductible taxes 1,460 0.10% 870 0.05%Finance income and expense (742) -0.05% 695 0.04%Realignment of tax bases and carrying amounts and taxation for previous years (9,945) -0.70% (943) -0.06%Other 3,226 0.23% (1,540) -0.09%



276

CURRENT TAX ASSETS AND LIABILITIES

Current tax assets and liabilities break down as follows:

Under IAS 12 - Income Taxes, IRES and IRAP credits are offset against the corresponding current tax liabilities, when ap-plied by the same tax authority to the same taxable entity, which has a legally enforceable right to offset and intends toexercise this right. Current tax assets not offset at 31 December 2012 includes:• €277,852 thousand in tax credits, recognised in 2012, related to the IRES refund arising from the overpayment of IRAP

on non-deductible personnel expenses under Law Decree 201/2011 in the years from 2007 to 2011. As described innote 2.4, the relevant positive effect of €277,852 thousand was determined on the basis of a prudent assessment andtaking into account the absence of consistent interpretations of the new legislation. The future availability of clear inter-pretations and specific operating instructions might generate further positive effects in future, with reference, in partic-ular, to the years prior to 2007, for which claims for rebates have been submitted;

• €39,334 thousand due to the payment of increased tax expense as a result of the non-deductibility of 10% of IRAP be-tween 2003 and 2007. A claim for a rebate of this amount has been filed.


Current taxes for the year ended 31 Dec 2012 Current taxes or the year ended 31 Dec 2011

IRES IRAP IRES IRAPItem Assets/(Liabilities) Assets/(Liabilities) Total Assets/(Liabilities) Assets/(Liabilities) Total

Balance at 1 January (14,016) (12,047) (26,063) 8,311 209 8,520

Payments of 579,029 323,294 902,323 486,927 290,761 777,688prepayments for the current year 507,470 304,370 811,840 456,519 287,764 744,283balance payable for the previous year 71,559 18,924 90,483 30,387 2,997 33,384substitute tax - - - 21 - 21

Provisions to profit or loss for (494,596) (298,380) (792,976) (515,010) (303,772) (818,782)current tax expense (508,492) (298,562) (807,054) (529,106) (303,931) (833,037)substitute tax - - - 52 - 52realignment(*) 13,896 182 14,078 14,044 159 14,203

Refund of IRES for previous years following change in legislation 277,852 - 277,852 - - -Provisions to equity 75,296 - 75,296 (17,150) 4 (17,146)Other 22,471(**) - 22,471 22,906(**) 751 23,657

Balance at 31 December 446,036 12,867 458,903 (14,016) (12,047) (26,063)

of which:Current tax assets 449,523 72,142 521,665 62,625 6,349 68,974Current tax liabilities (3,487) (59,275) (62,762) (76,641) (18,396) (95,037)

(*) The re-alignment is due to the impact of the differences between the carrying amounts of assets and liabilities and their tax bases arising after adoptionof IAS/IFRS in 2009, which became deductible in five equal annual instalments from 2009, and in the subsequent four years following payment of therelevant substitute tax. The positive effect on current tax liabilities is offset by the net negative impact of the release of deferred tax assets and liabili-ties, as described in notes 38.7 and 38.8.

(**) Primarily due to tax credits driving from withholding tax paid on fees.

38.4 - Movements in current tax assets/(liabilities)



DEFERRED TAX ASSETS AND LIABILITIES

The following table shows deferred tax assets and liabilities:

The nominal tax rates are 27.5% for IRES and 4.20% for IRAP (+/- 0.92% resulting from regional surtaxes and/or reliefand +0.15% as a result of additional surtaxes levied in regions with a health service deficit). The Group’s average statu-tory rate for IRAP is 5.32%.

Movements in deferred tax assets and liabilities are shown below:

In the year under review deferred tax assets of €4,153 thousand, which were originally recognised following realignmentof goodwill attributable to Postel SpA, in accordance with art. 2, paragraph 55, of Law Decree 225 of 29 December 2010(so-called Milleproroghe Decree) and art. 9 of Law Decree 201 of 6 December 2011 (so-called Rescue Italy or Monti De-cree), were converted to tax credits.



Deferred tax assets 905,479 1,730,199Deferred tax liabilities (412,533) (248,994)

Total 492,946 1,481,205

38.5 - Deferred taxes

Item 2012 2011

Balance at 1 January 1,481,205 466,219

Deferred tax income/(expenses) recognised in profit or loss 124,842 11,024 Deferred tax income/(expenses) recognised in equity (1,109,518) 996,461 Conversion of deferred tax assets to tax credits (4,153) - Change in the scope of consolidation 570 7,501

Balance at 31 December 492,946 1,481,205

38.6 - Movements in deferred tax assets and liabilities


278

The following table shows a breakdown of movements in deferred tax assets and liabilities:

Deferred tax assets represent the benefit expected to derive from reductions in future current tax expense as a result ofdeductible temporary differences arising between the tax bases of assets and liabilities and their carrying amounts. Theyprimarily reflect temporary differences arising between the tax bases of financial assets and liabilities and their carryingamounts, as a result of application of IAS 39 (€374,683 thousand). The increase during the period is primarily due to themovements in the fair value reserve, as described in note 19.1. Deferred tax assets also reflect the expected benefit ofthe future deductibility of provisions (€317,870 thousand), of contra asset accounts (€92,234 thousand), of the impairmentof trade and other receivables (€7,057 thousand), of commission income receivable by Poste Vita SpA, deferred, in appli-cation of IAS 18, over the term of individual policies (€9,700 thousand), and of accrued amounts payable to staff (€4,014thousand). Deferred tax assets on property, plant and equipment and intangible assets (€56,182 thousand) relate prima-rily to the properties transferred from Poste Italiane to the subsidiary EGI SpA, in 2001, recognising the deferred tax ben-efits generated by a calculation performed at the time of the transfer resulting in increased taxation on the higher taxablevalue of investment property recognised, and the deferred tax assets recognised on the Postel SpA goodwill.


PPE and Financial Contra Provision Trade andintangible Fees to be assets and asset for risk and other Personnel

assets amortised liabilities accounts charges receivables expenses Other Total

Balance at 1 January 2011 58,445 1,619 247,501 121,794 283,391 16,705 7,238 23,321 760,014

Income/(Expenses) recognised in profit or loss 1,612 4,915 (2,219) (36,262) 65,952 868 1,198 10,566 46,630

Income/(Expenses) recognised in profit or loss on realignment (1,885) - (5,952) (27) (378) (5,538) (2,298) - (16,078)

Income/(Expenses) recognised in equity - - 931,895 - - - - (92) 931,803

Change in the scope of consolidation 785 - 16 4,102 1,183 690 327 727 7,830

Balance at 31 December 2011 58,957 6,534 1,171,241 89,607 350,148 12,725 6,465 34,522 1,730,199

Income/(Expenses) recognised in profit or loss 1,360 3,166 80 2,655 (31,900) (127) (162) 8,082 (16,846)

Income/(Expenses) recognised in profit or loss on realignment - - (5,952) (28) (383) (5,541) (2,296) - (14,200)

Conversion of deferred tax assets to tax credits (4,153) - - - - - - - (4,153)

Income/(Expenses) recognised in equity - - (790,980) - - - - 875 (790,105)

Change in the scope of consolidation 18 - 294 - 5 - 7 260 584

Balance at 31 December 2012 56,182 9,700 374,683 92,234 317,870 7,057 4,014 43,739 905,479

38.7 - Movements in deferred tax assets

Item



Deferred tax liabilities reflect the benefit obtained as the result of a lower current tax charge due to taxable temporary dif-ferences arising between the tax bases of assets and liabilities and their carrying amounts. These taxes primarily relateto temporary differences arising between the tax bases of financial assets and liabilities and their carrying amounts, as aresult of application of IAS 39 (€386,062 thousand), from the deferral of gains (€16,264 thousand) and taxable temporarydifferences between the tax bases and carrying amounts of intangible assets (€4,755 thousand) and property, plant andequipment (€747 thousand).

At 31 December 2012 and 2011 deferred tax assets and liabilities recognised directly in equity are as follows:

Lower current tax expense of €75,297 thousand was recognised in equity during 2012, as a result of actuarial losses onemployee termination benefits, resulting in a total tax losses for the year accounted for in equity of €1,034,221 thousand.


Discounted Financial employee

Intangible assets and Deferred termination Item PPE assets liabilities gains benefits Other Total

Balance at 1 January 2011 4,411 15,270 232,029 38,114 710 3,261 293,795

Income/(Expenses) recognised in profit or loss (2,296) (6,418) 36,279 (8,452) (18) 555 19,650

Income/(Expenses) recognised in profit or loss on realignment - - (122) - - - (122)

Income/(Expenses) recognised in equity - - (64,704) - 46 - (64,658)

Change in the scope of consolidation 3 - 9 - 317 - 329

Balance at 31 December 2011 2,118 8,852 203,491 29,662 1,055 3,816 248,994

Income/(Expenses) recognised in profit or loss (1,371) (4,097) (136,975) (13,398) (15) 90 (155,766)

Income/(Expenses) recognised in profit or loss on realignment - - (122) - - - (122)

Income/(Expenses) recognised in equity - - 319,668 - (255) - 319,413

Change in the scope of consolidation - - - - 13 1 14

Balance at 31 December 2012 747 4,755 386,062 16,264 798 3,907 412,533

38.8 - Movements in deferred tax liabilities

Increases/(Decreases) in equity

For the year ended For the year endedItem 31 December 2012 31 December 2011

Fair value reserve for available-for-sale financial assets (1,081,329) 925,817Cash flow hedge reserve for hedging derivatives (29,319) 70,782Actuarial gains/(losses) on employee termination benefits 1,130 (138)

Total (1,109,518) 996,461

38.9 - Deferred tax assets and liabilities recognised in equity


280

39 - RELATED PARTY TRANSACTIONS

IMPACT OF RELATED PARTY TRANSACTIONS ON THE FINANCIAL POSITIONAND RESULTS OF OPERATIONS

The impact of related party transactions on the financial position and results of operations is provided in tables 39.1 to 39.4.


Balance at 31 December 2012Other assets Cash and

Financial Trade Other cash Financial Trade OtherName assets receivables receivables equivalents liabilities payables liabilities

Subsidiaries

Address Software Srl 141 103 25 - 5 1,534 -Docutel SpA - 371 40 - 1 1,592 -Kipoint SpA - 104 117 - 80 468 4PatentiViaPoste ScpA - - 49 - - - -Poste Tributi ScpA - 8,245 91 - 976 1,803 -

Joint ventures

Uptime SpA - 65 - - - 2,239 -

Associates

Consorzio ANAC in liquidation - - - - - - -Docugest SpA - 4,779 44 - - 4,399 -Telma-Sapienza Scarl - - - - - - -Other SDA group associates - 3,023 - - - - 6

Related parties external to the Group

Ministry of the Economy and Finances 7,102,100 1,153,179 21,137 1,397,125 13,373 110,300 12,140Direct relations 7,102,100 1,101,899 9,768 1,397,125 13,373 - 12,140Agencies and other local offices - 51,279 11,369 - - 540 -Former General Procurement Office of the State - 1 - - - 109,760 -

Cassa Depositi e Prestiti group(*) 1,025,232 948,429 - - 2,754,286 - -Arcus SpA - 1 - - - - -CONI Servizi - 183 - - - - -Consap SpA - - - - - 24 -Consip SpA - 41 - - - - -Enav SpA - 6 - - - - -EUR SpA - - - - - 478 -Expo 2015 SpA - - - - - 7,201 -Fondoposte pension fund - 134 - - - - 58,337Anas group - 111 - - - 1 -Enel group - 79,960 - - - 10,898 -Eni group - 4,353 - - - 16,968 31Equitalia group - 45,499 - - - 1,620 -Ferrovie dello Stato group - 1,446 - - - 136 -Finmeccanica group 301 420 - - - 38,046 -Gestore Servizi Elettrici group - 15 - - - - -Invitalia group - 711 - - - - -Istituto Poligrafico Zecca dello Stato group - 240 - - - 356 -Italia Lavoro group - 2 - - - - -RAI group 756 1 - - - 120 -Sogei group - 44 - - - - -Sogin group - - - - - 5 -Soc. Svil.po Mercato F.di Pensione SpA (MEFOP) - 2 - - - - -STMicroelectronics Holding N.V. - - - - - 31 -Provisions for doubtful debts from external related parties - (83,380) (10,070) - - - -

Total 8,128,530 2,168,087 11,433 1,397,125 2,768,721 198,219 70,518

(*) In November 2012 Cassa Depositi e Prestiti acquired 100% of Sace SpA and Fintecna SpA.

39.1 - Impact of related party transactions on the financial position at 31 December 2012



At 31 December 2012 total provisions for risks and charges made to cover probable liabilities arising from transactionswith related parties external to the Group arising on trading relations amount to €68,445 thousand (€54,735 thousand at31 December 2011).


Balance at 31 December 2011Other assets Cash

Financial Trade Other and cash Financial Trade OtherName assets receivables receivables equivalents liabilities payables liabilities

Subsidiaries

Address Software Srl 185 157 19 - 5 1,541 -Docutel SpA - 987 31 - - 2,321 -Kipoint SpA - 419 118 - - 792 4Poste Tributi ScpA - 5,089 - - 1,428 1,897 -

Joint ventures

Italia Logistica Srl 1,023 4,240 - - 2 9,821 20Uptime SpA - 66 - - - 1,362 -Associates

Consorzio ANAC in liquidation - - - - - - -Docugest SpA - 6,156 - - - 4,203 -Telma-Sapienza Scarl - - - - - - -Other SDA group associates - 2,776 - - - 215 6


Ministry of the Economy and Finance 8,371,855 1,837,611 21,482 829,399 7,057 452,845 12,140Direct relations 8,371,855 1,748,033 10,367 829,399 7,057 323,987 12,140Agencies and other local offices - 89,563 11,115 - - - -Former General Procurement Office of the State - 15 - - - 128,858 -

Cassa Depositi e Prestiti group - 149,606 - - 534,135 - -Arcus SpA - - - - - - -CONI Servizi - 265 - - - 6 -Consap SpA - 1 - - - 24 -Consip SpA - 106 - - - - -Enav SpA - 73 - - - - -EUR SpA - - - - - 244 -Fondoposte pension fund - 166 - - - - 53,047Anas group - 86 - - - -Enel group - 112,964 - - - 1,074 13,550Eni group - 10,230 - - - 18,420 -Equitalia group - 34,789 - - - 1,024 -Ferrovie dello Stato group 2 4,420 - - 1,000 10,031 -Finmeccanica group 319 1,256 - - - 47,045 -Fintecna group 2,526 31 - - - 26 -Gestore Servizi Elettrici group - 2 - - - - -Invitalia group - 464 - - - - -Istituto Poligrafico Zecca dello Stato group - 28 - - - 449 -Italia Lavoro group - - - - - - -RAI group 855 3 - - - 3 -Sogei group - 16 - - - - -Sogin group - - - - - 5 -Soc. Svil.po Mercato F.di Pensione SpA (MEFOP) - 2 - - - - -STMicroelectronics Holding N.V. - - - - - - -Provisions for doubtful debts from external related parties - (104,528) (16,017) - - - -

Total 8,376,765 2,067,481 5,633 829,399 543,627 553,348 78,767



282


For the year ended 31 December 2012Revenue Costs

Capital expenditure Current expenditureRevenues Other Property, Goods Other

from sales operating Finance plant and Intangible and Personnel operating FinanceName and services income income equipment assets services expenses costs costs

Subsidiaries

Address Software Srl 29 343 5 - - 1,544 - - -Docutel SpA 7 938 - - - 4,036 44 - -Italia Logistica Srl 2,123 144 33 - - 10,191 - 54 -Kipoint SpA 57 150 - - - 888 24 - -PatentiViaPoste ScpA - - - - - - - - -Poste Tributi ScpA 5,067 245 - - - 2 - 1,568 1

Joint ventures

Uptime SpA 15 1 - - - 3,853 - - -

Associates

Docugest SpA 632 287 - - - 5,878 - - -Telma-Sapienza Scarl - - - - - - - - -


Ministry of the Economy and Finances 785,348 753 22,605 - - 2,182 - (15,249) 109Direct relations 690,094 17 22,605 - - - - (9,046) 109Agencies and other local offices 95,254 736 - - - 2,182 - (6,203) -Former General Procurement Office of the State - - - - - - - -

Cassa Depositi e Prestiti group(*) 1,649,951 - 21,276 - - 23,542 - - 14,350Cinecittà Luce SpA 6 - - - - - - - -CONI Servizi 683 287 - - - 71 - - -Consap SpA 175 - - - - - - - -Consip SpA 39 - - - - - - - -Enav SpA 119 63 - - - - - - -EUR SpA - - - - - 2,086 - 1,368 -Expo 2015 SpA - 92 - - - - - - -Fondoposte pension fund 111 462 - - - - 33,353 335 -Anas group 710 14 - - - - - - -Enel group 142,843 24 - - - 2,079 - 164 81Eni group 27,424 39 - - - 64,452 - 60 -Equitalia group 12,979 - - - - 1,709 - - -Ferrovie dello Stato group 1,556 4 - - - 6,991 94 1 174Finmeccanica group 178 1 - 1,568 5,875 48,442 - - -Gestore Servizi Elettrici group 575 8 - - - - - 3 -Invitalia group 1,138 - - - - - - - -Istituto Poligrafico Zecca dello Stato group 1,105 25 - - - 10,002 - 1 -Italia Lavoro group - - - - - - - - -RAI group 7,812 2 - - - 118 - - -Sogei group 83 - - - - - - - -Sogin group 1 - - - - - - - -Sicot Srl 44 - - - - - - - -Soc. Svil.po Mercato F.di Pensione SpA (MEFOP) 2 - - - - - - - -STMicroelectronics Holding N.V. 29 - - - - 52 - - -

Total 2,640,841 3,882 43,919 1,568 5,875 188,118 33,515 (11,695) 14,715

(*) In November 2012 Cassa Depositi e Prestiti acquired 100% of Sace SpA and Fintecna SpA.

39.3 - Impact of related party transactions on the results of operations for the year ended 31 December 2012



In 2012 net provisions for risks and charges made to cover probable liabilities arising from transactions with related par-ties external to the Group arising on trading transactions amount to €17,892 thousand (€3,329 thousand in 2011).



Capital expenditure Current expenditureRevenue from Other Property, Goods Other

sales and operating Finance plant and Intangible and Personnel operating FinanceName services income income equipment assets services expenses costs costs

Subsidiaries

Address Software Srl 11 - 5 - - 1,520 14 - -Docutel SpA 8 - - - - 4,192 7 - -Kipoint SpA 85 - - - - 885 - - -Poste Tributi ScpA 2,873 - - - - 144 - 1,458 5Postel do Brasil Ltda - - - - - - - - -

Joint ventures

Italia Logistica Srl 2,226 369 23 - - 15,102 - 14 -Uptime SpA 15 - - - - 3,185 - - -

Associates

Docugest SpA 1,879 - - - - 6,919 - - -Telma-Sapienza Scarl - - - - - - - - 331


Ministry of the Economy and Finance 895,831 1,898 39,630 - - - - 9,563 152Direct relations 782,294 14 39,630 - - - - 9,858 152Agencies and other local offices 113,537 1,884 - - - - - (295) -Former General Procurement Office of the State - - - - - - - - -

Cassa Depositi e Prestiti group 1,504,349 - 148 - - - - 17 19,903Cinecittà Luce SpA 8 - - - - - - - -CONI Servizi 583 287 - - - 70 - - -Consap SpA 109 - - - - - - - -Consip SpA 186 - - - - - - - -Enav SpA 199 64 - - - - - - -EUR SpA - - - - - 1,009 - 1,015 -Expo 2015 SpA - - - - - - - - -Fondoposte pension fund 50 418 - - - - 29,563 - -Anas group 756 15 - - - - - - -Enel group 144,371 759 - 3 - 1,380 - 190 59Eni group 31,070 45 - - - 52,591 - - -Equitalia group 60,607 35 - - - 775 - - -Ferrovie dello Stato group 2,166 8 - - - 4,052 42 - 220Finmeccanica group 137 1 - 8,797 7,608 47,059 - - -Fintecna group 278 - - - - 389 - - -Gestore Servizi Elettrici group 373 - - - - - - - -Invitalia group 564 - - - - - - - -Istituto Poligrafico Zecca dello Stato group 1,236 16 - - - 8,009 - 2 -Italia Lavoro group 3 - - - - - - - -RAI group 10,061 2 - - - - - - -Sace group 164 - - - - - 305 - -Sogei group 41 - - - - - - - -Sogin group 2 - - - - 5 - - -Sicot Srl 50 - - - - - - - -Soc. Svil.po Mercato F.di Pensione SpA (MEFOP) 4 - - - - 3 - - -STMicroelectronics Holding N.V. 23 - - - - - - - -

Total 2,660,318 3,917 39,806 8,800 7,608 147,289 29,931 12,259 20,670

39.4 - Impact of related party transactions on the results of operations for the year ended 31 December 2011


284

The nature of the principal transactions with related parties external to the Group is summarised below.• Amounts received from the MEF relate primarily to payment for carrying out the USO, the management of postal cur-

rent accounts, as reimbursement for electoral tariff reductions and subsidies, and as payment for delegated services,integrated e-mail services, the franking of mail on credit, and for collection of tax returns.

• Amounts received from CDP SpA primarily relate to payment for the collection of postal savings deposits.• Amounts received from the Enel group primarily relate to payment for bulk mail shipments, unfranked mail, franking of

mail on credit and postage paid mailing services, etc. The costs incurred primarily relate to the supply of gas.• Amounts received from the Equitalia group primarily relate to payment for the integrated notification service and for un-

franked mail. The costs incurred primarily relate to electronic transmission of tax collection data.• Amounts received from the ENI group relate primarily to payment for mail shipments, etc. The costs incurred relate to

the supply of fuel for motorcycles and vehicles and the supply of gas.• Purchases from the Finmeccanica group primarily relate to the supply, by Elsag Datamat SpA, of equipment, mainte-

nance and technical assistance for mechanised sorting equipment, and systems and IT assistance regarding the cre-ation of document storage facilities, specialist consulting and software maintenance, and the supply of software licencesand of hardware.

KEY MANAGEMENT PERSONNEL

Key management personnel consist of Directors of the Parent Company, managers at the first organisational level of PosteItaliane SpA and senior management in main Group companies. The related remuneration, gross of expenses and socialsecurity contributions, is as follows:

No loans were granted to key management personnel during 2012; at 31 December 2012 Group companies do not reportreceivables in respect of loans granted to key management personnel.

TRANSACTIONS WITH STAFF PENSIONS FUNDS

The Parent Company and its subsidiaries that apply the National Collective Labour Contract are members of the Fondo-poste Pension Fund, the national supplementary pension fund for non-managerial staff. As indicated in art. 14, paragraph1 of Fondoposte’s By-laws, the representation of members among the various officers and boards (the General Meet-ing of delegates, the Board of Directors, Chairman and Deputy Chairman, Board of Statutory Auditors) is shared equallybetween the workers and the companies that are members of the Fund. The Fund’s Board of Directors takes decisionsincluding:• the general criteria for the allocation of risk in terms of investments and investment policies;• the choice of fund manager and custodian bank.



Remuneration paid in short/medium term 15,823 16,868Post-employment benefits 462 4,755

Total 16,285 21,623

39.5 - Remuneration of key management personnel



40 - OTHER INFORMATION

POSTAL SAVINGS DEPOSITS

The following table provides a breakdown of postal savings deposits collected by the Parent Company in the name of andon behalf of Cassa Depositi e Prestiti, by category:

The above amounts include interest accrued that has not been settled.

ASSETS UNDER MANAGEMENT

Assets under management by BancoPosta Fondi SpA SGR, measured at fair value using information available on the lastworking day of the year, break down as follows:

Average assets under management within BancoPosta Fondi SpA SGR’s proprietary mutual investment funds managedby the Group amount to €3,266 million for 2012 (€3,047 million at 31 December 2011).

BancoPosta Fondi SpA SGR also manages the individual investment portfolios of Poste Vita SpA and Poste Assicura SpA.


Item At 31 December 2012 At 31 December 2011

Post office savings books 98,777,506 92,614,043Interest-bearing postal certificates 213,269,999 208,187,134

Cassa Depositi e Prestiti 137,519,514 129,013,927MEF 75,750,485 79,173,207

Total 312,047,505 300,801,177

40.1 - Postal saving deposits


Collective investment funds 3,685,383 2,983,965Funds managed by the Group 802,815 216,766Funds managed by third parties 2,882,568 2,767,199

Total 3,685,383 2,983,965

40.2 - Assets under management


286



Purchase commitments

Goods and services 676,916 741,187

Property leases 572,494 580,106

Property, plant and equipment 48,136 55,954

Intangible assets 37,604 46,751

Investment property 14 52

Committed lines of credit

Loans agreed to be disbursed 19,216 26,696

Total 1,354,380 1,450,746

40.3 - Commitments

COMMITMENTS

Purchase commitments relating primarily to the Parent Company break down as follows:

Future commitments related to property leases (note 30.4), which may generally be terminated with six months’ notice,break down by due date as follows:

GUARANTEES

Unsecured guarantees issued by the Group are as follows:

During the year Poste Italiane SpA issued a guarantee of €20,554 thousand in the interests of the newly-established sub-sidiary, PatentiViaPoste ScpA.


Lease rentals due:

within 12 months 161,573 153,833between 2 and 5 years after end of reporting date 350,870 357,490after 5 years 60,051 68,783

Total 572,494 580,106

40.4 - Property lease commitments


Bank and other guarantees issued:

by the Group in its own interests in favour of third parties 1,141 2,080by banks in the interests of Group companies in favour of third parties 161,818 127,131

Total 162,959 129,211

40.5 - Guarantees



THIRD-PARTY ASSETS

ASSETS IN THE PROCESS OF ALLOCATION

At 31 December 2012 the Parent Company had paid a total of €369,317 thousand in claims on behalf of the Ministry ofJustice (€308,844 thousand at 31 December 2011), for which, under the agreement between Poste Italiane SpA and theMEF, it has already been reimbursed by the Treasury, whilst awaiting acknowledgement of the relevant account receiv-able from the Ministry of Justice.

LITIGATION

On 20 November 2012 the Court of Naples acquitted Poste Italiane SpA of charges made by the Prosecutors’ Office inthat city in 2008 for the alleged violation of certain provisions of Legislative Decree 231/2001. In 2011, as part of a local criminal investigation of third parties, the Tax Office in Rome seized accounting and administra-tive documents from Postel SpA related to e-procurement transactions performed in 2010 and, to a lesser extent, in 2011;as a precautionary measure, e-procurement operations were suspended in 2011. The company and its external legal ad-visors will consider what actions to take to best safeguard the company’s interests, should it be necessary.

TAX DISPUTES

In 2008, the Italian Tax Authorities notified Banca del Mezzogiorno-MedioCredito Centrale (BdM-MCC), acquired with effectfrom 1 August 2011, that it intends to contest the company’s tax treatment related to the purchase of its investment in Im-mobiliare Piemonte Srl in 2003, alleging that the company had avoided taxation by concealing the purchase of properties andomitting to issue an invoice for a taxable amount of €115 million. The case was brought before the Provincial Tax Commis-sion in Rome on 21 November 2012, which found in favour of BdM-MCC. On 21 March 2013 the tax authorities acceptedthe decision and the case is now closed. Upon conclusion of a tax audit relating to the 2008 tax year, on 22 December 2011, BdM-MCC received an official tax au-dit report contesting the deductibility of €19.6 million in costs, relating to agreements effected in 2008 to settle disputeswith the Parmalat group. The report further claims that BdM-MCC underreported its taxable income by €16.2 million, re-lated to the sale of non-performing loans to a company in the Unicredit group, to which BdM-MCC belonged at the time.The bank presented its own opinions and remarks on the assessment to the tax authorities in Lazio in February 2012, in-dicating that the bank had acted properly and in April an exhaustive answer was given to the Questionnaire sent by thetax authorities. Considering that for fiscal year 2008 the bank had elected to participate in the tax consolidation arrange-ments used by the Unicredit group, on 19 September 2012 the tax authorities served the consolidating entity, UnicreditSpA, and BdM-MCC at the domicile of the consolidating entity, with an assessment notice related to the second of thetwo alleged violations. Given that responsibility for these events and the related conduct rests with the previous ownerof the bank, whose lawyers are defending the bank in this case, it is felt that any liabilities arising from such violationscannot, in any way, be attributed to BdM-MCC.



Bonds subscribed by customers held at third-party banks(*) 16,449,062 20,283,396Other assets 24,427 24,413

Total 16,473,489 20,307,809

(*) In addition to 284 million in financial instruments other than bonds (about 222 million at 31 December 2011).

40.6 - Third-party assets


288

On 17 November 2011, EGI SpA received three notices of assessment related to fiscal years 2006, 2007 and 2008, pre-senting the same irregularity in each of the three years in the official tax audit report for 2008 (dated 16 March 2011). Theirregularity related to the application of IRES tax as provided by art. 11, paragraph 2 of Law 413/1991, to properties of his-torical and artistic value owned by EGI and leased to third parties. This resulted in a claim for additional IRES of €2.4 mil-lion, in addition to a fine of the same amount and interest of €0.3 million, representing a total of €5.1 million. EGI has ap-pealed the notices of assessment, deeming the findings to be without basis in law and fact. On 9 February 2012, EGI ap-peared at court to file copies of the appeal with the Provincial Tax Tribunal of Rome, where the dispute is currently pending.Given the strong support that case law provides to the company’s arguments, and considering the opinion of the compa-ny’s tax consultant, the risk that the final decision might be against the company is unlikely to materialise. In 2009 the Regional Tax Office for Large Taxpayers (Agenzia delle Entrate - Direzione Regionale del Lazio - Ufficio Gran-di Contribuenti) notified Poste Vita SpA of an alleged violation of the VAT regulations in the 2004 tax year, resulting in finesof approximately €2.3 million for the alleged failure to pay VAT on invoices for service commissions. The findings arebased on two separate official tax audit reports made on a commercial partner of Poste Vita SpA in a number of insur-ance transactions in 2004. In 2010 Poste Vita SpA appealed before the Provincial Tax Tribunal of Rome, requesting annul-ment of the fine. In December 2010 and September 2011, the tax authorities sent notices of two further small fines forthe same violation in fiscal years 2005 and 2006. Given that Poste Vita SpA deems the authorities’ findings to be withoutgrounds, these fines have also been appealed. The appeals are currently pending before the Provincial Tax Tribunal of Rome.The most likely outcomes of these disputes have been taken into account in determining the provisions for risks andcharges.On 27 April 2012 the Regional Tax Office for Large Taxpayers (Direzione Regionale del Lazio - Settore Controlli, Con-tenzioso e Riscossione - Ufficio Grandi Contribuenti) began an audit of the Parent Company’s IRES, IRAP, VAT and with-holding taxes for the 2009 fiscal year. The audit forms part of the normal two-yearly controls of so-called “large taxpay-ers” required by art. 42 of Law 388 of 23 December 2000. The audit is currently underway. In 2012 Postel SpA accepted the findings of a Tax Audit Report prepared by the tax authorities after an audit of its directand indirect taxes related to 2003-2006, submitting a petition to obtain a reduction in the IRPEG and VAT penalties in No-vember. Provision has been made for these penalties in provisions for risks and charges. The company’s petition, relatingto the statute of limitations for IRAP, has been challenged by the tax authorities and is still pending before the competentTax Commission. To this end, the company feels that it will be able to argue its case effectively. Finally, on 3 July 2012 the Tax Police (Guardia di Finanza - Nucleo Polizia Tributaria Roma - I Gruppo Tutela Entrate - 1°Sezione Verifiche Complesse) in Rome commenced a tax audit of SDA Express Courier SpA with respect to direct taxesfor the 2009 tax year and refuse collection taxes for the period 2008-2011. On 12 February 2013 the company receiveda tax audit report for 2009. The only finding concerned financial transactions involving SDA Express Courier SpA, PosteItaliane SpA and Consorzio Logistica Pacchi Scrl, though this is unlikely to result in a contingent liability for the company.


European CommissionActing on the European Commission’s Decision of 16 July 2008 regarding state aid, and in accordance with instructionsfrom the Parent Company’s shareholder, on 15 January 2009 Poste Italiane SpA paid the amount due to the MEF. TheCompany’s appeal is pending before the European Community Court. In 2012 the debate phase ended. The Court of firstinstance of the European Communities is likely to hand down a decision in 2013.

Antitrust AuthorityThe investigation of the Parent Company launched on 15 October 2009, in relation to deregulated postal services (in or-der “to determine whether the Company’s actions entailed an abuse of a dominant market position pursuant to art. 82 ofthe EC Treaty”, with specific reference to the Posta Time product and participation in certain tenders), came to an end on15 December 2011, with the application of a fine of €39 million to be paid by Poste Italiane SpA. The Company immedi-ately appealed before Lazio Regional Administrative Court which, on 11 January 2012, rejected the application for interim




relief and fixed a date for the hearing on the merits. On 4 April 2012, Lazio Regional Administrative Court upheld the ap-peal brought by Poste Italiane SpA and cancelled the Authority’s fine. The court’s decision was filed on 26 June 2012. On25 October 2012 the Antitrust Authority appealed the decision of the Regional Administrative Court. The Company con-tinues to act prudently with respect to the risks associated with this case in making provisions for risks and charges forthe year ended 31 December 2012. On 14 March 2012 the Antitrust Authority launched an investigation of Poste Italiane to establish if the Company has abusedits dominant position in the deregulated postal services market. The procedure aims to determine whether or not PosteItaliane provides individual customers with services for which it does not charge VAT, thereby benefitting from an unjus-tified competitive advantage in being able to offer services exempt from value added tax. In June 2012 Poste Italiane SpAsubmitted its commitments to the Authority. On 4 February 2013 the Authority released the results of its investigation,where it noted that the national VAT legislation is not in keeping with that of the EU which, as such, must be disappliedwhile the Parent Company may not be punished for its conduct prior to this decision. However, the Antitrust Authoritycontinues to hold that Poste Italiane SpA has committed an abuse of its dominant position in the market for postal serv-ices, applying discounts – due to the non-application of VAT – that its competitors could not match. Therefore, followingthe end of the proceedings, the Parent Company must cease and desist from any such abuse. This date, which was orig-inally scheduled for 4 February 2013, has been extended until 30 April 2013. On 28 June 2012 the Antitrust Authority launched an investigation of the Parent Company for alleged unfair commercialpractices in relation to advertisement of the Paccocelere Internazionale (International Express Parcel) service, requestingadditional information. On 18 July 2012 Poste Italiane submitted a report in reply to the Authority’s requests. The investi-gation, where Poste Italiane submitted briefs and commitments, ended on 19 December 2012. The minimum fine levied,amounting to €45 thousand, was paid on 6 February 2013. Finally, on 5 November 2012 the Antitrust Authority launched an investigation of the Parent Company for unfair commer-cial practices, requesting also information in relation to the advertisement of a 4% gross return on BancoPosta Più andBancoPosta Click accounts in December 2011 - March 2012. In particular, the Authority challenged the manner with whichthe terms and conditions of the accounts were advertised. The end of the proceedings is scheduled for 3 June 2013.

AGCom (Italian communications authority)Law Decree 201 of 6 December 2011, converted into Law 214 of 22 December 2011, has transferred responsibility forregulation and supervision of the postal sector from the Ministry of Economic Development to the Italian CommunicationsAuthority (AGCom). In 2012 AGCom launched a number of investigations of the postal sector, some of which were com-pleted while others are pending. Of the latter, particularly important are those concerning the performance of the Univer-sal Service and compensation for the relevant expenses: analysis and application of the allocation mechanism and assess-ment of the net cost of the service for 2011, according to the criteria laid down by EU Directive 2008/6/EC; setting of theprice cap for services falling within the scope of the USO; and evaluation of the General Terms and Conditions of service.Moreover, the following are still pending: a public consultation related to draft regulations governing the settlement of dis-putes deriving from complaints in the postal sector, and the definition of standards designed to take account of the pre-vailing needs of tourists, so as to reschedule the opening hours of post offices in the summer months.

Bank of ItalyIn February 2012 the Bank of Italy began an inspection of the Parent Company in accordance with art. 54 of Legislative De-cree 385/93, with respect to the activities of BancoPosta. The inspection ended on 24 August 2012 and the report was sub-mitted on 12 November 2012. On 14 December 2012 Poste Italiane SpA submitted its considerations to the regulator. During the year the Parent Company also underwent inspections by the “Department of external relations and general af-fairs” within the Bank of Italy’s Supervision Unit (“Servizio rapporti esterni e affari generali” dell’Area Vigilanza) to verifythe compliance of BancoPosta’s activities. The areas reviewed included, among others, anti-money-laundering, the trans-parency of contractual terms and conditions and fair trade issues. The outcome of the inspections was notified to PosteItaliane SpA in a letter dated 18 December 2012. The Parent Company submitted its own considerations to the Bank ofItaly, in reply to this letter, on 13 March 2013.



290

Lastly, on 18 April 2012 the Financial Reporting Unit (Unità di Informazione Finanziaria, or UIF) of the Bank of Italy beganan inspection of the Parent Company with reference to BancoPosta RFC, pursuant to art. 47, paragraph 1 of LegislativeDecree 231/07 relating to the reporting of alleged money-laundering transactions. The inspection was completed in Octo-ber 2012. Following the inspection, the Unit identified six failures to report suspicious transactions, in addition to five suchfailures uncovered and notified by the Finance Police in 2012. The Parent Company sent a defence brief to the MEF forevery notification received. Overall, at 31 December 2012, there are twenty pending proceedings before the MEF, includ-ing fourteen for failures to report suspicious transactions and six in relation to violations of the rules governing limits onthe use of cash and bearer instruments.

DISCLOSURE OF FEES PAID TO THE INDEPENDENT AUDITORS

Poste Italiane SpA has voluntarily adopted guidelines governing the procedures for awarding contracts to the Independ-ent Auditors or companies within its network. The guidelines also require the Company to provide a summary of the con-tracts awarded.The following table shows fees, broken down by type of service, payable to PricewaterhouseCoopers SpA and compa-nies within its network for 2012 and 2011.

The services other than audit mainly relate to a long-term contract, awarded by Poste Italiane SpA via a tender process,for monitoring the quality of the Priority Mail and Posta Target services.


Fees(*)

For the year ended For the year ended Item Entity providing the service 31 December 2012 31 December 2011

Audit PricewaterhouseCoopers SpA 2,079 1,859PricewaterhouseCoopers Network - -

Voluntary audits or audit-related services PricewaterhouseCoopers SpA 145 55PricewaterhouseCoopers Network 113 -

Services other than audit PricewaterhouseCoopers SpA - -PricewaterhouseCoopers Network 845 797

Total 3,182 2,711

(*) The above amounts do not include incidental expenses and charges (for example, the regulatory fee paid to the CONSOB).

40.7 - Disclousure of fees paid to Independent Auditors



41 - INFORMATION ON INVESTMENTS


% Share Profit/(Loss)Name (registered office) interest capital for the year Equity

BancoPosta Fondi SpA SGR (Rome) 100% 12,000 8,683 84,791

Banca del Mezzogiorno-MedioCredito Centrale SpA (Rome) 100% 132,509 7,145 145,569

Consorzio Logistica Pacchi ScpA (Rome) 100% 516 - 516

Consorzio per i Servizi di Telefonia Mobile ScpA (Rome)(*) 100% 120 - 120

Europa Gestioni Immobiliari SpA (Rome) 100% 103,200 (498) 441,480

Italia Logistica Srl (Rome)(**) 100% 300 (1,852) 406

Mistral Air Srl (Rome) 100% 530 (8,242) (5,949)

Postecom SpA (Rome) 100% 6,450 5,120 47,600

PosteMobile SpA (Rome) 100% 32,561 18,088 79,100

Poste Energia SpA (Rome) 100% 120 198 1,159

PosteTutela SpA (Rome) 100% 153 1,091 10,382

Poste Vita SpA (Rome)(*) 100% 866,608 265,485 2,060,082

Poste Assicura SpA (Rome)(*) 100% 25,000 4,592 35,483

Postel SpA (Rome) 100% 20,400 6,027 129,825

PostelPrint SpA (Rome) 100% 7,140 1,073 36,909

PosteShop SpA (Rome) 100% 2,582 310 4,756

SDA Express Courier SpA (Rome) 100% 56,339 (50,470) (6,820)

(*) These figures have been calculated under IFRS, and may not be consistent with those included in the financial statements prepared in accordance withthe Civil Code and Italian GAAP.

(**) This company, which was originally consolidated using the proportionate method, following the acquisition of full control by SDA Express Courier SpA,is consolidated on a line-by-line basis as of 1 October 2012. The company’s contribution to the consolidated result is a loss of €770 thousand.

41.1 - List of investments consolidated on a line-by-line basis


292

42 - EVENTS AFTER THE END OF THE REPORTING PERIOD

Other events after the end of the reporting period are described in the above notes. No other material events have tak-en place after 31 December 2012.


% Revenue from Profit/(Loss) forName (registered office) interest Assets Liabilities services the year

Address Software Srl (Rome) 51% 1,722 1,479 2,574 (22)

Docugest SpA (Parma)(a) 49% 20,495 11,804 13,463 1,075

Docutel Communications Services SpA (Siena) 85% 3,765 2,164 4,771 134

Kipoint SpA (Rome) 100% 1,487 984 1,199 (295)

PatentiViaPoste ScpA (Rome)(b) 86.86% 120 - - -

Poste Tributi ScpA (Rome) 90% 12,173 9,590 4,172 -

Programma Dinamico SpA (Rome)(c) - 582 650 1 3

Telma Sapienza Scarl (Rome)(a) 30.20% 1,524 14 - (12)

Uptime SpA (Rome)(a) 28.57% 4,693 4,975 3,767 (419)(a) Data from the company’s latest approved financial statements for the year ended 31 December 2011.(b) At the date of establishment of the company on 6 December 2012; the company will prepare its first financial statements for the year ended 31 Decem-

ber 2013.(c) Data from the company’s latest approved financial statements for the year ended 31 December 2010. No Group company has any equity interest in Pro-

gramma Dinamico SpA.

41.2 - List of investments accounted for using the equity method


293Notes to the consolidated financial statements | Attestation of the separate and consolidated financial statements for the year ended 31 December 2012

Attestation of the separate and consolidated financial statements for the year ended 31 De-cember 2012 pursuant to art. 154-bis of Legislative Decree 58/1998

1. The undersigned, Massimo Sarmi, as Chief Executive Officer, and Alessandro Zurzolo, as Manager responsible for PosteItaliane SpA’s financial reporting, having also taken account of the provisions of art.154-bis, paragraphs 3 and 4 of Legisla-tive Decree 58 of 24 February 1998, attest to:

- the adequacy with regard to the nature of the Company and- the effective application of the administrative and accounting procedures adopted in preparation of the separate and con-

solidated financial statements during 2012.

2. In this regard, it should be noted that, as highlighted in the Internal Control-Integrated framework model issued by theCommittee of Sponsoring Organizations of the Treadway Commission, which represents the international standard bodyof generally accepted principles of internal control, as expressly referred to by Confindustria (the main organization repre-senting Italian manufacturing and services companies) in its Guidelines for the role of Manager responsible for financialreporting pursuant to art.154-bis of the Consolidated Law on Finance, an internal control system, no matter how well de-signed and implemented, can only provide reasonable, not absolute, assurance that the company’s objectives will beachieved, including true and fair financial reporting.

3. We also attest that:

3.1 the separate and consolidated financial statements:

a) have been prepared in compliance with the International Financial Reporting Standards endorsed by the EuropeanUnion through EC Regulation 1606/2002, issued by the European Parliament and by the Council on 19 July 2002;

b) are consistent with the underlying accounting books and records;c) give a true and fair view of the financial position and results of operations of the issuer and the companies included in

the scope of consolidation.

3.2 the Directors’ Report on Operations includes a reliable analysis of the operating and financial performance and situa-tion of the issuer and the companies included in the scope of consolidation, as well as a description of the main risks anduncertainties to which they are exposed.

Rome, Italy27 March 2013

Chief Executive Officer Manager responsible for financial reporting

Massimo Sarmi Alessandro Zurzolo

(This certification has been translated from the original which was issued in accordance with Italian legislation).



294

BOARD OF STATUTORY AUDITORS’ REPORT

To the General Meeting of Shareholders of Poste Italiane SpA

The Poste Italiane Group’s consolidated financial statements for the year ended 31 December 2012, which report profitfor the year of €1,032,492 thousand (€846,381 thousand for the year ended 31 December 2011), have been prepared bythe Parent Company, in accordance with the provisions of EC Regulation 1606/2002, under international financial report-ing standards (IFRS). The financial statements consist of the consolidated statement of financial position, the consolidat-ed statement of profit or loss, the consolidated statement of comprehensive income, the consolidated statement ofchanges in equity, the consolidated statement of cash flows and the notes to the consolidated financial statements, ac-companied by the Directors’ Report on Operations.The notes provide a clear description of the basis of accounting used, the specific accounting standards chosen and ap-plied, and the impact of related party transactions on the results of operations and the financial position.The statement of financial position format uses the current/non-current distinction, whilst the separate statement of prof-it or loss has been prepared using the nature of expense method, and the statement of cash flows using the indirect method.The Board acknowledges that the independent auditors, PricewaterhouseCoopers SpA, issued their opinion on the con-solidated financial statements on 12 April 2013.In conclusion, determination of the scope of consolidation, the principles used in consolidating investments and the pro-cedures adopted for this purpose meet the requirements of IFRS. The structure of the consolidated financial statementsis thus technically correct and, taken as a whole, complies with the specific legislation.The Report on Operations provides adequate disclosure regarding the results of operations, financial position and cash flows,the operating performance in 2012 and the outlook of and for the Group of companies included in the scope of consoli-dation. Our examination has confirmed that it is consistent with the consolidated financial statements.

Rome, Italy12 April 2013

THE BOARD OF STATUTORY AUDITORS

Silvana Amadori - Chairwoman Ernesto Calaprice - AuditorFrancesco Ruscigno - Auditor



295Board of Statutory Auditors’ Report | Independent Auditors’ Report

INDIPENDENT AUDITORS’ REPORT



296



297Independent Auditors’ Report



POSTE ITALIANE SPASEPARATE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2012 STATEMENTS AND NOTES


298-423 SEPARATE FINANCIAL STATEMENTS 2012:Layout 1 23/09/13 14:41 Pagina 298

ANNUALREPORT2012




300

STATEMENT OF FINANCIAL POSITION 302

STATEMENT OF FINANCIAL POSITION (CONTINUED) 303

STATEMENT OF PROFIT OR LOSS 305

STATEMENT OF COMPREHENSIVE INCOME 306

STATEMENT OF CHANGES IN EQUITY 307

STATEMENT OF CASH FLOWS 308

NOTES TO THE SEPARATE FINANCIAL STATEMENTS 3091. Introduction 3092. Basis of accounting 3093. Risk management 3274. Property, plant and equipment 3485. Investment property 3506. Intangible assets 3517. Investments 3528. Financial assets attributable to BancoPosta 3559. Financial assets 362

10. Trade receivables 36611. Other receivables and assets 37212. Cash and deposits attributable to BancoPosta 37513. Cash and cash equivalents 37514. Non-current assets held for sale 37615. Share capital 37716. Shareholder transactions 37717. Reserves 37718. Provisions for risks and charges 37919. Employee termination benefits 38120. Financial liabilities attributable to BancoPosta 383

CONTENTS


Separate financial statements

301

21. Financial liabilities 38522. Trade payables 38923. Other liabilities 39124. Revenue from sales and services 39525. Other income from financial activities 39926. Other operating income 39927. Cost of goods and services 40128. Other expenses from financial activities 40329. Personnel expenses 40330. Depreciation, amortisation and impairments 40531. Other operating costs 40632. Finance income/(costs) 40733. Income tax expense 40834. Related party transactions 41335. Other information 41836. Events after the end of the reporting period 42237. BancoPosta’s Separate Report 422

ATTESTATION OF THE SEPARATE AND CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012 PURSUANT TO ART. 154-BIS OF LEGISLATIVE DECREE 58/1998 537

BOARD OF STATUTORY AUDITORS’ REPORT 538

INDEPENDENT AUDITORS’ REPORT 541


302

STATEMENT OF FINANCIAL POSITIONat 31 December


ASSETS

of which related of which related(€) Note 2012 party 2011 party

Non-current assets

Property, plant and equipment [4] 2,495,611,309 - 2,621,453,754 -Investment property [5] 74,041,912 - 80,196,885 -Intangible assets [6] 380,104,938 - 370,975,799 -Investments [7] 1,430,011,836 1,430,011,836 1,488,002,996 1,488,002,996Financial assets attributable to BancoPosta [8] 33,521,953,740 - 26,377,257,057 -Financial assets [9] 1,162,780,958 648,251,902 1,188,597,779 748,089,320Trade receivables [10] 138,702,782 - 181,554,500 -Deferred tax assets [33] 800,857,726 - 1,578,467,952 -Other receivables and assets [11] 403,405,873 1,465,574 222,363,309 1,465,574

Total 40,407,471,074 34,108,870,031

Current assets

Trade receivables [10] 3,450,284,437 2,381,092,744 3,596,776,282 2,326,179,207Current tax assets [33] 496,752,530 - 38,477,065 -Other receivables and assets [11] 934,994,764 203,241,632 574,158,696 23,309,971Financial assets attributable to BancoPosta [8] 10,811,670,519 6,741,807,596 10,291,916,110 7,854,036,390Financial assets [9] 520,252,452 473,050,370 619,993,481 512,331,179Cash and deposits attributable to BancoPosta [12] 3,179,701,384 - 2,559,994,557 -Cash and cash equivalents [13] 1,458,274,942 1,397,124,528 1,208,802,583 829,399,265

Total 20,851,931,028 18,890,118,774

Non-current assets held for sale [14] 129,447 - 6,567,591 -

TOTAL ASSETS 61,259,531,549 53,005,556,396

LIABILITIES AND EQUITY

of which related of which related(€) Note 2012 party 2011 party

Equity

Share capital [15] 1,306,110,000 - 1,306,110,000 -Reserves [17] 1,163,588,420 - (1,010,555,287) -Retained earnings 1,843,171,717 - 1,706,257,923 -

Total 4,312,870,137 2,001,812,636


Provisions for risks and charges [18] 503,473,561 56,902,052 504,939,664 46,178,821Employee termination benefits [19] 1,398,665,334 - 1,162,602,399 -Financial liabilities attributable to BancoPosta [20] 5,026,251,417 2,523,541,907 594,492,369 -Financial liabilities [21] 554,975,291 116,975,348 685,654,296 226,417,433Deferred tax liabilities [33] 325,223,288 - 68,883,269 -Other liabilities [23] 303,105,395 - 133,743,095 -

Total 8,111,694,286 3,150,315,092

Current liabilities

Provisions for risks and charges [18] 850,714,149 11,543,034 988,030,700 8,556,155Trade payables [22] 1,417,130,702 509,084,987 1,867,747,291 890,073,597Current tax liabilities [33] - - 72,326,659 -Other liabilities [23] 1,304,888,500 80,223,052 1,219,483,138 85,707,406Financial liabilities attributable to BancoPosta [20] 43,695,598,072 103,033,574 41,657,362,166 182,456,966Financial liabilities [21] 1,566,635,703 505,780,455 2,048,478,714 772,085,605

Total 48,834,967,126 47,853,428,668

TOTAL LIABILITIES AND EQUITY 61,259,531,549 53,005,556,396


303Statement of financial position

STATEMENT OF FINANCIAL POSITION (continued)SUPPLEMENTARY STATEMENT SHOWING BANCOPOSTA RFC AT 31 DECEMBER 2012


ASSETSCapital outside BancoPosta

(€) Note the ring-fence RFC Adjustments Total

Non-current assets

Property, plant and equipment 2,495,611,309 - - 2,495,611,309Investment property 74,041,912 - - 74,041,912Intangible assets 380,104,938 - - 380,104,938Investments 1,430,011,836 - - 1,430,011,836Financial assets attributable to BancoPosta [8] - 33,521,953,740 - 33,521,953,740Financial assets 1,162,780,958 - - 1,162,780,958Trade receivables 138,702,782 - - 138,702,782Deferred tax assets [33] 359,099,032 441,758,694 - 800,857,726Other receivables and assets [11] 230,660,768 172,745,105 - 403,405,873

Total 6,271,013,535 34,136,457,539 - 40,407,471,074

Current assets

Trade receivables [10] 1,954,415,733 1,495,868,704 - 3,450,284,437Current tax assets [33] 489,090,019 18,200,233 (10,537,722) 496,752,530Other receivables and assets [11] 421,554,930 513,439,834 - 934,994,764Financial assets attributable to BancoPosta [8] - 10,811,670,519 - 10,811,670,519Financial assets 520,252,452 - - 520,252,452Cash and deposits attributable to BancoPosta [12] - 3,179,701,384 - 3,179,701,384Cash and cash equivalents [13] 44,801,288 1,413,473,654 - 1,458,274,942

Total 3,430,114,422 17,432,354,328 (10,537,722) 20,851,931,028

Non-current assets held for sale 129,447 - - 129,447

Intersegment relations net amount 262,729,493 - (262,729,493) -

TOTAL ASSETS 9,963,986,897 51,568,811,867 (273,267,215) 61,259,531,549

LIABILITIES AND EQUITY

Capital outside BancoPosta(€) Note the ring-fence RFC Adjustments Total

Equity

Share capital 1,306,110,000 - - 1,306,110,000Reserves [17] 235,991,845 927,596,575 - 1,163,588,420Retained earnings 1,246,203,768 596,967,949 - 1,843,171,717

Total 2,788,305,613 1,524,564,524 - 4,312,870,137


Provisions for risks and charges [18] 268,164,058 235,309,503 - 503,473,561Employee termination benefits [19] 1,379,817,358 18,847,976 - 1,398,665,334Financial liabilities attributable to BancoPosta [20] - 5,026,251,417 - 5,026,251,417Financial liabilities 554,975,291 - - 554,975,291Deferred tax liabilities [33] 15,358,426 309,864,862 - 325,223,288Other liabilities [23] 75,295,237 227,810,158 - 303,105,395

Total 2,293,610,370 5,818,083,916 - 8,111,694,286

Current liabilities

Provisions for risks and charges [18] 804,011,951 46,702,198 - 850,714,149Trade payables [22] 1,352,284,383 64,846,319 - 1,417,130,702Current tax liabilities [33] - 10,537,722 (10,537,722) -Other liabilities [23] 1,159,138,877 145,749,623 - 1,304,888,500Financial liabilities attributable to BancoPosta [20] - 43,695,598,072 - 43,695,598,072Financial liabilities 1,566,635,703 - - 1,566,635,703

Total 4,882,070,914 43,963,433,934 (10,537,722) 48,834,967,126

Intersegment relations net amount - 262,729,493 (262,729,493) -

TOTAL LIABILITIES AND EQUITY 9,963,986,897 51,568,811,867 (273,267,215) 61,259,531,549


304

STATEMENT OF FINANCIAL POSITION (continued)SUPPLEMENTARY STATEMENT SHOWING BANCOPOSTA RFC AT 31 DECEMBER 2011


ASSETSCapital outside BancoPosta


Non-current assets

Property, plant and equipment 2,621,453,754 - - 2,621,453,754Investment property 80,196,885 - - 80,196,885Intangible assets 370,975,799 - - 370,975,799Investments 1,488,002,996 - - 1,488,002,996Financial assets attributable to BancoPosta [8] - 26,377,257,057 - 26,377,257,057Financial assets 1,188,597,779 - - 1,188,597,779Trade receivables 181,554,500 - - 181,554,500Deferred tax assets [33] 397,524,754 1,180,943,198 - 1,578,467,952Other receivables and assets 222,363,309 - - 222,363,309

Total 6,550,669,776 27,558,200,255 - 34,108,870,031

Current assets

Trade receivables [10] 2,830,616,786 766,159,496 - 3,596,776,282Current tax assets 38,477,065 - - 38,477,065Other receivables and assets [11] 220,317,714 353,840,982 - 574,158,696Financial assets attributable to BancoPosta [8] - 10,291,916,110 - 10,291,916,110Financial assets 619,993,481 - - 619,993,481Cash and deposits attributable to BancoPosta [12] - 2,559,994,557 - 2,559,994,557Cash and cash equivalents [13] 369,852,363 838,950,220 - 1,208,802,583

Total 4,079,257,409 14,810,861,365 - 18,890,118,774

Non-current assets held for sale 6,567,591 - - 6,567,591

Intersegment relations net amount 454,983,248 - (454,983,248) -

TOTAL ASSETS 11,091,478,024 42,369,061,620 (454,983,248) 53,005,556,396

LIABILITIES AND EQUITYCapital outside BancoPosta


Equity

Share capital 1,306,110,000 - - 1,306,110,000Reserves [17] 166,471,427 (1,177,026,714) - (1,010,555,287)Retained earnings 1,449,401,185 256,856,738 - 1,706,257,923

Total 2,921,982,612 (920,169,976) - 2,001,812,636


Provisions for risks and charges [18] 261,332,103 243,607,561 - 504,939,664Employee termination benefits [19] 1,147,194,173 15,408,226 - 1,162,602,399Financial liabilities attributable to BancoPosta [20] - 594,492,369 - 594,492,369Financial liabilities 685,654,296 - - 685,654,296Deferred tax liabilities [33] 24,940,687 43,942,582 - 68,883,269Other liabilities [23] 68,161,996 65,581,099 - 133,743,095

Total 2,187,283,255 963,031,837 - 3,150,315,092

Current liabilities

Provisions for risks and charges [18] 936,061,525 51,969,175 - 988,030,700Trade payables [22] 1,807,097,555 60,649,736 - 1,867,747,291Current tax liabilities [33] 63,243,030 9,083,629 - 72,326,659Other liabilities [23] 1,127,331,333 92,151,805 - 1,219,483,138Financial liabilities attributable to BancoPosta [20] - 41,657,362,166 - 41,657,362,166Financial liabilities 2,048,478,714 - - 2,048,478,714

Total 5,982,212,157 41,871,216,511 - 47,853,428,668

Intersegment relations net amount - 454,983,248 (454,983,248) -

TOTAL LIABILITIES AND EQUITY 11,091,478,024 42,369,061,620 (454,983,248) 53,005,556,396


305Statement of financial position | Statement of profit or loss

STATEMENT OF PROFIT OR LOSSfor the year ended 31 December


of which related of which related(€) Note 2012 party transactions 2011 party transactions

Revenue from sales and services [24] 9,206,306,284 2,908,224,785 9,467,613,859 2,960,148,980Other income from financial activities [25] 155,686,252 - 124,693,133 -Other operating income [26] 123,279,638 13,195,288 166,478,613 23,904,864

Total revenue 9,485,272,174 9,758,785,605

Cost of goods and services [27] 2,121,093,562 824,720,161 1,946,181,656 758,301,280Other expenses from financial activities [28] 1,471,569 - 8,930,826 -Personnel expenses [29] 5,658,395,664 33,769,972 5,681,006,425 30,235,080

of which non-recurring costs/(income) (82,042,488) - (54,714,714) -Depreciation, amortisation and impairments [30] 525,545,968 - 475,453,472 -Capitalised costs and expenses (7,628,517) - (8,420,690) -Other operating costs [31] 235,725,350 7,350,850 253,870,757 16,526,055

Operating profit/(loss) 950,668,578 1,401,763,159

Finance costs [32] 115,027,427 16,566,641 146,503,771 25,275,151Finance income [32] 90,694,792 49,592,324 135,323,930 70,351,247

Profit/(Loss) before tax 926,335,943 1,390,583,318

Income tax expense [33] 474,390,174 - 692,044,690 -Income tax for previous years following change in legislation [33] (270,299,294) - - -

PROFIT FOR THE YEAR 722,245,063 698,538,628


306

STATEMENT OF COMPREHENSIVE INCOMEfor the year ended 31 December


(€) Note 2012 2011

Profit/(Loss) for the year 722,245,063 698,538,628

Items to be reclassified in the Statement of profit or loss


Increase/(Decrease) in fair value during the year [17.1] 3,045,912,382 (2,675,514,966)

Transfers to profit or loss 11,455,928 (68,552,823)

Cash flow hedges

Increase/(Decrease) in fair value during the year [17.1] 201,702,687 (148,109,936)

Transfers to profit or loss (111,622,955) (71,033,963)

Taxation of items recognised directly in, or transferred from, equity to be reclassified in the Statement of profit or loss [33.9] (1,010,487,338) 958,138,800

Items not to be reclassified in the Statement of profit or loss

Actuarial gains/(losses) on provisions for employee termination benefits [19.1] (273,307,953) 62,236,464

Taxation of items recognised directly in, or transferred from, equity not to be reclassified in the Statement of profit or loss [33.4] 75,159,687 (17,115,028)

Total other components of comprehensive income 1,938,812,438 (1,959,951,452)

TOTAL COMPREHENSIVE INCOME FOR THE YEAR 2,661,057,501 (1,261,412,824)


307Statement of comprehensive income | Statement of changes in equity

STATEMENT OF CHANGES IN EQUITY


EquityReserves

Cash Retained BancoPosta flow earnings/

Share Legal RFC Fair value hedge (Accumulated (€) capital reserve reserve reserve reserve losses) Total

Balance at 1 January 2011 1,306,110,000 186,990,926 - (193,803,075) (37,618,388) 2,351,545,997 3,613,225,460

Total comprehensive income for the year - - - (1,856,719,357) (148,353,531) 743,660,064 (1,261,412,824)

Attribution of profit to reserves - 38,948,138 - - - (38,948,138) -

Dividends paid - - - - - (350,000,000) (350,000,000)

Creation of BancoPosta RFC reserve - - 1,000,000,000 - - (1,000,000,000) -

Balance at 31 December 2011 1,306,110,000 225,939,064 1,000,000,000 (2,050,522,432) (185,971,919) 1,706,257,923 2,001,812,636

of which attributable to BancoPosta RFC - - 1,000,000,000 (1,991,054,795) (185,971,919) 256,856,738 (920,169,976)

Total comprehensive income for the year - - - 2,076,208,608 60,752,096 524,096,797(*) 2,661,057,501

Attribution of profit to reserves - 37,183,003 - - - (37,183,003) -

Dividends paid - - - - - (350,000,000) (350,000,000)

Balance at 31 December 2012 1,306,110,000 263,122,067 1,000,000,000 25,686,176 (125,219,823) 1,843,171,717 4,312,870,137

of which attributable to BancoPosta RFC - - 1,000,000,000 52,816,398 (125,219,823) 596,967,949 1,524,564,524

(*) This item includes profit for the year of €722,245 thousand, actuarial losses on provisions for employee termination benefits of €273,308 thousand afterthe related reduction in current tax expense of €75,160 thousand.


308

STATEMENT OF CASH FLOWSfor the year ended 31 December


(€000) Note 2012 2011

Cash and cash equivalents at beginning of year 1,208,802 907,980

Profit/(Loss) before tax 926,336 1,390,583Depreciation, amortisation and impairments [30] 525,547 475,454Impairments/(Reversals of impairments) of investments [7] 58,074 7,200Net provisions for risks and charges [18] 262,912 439,611Use of provisions for risks and charges [18] (403,702) (207,887)Employee termination benefits paid (93,700) (132,050)Interest expense to financial institutions 48,280 12,583(Gains)/Losses on disposals [26] (1,849) (40,634)(Gains)/Losses on financial transactions 61,972 (111,176)(Dividends) [32] (71) (70)Dividends received 71 59(Finance income realised) [32] - (20,318)(Finance income in form of interest) [32] (87,723) (112,497)Interest received 92,728 63,200Interest expense and other finance costs [32] 113,136 143,193Interest paid (73,366) (58,334)Losses and impairments/(Recoveries) on receivables [31] 21,285 (5,238)Income tax paid [33] (856,476) (722,055)Other movements 1,921 884Cash generated by operating activities before movements in working capital [a] 595,375 1,122,508Movements in working capital:(Increase)/Decrease in Trade receivables 130,177 (54,496)(Increase)/Decrease in Other receivables and assets (289,647) 30,418Increase/(Decrease) in Trade payables (450,616) 344,658Increase/(Decrease) in Other liabilities 249,744 (253,259)Cash generated by/(used in) movements in working capital [b] (360,342) 67,321Increase/(Decrease) in liabilities attributable to BancoPosta 6,229,481 2,002,015Net cash generated by/(used for) financial assets held for trading - (6)Net cash generated by/(used for) available-for-sale financial assets (5,689,559) (1,069,548)Net cash generated by/(used for) held-to-maturity financial assets 320,326 347,069(Increase)/Decrease in other financial assets attributable to BancoPosta 937,887 (1,321,981)(Increase)/Decrease in cash and deposits attributable to BancoPosta (619,707) (208,749)Cash generated by/(used for) financial assets and liabilities attributable to BancoPosta [c] 1,178,428 (251,200)Net cash flow from/(for) operating activities [d]=[a+b+c] 1,413,461 938,629

- of which related party transactions 2,939,254 (563,934)

Investing activities:Property, plant and equipment [4] (228,864) (189,062)Investment property [5] (531) (212)Intangible assets [6] (171,877) (154,226)Investments (84) (444,050)Other financial assets (38,246) (124,911)Disposals:Property, plant and equipment, investment property and assets held for sale 6,883 45,232Investments - 7,941Other financial assets 97,630 210,280Net cash flow from/(for) investing activities [e] (335,089) (649,008)

- of which related party transactions (61,367) (300,519)

Proceeds from/(Repayments of) long-term borrowings 90,355 55,094(Increase)/Decrease in loans and receivables 143,771 154,526Increase/(Decrease) in short-term borrowings (713,025) 151,582Dividends paid [16] (350,000) (350,000)Net cash flow from/(for) financing activities and shareholder transactions [f] (828,899) 11,202

- of which related party transactions (576,360) 38,792

Net increase/(decrease) in cash [g]=[d+e+f] 249,473 300,823

Cash and cash equivalents at end of year [13] 1,458,275 1,208,803

Cash and cash equivalents at end of year [13] 1,458,275 1,208,803

Cash subject to investment restrictions (1,266,408) -Escrow account held at the Italian Treasury - (323,987)Amounts that cannot be drawn on due to court rulings (25,606) (17,765)

Unrestricted net cash and cash equivalents at end of year 166,261 867,051


309Statement of cash flows | Notes to the separate financial statements

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

1 - INTRODUCTION

Poste Italiane SpA originated from the conversion of the public entity, “Poste Italiane”, under Resolution 244 of 18 De-cember 1997 passed by the Interministerial Economic Planning Committee. The Company’s registered office is at VialeEuropa 190, Rome (Italy) and it is a wholly owned subsidiary of the Ministry of the Economy and Finance (the “MEF”). The Company provides a universal postal service (under a Universal Service Obligation, or “USO”) in Italy, whilst offeringintegrated communication, logistics and financial products and services throughout the country via its national network ofapproximately 14,000 post offices. The Company’s operations can be classified into two segments being Postal servicesand BancoPosta, performed by the various business units and Group companies. Postal services include Mail, Express De-livery, Logistics, Parcels and Philately. BancoPosta’s services regard the activities listed in art. 2 of Presidential Decree 144of 14 March 2001, and include the collection of all forms of public deposits, the provision of payment services, foreigncurrency trading, the promotion and marketing of loans issued by banks and other authorised financial institutions, andthe provision of investment services. Poste Italiane SpA operates to increase the integration of services and to provideinnovative solutions to the public, to corporate clients and to central and local government by exploiting its own distribu-tion channels and the multiple and complementary competencies of its organisational structure.These financial statements for the year ended 31 December 2012 have been prepared in euros, the currency of the econ-omy in which the Company operates. They consist of the statement of financial position, which includes a supplementarystatement showing the separate components of the ring-fenced capital, the statement of profit or loss1, the statement ofcomprehensive income, the statement of changes in equity, the statement of cash flows and the following notes, whichinclude BancoPosta RFC’s Separate Report (note 37). All amounts in the notes to the financial statements are shown inthousands of euros, unless otherwise stated. Poste Italiane SpA’s consolidated financial statements are published togeth-er with this document.

2 - BASIS OF ACCOUNTING

2.1 BASIS OF PREPARATION

Poste Italiane SpA prepares its financial statements in accordance with the International Financial Reporting Standards (“IFRS”)issued by the International Accounting Standards Board (“IASB”), and adopted by the European Union (“EU”) in EC Reg-ulation 1606/2002 of 19 July 2002, and in accordance with Legislative Decree 38 of 20 February 2005, which introducedregulations governing the adoption of IFRS in Italian law.The term IFRS includes all the International Financial Reporting Standards, International Accounting Standards (“IAS”) andinterpretations issued by the International Financial Reporting Interpretations Committee (“IFRIC”, previously known as


1. Formerly referred to as the “Income statement”. The name was changed following transposition of the changes introduced by IAS 1 into EU Regula-tion 475 of 5 June 2012.


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the Standing Interpretations Committee or “SIC”), adopted by the European Union and contained in the EU regulationspublished as of 27 March 2013, the date on which the Board of Directors of Poste Italiane SpA approved these financialstatements as part of the Annual Report.Poste Italiane redeemed the €750 million bond listed on the Luxembourg Stock Exchange on 3 July 2012, the bond’s sched-uled maturity date. Poste Italiane SpA has, in any event, renewed its EMTN (European Medium Term Note) programmewith the same stock exchange, thereby permitting the Company to issue new bonds should there be a future need to doso. As a result, the CONSOB regulations contained in Resolution 15519 of 27 July 2006 and in Ruling DEM/6064293 of28 July 2006 have been taken into account for the preparation of this document.The accounting policies adopted, described in note 2.3, reflect the fact that the Company will remain fully operational inthe foreseeable future, in accordance with the going concern assumption, and are consistent with those applied in thepreparation of the financial statements for the year ended 31 December 2011. The statement of financial position has been prepared on the basis of the current/non-current distinction2. In the statementof profit or loss, expenses are classified according to their nature. The indirect method has been applied in preparation ofthe statement of cash flows3.In line with the past, the statement of financial position, the statement of profit or loss and the statement of cash flowsshow amounts deriving from related party transactions. The statement of profit or loss also shows, where applicable, in-come and expenses deriving from material non-recurring transactions or from non-recurring events in the normal courseof business. Given the diverse nature frequency of transactions conducted by the Company, many items of income andexpense of a non-recurring nature may occur with considerable frequency. These items of income and expense are onlypresented separately when they are both of an exceptional nature and were generated by a material transaction.In order to allow comparison on a like-for-like basis with amounts for the year ended 31 December 2011, certain items inthe statement of profit or loss and the statement of cash flows have been reclassified.Pursuant to art. 2447-septies of the Italian Civil Code, following the creation of BancoPosta’s ring-fenced capital in 2011,the assets and contractual rights included in BancoPosta’s ring-fenced capital (from now on: BancoPosta RFC) are shownseparately in Poste Italiane SpA’s statement of financial position, in a specific supplementary statement, and in the notesto the financial statements. At the date of approval of these financial statements, there is no established practice on which to base interpretation andapplication of newly published, or revised, international accounting standards. The tax authorities have issued systematicofficial interpretations for a number of the tax-related effects of the measures contained in Legislative Decree 38 of 20February 2005, Law 244 of 24 December 2007 (the 2008 Budget Law) and the Ministerial Decree of 1 April 2009, imple-menting the 2008 Budget Law, which introduced numerous changes to IRES and IRAP. The MEF Decree issued on 8 June2011 contains instructions regarding the coordinated application of EU-endorsed international accounting standards com-ing into effect between 1 January 2009 and 31 December 2010, in addition to regulations governing determination of thetax bases for IRES and IRAP. This does not, however, cover all aspects and, in view of the fact that the Decree has onlyrecently been issued, there are no relevant legal interpretations or specific examples of best practice. The finance state-ments have, therefore, been prepared on the based information currently available and taking account of best practice.Any future changes or updated interpretations will be reflected in subsequent reporting periods, in accordance with thespecific procedures provided for by the related standards.

2. Current assets include assets (such as inventories and trade receivables) that are sold, consumed or realised as part of the normal operating cycle evenwhen they are not expected to be realised within twelve months after the reporting period (IAS 1 Revised, paragraph 68).



311Notes to the separate financial statements

2.2 - INFORMATION ON BANCOPOSTA RFC

As required by art. 2, paragraphs 17-octies et seq. of Law 10 of 26 February 2011, converting Law Decree 225 of 29 De-cember 2010, in order to identify ring-fenced capital for the purposes of applying the Bank of Italy’s prudential require-ments to BancoPosta’s operations and for the protection of creditors, at the General Meeting held on 14 April 2011 PosteItaliane SpA’s shareholder approved the creation of ring-fenced capital to be used exclusively in relation to BancoPosta’soperations (BancoPosta Ring-fenced Capital or BancoPosta RFC), as governed by Presidential Decree 144 of 14 March 2001,and established the assets and contractual rights to be included in the ring-fence as well as By-laws governing its organ-isation, management and control. BancoPosta RFC was provided originally with an initial reserve of €1 billion through theattribution of Poste Italiane SpA’s retained earnings. The resolution of 14 April 2011 became effective on 2 May 2011, thedate on which it was filed with the Companies’ Register.The separation of BancoPosta from Poste Italiane SpA is only partly comparable to other ring-fenced capital solutions. In-deed, BancoPosta is not expected to meet the requirements of articles 2447 bis et seq. of the Italian Civil Code or forother special purpose entities, in that it has not been established for a single specific business but rather, pursuant to Pres-idential Decree 144 of 14 March 2001, for several types of financial activities to be regularly carried out for an unlimitedperiod of time. For this reason, the above legislation does not impose the 10% limit on BancoPosta’s equity, waiving theprovisions of Italian Civil Code unless expressly cited as applicable.

Nature of assets and contractual rights and authorisations

BancoPosta’s assets, contractual rights and authorisations pursuant to notarial deed were conferred on BancoPosta RFCexclusively by Poste Italiane SpA without third-party contributions. BancoPosta’s operations consist of those listed in Pres-idential Decree 144 of 14 March 2001, as amended, namely:• the collection of savings from the public in accordance with art. 11, paragraph 1 of Legislative Decree 385 of 1 Septem-

ber 1993 - Consolidated Banking Law (Testo Unico Bancario, or TUB) and all related and consequent activities;• the collection of savings through postal securities and deposits;• payment services, including the issuance, administration and sale of prepaid cards and other payment instruments pur-

suant to art. 1, paragraph 2, letter f) numbers 4) and 5), TUB;• foreign exchange brokerage services;• promotion and placement to the public of loans issued by approved banks and financial brokers;• investment and related services pursuant to art. 12, Presidential Decree 144/2001;• debt collection services;• professional gold trading, on own behalf or on behalf of third parties, in accordance with the requirements of Law 7 of

17 January 2000.

All of the assets and rights arising out of various contracts, agreements and legal transactions related to the above activ-ities have also been conferred on BancoPosta RFC.

Cost and revenue allocation

Given the fact that Poste Italiane is a single legal entity, the Company’s general accounting system maintains its uniformcharacteristics and capabilities. In this context, the general principles governing administrative and accounting aspects ofBancoPosta RFC are as follows: • identification of transactions in Poste Italiane SpA’s general ledgers relating to BancoPosta’s ring-fenced operations which

are then extracted for recording in BancoPosta’s separate ledgers;• allocation to BancoPosta of all relevant revenues and costs. In particular the services rendered by the different functions




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• settlement of all incoming and outgoing third party payments by the Poste Italiane SpA Finance function; • allocation of income taxes based on BancoPosta’s separate income statement after adjusting for deferred taxation; • reconciliation of BancoPosta’s separate books to Poste Italiane’s general ledger.

Separate General Operating Guidelines have been developed and approved by Poste Italiane SpA’s Board of Directorswhich, in implementation of BancoPosta RFC’s By-laws, identifies the services provided by Poste Italiane SpA functionsto BancoPosta and determines the manner in which they are remunerated. Costs are allocated to BancoPosta by trans-fer pricing as determined with reference to:• market prices for similar services, e.g., the free market comparable price method; or,• cost plus a mark-up, e.g., the cost plus method, when market prices are not available for the particular type of services

provided by Poste Italiane SpA. Costs are determined by unbundling total costs incurred with the application of thesame process used for Universal Postal Service purposes in the related regulatory accounting records, which are sub-ject to independent audit. The mark-up is determined taking into account the market prices of BancoPosta’s principalservices.

The resulting transfer prices are reviewed annually as part of the planning and budget process.

Obligations

Poste Italiane SpA’s liability, pursuant to art. 2, paragraph 17-nonies of Law Decree 225 of 29 December 2010 convertedinto law by Law 10, to creditors of BancoPosta is limited to the ring-fenced capital, represented by the assets and con-tractual rights originally allocated or arisen after the separation. Poste Italiane’s liability is, however, unlimited with respectto claims arising from actions in tort relating to the management of BancoPosta or for transactions for which no indica-tion was made that the obligation was taken specifically by BancoPosta RFC. The By-laws approved at the ExtraordinaryGeneral Meeting of Poste Italiane SpA’s shareholder on 14 April 2011 provide that BancoPosta RFC’s equity shall be suf-ficient to support the risk inherent in its operations.

Separate Report

As required by law, at the end of each reporting period Poste Italiane SpA prepares a Separate Report on BancoPosta RFC’sfinancial position and results of operations, in compliance with the same EU-endorsed international accounting standardsadopted by Poste Italiane SpA, and also, where applicable, in conformity with Bank of Italy Circular 262 - Banks’ FinancialStatements: Layouts and Preparation. The Report consists of the statement of financial position, the income statement,the statement of comprehensive income, the statement of changes in equity, the statement of cash flows and notes. TheSeparate Report is an integral part of the Company’s financial statements (note 37).

2.3 - SUMMARY OF SIGNIFICANT ACCOUNTING STANDARDS AND POLICIES

Poste Italiane SpA’s financial statements have been prepared on a historical cost basis, with the exception of certain itemsthat must be measured at fair value. The significant accounting standards and policies are described below.

Property, plant and equipment

Property, plant and equipment is stated at acquisition or construction cost, less accumulated depreciation and any ac-cumulated impairment losses. The cost includes any directly attributable costs incurred to prepare the asset for its in-tended use, and the cost of dismantling and removing the asset to be incurred as a result of legal obligations requir-




ing the asset to be restored to its original condition. Borrowing costs incurred for the acquisition or construction of prop-erty, plant and equipment are recognised as an expense in the period in which they are incurred (with the exceptionof borrowings costs directly attributable to the acquisition or construction of a qualifying asset, in which case the bor-rowings costs are capitalised as part of the cost of that asset). The costs incurred for routine and/or cyclical mainte-nance and repairs are recognised directly in profit or loss in the year in which they are incurred. The capitalisation ofcosts attributable to the extension, modernisation or improvement of assets owned by the Company or held under leaseis carried out to the extent that they qualify for separate recognition as an asset or as a component of an asset, apply-ing the component approach, which states that each component with a different useful life and value is recognised sep-arately. The original cost is depreciated on a straight-line basis from the date the asset is available and ready for use,based on the asset’s expected useful life.The useful life and residual value of property, plant and equipment are reviewed annually and adjusted, where neces-sary, at the end of each year. Land is not depreciated. When a depreciable asset consists of separately identifiable com-ponents, with useful lives that are significantly different from those of the other components of the asset, each com-ponent is depreciated separately, in accordance with component approach, over a period that does not, exceed the lifeof the principal asset. The Company has estimated the following useful lives for the various categories of property, plantand equipment:

Property assets and the related fixed plant and machinery located on land held under concession or sub-concession, whichis to be returned free of charge to the grantor at the end of the concession term, are accounted for, based on the natureof the asset, within property, plant and equipment and depreciated on a straight-line basis over the shorter of the usefullife of the asset and the residual concession term.Gains and losses deriving from the disposal or retirement of an asset are calculated as the difference between the dis-posal proceeds and the net carrying amount of the asset retired or sold, and are recognised in profit or loss in the periodin which the transaction occurs.

Investment property

Investment property relates to land or buildings held with a view to earn rentals or for capital appreciation or both, there-fore generating cash flows that are largely independent of other assets. The same accounting treatment is applied to in-vestment property and property, plant and equipment.


Category Years

Buildings 33Structural improvements to own assets 20Plant 5 - 10Electronic stations 6Light constructions 10Equipment 8Furniture and fittings 8Electrical and electronic office equipment 5Motor vehicles 4 - 5Leasehold improvements Estimated lease term(*)

Other assets 3 - 5(*) Or the useful life of the improvement if shorter than the estimated lease term.


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Intangible assets

An intangible asset is an identifiable non-monetary asset without physical substance, which is controllable and capable ofgenerating future economic benefits. Intangible assets are recognised at cost, including any directly attributable costs re-quired to prepare the asset for its intended use, less accumulated amortisation and any accumulated impairment losses.Borrowings costs are capitalised as part of the cost of the asset only if directly attributable to the purchase or develop-ment of an intangible asset; otherwise, they are recognised as an expense in the period in which they are incurred. Amortisation is applied from the date the asset is ready for use, systematically over the remaining useful life of the as-set, or its estimated useful life. The costs of acquiring industrial patents, intellectual property rights, licences and similar rights are capitalised. Amortisa-tion is applied on a straight-line basis, in order to allocate the purchase cost over the shorter of the expected useful lifeand the related contract term from the date the Company has the right to use the asset. Costs associated with developing or maintaining software programmes are recognised in profit or loss in the period in whichthey are incurred. Costs that are directly associated with the production of identifiable and unique software products con-trolled by the Company, and that generate economic benefits beyond one year, are recognised as intangible assets. Di-rectly attributable costs, which are identifiable and measurable, include the cost of staff involved in software developmentand an appropriate portion of the relevant overheads. Amortisation is calculated on the basis of the estimated useful lifeof the software, which is usually three years.

Leased assets

Assets held under finance leases, where the risks and rewards of ownership are substantially transferred to the les-see, are recognised at fair value or, if lower, at the present value of the minimum lease payments. The correspondingliability, recognised by the lessor is the equal to the principal amount of future lease payments, is recognised as a fi-nancial liability. These assets are depreciated applying the same policies and rates previously described for property,plant and equipment.Leases where the lessor retains substantially all the risks and rewards of ownership are classified as operating leases.Payments made under operating leases are recognised in profit or loss on a straight-line basis over the lease term.

Impairment of assets

At the end of each reporting period, property, plant, equipment and intangible assets with finite and indefinite lives areanalysed to assess whether there is any indication that an asset may be impaired. If any indication exists, the Compa-ny estimates the recoverable amount of the asset in order to determine the impairment loss to be recognised in prof-it or loss. The recoverable amount is the higher of an asset’s fair value less costs to sell, and value in use, represent-ed by the present value of the future cash flows expected to be derived from the asset. In calculating value in use, fu-ture cash flow estimates are discounted using a rate that reflects current market assessments of the time value of moneycompared to the period of the investment and the risks specific to the asset. The realisable value of assets that do notgenerate separate cash flows is determined with reference to the CGU to which the asset belongs. An impairment lossis recognised for the amount by which the net carrying amount of the asset, or the CGU to which it belongs, exceedsits recoverable amount. When the impairment indicators no longer exist, the carrying amount of the asset is reinstat-ed, with the exception of goodwill, and the reversal recognised in profit or loss. The reversal must not exceed the car-rying amount that would have been determined had no impairment loss been recognised and depreciation or amorti-sation been charged.





Investments

Investments in subsidiaries and associates are accounted for at cost (including any directly attributable incidental expens-es), after adjustment for any impairments. Investments in subsidiaries and associates are tested annually for impairmentor whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Any impair-ment is recognised in profit or loss as an impairment loss. When an impairment no longer exists, the carrying amount ofthe asset is reinstated and the reversal recognised in profit or loss. The reversal must not exceed the carrying amountthat would have been determined had no impairment loss been recognised.

Financial instruments

Financial instruments include financial assets and liabilities that are classified on initial recognition, based on the businesspurpose for which they were acquired, at fair value. Purchases and sales of financial instruments are recognised for eachcategory of financial instrument at the date on which the Company commits to purchase or sell the asset (trade date ortransaction date), or, in the case of BancoPosta’s operations, at the settlement date4, which almost always coincides withthe transaction date. Movements in fair value between the transaction date and the settlement date are recognised in thefinancial statements.

Financial assetsOn initial recognition, financial assets are classified in one of the following four categories and valued as follows:

• Financial assets at fair value through profit or loss

This category includes: (a) financial assets held for trading, (b) those that qualify for designation at fair value through prof-it or loss on initial recognition, or for which the option to measure at fair value can be exercised, and (c) derivative in-struments, with the exception of the effective portion of those designated as cash flow hedges. Financial assets in thiscategory are accounted for at fair value and changes during the period of ownership are recognised in profit or loss. Fi-nancial instruments in this category are classified as short-term if they are held for trading or if they are expected to berealised within twelve months of the end of the reporting period. Derivative instruments are recognised as assets or li-abilities depending on whether the fair value is positive or negative. Fair value gains and losses on outstanding transac-tions with the same counterparty are offset, where contractually permitted.

• Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted inan active market, and primarily regard amounts due from customers, including trade receivables. They are included incurrent assets, except for those with maturities greater than twelve months after the end of the reporting period, whichare classified as non-current assets. These assets are carried at amortised cost5 using the effective interest method.If there is objective evidence of impairment, the asset is impaired to the estimated future cash flows. The resultingimpairment loss is recognised in profit or loss. If in subsequent periods the conditions which led to the impairmentno longer exist, the carrying amount of the asset is reinstated on the basis of the value that would have resulted fromapplication of the amortised cost method. The estimation procedure adopted in determining provisions for doubtfuldebts, or operating revenue to be suspended in the provision, primarily reflects the identification and measurement

4. This is possible for transactions carried out on organised markets (“regular way”).5. The amortised cost of a financial asset or liability means the amount recognised initially, less principal repayments and plus or minus accumulated amor-

tisation, using the effective interest method, of the difference between the initial amount and the maturity amount, after reductions for impairment andinsolvency. The effective interest rate is the rate that exactly discounts contractual (or expected) future cash payments or receipts over the expectedlife of the asset or liability to its initial carrying amount. Calculation of amortised cost must also include external costs and income directly attributableto the asset or liability on initial recognition.


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of elements resulting in specific reductions in the value of individually significant assets. Financial assets with similarrisk profiles are subsequently measured collectively, taking account, among other things, of the age of the receivable,the nature of the counterparty, past experience of losses and collections on similar positions and information on therelated markets.

• Held-to-maturity financial assets

Held-to-maturity financial assets are non-derivative financial assets with fixed or determinable payments and maturitiesthat the Company has a positive intention and ability to hold to maturity. These assets are carried at amortised cost us-ing the effective interest method, adjusted to reflect any impairment loss. The same policies as described in relation toloans and receivables are applied if there is impairment.

• Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial instruments that are either designated in this category ornot attributable to any of the other categories described above. These financial instruments are recognised at fair val-ue and any resulting fair value gains or losses are recognised in an equity reserve. This reserve is only reclassified toprofit or loss when the financial asset is effectively disposed of (or extinguished) or, in the event of accumulated loss-es, when there is evidence that the impairment recognised in equity cannot be recovered. Solely in the case of debtsecurities, if the fair value subsequently increases as the objective result of an event that took place after the impair-ment loss was recognised in profit or loss, the value of the financial instrument is reinstated and the reversal recog-nised in profit or loss. The recognition of returns on debt securities under the amortised cost method takes place throughprofit or loss, as do the effects of movements in exchange rates, whilst movements in exchange rates relating to avail-able-for-sale equity instruments are recognised in a specific equity reserve. The classification of an asset as currentor non-current depends on the strategic choice regarding how long to hold the asset and its effective negotiability. Asa result, financial instruments expected to be realised within twelve months of the end of the reporting period areclassified as current assets.

Financial assets are derecognised when the Company no longer has a contractual right to receive cash flows from the in-vestment or when it has substantially transferred all the related risks and rewards and control.

Financial liabilitiesFinancial liabilities, including borrowings, trade payables and other payment obligations, are carried at amortised costusing the effective interest method. If there is a change in the expected cash flows and they can be reliably estimat-ed, the value of borrowings is recalculated to reflect the change on the basis of the present value of estimated futurecash flows and the internal rate of return initially applied. Financial liabilities are classified as current liabilities, unlessthe Company has an unconditional right to defer settlement of the liability for at least twelve months after the end ofthe reporting period.Financial liabilities are derecognised on settlement or when the Company has substantially transferred all the risks and re-wards related to the instrument.

Derivative financial instrumentsDerivatives are initially recognised at fair value on the date the derivative contract is executed and if they do not qualifyfor hedge accounting treatment, gains and losses arising from movements in fair value are accounted for in profit or lossfor the period.If, on the other hand, derivative financial instruments qualify for hedge accounting, gains and losses arising from move-ments in fair value after initial recognition are accounted for in accordance with the specific policies described below.The Company documents the relationship between each hedging instrument and the hedged item, as well as its risk man-agement objective, the strategy for undertaking the hedge transaction and the methods used to assess effectiveness. As-sessment of whether the hedging derivative is effective takes place both at inception of the hedge and throughout theterm of the hedge.





• Fair value hedgesWhen the hedge is related to recognised assets or liabilities, or an unrecognised firm commitment6, the movements infair value of both the hedging instrument and the hedged item are recognised in profit or loss. When the hedging trans-action is not fully effective, resulting in differences between the above movements, the ineffective portion represents aloss or gain recognised separately in profit or loss for the period.

• Cash flow hedgesThe effective portion of movements in the fair value of derivatives that are designated and qualify as cash flow hedges7

after initial recognition are recognised in a specific equity reserve (Cash flow hedge reserve). A hedging transaction isgenerally considered highly effective if, both at inception of the hedge and on an ongoing basis, movements in the ex-pected future cash flows of the hedged item are substantially offset by movements in the fair value of the hedging in-strument. Amounts accumulated in equity are reclassified to profit or loss in the period in which the hedged item af-fects profit or loss.In the case of hedges associated with a highly probable forecast transaction (such as the purchase of fixed income debtsecurities), the reserve is reclassified to profit or loss in the period or in the periods in which the asset or liability, sub-sequently accounted for and connected to the above transaction, will affect profit or loss (for example, an adjustment tothe return on the security).If the hedging transaction is not fully effective, the gain or loss arising from a change in fair value relating to the ineffec-tive portion is recognised in profit or loss for the period.If, during the life of the derivative, the forecast hedged transaction is no longer expected to occur, the related gains andlosses accumulated in the cash flow hedge reserve are immediately reclassified to profit or loss for the period. When ahedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, the relatedgains and losses accumulated in the cash flow hedge reserve at that time remain in equity and are recognised in profitor loss at the same time as the original underlying transaction.

Determining the fair value of financial instrumentsThe fair value of financial instruments traded in active markets is based on quoted market prices at the end of the report-ing period. The fair value of financial instruments that are not traded on an active market is based on prices quoted by ex-ternal dealers and on valuation techniques primarily based on objective financial variables, as well as by taking account,where possible, of prices in recent transactions and quoted market prices for substantially similar instruments.

Classification the receivables and payables attributable to BancoPosta RFCIn general, the receivables and payables attributable to BancoPosta RFC are treated as financial assets and liabilities if re-lated to BancoPosta’s typical deposit-taking and lending activities, or services provided under authority from customers.The matching operating expenses and income, if not settled or classifiable in accordance with Bank of Italy Circular 272of 30 July 2008 - The Account Matrix, are accounted for in trade receivables and payables.

Income tax expense

Current income tax expense (IRES and IRAP) is based on the best estimate of taxable profit for the period and the relat-ed regulations, applying the rates in force. The impact of the reforms recently introduced by Law Decree 201 of 6 De-cember 2011, which permit companies, from 2012, to deduct IRAP paid on personnel expenses in full from the IRES taxbase, and to apply for a refund of the IRES overpaid in previous years, has been assessed on a prudent basis, taking in-to account the absence of consistent interpretations and specific best practice.




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Deferred tax assets and liabilities are calculated on all temporary differences arising between the tax bases of assetsand liabilities and their carrying amounts, using tax rates that are expected to apply when the related deferred tax as-sets are realised or the deferred tax liabilities are settled. Deferred tax assets and liabilities are not recognised if thetemporary differences derive from investments in subsidiaries, where the timing of the reversal of the temporary dif-ference is controlled by the Company and it is probable that the temporary difference will not reverse in the foresee-able future. In accordance with IAS 12, deferred tax liabilities are not recognised on goodwill deriving from a businesscombination.Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against whichthe temporary differences can be utilised.Current and deferred taxes are recognised in profit or loss, with the exception of taxes charged or credited directly to eq-uity, in which case the tax effect is recognised directly in equity.Current and deferred tax assets and liabilities are offset when they are applied by the same tax authority to the sametaxpaying entity, which has the legally exercisable right to offset the amounts recognised, and the entity has the in-tention of exercising this right. As a result tax liabilities accruing in interim periods that are shorter than the tax yearare not offset against the matching assets deriving from withholding tax or advances paid. The Company’s tax expenseand its accounting treatment reflect the effects deriving from the Poste Italiane SpA consolidated tax return, for whichthe Company has adopted a tax consolidation arrangement, which it has elected to apply in accordance with the re-lated law together with the subsidiaries, Poste Vita SpA, SDA Express Courier SpA and Mistral Air Srl. The tax con-solidation arrangement is governed by Group regulations based on the principles of neutrality and equality of treat-ment, which are intended to ensure that the companies included in the tax consolidation are in no way penalised asa result. Following adoption of the tax consolidation arrangement, Poste Italiane SpA posts its IRES tax expense toincome taxes for the period, after adjustments to take account of the positive or negative impact of consolidation ad-justments. Should the reductions or increases in tax expense deriving from such adjustments be attributable to thecompanies included in the tax consolidation, to which the positive or negative income components adjusted in theprocess of consolidation refer, Poste Italiane SpA attributes such reductions or increases in tax expense to the abovecompanies. 50% of the economic benefit deriving from tax losses for the period transferred to the Company fromcompanies included in the tax consolidation is passed on to these companies by Poste Italiane SpA. The remainingbenefit is covered by specific provisions for tax consolidation losses, which is offset by a corresponding reduction intax liabilities and attributed to the companies that generated such benefit, should there be reasonable certainty thatsuch companies will produce sufficient future taxable income to enable them to recover the related deferred tax as-sets. Should such conditions not occur, the provisions, which represent the Company’s potential debt to its sub-sidiaries, is taken to Poste Italiane SpA’s profit or loss as a tax consolidation gain. Consolidated tax expense is deter-mined on the basis of the tax expense or tax losses for the period for each company included in the consolidation,taking account of any withholding tax or advances paid.Other taxes not related to income are included in other operating costs.

Inventories

Inventories are valued at the lower of cost and net realisable value.The cost of interchangeable assets and goods for resale is calculated using the weighted average cost method. In the caseof non-interchangeable assets, cost is measured on the basis of the specific cost of the asset at the time of purchase.The value of the inventories is adjusted, if necessary, by provisions for obsolete or slow moving stock. When the circum-stances that previously led to recognition of the above provisions no longer exist, or when there is a clear indication of anincrease in the net realisable value, the provisions are fully or partly reversed, so that the new carrying amount is the low-er of cost and net realisable value at the end of the reporting period.Assets are not, recognised in the statement of financial position when the Company has incurred an expense that, basedon the best information available at the date of preparation of the financial statements, it is deemed unlikely that the ex-pense will generate economic benefits for the Company after the end of the reporting period.





Cash and securities held at post offices, and bank deposits attributable to the operations of BancoPosta, are accountedfor separately from cash and cash equivalents as they derive from deposits subject to investment restrictions, or from ad-vances from the Italian Treasury to ensure that post offices can operate. This cash cannot be used for purposes other thanto extinguish obligations deriving from the above transactions.

Cash and cash equivalents

Cash and cash equivalents refer to cash in hand, deposits held at call with banks, amounts that at 31 December 2012Poste Italiane SpA has temporarily deposited with the MEF and other highly liquid short-term investments with originalmaturities of ninety days or less. Current account overdrafts are accounted for in current liabilities.

Non-current assets held for sale

This category refers to non-current assets or assets included in disposal groups where the carrying amount is to be re-covered primarily through a sale transaction rather than through continued use. Assets held for sale are accounted for atthe lower of the net carrying amount and fair value less costs to sell. When a depreciable asset is reclassified in this cat-egory, the depreciation process is halted at the date of the reclassification.

Equity

Share capitalThe share capital is represented by the Company’s subscribed and paid-up capital. Incremental costs directly attributableto the issue of new shares are recognised as a reduction of the share capital, net of any deferred tax effect.

ReservesReserves relate to capital or revenue reserves. They include, the BancoPosta RFC reserve, representing the initial attribu-tion of equity attributed to BancoPosta ring-fenced capital, the fair value reserve, relating to items recognised at fair val-ue through equity, and the cash flow hedge reserve, deriving from recognition of the effective portion of hedging instru-ments outstanding at the end of the reporting period.

Retained earningsRetained earnings relate to the portion of profit for the period and for previous periods which was not distributed or tak-en to reserves or used to cover losses, and actuarial gains and losses deriving from the calculation of the liability for em-ployee termination benefits. This item also includes transfers from other equity reserves, when they have been releasedfrom the restrictions to which they were subjected.


Provisions for risks and charges are recorded to cover losses that are either probable or certain to be incurred, for which,however, there is an uncertainty as to the amount or as to the date on which they will occur. Provisions for risks and chargesare made when the Company has a present (legal or constructive) obligation as a result of a past event, and it is proba-ble that an outflow of resources will be required to settle the obligation. Provisions are measured on the basis of man-agement’s best estimate of the use of resources required to settle the obligation. The value of the liability is discounted



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at a rate that reflects current market values and takes into account the risks specific to the liability. Risks that may onlypossibly give rise to an outflow of resources are reported in a specific section of the notes on contingent assets and lia-bilities and no provisions are made.In rare cases, where disclosure of some or all of the information regarding the risks in question can be expected to prej-udice seriously the Company’s position in a dispute or in ongoing negotiations with third parties, the Company exercisesthe option granted by the relevant accounting standards to provide limited disclosure.

Employee benefits

Post-employment benefits are of two types: defined contribution plans and defined benefit plans. Under defined contri-bution plans the contributions payable are recognised in profit or loss when incurred, measured at the payable amount.Under defined benefit plans, given that the benefit to be paid can only be quantified after the termination of employment,the related impact on profit or loss and the statement of financial position is recognised on the basis of actuarial calcula-tions, in accordance with IAS 19.

Post-employment benefits: defined benefit plansDefined benefit plans include employee termination benefits payable to employees in accordance with article 2120 of theItalian Civil Code. Benefits vesting up to 31 December 20068, which are covered by the reform of supplementary pensionprovision, must, from 1 January 2007, be paid into a supplementary pension fund or into a Treasury Fund set up by INPS.A company’s liabilities deriving from defined benefit plans thus only regard provisions made up to 31 December 20068.The amount to be paid upon termination of employment (TFR) in the future is projected and discounted using the project-ed unit credit method to account for the time value of money prior to the liability being settled. The liability recognised inthe financial statements is based on calculations performed by independent actuaries. The calculation takes account oftermination benefits accrued for the period of service to date and is based on actuarial assumptions. These primarily re-gard the use of interest rates, with a maturity consistent with the expected maturity for the liability, and employee turnover.In the case of companies with at least 50 employees, as the company is not liable for employee termination benefits ac-cruing after 31 December 20068, the actuarial calculation of employee termination benefits no longer takes account of fu-ture rises in salary. Actuarial gains and losses are recognised at the end of each reporting period, directly in equity, basedon the difference between the carrying amount of the liability and the present value of the company’s obligations at theend of the period, due to changes in the actuarial assumptions.

Termination benefits and incentive schemes: defined contribution plansThe benefits payable to staff on termination of employment are recognised as liabilities when a company is demonstra-bly committed to terminating the employment of an employee or group of employees before the normal retirement date,or to offer termination benefits to the employee or group of employees to encourage voluntary redundancy. The abovebenefits are recognised immediately in personnel expenses given that they are not capable of generating future econom-ic benefits for the company.

Other long-term employee benefitsOther long-term employee benefits consist of benefits not payable within twelve months of the end of the reporting pe-riod, during which the employees provided their services. Generally, there is not the same degree of uncertainty regard-ing the measurement of other long-term employee benefits as there is in relation to post-employment benefits. As a re-sult, IAS 19 permits use of a simplified method of accounting: the net change in the value of the liability during the re-porting period is recognised in full in profit or loss.

8. Where, following entry into effect of the new legislation, the employee has not exercised any option regarding the investment of vested staff termina-tion benefits, the Company has remained liable to pay the benefits until 30 June 2007, or until the date, between 1 January 2007 and 30 June 2007,on which the employee exercised a specific option. Where no option was exercised, from 1 July 2007 vested staff termination benefits have been paidinto a supplementary pension fund.



Translation of items denominated in currencies other than the euro

Transactions in currencies other than the euro are translated to euro using the exchange rates prevailing at the date of thetransaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from the transla-tion at closing exchange rates of monetary assets and liabilities denominated in currencies other than the euro are recog-nised in profit or loss.

Revenue recognition

Revenue is recognised at the fair value of the consideration received, net of rebates and discounts, and in accordancewith the accruals basis of accounting. Revenue from the rendering of services is recognised when it can be reliably meas-ured on the basis of the stage of completion of the service provided. Revenue from activities carried out in favour of oron behalf of the state and Public Sector entities is recognised on the basis of the amount effectively accrued, with refer-ence to the laws and agreements in force, taking account, in any event, of the instructions contained in legislation regard-ing the public finances.The return on the current account deposits held by the MEF is determined using the effective interest method andis recognised as revenue based on its characteristics. The same classification is applied to income from euro area gov-ernment securities, in which deposits paid into accounts by private customers are invested. Revenue from the saleof goods is recognised when the significant risks and rewards of ownership of the goods have been transferred tothe buyer.

Government grants

Government grants are recognised once they have been formally allocated to the Company from the public entity con-cerned and only if, based on the information available at the end of the year, there is reasonable assurance that the proj-ect to which the grant relates will be effectively carried out and completed in accordance with the conditions attaching tothe grant. Government grants are recognised in profit or loss as other operating income as follows: grants related to in-come in full; grants related to property, plant and equipment over the useful life of the asset to which the grants referstarting from the entry into service of the asset.

Finance income and costs

Finance income and costs are recognised on an accruals basis based on the effective interest method, i.e. using an inter-est rate that exactly discounts all the cash flows of the related instrument.

Dividends

Dividends are recognised as finance income when the right to receive payment is established, which generally corre-sponds with approval of the distribution by the General Meeting of shareholders of the investee company.

Related parties

Related parties within the Group refer to Poste Italiane SpA’s direct and indirect subsidiaries and associates. Related par-ties external to the Group relate to the parent, the MEF, entities, including joint ventures, controlled by the MEF, and as-sociates of such entities. The Company’s key management personnel are also classified as related parties.



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The State and Public Sector entities other than the MEF are not classified as related parties. Related party transactionsdo not include those deriving from financial assets and liabilities represented by instruments traded on organised markets.

Accounting standards and interpretations applicable from 1 January 2012

IFRS 7 - “Financial Instruments: Disclosures - Transfers of Financial Assets”, adopted by EU Regulation 1205/2011, wasapplicable from 1 January 2012. The disclosures required by this amendment are provided below in note 3, “Risk man-agement”.Amendments to IAS 1 - “Presentation of Financial Statements: Presentation of Other Comprehensive Income”, adoptedby EU Regulation 475/2012, were effective from 1 July 2012. The amendments provide two alternatives for the presen-tation of components of comprehensive income:• in a single statement consisting of two separate sections, with the first, ”Profit/(Loss) for the year”, followed by the

section “Other components of comprehensive income”; or• in two separate statements, with the “Statement of profit or loss” immediately preceding the “Statement of compre-

hensive income”.

In both cases, items in the section relating to “Other components of comprehensive income” must be grouped in orderto distinguish between those that will subsequently be reclassified to profit or loss and those that will not. These compo-nents may be presented net of or before tax. Poste Italiane SpA has elected to present two separate statements: the “Statement of profit or loss” and the “Statementof comprehensive income”. In the latter statement the items are grouped in order to distinguish between those that willsubsequently be reclassified to profit or loss and those that will not. These components are presented before tax. Finally, EU Regulation 1256/2012 of 29 December 2012 has adopted, among other things, the amendment to IFRS 7 - “Fi-nancial Instruments: Disclosures - Offsetting Financial Assets and Financial Liabilities”, retroactively abolishing section 13- Derecognition from 1 July 2011.


At the date of approval of these financial statements, the IASB has issued the following accounting standards, interpre-tations and amendments applicable from 1 January 2013:• IAS 19 - “Employee benefits” amended by EU Regulation 475/2012;• IAS 12 -“Income Taxes - Deferred Tax: Recovery of Underlying Assets” amended by EU Regulation 1255/2012;• IFRS 1 - “First-time Adoption of International Financial Reporting Standards - Severe Hyperinflation and Removal of Fixed



ulation 183/2013.

The following accounting standards, interpretations and amendments are, on the other hand, applicable from 1 January2014:• IAS 27 - “Separate Financial Statements” adopted by EU Regulation 1254/2012;• IAS 28 - “Investments in Associates and Joint Ventures” adopted by EU Regulation 1254/2012;• IFRS 10 - “Consolidated Financial Statements” adopted by EU Regulation 1254/2012;• IFRS 11 - “Joint Arrangements” adopted by EU Regulation 1254/2012;• IFRS 12 - “Disclosure of Interests in Other Entities” adopted by EU Regulation 1254/2012;




• IAS 32 - “Financial Instruments: Presentation - Offsetting Financial Assets and Financial Liabilities” adopted by EU Reg-ulation 1256/2012.

The potential impact on Poste Italiane SpA’s financial reporting of the accounting standards, amendments and interpreta-tions due to come into effect is currently being assessed.Finally, at the date of approval of these financial statements, the IASB has issued the following accounting standards, in-terpretations and amendments, which have yet to be endorsed by the European Union and which, in certain cases, arestill at the consultation stage. These include the following:• IFRS 9 - “Financial Instruments”, as part of the review of the existing IAS 39; • a number of Exposure Drafts, also as part of the review of the existing IAS 39, have been issued regarding “Amortised

Cost and Impairment, Fair Value Option for Financial Liabilities and Hedge Accounting”;• Exposure Draft “Improvements to IFRS” as part of the annual programme of general improvements and review of IFRS; • Exposure Draft “Transition Guidance” regarding the introduction of amendments to IFRS 10, IFRS 11 and IFRS 12;• Exposure Draft “Investment Companies”; • Exposure Draft “Measurement of Non-financial Liabilities” as part of the review of the existing IAS 37 regarding the recog-



of insurance contracts;• Exposure Draft “Leases” as part of the review of the existing IAS 17, regarding the accounting treatment of leases;• Interpretation on “Levies Charged by Public Authorities on Entities that Operate in a Specific market”;• Interpretation on ”Put Options Written on Non-Controlling Interests”;• Exposure Draft “IAS 28 - Equity Method: Share of Other Net Asset Changes”;• Exposure Draft “IAS 16 - Property, Plant and Equipment” and “IAS 38 - Intangible Assets - Clarification of Acceptable


tures: Sale of Contribution of Assets between an Investor and its Associate or Joint Venture”;• Exposure Draft “IFRS 11 - Joint Arrangements: Acquisition of an Interest in a Joint Operation”;• Exposure Draft “IAS 36 - Recoverable Amount Disclosures for Non-Financial Assets”.

The potential impact on Poste Italiane SpA’s financial reporting of the accounting standards, amendments and interpreta-tions due to come into effect is currently being assessed.

2.4 - USE OF ESTIMATES

Preparation of the financial statements requires the application of accounting standards and methods that are at times basedon complex judgements and estimates, based on historical experience, and assumptions that are considered reasonableand realistic under the circumstances. Use of these estimates and assumptions affects the amounts reported in the fi-nancial statements, including the statement of financial position, the statement of profit or loss, the statement of com-prehensive income and the statement of cash flows, and the accompanying notes. The actual amounts of items for whichthe above estimates and assumptions have been applied may differ from those reported in previous financial statements,due to uncertainties which characterise the assumptions and the conditions on which estimates are based. The estimatesand assumptions are periodically reviewed the impact of any changes is reflected in the financial statements for the pe-riod in which the estimate is revised if the revision only influences the current period, or also in future periods if the revi-sion influences the current and future periods. This section provides a description of accounting treatments that require the use of subjective estimates and for whicha change in the conditions underlying the assumptions used could have a material impact on the Company’s financialstatements.



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Current tax assets relating to previous years

Law Decree 201 of 6 December 2011 permits companies to deduct IRAP paid on personnel expenses in full from theIRES tax base from 2012, and to apply for a refund of the IRES overpaid in previous years, in accordance with the proce-dure established by the tax authorities in the ruling issued on 17 December 2012. In compliance with this procedure, whichrequires applications to be submitted electronically on pre-established dates (so-called “click days”), on 6 March 2013 PosteItaliane applied for a refund of the overpaid tax for periods of assessment that remain open. In the 2012 financial state-ments Poste Italiane SpA has recognised tax income of €270 million, assessed on a prudent basis and taking into accountthe absence of consistent interpretations of the new legislation. The future availability of further clarification of interpre-tation of the law and specific operational instructions could result in a review of the tax asset in question with a poten-tially significant positive impact on the operating results for future years.

Revenue and receivables due from the State

Revenue from activities carried out in favour of or on behalf of the State and Public Sector entities is recognised on thebasis of the amount effectively accrued, with reference to the laws and agreements in force, taking account, in any event,of the instructions contained in legislation regarding the public finances.Whilst awaiting the conclusion of negotiations regarding the Contratto di Programma (Planning Agreement) for 2012-2014,determination of the compensation partially covering the cost of the universal service for 2012 has been based on the samesubsidy cap used in the Contratto di Programma (Planning Agreement) for 2009-2011. The cost incurred by Poste ItalianeSpA was calculated using the new “net avoided cost” method, introduced by EU Directive 2008/6/EC and transposed in-to Italian law by Legislative Decree 58 of 31 March 20119. The model developed by Poste Italiane SpA is currently beingassessed by AGCom (the Italian communications authority) as part of a specific investigation and only after completion ofthis process will it be possible to confirm the cost calculated by the Company. The amount of compensation, estimatedto be €350 million, is in any event significantly lower than the actual cost incurred, whether calculated using the new methodor by applying the method previously in force. Whilst awaiting renewal of agreements between Poste Italiane SpA and the Tax Authorities that expired in 2007, in 2012the Company continued to provide the related services. Revenue recognition is based on the tariffs established in the pre-vious agreements and which it is reasonable to expect will be confirmed in the new agreement, or on the lower tariffsderived from the recent negotiations with the relevant Public Sector entity. At 31 December 2012 receivables due to the Company from the MEF and the Cabinet Office amounted to approximate-ly €1.35 billion. This amount consists of: • receivables of over €645 million in the form of universal service compensation, including €350 million for 2012, which

can only be collected once the Contratto di Programma (Planning Agreement) for 2012-2014 has been formalised, and€9 million for 2005, which was cut following the budget laws for 2007 and 2008;

• receivables of approximately €251 million in the form of publisher tariff subsidies. Of this amount, approximately €203million in subsidies for the years from 2001 to 2007 are to be received in instalments in accordance with a specific Cab-inet Office Decree, which has established that collection is to take place on a straight-line basis between 2010 and2016. These receivables have been accounted for at present value. A further sum of approximately €9 million for 2009and 2010 has not yet been funded by the State budget;

• further receivables of approximately €451 million due from the MEF, in relation to payment of interest on the Compa-ny’s mandatory deposits with the MEF, for the provision of treasury services, for the distribution of euro converters andfor electoral subsidies. No provision has been made in the State budget for approximately €75 million of these items,and payment of approximately €8 million has been suspended whilst awaiting specific measures.

9. This method defines the cost incurred as the difference between the net operating cost incurred by a designated universal service provider when sub-ject to universal service obligations and the net operating cost without such obligations. Application of the method requires a series of assumptions inorder to construct the hypothetical postal operator without obligations, on which to base assessment of the related net cost/profit.



Based on the above, of the total amount receivable, with a nominal value of over €1.35 billion, in the case of approximate-ly €101 million either no provision has been made in the State budget or there is no legislation establishing the proce-dures for the payment to the Company, whilst the collection of approximately €553 million is deferred or suspended. Given the length of time these receivables have been outstanding, Poste Italiane SpA has to manage working capital, witha negative impact on cash flow. Given that it is not currently possible to forecast when and how the receivables will bepaid by the various Public Sector entities, without prejudice to the Company’s full entitlement and related rights, provi-sions for doubtful debts due from the MEF at 31 December 2012 reflect the best estimate based on the circumstancesand the financial impact of the above situation.In the past, changes to the relevant legislation have been introduced after the end of the reporting period, resulting in changesto estimates and influencing profit or loss. The above circumstances mean that management cannot exclude the possi-bility that, as a result of future legislation or the negotiations currently underway, the operating results for reporting peri-ods after the year ended 31 December 2012 will reflect changes to these estimates.


The Company makes provisions for probable liabilities deriving from disputes with staff, suppliers, third parties and, in gen-eral, for liabilities deriving from present obligations. These provisions cover the liabilities that could result from legal ac-tion relating to labour disputes over fixed-term contracts. In the course of the disputes in question, the plaintiffs have al-so at times attempted to make claims for the Company’s liquidity, and an estimate of the liabilities linked to this factor isincluded in the calculation of the related provisions.Determination of the provisions involves the use of estimates based on current knowledge of factors that may changeover time, potentially resulting in outcomes that may be significantly different from those taken into account when prepar-ing the financial statements.

Valuation of fixed-assets

Non-current assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amountmay not be recoverable, requiring the use of subjective judgements based on information available within the Company andin the market, and on historical experience. When impairment is recognised, value of the impairment is calculated using ap-propriate measurement techniques. The identification of impairment indicators, and the estimates used in the calculation ofimpairment, are linked to factors that may change over time, with a resulting impact on the measurements performed.The current economic and financial crisis, which has resulted in highly volatile markets and great uncertainty with regardto economic projections, makes it is difficult to produce forecasts that can, without any uncertainty, be defined as reliable.In this context, given the ongoing crisis in the property market, the Company has recently embarked on a plan to update es-timates of the market value of its property assets, with the aim of verifying the significance of any indicators of impairment.Whilst awaiting completion of this process, which is due to take place after the end of the reporting period under review, theCompany has prudently taken into account the ongoing volatility of property prices and the related impact on the value in useof certain properties, should such properties no longer be used in operations in future. At 31 December 2012 the fair valueof the Company’s properties used in operations was, however, significantly higher than their carrying amount. In reviewingthe net carrying amount of land and buildings used in operations, the Company also took account of any indications that theseassets may be impaired. With particular reference to properties used as post offices and Sorting Centres, Poste Italiane SpA’sservice obligation was taken into account, contemplating the inseparability of the cash flows generated by the large numberof properties that provide this service, which the Company is required to operate throughout the country regardless of theexpected profitability of each location. The unique nature of the operating processes involved and the substantial overlap be-tween postal and financial activities within the same outlets, represented by post offices, were also considered. On this ba-sis, the value in use of land and buildings used in operations is relatively unaffected by changes in the commercial value ofthe properties concerned and, under particular market conditions, certain properties may have values that are significantlyhigher than their market value, without this having any impacting on the Company’s cash flows or results.



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Depreciation and amortisation of property, plant and equipment and intangible assets

The cost of these assets is depreciated or amortised on a straight-line basis over the estimated useful life of the asset.The useful life is determined at the time of acquisition and is based on historical experience of similar investments, mar-ket conditions and expectations regarding future events that may have an impact, such as technological developments.The actual useful life may, therefore, differ from the estimated useful life. Changes in technology and industry, in disman-tling costs and in the recoverable amount of assets is reviewed annually in order to update their residual useful lives. Thisperiodic update may lead to changes in the depreciation or amortisation period and thus in charges for depreciation or amor-tisation in the current and in future years.In the case of assets located on land held under concession or sub-concession, on expiry of the concession term, orwhilst awaiting confirmation of renewal, any additional depreciation of assets to be returned free of charge at the end ofthe concession term is calculated on the basis of the probable residual duration of the right to use the assets to providepublic services, estimated on the basis of the framework agreements entered into with the Public Sector entity, the sta-tus of negotiations with the grantors and past experience.

Deferred tax assets

The recognition of deferred tax assets is based on the expectation of taxable income in future years. Assessments of ex-pected taxable income depend on factors which may change over time, impacting on the valuation of the deferred tax as-sets in the statement of financial position.

Provision for doubtful debts

The provision for doubtful debts reflects the estimated losses on receivables, which, in the case of receivables due fromPublic Sector entities, considers the legislation restricting public spending. Provisions for expected losses reflect the es-timated credit risk associated with historical experience of similar receivables, an analysis of past due items (current andhistorical), losses and collections and the monitoring of the current and future economic conditions in the related markets.Net provisions for doubtful debts are accounted for in profit or loss under other operating costs, or, if relating to receiv-ables accrued during the year, by deferring the related revenue.

Fair value of unquoted financial instruments

The fair value of financial instruments that are not traded on an active market is based on prices quoted by external deal-ers or on internal valuation techniques which estimate the transaction price on the measurement date in an arm’s lengthexchange motivated by normal business considerations. The valuation models are primarily based on market variables, con-sidering where possible, the prices in recent transactions and quoted market prices for substantially similar instruments,and of any related credit risk.

Employee termination benefits

The calculation of employee termination benefits is conducted by independent actuaries, considering vested terminationbenefits for the period of service to date and actuarial assumptions of a demographic, economic and financial nature.These assumptions, which are based on the Company’s experience and relevant best practices, are subject to periodicreviews.




3 - RISK MANAGEMENT

Definition and optimisation of Poste Italiane SpA’s financial structure, over the short and medium/long term, and manage-ment of the related cash flows is the responsibility of the Finance department, acting in accordance with the generalguidelines established by governance bodies. Management of Poste Italiane SpA’s financial transactions and of the associated risks is primarily related to BancoPosta’soperations and transactions involved in assets financing and liquidity investment. BancoPosta’s operations are governed by Presidential Decree 144/2001. From 2 May 2011 BancoPosta has a RFC reserve,as approved by the General Meeting of 14 April 2011, to comply with Bank of Italy’s prudential requirements and protectcreditors, in accordance with art. 2 (paragraphs 17-octies to 17-duodecies) of the “Milleproroghe” Decree, converted in-to Law 10 of 26 February 2011. BancoPosta RFC was provided with a legally separate reserve of €1 billion provided byPoste Italiane SpA’s retained earnings. BancoPosta RFC’s operations consist in the management of liquidity generated bypostal current accounts deposits, carried out in the name of BancoPosta but subject to statutory restrictions, and collec-tions and payments on behalf of third parties. The funds deriving from postal current account deposits by private customers are invested in euro zone government securi-ties, whilst deposits by Public Sector entities are deposited with the MEF. During 2012 BancoPosta was engaged in the fol-lowing: reinvestment of the funds deriving from maturing government securities; the trading of securities designed to pro-gressively match the maturity profile of the portfolio with the investment model adopted by the Company in 2010; and in thearrangement of two repo loans, totalling €5 billion (note 20.1), entered into with two first ranking financial institutions, as pro-moted by the European Central Bank in February 2012, with the loan proceeds subsequently invested in fixed rate Italiangovernment securities in order to anticipate the renewal of investments maturing over the next three years. The maturityprofile is based, among other things, on a leading market operator’s statistical/econometric model that reflects the interestrates and maturities typical of postal current accounts. The model is also used as the basis for investment policies in orderto limit exposure to interest rate risk and liquidity risks by foreseeing deviations caused by the need to combine the exigen-cies of risk management with those of improving returns which are dependent on movements in the market yield curve.Operations not covered by BancoPosta RFC, primarily relate to the management of the Company’s own liquidity, carriedout in accordance with investment guidelines approved by the Board of Directors, which require the Company to investin instruments such as government securities, high-quality corporate or bank bonds and term bank deposits. Liquidity isalso deposited in postal current accounts, with the resulting deposits subject to the same requirements applied to the in-vestment in deposits by private current account holders.The objectives of a balanced financial management and monitoring of the main risk/return profiles are carried out byorganisational structures operating separately and independently. In addition, specific processes are in place governingthe assumption, management and control of financial risks, including the progressive introduction of appropriate infor-mation systems. From an organisational viewpoint, the model used for BancoPosta RFC and for the Company’s otherfinancial transactions outside the ring-fence consists of:• a Finance Committee, which oversees financial strategy, based on indicators referring to internal planning and the ex-

ternal economic/financial cycle. The Committee meets at least on a quarterly basis and is a specialist body that adviseson the analysis and identification of investment and disinvestment opportunities;

• a Risk Measurement and Control function carried out by an appropriate function that operates on the basis of the or-ganisational separation of risk assessment from risk management activities. Where necessary, this function coordinatesits activities with similar functions established within subsidiaries. The results of these activities are examined by a Fi-nancial Risk Committee, which meets at least every three months and is responsible for carrying out an integrated as-sessment of the main risk profiles;

• BancoPosta RFC’s Cross-functional Committee, set up under the BancoPosta RFC By-laws and headed by Poste Ital-iane SpA’s CEO. Other permanent members are the Head of BancoPosta and the heads of the functions within PosteItaliane SpA primarily involved with BancoPosta. The Committee provides advice, makes recommendations and coordi-nates BancoPosta’s operations with those of other Poste Italiane functions. As a rule the Committee meets once amonth to examine, at the proposal of the Head of BancoPosta, key issues relating to the management and performanceof the ring-fenced capital. Poste Italiane SpA’s CEO then takes the necessary actions based on the work of the Com-mittee, supported by the relevant functions.



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The risk environment is defined on the basis of the framework established by IFRS 7 - “Financial Instruments: Disclosures”,which distinguishes between four main types of risk (a non-exhaustive classification):• market risk;• credit risk;• liquidity risk;• cash flow interest rate risk.




• fair value interest rate risk: the risk that the value of a financial instrument fluctuates as a result of movements in mar-ket interest rates.

Sovereign risk became a major component of market risk from 2011, due to the importance of the impact of the spreadsapplicable to government securities on the fair value of euro zone government securities, which reflects the market’s per-ception of the credit rating of sovereign issuers. The impact of the performance of spreads on the fair value of the secu-rities held by the Company at 31 December 2012 is described in the note on Sovereign risk. In constructing the Risk Model adopted in order to monitor credit, liquidity and interest rate risks, the Company has alsotaken into account the regulations provided by the Bank of Italy’s prudential supervisory standards, despite the fact thatBancoPosta RFC is not yet required to apply such standards, whilst waiting for specific instructions.

MARKET RISK

Price risk

Market risk relates to financial assets that the Company has classified as “Available-for-sale” (AFS) or “Held for trading”and certain derivative financial instruments where changes in value are recognised in profit or loss. The following sensitivity analysis relates to the principal positions potentially exposed to fluctuations in value, excludingcertain minor items not traded on an active market. The amounts accounted for in the financial statements at 31 Decem-ber 2011 and 31 December 2012 were subjected to a stress test, based on historical volatility from the respective peri-ods, considered representative of potential market movements. The principal financial assets subject to price risk and theresults of the analysis are shown in the following table.




Investments in equity instruments consist of the Company’s investments in 75,628 Mastercard Incorporated class B shareswith a fair value of €28,019 thousand (compared with 75,628 shares with a fair value of €21,682 thousand at 31 Decem-ber 2011), and in 11,144 Visa Incorporated class C shares, with a fair value of €1,216 thousand (11,144 shares with a fairvalue of €870 thousand at 31 December 2011). These shares are not traded on a regulated stock exchange but, in theevent of their sale, are convertible into an equal number of class A shares, which are traded on the New York Stock Ex-change. The increase in the fair value of the Mastercard shares during the year reflects an increase in the price of the classA shares, partially offset by the exchange rate effect of a slight strengthening of the value of the euro against the USdollar. For sensitivity analysis purposes, the value of these shares was associated with the corresponding class A shares, takinginto account the volatility of the shares traded on the NYSE.Other investments regard the equity mutual investment funds referred to in note 9.4.

Foreign exchange risk

Sensitivity analysis of the items subject to foreign exchange risk was based on the most significant positions, assuminga stress scenario determined by the levels of exchange rate volatility applicable to each foreign currency position consid-ered to be material. It was decided to apply an exchange rate movement based on volatility during the year, which wasconsidered to be representative of potential market movements. The results of the analysis are reported below.

Financial assets attributable to BancoPostaThe position at 31 December 2012 relates almost entirely to the Mastercard Incorporated and Visa Incorporated shares(note 3.1), denominated in US dollars.



Date of reference of the analysis Position +Vol -Vol +Vol -Vol +Vol -Vol

2011 effects

Financial assets attributable to BancoPostaAvailable-for-sale financial assets 22,552 8,544 (8,544) - - 8,544 (8,544)Equity instruments 22,552 8,544 (8,544) - - 8,544 (8,544)

Financial assetsAvailable-for-sale financial assets 3,692 661 (661) - - 661 (661)Other investments 3,692 661 (661) - - 661 (661)

Variability at 31 December 2011 26,244 9,205 (9,205) - - 9,205 (9,205)

2012 effects

Financial assets attributable to BancoPostaAvailable-for-sale financial assets 29,235 6,710 (6,710) - - 6,710 (6,710)Equity instruments 29,235 6,710 (6,710) - - 6,710 (6,710)

Financial assetsAvailable-for-sale financial assets 4,245 554 (554) - - 554 (554)Other investments 4,245 554 (554) - - 554 (554)

Variability at 31 December 2012 33,480 7,264 (7,264) - - 7,264 (7,264)

3.1 - Market risk - Price


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Trade receivables/payables due from and to overseas counterparties The most significant net position outside the ring-fence (approximately 98% of the reported foreign exchange exposure)is denominated in SDRs (Special Drawing Rights), a synthetic currency determined by the weighted average of the ex-change rates of four major currencies (the euro, US dollar, British pound, Japanese yen) used worldwide to settle com-mercial positions among postal operators. At 31 December 2012 this position has a negative balance of €2,022 thousand(a positive balance of €368 thousand at 31 December 2011).


This concerns the effects of changes in interest rates on the price of fixed income and fixed rate securities held by PosteItaliane SpA, mainly in relation to BancoPosta’s activities, as a result of the investment of deposits paid into postal cur-rent accounts by private customers.



Position in Position in +Vol -Vol +Vol -Vol +Vol -VolDate of reference of the analysis USD/000 EUR/000 260 days 260 days 260 days 260 days 260 days 260 days

2011 effects

Financial assets attributable to BancoPostaAvailable-for-sale financial assets 29,180 22,552 2,501 (2,501) - - 2,501 (2,501)Equity instruments 29,180 22,552 2,501 (2,501) - - 2,501 (2,501)

Variability at 31 December 2011 29,180 22,552 2,501 (2,501) - - 2,501 (2,501)

2012 effects

Financial assets attributable to BancoPostaAvailable-for-sale financial assets 38,573 29,235 2,520 (2,520) - - 2,520 (2,520)Equity instruments 38,573 29,235 2,520 (2,520) - - 2,520 (2,520)

Variability at 31 December 2012 38,573 29,235 2,520 (2,520) - - 2,520 (2,520)

3.2 - Market risk - US dollar


Position in Position in +Vol -Vol +Vol -Vol +Vol -VolDate of reference of the analysis SDRs/000 EUR/000 260 days 260 days 260 days 260 days 260 days 260 days

2011 effects

Current assets in SDRs 66,872 79,347 4,343 (4,343) 4,343 (4,343) - -Current liabilities in SDRs (66,562) (78,979) (4,323) 4,323 (4,323) 4,323 - -Variability at 31 December 2011 310 368 20 (20) 20 (20) - -

2012 effects

Current assets in SDRs 68,019 79,233 2,945 (2,945) 2,945 (2,945) - -Current liabilities in SDRs (69,755) (81,255) (3,020) 3,020 (3,020) 3,020 - -Variability at 31 December 2012 (1,736) (2,022) (75) 75 (75) 75 - -

3.3 - Market risk - SDRs



In line with previous years, the following interest rate sensitivity analysis was based on movements in fair value with aparallel shift in the forward yield curve of +/- 100 bps. The measures of sensitivity shown in the following analysis do,however, offer a basic point of reference, useful in assessing potential movements in fair value in the event of greatermovements in interest rates.

Financial assets attributable to BancoPostaBancoPosta RFC’s investments (note 8.1) consist of Held-to-maturity financial assets (HTM) and Available-for-sale finan-cial assets (AFS). Due to the fact that HTM assets are initially recognised at fair value and subsequently measured at amor-tised cost, movements in fair value have no effect on profit or loss. For AFS assets, on the other hand, which are meas-ured at fair value, movements in fair value are taken to a separate equity reserve which, consequently, must be continu-ally monitored for gains and losses on measurement. The sensitivity analysis shown above is for AFS financial assets.BancoPosta RFC’s AFS financial assets include:• fixed rate Italian government securities (ordinary BTPs) with a par value of €15,092,100 thousand (€12,221,800 thou-

sand at 31 December 2011);• inflation-linked Italian government bonds (BTP€i) purchased in 2012 and having a par value €2,800,000 thousand, which

are not hedged. These bonds provide a fixed rate of return calculated on their nominal value, as revalued on the basisof the rate of inflation since they were issued. This feature makes for a modified duration of unhedged inflation-linked




2011 effects

Financial assets attributable to BancoPosta(1) 17,655,550 13,416,648 (671,834) 691,691 (25,648) 26,517 (646,185) 665,175Available-for-sale financial assetsFixed income instruments 15,805,550 13,442,018 (613,333) 629,928 - - (613,333) 629,928


Financial assets(1) 500,000 428,945 (5,134) 5,423 - - (5,134) 5,423Available-for-sale financial assetsFixed income instruments 500,000 428,945 (5,134) 5,423 - - (5,134) 5,423

Variability at 31 December 2011 18,155,550 13,845,593 (676,967) 697,115 (25,648) 26,517 (651,319) 670,598

2012 effects

Financial assets attributable to BancoPosta(1) 22,275,850 22,438,773 (1,159,793) 996,126 - - (1,159,793) 996,126Available-for-sale financial assetsFixed income instruments 21,475,850 22,426,616 (1,143,568) 994,459 - - (1,143,568) 994,459


Financial assets(1) 500,000 502,837 (4,868) 2,352 - - (4,868) 2,352Available-for-sale financial assetsFixed income instruments 500,000 502,837 (4,868) 2,352 - - (4,868) 2,352

Variability at 31 December 2012 22,775,850 22,941,610 (1,164,661) 998,478 - - (1,164,661) 998,478

(1) The effects are only measured for components of the portfolio not covered by fair value hedges.



332


bonds, which measures price sensitivity to changes only in interest rates, greater than the modified duration of fixedrate bonds with the same tenor (e.g. BTPs);

• variable rate securities swapped into fixed rate through cash flow hedges. The latter are inflation linked BTPs (BTP€i)with a par value of €2,583,750 thousand (€2,583,750 thousand at 31 December 2011);


The portion of the fixed rate portfolio relating to ordinary BTPs was partially hedged against fair value interest rate riskthrough asset swaps designated as fair value hedges: • BTPs with a nominal value of €500,000 thousand were hedged against interest rate risk through IRSs designated as fair

value hedges, which took effect immediately;• 2023 and 2025 BTPs with a nominal value of €400,000 thousand were partially hedged through IRSs designated as fair

value hedges with a forward start in 2016; • 2026, 2034 and 2040 BTPs with a nominal value of €2,800,000 thousand were partially hedged through IRSs designat-


Hedging transactions are described in note 8.9.The duration of the AFS financial assets is 6.28 (at 31 December 2011 the duration of the securities portfolio was 6.21),partially raising the sensitivity of the fair value of the portfolio to changes in interest rates. At 31 December 2012 changes in interest rate risk affect fair value on forward purchases of securities with a nominal val-ue of €800,000 thousand (so-called cash flow hedges of forecast transactions).

Financial assets These relate to available-for-sale financial assets reported in note 3.4, with a nominal value of €125,000 thousand and afair value of €129,362 thousand, out of total investments with a nominal value of €500,000 thousand and a fair value of€502,837 thousand, including €375,000 thousand hedged in 2010 against movements in their fair value by entering intoan asset swaps designated as fair value hedges.

Sovereign risk

The global financial system has been affected by significant tensions and ongoing financial market turbulence and volatil-ity since 2011, with Italy particularly exposed. From July 2012 spreads between German bunds and government bondsissued by many other European countries, including Italy, have been falling, as the spreads on ten-year bonds dropped to321 bps at 31 December 2012 (527 bps at 31 December 2011).The progressive improvement in Italy’s credit rating in the year ended 31 December 2012 had a positive impact on theprice of Italian government securities, generating substantial positive movements in the fair value of those classified asavailable-for-sale (AFS), recognised in the fair value reserve in equity, net of tax. In particular, at 31 December 2012 thefair value reserve related to the Company’s portfolio is a positive €26 million (a negative balance of €2,050 million at 31December 2011).The sensitivity to the spread has been calculated by applying a shift of +/- 100 bps to the risk factor that affects the dif-ferent types of instrument held which, in the case of BancoPosta, is represented by the yield curve of Italian governmentbonds. A floor of zero was set for the shift of -100 bps to avoid negative returns for shorter-term maturities.It is also noted that the value of the portfolio of Italian government bonds is much more sensitive to the credit risk asso-ciated with the Italian Republic than to movements in so-called risk-free interest rates. This is due, in part, to the fact that

10. In July 2012, following changed market conditions and to stabilise the benefit of the cash flow hedging strategy, Poste Italiane SpA unwound early as-set swaps used to lock in a fixed interest rate for a portion of the €950,000 thousand invested in CCTeus. As a result of the transaction, the positivebalance of the cash flow hedge reserve, which reflects the increase in the value of the asset swaps, will be released to profit or loss throughout theremaining life of these securities, thereby boosting their return.



movements in credit spreads also affect the value of variable rate bonds and, especially, to the fact that, unlike pure in-terest rate risk, no hedging policy is in place to protect against credit risk. This means that, in the event of increases ininterest rates attributable to the swap component, unrealised losses on fixed rate bonds are offset by an increase in thevalue of hedging IRSs (a fair value hedge strategy). If interest rates rise as a result of a wider credit spread for the ItalianRepublic, losses on government bonds are not offset by movements in the opposite direction of other exposures.The table below shows a sensitivity analysis for both the instruments held by BancoPosta RFC and those outside thering-fence.

In addition to using the above sensitivity analysis, Poste Italiane SpA monitors credit risk by calculating its maximum po-tential losses, through an estimate of Value at Risk (VaR) on statistical bases, over a 3-day time horizon and at a 99% con-fidence level. Risk analysis performed through VaR takes into account the historical variability of the risk (spread) in ques-tion, in addition to modelling parallel shifts of the yield curve.The table below shows the VaR analysis performed on both the instruments held by BancoPosta RFC and those outsidethe ring-fence.




2011 effects

Financial assets attributable to BancoPosta 17,655,550 13,416,648 (1,115,056) 1,267,280 (25,648) 26,517 (1,089,407) 1,240,763Available-for-sale financial assetsFixed income instruments 15,805,550 13,442,018 (1,056,555) 1,205,516 - - (1,056,555) 1,205,516


Financial assets 500,000 428,945 (27,747) 30,064 - - (27,747) 30,064Available-for-sale financial assetsFixed income instruments 500,000 428,945 (27,747) 30,064 - - (27,747) 30,064

Variability at 31 December 2011 18,155,550 13,845,593 (1,142,803) 1,297,344 (25,648) 26,517 (1,117,154) 1,270,827

2012 effects

Financial assets attributable to BancoPosta 22,275,850 22,438,773 (1,717,179) 1,934,709 - - (1,717,179) 1,934,709Available-for-sale financial assetsFixed income instruments 21,475,850 22,426,616 (1,700,954) 1,917,415 - - (1,700,954) 1,917,415


Financial assets 500,000 502,837 (29,970) 32,219 - - (29,970) 32,219Available-for-sale financial assetsFixed income instruments 500,000 502,837 (29,970) 32,219 - - (29,970) 32,219




334

Value at Risk analysis

Poste Italiane SpA monitors the market risk for available-for-sale financial assets and derivative financial instruments alsoby calculating their maximum potential losses, through an estimate of the Value at Risk (VaR) on statistical bases, over a3-day time horizon and at a 99% confidence level. VaR analysis makes it possible to consider the combined effects of thedifferent risk factors considered, particularly the effect of the interest rate risk on fair value and country risk.

Financial assets attributable to BancoPostaAt 31 December 2012, the maximum potential losses for available-for-sale financial assets amounted to €559,802 thou-sand (€807,091 thousand at 31 December 2011) while for financial derivative instruments, in relation to forward purchas-es, they amounted to €5,799 thousand (€29,353 thousand at 31 December 2011). The decrease in VaR with respect to31 December 2011 was due to the lower volatility of the risk factors considered (the spread risk in particular).

Financial assetsAt 31 December 2012, VaR, as calculated on the basis of the above parameters, considering the existing fair value hedges,reflected maximum potential losses of €11,147 thousand (€26,600 thousand at 31 December 2011) for available-for-salefinancial assets. Also for this portfolio, Value at Risk fell as a result of the country risk volatility during the year.



2011 effects

Financial assets attributable to BancoPosta 17,655,550 13,416,648 919,475Available-for-sale financial assetsFixed income instruments 15,805,550 13,442,018 870,269

Derivative financial instrumentsCash flow hedges (liabilities) 800,000 (31,281) 16,041Fair value through profit or loss 1,050,000 5,911 14,623

Financial assets 500,000 428,945 26,208Available-for-sale financial assetsFixed income instruments 500,000 428,945 26,208


2012 effects

Financial assets attributable to BancoPosta 22,275,850 22,438,773 608,467Available-for-sale financial assetsFixed income instruments 21,475,850 22,426,616 604,220

Derivative financial instrumentsCash flow hedges 800,000 12,157 6,054Fair value through profit or loss - - -

Financial assets 500,000 502,837 10,861Available-for-sale financial assetsFixed income instruments 500,000 502,837 10,861





CREDIT RISK

Credit risk refers to the risk that a debtor might default. This risk is managed as follows:• minimum rating requirements for issuers/counterparties, based on the type of instrument; • concentration limits per issuer/counterparty; • monitoring of changes in the ratings of counterparties.

Since 2011 the macroeconomic events that had an impact on the risk-return profiles of the Company’s financial assets werethe debt crises in certain peripheral EU countries (Greece, Ireland, Portugal and Spain), which caused spreads on European gov-ernment securities to widen, with a particular impact on those related to Italy’s sovereign risk, and continuing uncertainty relat-ed to the banking sector. In the second half of 2011, and for part of 2012, a significant number of rating downgrades by theleading agencies resulted in a progressive deterioration in the weighted average rating of Poste Italiane SpA’s exposures, which,for investments other than Italian government bonds, has fallen from A at 31 December 2011 to A- at 31 December 2012.The nature of Poste Italiane SpA’s operations, and in particular BancoPosta’s investment activities, exposes it to a sub-stantial degree of concentration in respect of the Italian state, linked essentially to deposits with the MEF and the portfo-lio invested entirely in Italian government securities (note 8.1).Communication DEM/11070007 of 28 July 2011, implementing Document 2011/266 published by the European Securi-ties and Markets Authority (ESMA) and later amendments, has introduced new requirements regarding sovereign debt dis-closures that listed issuers with investments in national and euro area government securities and IFRS-compliant compa-nies must include in their annual and interim financial statements. Sovereign debt includes bonds issued by, and loansprovided to, central and local governments and government bodies. Information on the Company’s sovereign debt expo-sure is provided below, including the nominal value, carrying amount and fair value of each type of portfolio.


At 31 December 2011Nominal Carrying Fair

Item value amount value

Assets attributable to BancoPosta RFCItaly 30,043,200 27,805,911 26,616,736

Held-to-maturity financial assets 14,237,650 14,363,893 13,174,718Available-for-sale financial assets 15,805,550 13,442,018 13,442,018Financial assets at fair value through profit or loss - - -

Assets outside the ring-fenceItaly 500,000 428,945 428,945

Held-to-maturity financial assets - - -Available-for-sale financial assets 500,000 428,945 428,945Financial assets at fair value through profit or loss - - -

Total 30,543,200 28,234,856 27,045,681

3.7 - Exposure to sovereign debt

At 31 December 2012Nominal Carrying Fair

Item value amount value

Assets attributable to BancoPosta RFCItaly 35,378,500 36,474,684 36,942,465

Held-to-maturity financial assets 13,902,650 14,048,068 14,515,849Available-for-sale financial assets 21,475,850 22,426,616 22,426,616Financial assets at fair value through profit or loss - - -

Assets outside the ring-fenceItaly 500,000 502,837 502,837

Held-to-maturity financial assets - - -Available-for-sale financial assets 500,000 502,837 502,837Financial assets at fair value through profit or loss - - -

Total 35,878,500 36,977,521 37,445,302


336

The relevant credit exposure is shown below for each category of financial instrument. The ratings reported in the tablehave been assigned by Moody’s.

Financial assets attributable to BancoPosta

Credit risk arising from derivative transactions is mitigated through rating and group/counterparty concentration limits, inaddition to interest rate and asset swap contracts guaranteed by collateral provided by specific Credit Support Annexes.Exposure is quantified and monitored using the current value method, in accordance with the Bank of Italy’s prudentialsupervisory instructions.At 31 December 2012 all counterparties for the Company’s derivatives have investment grade ratings. Accreting11 assetswaps on long-term BTP€ is have been entered into so as to minimise collateral requirements.

Financial assets



from Aaa from A1 from Ba1 from Aaa from A1 from Ba1Item Note to Aa3 to Baa3 to Not rated Total to Aa3 to Baa3 to Not rated Total

Loans and receivables [8.2] 111,351 7,168,940 537,141 7,817,432 303,199 8,014,467 436,513 8,754,179Receivables 111,351 7,168,940 537,141 7,817,432 303,199 8,014,467 436,513 8,754,179

Held-to-maturity financial assets [8.8] - 14,048,068 - 14,048,068 - 14,363,893 - 14,363,893Fixed income instruments - 14,048,068 - 14,048,068 - 14,363,893 - 14,363,893

Available-for-sale financial assets [8.8] - 22,426,616 - 22,426,616 - 13,442,018 - 13,442,018Fixed income instruments - 22,426,616 - 22,426,616 - 13,442,018 - 13,442,018

Derivative financial instruments [8.9] - 12,157 - 12,157 48,674 37,739 - 86,414Cash flow hedges - 12,157 - 12,157 46,333 27,237 - 73,570Fair value hedges - - - - - - - -Fair value through profit or loss - - - - 2,341 10,502 - 12,844

Total 111,351 43,655,781 537,141 44,304,273 351,873 35,858,117 436,513 36,646,504

3.8 - Credit risk - Financial assets attributable to BancoPosta


from Aaa from A1 from Ba1 from Aaa from A1 from Ba1Item Note to Aa3 to Baa3 to Not rated Total to Aa3 to Baa3 to Not rated Total

Loans and receivables - 391,170 780,281 1,171,451 - 492,344 784,644 1,276,988Loans [9.1] - - 767,282 767,282 - - 768,076 768,076Receivables [9.3] - 391,170 12,999 404,169 - 492,344 16,568 508,912

Available-for-sale financial assets [9.4] - 502,837 - 502,837 90,000 433,411 - 523,411

Other instruments and deposits - 502,837 - 502,837 90,000 433,411 - 523,411Derivative financial instruments [9.6] - - - - - - - -

Cash flow hedges - - - - - - - -Fair value hedges - - - - - - - -Fair value through profit or loss - - - - - - - -

Total - 894,007 780,281 1,674,288 90,000 925,755 784,644 1,800,399

3.9 - Credit risk - Financial assets

11. Accreting asset swaps entered into to hedge against interest rate risk make it possible to reduce the payments to be made to the counterparty fromtime to time under the CSA contracts.



At 31 December 2012 the following positions are subject to this risk:

Loans and receivablesLoans of €767,282 thousand at 31 December 2012 (€768,076 thousand at 31 December 2011) refer entirely to loans (note9.1) granted to Group companies and intercompany current accounts (note 9.2), with both types of transaction conduct-ed on an arm’s length basis. These loans include subordinated loans of €540,000 thousand to the insurance company,Poste Vita SpA (€540,000 thousand at 31 December 2011).Receivables (note 9.3), totalling €404,169 thousand, include €354,020 thousand for claims on the MEF (€492,344 thou-sand at 31 December 2011) and €37,150 thousand (€3,729 thousand at 31 December 2011) in guarantee deposits, ac-counted for in current assets, issued to counterparties for reverse repurchase agreements on fixed income instruments(collateral governed by a specific Global Master Repurchase Agreements).

Available-for-sale financial assetsOther instruments and deposits include BTPs with a fair value of €502,837 thousand and a nominal value of €500,000thousand.

Current assets - Trade receivables

The nature of customers, the structure of revenue and the method of collection limit the risk of default on trade receiv-ables. Reference should be made to the paragraph of note 2.4 dealing with “Revenue and receivables due from theState”. All receivables are subject to specific monitoring and reporting procedures to support credit collection activities.


3.10 - Credit risk - Trade receivables attributable to Poste Italiane



Overseas postal operators 213,939 (257) 211,912 (423)Public Sector 568,799 (81,603) 890,225 (72,145)Private customers 357,315 (51,371) 322,689 (53,557)Due from subsidiaries 186,999 - 271,567 -Due from associates 4,325 - 5,502 -Due from MEF 761,742 (53,976) 1,310,277 (74,740)

Total 2,093,119 3,012,172




Cassa Depositi e Prestiti 927,490 (20,556) 129,050 (20,556)Public Sector 104,771 (1,486) 100,447 (2,319)Private customers 111,043 (107,894) 120,711 (102,042)Due from subsidiaries 74,959 - 60,907 -Due from MEF 277,605 (7,972) 355,045 (7,972)

Total 1,495,868 766,160


3.11 - Credit risk - Trade receivables attributable to BancoPosta


338

Other receivables and assets

LIQUIDITY RISK

Liquidity risk is the risk that an entity may have difficulties in raising sufficient funds, at market conditions, to meet its ob-ligations deriving from financial instruments. Liquidity risk may derive from the inability to sell financial assets quickly atan amount close to fair value or the need to raise funds on excessively onerous terms or, in extreme cases, the inabilityto borrow on the market. Poste Italiane SpA applies a financial policy that aims to minimise this type of risk as follows:• diversification of the various forms of short-term and long-term borrowings and counterparties;• availability of relevant lines of credit in terms of amounts and the number of banks;• gradual and consistent distribution of the maturities of medium/long-term borrowings;• adoption of analysis models designed to monitor the maturities of assets and liabilities.

At 31 December 2012 liquidity risk regards the potential exposure deriving from obligations relating to the investment ofdeposits by current account customers.




Receivables due from staff under fixed-term contracts settlement 311,755 (2,189) 298,641 (2,189)Other amounts due from subsidiaries 193,619 - 19,281 -Accrued income and prepaid expenses 14,814 - 16,904 -Guarantee deposits paid to suppliers 3,241 - 3,101 -Third-party deposits in Postal Savings Books registered in the name of Poste Italiane SpA 2,771 - 2,937 -Tax assets 6,314 - 828 -Amounts due from others 119,701 (34,783) 100,989 (27,483)

Total 652,215 442,681


3.12 - Credit risk - Other receivables and assets attributable to Poste Italiane



Tax assets 233,937 - 240,166 -Receivables due from third parties for stamp duties 354,738 - 6,430 -Other amounts due from subsidiaries 21 - 30 -Accrued income and prepaid expenses - - - -Amounts due from others 97,490 (19,175) 107,215 (24,958)

Total 686,186 353,841

of which past due - -

3.13 - Credit risk - Other receivables and assets attributable to BancoPosta



BancoPosta RFC

In terms of BancoPosta’s specific operations, the liquidity risk regards the investment of current account deposits in eurozone government securities. The potential risk derives from a mismatch between the maturities of investments in securi-ties and those of liabilities, represented by current accounts where the funds are available on demand, thus compromisingthe Company’s ability to meet its obligations to current account holders. This potential mismatch between assets and lia-bilities is monitored via comparison of the maturity schedule for assets with the statistical model of the performance of cur-rent account deposits, in accordance with the various likely maturity schedules and assuming the progressive total with-drawal of deposits over a period of thirty years for private customers and within five years for Public Sector customers. At 31 December 2012 the maturities of investments in euro area government securities and the portfolio replication mod-el approved by the Board of Directors in April 2010 were largely matched, whilst the average duration of the investmentsas a whole went from 5.39 at 31 December 2011 to 5.50 at 31 December 2012.In addition, for the proper evaluation of the liquidity risk faced by BancoPosta RFC, it should be borne in mind that, un-less they are restricted, investments in euro area government securities are highly liquid assets and can be used as col-lateral in repurchase agreements to obtain short-term financing.The components of BancoPosta’s financial statements most exposed to liquidity risk are described below. The amountsshown refer to obligations at maturity (nominal value plus accrued interest).

Liabilities

For the purposes of liquidity risk analysis at 31 December 2012, the timing of withdrawals from postal current accounts(with a carrying amount of €40,018,626 thousand, as shown in note 20.1) was based on the amortisation schedule deriv-ing from the application of the statistical model developed in order to model the behaviour of current account holders.Average demand deposits by private customers, with specific regard to the retail component, which is typically more sta-ble, have risen compared to 31 December 2011. The Company continues to closely monitor the deposit base.Moreover, from 2010 new short-term funding arrangements have been introduced via the matched sale and repurchase of BTPs,with the aim of optimising profitability and funding temporary cash withdrawals from demand deposits. In addition, in connec-tion with the refinancing operation initiated by the European Central Bank in February 2012, the Company entered into two long-term refinancing operations of €2.5 billion each, with maturities of up to 3 years, using the proceeds to buy Italian governmentbonds with the same nominal amount and matching maturities, with a view to anticipating the rollover of bonds maturing inthe next three years. The first loan is expected to be repaid in a balloon payment in February 2015, with the option of early re-payment every month starting from the second year of the loan, whilst the second loan will be repaid in three successive in-stalments of €0.8 billion, €0.8 billion and €0.9 billion in September 2013, August 2014 and February 2015, respectively.


3.14 - BancoPosta RFC’s exposure to liquidity risk

At 31 December 2012 At 31 December 2011Within Between 1 Over Within Between 1 Over

Item 12 months and 5 years 5 years Total 12 months and 5 years 5 years Total

Financial liabilities attributable to BancoPosta 19,002,975 13,668,115 18,306,572 50,977,662 19,147,085 9,006,451 15,115,329 43,268,865

Postal current accounts 14,521,045 9,366,366 18,306,572 42,193,983 14,000,068 9,006,451 15,115,329 38,121,848

Borrowings 1,359,495 4,301,750 - 5,661,245 1,989,348 - - 1,989,348

Derivative financial instruments 801,149 - - 801,149 770,514 - - 770,514

Other financial liabilities 2,321,285 - - 2,321,285 2,387,155 - - 2,387,155

Trade payables 64,846 - - 64,846 60,650 - - 60,650

Other liabilities 145,750 227,810 - 373,560 92,152 65,581 - 157,733

Total liabilities 19,213,571 13,895,925 18,306,572 51,416,068 19,299,887 9,072,032 15,115,329 43,487,248


340

AssetsAt 31 December 2012 these liabilities are invested in the following types of financial instrument.

Investments in fixed income instruments (a carrying amount of €36,474,684 thousand, as described in note 8.8) are shownon the basis of the expected cash flows, consisting of the redemption value of the securities and the coupon interest tobe collected as it falls due.

Items outside the ring-fence

LiabilitiesExpected cash flows for financial liabilities accounted for at the end of the reporting period, broken down by maturity, areshown below. Repayments of principal at nominal value are increased by interest payments calculated on the basis of theyield curve applicable at 31 December 2012 and 31 December 2011.


3.15 - BancoPosta RFC’s exposure to liquidity risk



Financial assets attributable to BancoPosta 11,768,249 13,472,977 33,490,002 58,731,228 11,136,377 11,341,544 30,500,139 52,978,060

Amounts deposited with the MEF 5,416,414 - - 5,416,414 7,060,499 - - 7,060,499

MEF on behalf of Italian Treasury 1,325,394 - - 1,325,394 793,537 - - 793,537

Investments in securities 3,950,817 13,472,977 33,490,002 50,913,796 2,382,198 11,341,544 30,500,139 44,223,881

Other financial receivables 1,075,624 - - 1,075,624 900,143 - - 900,143

Trade receivables 1,495,868 - - 1,495,868 766,160 - - 766,160

Other receivables 513,441 172,745 - 686,186 353,841 - - 353,841

Cash and deposits attributable to BancoPosta 3,179,701 - - 3,179,701 2,559,994 - - 2,559,994

Cash and cash equivalents 1,413,474 - - 1,413,474 838,951 - - 838,951

Total assets 18,370,733 13,645,722 33,490,002 65,506,457 15,655,323 11,341,544 30,500,139 57,497,006

3.16 - Liquidity risk outside the ring-fence



Financial liabilities 1,582,461 165,103 415,010 2,162,574 2,090,002 517,370 209,380 2,816,752Borrowings 1,169,851 164,590 415,010 1,749,451 1,622,659 516,651 209,380 2,348,690Bonds - - - - 789,375 - - 789,375Amounts due to Cassa Depositi e Prestiti for loans 118,217 121,910 - 240,127 320,743 240,127 - 560,870Financial institutions borrowings 1,051,634 42,680 415,010 1,509,324 492,239 276,524 209,380 978,143Other borrowings - - - - 20,302 - - 20,302

Financial liabilities due from subsidiaries 396,338 - - 396,338 465,781 - - 465,781Other financial liabilities 16,272 513 - 16,785 1,562 719 - 2,281

Trade payables 1,352,285 - - 1,352,285 1,807,097 - - 1,807,097Other liabilities 1,160,428 38,109 47,524 1,246,061 1,128,684 28,003 51,786 1,208,473

Total liabilities 4,095,174 203,212 462,534 4,760,920 5,025,783 545,373 261,166 5,832,322



AssetsAssets at 31 December 2012, broken down by maturity, are shown below at nominal value and increased, where appli-cable, by interest receivable.

Investments in fixed income instruments (a carrying amount of €502,837 thousand, note 9.4) are shown on the basis ofthe expected cash flows, consisting of the redemption value of the securities and the coupon interest to be collected asit falls due.

CASH FLOW INTEREST RATE RISK

Cash flow interest rate risk refers to the uncertainty over future cash flows following fluctuations in market interest rates.It may be caused by a mismatch – in terms of type of rate, indexation method and term to maturity – between financialassets and liabilities that tend to last until contractual and/or expected maturity (the banking book), and which, as such,generates an impact on the interest margin, which is thus reflected in the operating results for future periods. At 31 December 2011 and 31 December 2012, sensitivity to cash flow interest rate risk relating to variable rate investments,or transactions rendered thus by fair value hedges, is summarised in the table below, and calculated to reflect movementsresulting from a parallel shift in the forward yield curve (+/- 100 bps). A floor of 0 (zero) was set for the shift of -100 bps toavoid negative returns for shorter-term maturities.


3.17 - Liquidity risk outside the ring-fence



Financial assets 539,980 474,932 1,157,555 2,172,467 654,163 628,952 1,221,562 2,504,677Loans 240,461 215,261 697,683 1,153,405 243,900 243,611 733,660 1,221,171Receivables 288,780 116,976 12,999 418,755 299,321 226,418 12,839 538,578Fixed income instruments (principal and interest) 10,739 142,695 446,873 600,307 16,090 158,923 475,063 650,076Other investments - - - - 94,852 - - 94,852

Trade receivables 1,954,416 155,515 - 2,109,931 2,830,617 204,793 3,021 3,038,431Other receivables 421,554 156,358 132,717 710,629 220,318 161,271 112,006 493,595

Receivables due under fixed-term contracts settlement 87,106 150,346 132,717 370,169 82,316 155,233 112,006 349,555Other 334,448 6,012 - 340,460 138,002 6,038 - 144,040

Cash and cash equivalents 44,801 - - 44,801 369,852 - - 369,852

Total assets 2,960,751 786,805 1,290,272 5,037,828 4,074,950 995,016 1,336,589 6,406,555


342


Pre-tax Equity TotalNominal profit reserves equity

Date of reference of the analysis Note value +100bps -100bps +100bps -100bps +100bps -100bps

2011 effects

Financial assets attributable to BancoPostaAmounts deposited with the MEF [8.2] 7,060,499 70,605 (70,605) - - 70,605 (70,605)Other financial receivables [8.7] 503,880 5,039 (3,169) - - 5,039 (3,169)Fixed income instruments [8.1] 550,000 5,500 (5,500) - - 5,500 (5,500)

Financial assetsLoans [9.1] 739,077 7,391 (7,391) - - 7,391 (7,391)Receivables due from others [9.3] 3,729 37 (23) - - 37 (23)Fixed income instruments [9.4] 375,000 3,750 (3,750) - - 3,750 (3,750)Other investments [9.4] 93,550 936 (936) - - 936 (936)

Cash and deposits attributable to BancoPostaBank deposits [12.1] 90,610 906 (457) - - 906 (457)

Cash and cash equivalents attributable to Poste ItalianeBank deposits [13.1] 43,342 433 (212) - - 433 (212)

Cash and cash equivalents attributable to BancoPostaAmounts deposited with the MEF [13.1] 829,399 8,294 (8,294) - - 8,294 (8,294)Bank deposits [13.1] 1,670 17 (9) - - 17 (9)

Financial liabilities attributable to BancoPostaBorrowings (Financial institutions borrowings) - - - - - - -Other financial liabilities [20.2] (9,520) (95) 60 - - (95) 60

Financial liabilitiesBorrowings (Financial institutions borrowings) [21.3] (250,000) (2,500) 2,500 - - (2,500) 2,500Borrowings (from subsidiaries) [21.4] (465,781) (4,658) 4,471 - - (4,658) 4,471Other financial liabilities - - - - - - -

Variability at 31 December 2011 9,565,455 95,655 (93,316) - - 95,655 (93,316)

2012 effects

Financial assets attributable to BancoPostaAmounts deposited with the MEF [8.2] 5,416,414 54,164 (54,164) - - 54,164 (54,164)Other financial receivables [8.7] 517,265 5,173 (678) - - 5,173 (678)Fixed income instruments [8.1] 1,500,000 15,000 (15,000) - - 15,000 (15,000)

Financial assetsLoans [9.1] 734,863 7,349 (7,349) - - 7,349 (7,349)Receivables due from others [9.3] 37,150 372 (49) - - 372 (49)Fixed income instruments [9.4] 375,000 3,750 (3,750) - - 3,750 (3,750)Other investments [9.4] - - - - - - -

Cash and deposits attributable to BancoPostaBank deposits [12.1] 11,421 114 (1) - - 114 (1)

Cash and cash equivalents attributable to Poste ItalianeBank deposits [13.1] 31,877 319 (141) - - 319 (141)

Cash and cash equivalents attributable to BancoPostaAmounts deposited with the MEF [13.1] 1,397,125 13,971 (10,478) - - 13,971 (10,478)Bank deposits [13.1] 8,637 86 (56) - - 86 (56)

Financial liabilities attributable to BancoPostaBorrowings (Financial institutions borrowings) [20.1] (5,000,000) (50,000) 50,000 - - (50,000) 50,000Other financial liabilities [20.2] - - - - - - -

Financial liabilitiesBorrowings (Financial institutions borrowings) [21.3] (250,000) (2,500) 2,500 - - (2,500) 2,500Borrowings (from subsidiaries) [21.4] (396,338) (3,963) 1,625 - - (3,963) 1,625Other financial liabilities (15,374) (154) 20 - - (154) 20

Variability at 31 December 2012 4,368,040 43,680 (37,520) - - 43,680 (37,520)

3.18 - Cash flow interest rate risk



BancoPosta RFC

At 31 December 2012 the risk primarily relates to the investment of the funds deriving from the current account depositsof Public Sector entities, which must be deposited with the MEF. Since 1 January 2008 these investments earn interestat a variable rate, calculated on the basis of a basket of government securities and money market indexes, as set out inthe agreement between the MEF and Poste Italiane SpA. The agreement in question, which was renewed on 10 April2012 with a Ministerial Decree, expired on 31 December 2012 and it is currently being renewed to 31 December 2014.

Cash flow interest rate risk primarily concerns:• a receivable of €517,265 thousand posted as cash collateral for derivative liabilities (note 8.7);• a portion of the fixed rate portfolio consisting of BTPs, hedged immediately by the fair value hedges described in note

3.4, with a nominal value of €500,000 thousand;• CCTeus with a nominal value of €1,000,00 thousand, whose yields have not been hedged by cash flow hedges;• bank deposits paying interest at variable rates;• cash deposited with the MEF and held in the so-called buffer account which, until 30 November 2011, earned interest

calculated on the basis of the average yield on auctions of Short-term Treasury Certificates (BOT) organised by the MEFduring the relevant six-month period, and from 1 December 2011 earns interest based on the Main Refinancing Opera-tions (MRO) rate12.

Variable rate financial liabilities are described in note 20. At 31 December 2012 these included the two three-year loansfor a total of €5 billion described in the paragraph on liquidity risk, which carry an interest rate equal to the variable REFIrate13 plus a spread negotiated with the lending banks.


At 31 December 2012 this risk primarily concerns: • the loans to Group companies described in note 9.1;• a portion of the fixed rate portfolio, consisting of BTPs with a nominal value of €375,000 thousand, hedged immediate-

ly by the fair value hedges described in note 3.4;• €15,374 thousand received by the Company from counterparties with which it has entered into repo transactions for

fixed income securities (note 21).

CASH FLOW INFLATION RISK

This reflects the uncertainty related to future cash flows due to changes in the rate of inflation. At 31 December 2012 thementioned risk relates to the unhedged inflation-linked BTPs described in the note on fair value interest rate risk, with atotal nominal value of €2,800 million.



13. The ECB’s interest rate is the so-called REFI rate (known also as “rate for the main refinancing operations”) which reflects the variable interest rate thatbanks pay when they borrow from the ECB.


344

DETERMINATION OF FAIR VALUE

Financial instruments recognised at fair value in these financial statements are classified below on the basis of a hierar-chy reflecting the significance of the sources used in determining fair value. The fair value hierarchy comprises the fol-lowing levels:• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;• Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly

(as prices) or indirectly (derived from prices);• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

There were no movements in financial instruments classified in Level 3 during the period.


Change Pre-tax Equityin value profit reserves


2012 effects

Financial assets attributable to BancoPosta 2,800,000 2,998,597 197 (196) 197 (196) - -Available-for-sale financial assestsFixed income instruments 2,800,000 2,998,597 197 (196) 197 (196) - -

Variability at 31 December 2012 2,800,000 2,998,597 197 (196) 197 (196) - -

3.19 - Cash flow inflation risk

3.20 - Fair value hierarchy

At 31 December 2012 At 31 December 2011Item Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total

Financial assets attributable to BancoPosta 22,426,616 41,392 117 22,468,125 13,442,018 108,966 117 13,551,101

Available-for-sale financial assets 22,426,616 29,235 117 22,455,968 13,442,018 22,552 117 13,464,687Fixed income instruments 22,426,616 - - 22,426,616 13,442,018 - - 13,442,018Equity instruments - 29,235 117 29,352 - 22,552 117 22,669Held for trading - - - - - - - -

Derivative financial instruments - 12,157 - 12,157 - 86,414 - 86,414

Financial assets 507,082 - 4,500 511,582 432,637 94,466 4,500 531,603

Available-for-sale financial assets 507,082 - 4,500 511,582 432,637 94,466 4,500 531,603Fixed income instruments 502,837 - - 502,837 428,945 - - 428,945Equity instruments - - 4,500 4,500 - - 4,500 4,500Held for trading 4,245 - - 4,245 3,692 94,466 - 98,158

Derivative financial instruments - - - - - - - -

Total financial assets at fair value 22,933,698 41,392 4,617 22,979,707 13,874,655 203,432 4,617 14,082,704

Financial assets attributable to BancoPosta - (816,116) - (816,116) - (623,882) - (623,882)


Financial liabilities - (40,074) - (40,074) - (9,531) - (9,531)


Total financial liabilities at fair value - (856,190) - (856,190) - (633,413) - (633,413)



TRANSFER OF FINANCIAL ASSETS THAT ARE NOT DERECOGNISED

The amendments to IFRS 7 introduced by EU Regulation 1205/2011 of 22 November 2011 require additional disclosuresin case an entity transfers financial assets that are not derecognised or that are not derecognised in their entirety (contin-uing involvement). At 31 December 2012 these amendments concerned the repurchase agreements entered into by Poste Italiane SpA withprimary financial intermediaries with a total nominal value of €6,006 million (note 20). Of this total nominal amount:• €5,000 million refers to the two three-year borrowings by BancoPosta RFC described in the previous paragraph on liq-

uidity risk, which carry an interest rate equal to the REFI rate plus a spread agreed with the lending institutions. The pro-ceeds from these two loans were invested in government bonds with a nominal value of €5,000 million, including€2,450 million in ordinary BTPs and €2,550 million in inflation-linked BTP designed to replace BTPs maturing in the nextthree years;

• €517 million refers to other repurchase agreement transactions by BancoPosta;• €489 million relates to transactions carried out in connection with the cash management activities by Poste Italiane SpA.

The transactions in question have been conducted through margin accounts (making margin calls provided for by specif-ic Global Master Repurchase Agreements); credit balances in the margin accounts earn interest tied to the Euro OverNightIndex Average (Eonia)14.Pursuant to the above amendments to IFRS 7, the table below summarises the described transactions, showing the fi-nancial assets transferred that are not derecognised and the associated liabilities.

The financial liabilities in question were measured at fair value by discounting to present value the expected cash flowsat the interest rates placed along the Eonia curve (reference for REPO transactions) prevailing on 28 December 2012 (lastcalculation for the year).

OTHER RISKS

Operational risk

Operational risk refers to the risk of losses resulting from inadequate or failed internal processes, people and systems, orfrom external events. This category of risk includes losses resulting from fraud, human error, business disruption, systemsfailures, breach of contracts and natural disasters. Operational risk includes legal risk, but not strategic and reputational risks.


At 31 December 2012

Nominal CarryingItem value amount Fair value

Held-to-maturity financial assets 6,246,310 6,282,443 6,563,438

Available-for-sale financial assets 500,000 502,837 502,837

Financial liabilities arising from REPO (6,006,112) (6,054,686) (6,098,268)

Total 740,198 730,594 968,007

3.21 - Transfer of financial assets that are not derecognised

14. Average interest rate which a selected number of European banks charge each other for one-day loans.


346

To protect against this form of risk, in line with the prudential supervisory requirements for banks, issued by the Bank ofItaly in December 2006 and adopted by Poste Italiane SpA as benchmarks, the Company has formalised and agreed a method-ological and organisational framework to identify, measure and manage the operating risk related to the products/process-es of BancoPosta RFC.The framework described, based on an integrated (qualitative and quantitative) measurement model made it possible, inthe meantime, to monitor risk and to manage it on an increasingly informed basis.At 31 December 2012 controls conducted in accordance with the above framework have shown what type of operationalrisks BancoPosta’s products are exposed to, as follows:

For each type of mapped risk, the Company has recorded and classified the related sources of risk (internal losses, externallosses, scenario analysis and risk indicators) in order to construct complete inputs for the integrated measurement model. Systematic measurement, in relation to BancoPosta, of the mapped risks has enabled the Company to prioritise mitiga-tion initiatives and the related attribution of responsibilities to the competent functions of Poste Italiane SpA in order toreduce any future impact.

Reputational risk

Poste Italiane SpA’s business is by its nature exposed to elements of reputational risk, associated mainly with the place-ment of investment products issued by third-party credit institutions, such as real estate mutual funds and index-linkedbonds, and/or insurance policies issued by the subsidiary, Poste Vita SpA.In this respect, in July 2008, in accordance with the Markets in Financial Instruments Directive by the EU (Directive2004/39/EC, “MiFID”), the Company has adopted the “consulting service” model.As mentioned above in these notes, the crisis of recent years has had profound effects on the performance of all the finan-cial instruments on the market, above all on the value of Italian government securities, which account for all of BancoPos-ta’s investments, as well as the performance of the real estate market and the products related to it. Even though the Com-pany has developed over time prudential policies in the customers’ best interests, entailing the selection of domestic andforeign issuers solely with investment grade ratings, the situation has prompted even closer scrutiny, at Company and Grouplevel, so as to ensure full awareness of the performance of the products placed and the risks for customers.

INFORMATION ABOUT THE GROUP

With regard to Group cash flows management, a centralised treasury management system enables the automatic elimi-nation of co-existing large debit and credit balances attributable to individual companies, offering advantages in terms ofimproved liquidity and a reduction in the related risk.


Event type Number of types

Internal fraud 28External fraud 51Employee practices and workplace safety 8Customers, products and business practices 26Damage caused by external events 4Business disruption and system failure 8Execution, delivery and process management 172

Total 297



The system includes the four main subsidiaries and makes use, with regard to the banking activities, of zero balance cashpooling. In this way cash flows between the current accounts of subsidiaries and Poste Italiane SpA are transferred on adaily basis.

FINANCIAL STRUCTURE

Poste Italiane SpA’s financial structure at 31 December 2012 is solid and balanced, and adequately protected from liquid-ity or refinancing risks. Overall borrowings are primarily medium/long term, except for drawdowns on short-term lines ofcredit and repurchase agreements. The bond of €750 million issued by Poste Italiane SpA was repaid at maturity on 3 Ju-ly 2012.


At 31 December 2012 the following credit facilities were available:• committed lines of credit of €550 million;• uncommitted lines of credit of €680 million, of which €350 million in short-term borrowings, €200 million in advances

against trade receivables and €130 million in short-term loans, overdrafts or unsecured guarantees;• overdraft facilities of €81 million;• unsecured guarantee facilities with a value of €68 million.

The uncommitted lines of credit and overdraft facilities are also available for overnight transactions entered into by Ban-coPosta RFC.At 31 December 2012 €300 million in uncommitted lines of credit has been drawn down in the form of short-term bor-rowings (note 21.3). Unsecured guarantees with a value of €89 million have been used on behalf of Poste Italiane SpAand with a value of €25 million on behalf of Group companies, compared with guarantees of €21 million effectively giv-en (note 35.4).

BancoPosta RFC

BancoPosta RFC has not made use of its credit facilities. The existing lines of credit and medium/long-term borrowings are adequate to meet expected financing requirements.



348

4 - PROPERTY, PLANT AND EQUIPMENT

The following table shows movements in property, plant and equipment in 2011 and 2012:

None of the above items is attributable to BancoPosta RFC.


Industrial Assets underProperties Plant and Leasehold contruction

used in and commercial improve- Other andLand operations equipment equipment ments assets advances Total


Cost 70,567 2,521,092 1,915,946 301,088 274,938 1,268,318 88,481 6,440,430Accumulated depreciation - (923,378) (1,324,175) (241,689) (80,268) (1,045,561) - (3,615,071)Accumulated impairments (103) (15,248) (3,640) (770) (34) (1) - (19,796)

Carrying amount 70,464 1,582,466 588,131 58,629 194,636 222,756 88,481 2,805,563


Purchases 1,376 22,489 48,321 7,479 27,273 41,033 41,091 189,062Adjustments 237 - - - - - - 237Reclassifications (31) 5,462 13,136 414 13,426 23,192 (59,290) (3,691)Disposals (51) (2,283) (18,909) (58) (363) (11,512) (2,049) (35,225)Depreciation - (96,862) (114,083) (13,552) (30,093) (76,238) - (330,828)Impairments - (2,716) (45) - (865) (38) - (3,664)

Total movements 1,531 (73,910) (71,580) (5,717) 9,378 (23,563) (20,248) (184,109)


Cost 72,098 2,541,486 1,797,129 306,810 313,685 1,303,856 68,233 6,403,297Accumulated depreciation - (1,016,123) (1,277,751) (253,128) (109,631) (1,104,624) - (3,761,257)Accumulated impairments (103) (16,807) (2,827) (770) (40) (39) - (20,586)

Carrying amount 71,995 1,508,556 516,551 52,912 204,014 199,193 68,233 2,621,454


Purchases 1,563 27,903 54,447 6,257 25,244 66,006 47,444 228,864Adjustments(1) - 122 - - - - - 122Reclassifications(2) (29) 22,692 14,371 33 5,755 17,945 (55,375) 5,392Disposals(3) (50) (36) (175) (431) (1,613) (147) - (2,452)Depreciation - (98,209) (108,612) (12,489) (29,549) (75,041) - (323,900)Impairments - (32,452) (437) - (430) (550) - (33,869)

Total movements 1,484 (79,980) (40,406) (6,630) (593) 8,213 (7,931) (125,843)


Cost 73,493 2,594,965 1,839,582 310,083 342,052 1,341,045 60,302 6,561,522Accumulated depreciation - (1,117,130) (1,362,481) (263,031) (138,162) (1,133,050) - (4,013,854)Accumulated impairments (14) (49,259) (956) (770) (469) (589) - (52,057)

Carrying amount 73,479 1,428,576 476,145 46,282 203,421 207,406 60,302 2,495,611

Adjustments(1)

Cost - 122 - - - 148 - 270Other liabilities - - - - - - - -Accumulated depreciation - - - - - (148) - (148)

Total - 122 - - - - - 122


Cost (118) 25,656 16,139 26 5,757 17,983 (55,375) 10,068Accumulated depreciation - (2,964) (1,768) 7 (2) (38) - (4,765)Accumulated impairments 89 - - - - - - 89

Total (29) 22,692 14,371 33 5,755 17,945 (55,375) 5,392

Disposals(3)

Cost (50) (202) (28,133) (3,010) (2,634) (46,948) - (80,977)Accumulated depreciation - 166 25,650 2,579 1,020 46,801 - 76,216Accumulated impairments - - 2,308 - 1 - - 2,309

Total (50) (36) (175) (431) (1,613) (147) - (2,452)

4.1 - Movements in property, plant and equipment



At 31 December 2012 property, plant and equipment includes assets located on land held under concession or sub-con-cession, which are to be handed over free of charge at the end of the concession term, amounting to €136,282 thousand(€149,223 thousand at 31 December 2011).

The main movements during 2012 are described below.

Purchases of €228,864 thousand primarily relate to:• €27,903 thousand relating primarily to extraordinary maintenance of post offices, mail sorting offices and local head of-

fices around the country; • €54,447 thousand relating to plant, consisting primarily of: €36,784 thousand relating to plant and equipment related to

buildings, €8,643 thousand to the installation and extraordinary maintenance of video surveillance systems, €6,687thousand to the installation of ATMs and €1,568 thousand relating to the purchase of sorting equipment used at Sort-ing Centres;

• €6,257 thousand relating primarily to the purchase of various front and back office equipment for post offices (€3,969thousand) and security equipment for post office access and for the deposit of cash and sundry documents (€1,687 thou-sand);

• €25,244 thousand invested in leasehold improvements, relating almost entirely to upgrades of plant (€16,090 thousand)and structural improvements (€9,154 thousand) to properties held under lease;

• €66,006 thousand relating to other assets, of which €29,115 thousand for the purchase of new computer hardware forpost offices and head offices and the consolidation of storage systems, €7,200 thousand for the purchase of furnitureand fittings in connection with the new layouts for post offices, and €2,490 thousand for the purchase of security equip-ment to allow the secure delivery of web services;

• €47,444 thousand relating to assets under construction, of which €16,737 thousand relates to the purchase of com-puter hardware and other equipment not yet in use, €10,345 thousand relates to the restyling of post offices, €4,880thousand relates to the renovation of central facilities and peripheral offices, €3,205 thousand to the purchase of ATMsto be installed, €2,466 thousand to works on primary Sorting Centres, €2,432 thousand to the reorganisation of pack-age logistics and €2,012 thousand to the installation of energy efficient equipment.

Impairments for the year concern certain facilities used in operations for which account was taken, prudentially, of the ef-fects of the persisting volatility of their value in use, land held under concession or sub-concession for which, whilst await-ing confirmation of renewal, the concession term has expired (note 2.4 - Use of estimates) and damaged assets follow-ing the flood and the earthquake that occurred in 2012.Reclassifications from assets under construction, totalling €55,375 thousand, relate primarily to the acquisition cost of as-sets that became available and ready for use during the year. In particular, these assets regard the rollout of hardware heldin storage and completion of the process of restyling leased and owned properties.Disposals, amounting to €2,452 thousand, primarily relate to the release of the facilities held under lease for which, in thepast, leasehold improvements were capitalised.The impact of these disposals on profit or loss is described in note 26.2.



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5 - INVESTMENT PROPERTY

Investment property primarily regards former service accommodation owned by Poste Italiane SpA pursuant to Law 560of 24 December 1993, and residential accommodation previously used by post office directors. None of the property in-cluded in this item is attributable to BancoPosta RFC.

The following movements in investment property took place in 2012 and 2011:

The fair value of investment property at 31 December 2012 amounts to €123,649 thousand. This value includes €72,351thousand representing the sale price applicable to the Company’s former service accommodation in accordance with Law560 of 24 December 1993, whilst the residual amount refers to internal estimates of market prices.Most of the properties included in this category are subject to lease agreements classifiable as operating leases, giventhat Poste Italiane SpA retains substantially all the risks and rewards of ownership of the properties. Under the relevantagreements, tenants usually have the right to break off the lease with six-month notice. Given the resulting lack of cer-tainty, the expected revenue flows from these leases are not referred to in these notes.


2012 2011





Purchases 531 212Reclassifications(1) 846 (9)Disposals(2) (2,542) (7,710)Depreciation (4,861) (5,120)Reversals of impairments/(Impairments) (129) 801

Total movements (6,155) (11,826)




Fair value at 31 December 123,649 126,540


Cost 2,094 (20)Accumulated depreciation (694) 11Accumulated impairments (554) -

Total 846 (9)

Disposals(2)

Cost (5,771) (13,009)Accumulated depreciation 2,436 5,066Accumulated impairments 793 233

Total (2,542) (7,710)

5.1 - Movements in investment property



6 - INTANGIBLE ASSETS

The following table shows movements in intangible assets in 2011 and 2012:

None of the above items is attributable to BancoPosta RFC.

Investment in intangible assets during 2012 amounted to €171,877 thousand, including €7,629 thousand in internal soft-ware development costs and the related expenses.


6.1 - Movements in intangible assets

Concessions, Industrial patents licenses, Assets under

and intellectual trademarks and contructionproperty rights similar rights and advances Other Total


Cost 1,209,257 2,026 153,939 68,868 1,434,090Accumulated amortisation (1,004,861) (2,015) - (68,868) (1,075,744)

Carrying amount 204,396 11 153,939 - 358,346


Purchases 71,312 - 82,914 - 154,226Adjustments - - - - -Reclassifications 93,001 - (93,092) - (91)Disposals (2,916) - (1,709) - (4,625)Amortisation (136,876) (3) - - (136,879)

Total movements 24,521 (3) (11,887) - 12,631


Cost 1,364,279 2,026 142,052 68,868 1,577,225Accumulated amortisation (1,135,362) (2,018) - (68,868) (1,206,248)

Carrying amount 228,917 8 142,052 - 370,977


Purchases 43,836 - 128,041 - 171,877Reclassifications(1) 114,513 - (114,431) - 82Disposals(2) (43) - - - (43)Amortisation and impairments (162,785) (3) - - (162,788)

Total movements (4,479) (3) 13,610 - 9,128


Cost 1,522,574 2,026 155,662 68,868 1,749,130Accumulated amortisation and impairments (1,298,136) (2,021) - (68,868) (1,369,025)

Carrying amount 224,438 5 155,662 - 380,105


Cost 114,513 - (114,431) - 82Accumulated amortisation - - - - -

Total 114,513 - (114,431) - 82

Disposals(2)

Cost (54) - - - (54)Accumulated amortisation 11 - - - 11

Total (43) - - - (43)


352

The increase of €43,836 thousand in industrial patents and intellectual property rights, before amortisation for the year, prima-rily refers to the purchase and entry into service of new software programmes as a result of the acquisition of software licences.Assets under construction includes uncompleted investment, primarily regarding the development for software relating tothe infrastructure platform (€70,861 thousand), the postal products platform (€39,147 thousand) and the platform relatedto BancoPosta services (€25,803 thousand) and for the re-engineering of reporting processes and other staff functions(€18,876 thousand).During the year the Company effected reclassifications from intangible assets under construction to industrial patents, in-tellectual property rights, concessions, licences, trademarks and similar rights, amounting to €114,513 thousand, reflect-ing the completion and commissioning of software and the evolution of existing software.

7 - INVESTMENTS

This item includes the following:

No investments are attributable to BancoPosta RFC. Movements in investments in subsidiaries and associates during2011 and 2012 are as follows:



Investments in subsidiaries 1,429,032 1,487,022Investments in associates 980 980

Total 1,430,012 1,488,002

7.1 - Investments

Additions Reductions AdjustmentsBalance at Subscrip- Sales, Balance at1 January tions/Capital Acquisi- liquidations, 31 December

Investments 2011 contributions tions mergers Reval. (Impair.) 2011

In subsidiariesBanca del Mezzogiorno-MedioCreditoCentrale SpA - - 139,978 - - - 139,978BancoPosta Fondi SpA SGR 12,000 - - - - - 12,000CLP ScpA 263 - - - - - 263Cons. Servizi di Telefonia Mobile ScpA 61 - - - - - 61EGI SpA 191,410 - - - - - 191,410Mistral Air Srl 9,269 3,000 - - - - 12,269Poste Energia SpA 120 - - - - - 120Poste Link Scrl 154 - - (154) - - -Poste Tributi ScpA 1,808 - - - - - 1,808PosteTutela SpA 818 - - - - - 818Poste Vita SpA 563,481 305,000 - - - - 868,481Postecom SpA 12,789 - - - - - 12,789Postel SpA 131,575 - - - - (7,200) 124,375PosteMobile SpA 41,051 29,979 - - - - 71,030PosteShop SpA 5,815 - - - - - 5,815SDA Express Courier SpA 45,805 - - - - - 45,805Total subsidiaries 1,016,419 337,979 139,978 (154) - (7,200) 1,487,022

In associates

Telma-Sapienza Scarl 980 - - - - - 980Total associates 980 - - - - - 980

Total 1,017,399 337,979 139,978 (154) - (7,200) 1,488,002

7.2 - Movements in investments for the year ended 31 December 2011



Movements in 2012 regard the subscription of 69.65% of the share capital of the newly established PatentiViaPoste Sc-pA (equal to €84 thousand), whose business purpose is to carry out the centralised printing, distribution and delivery ofdriving licences having been awarded the relevant contract at the end of the tender process organised by the Ministry ofInfrastructure and Transport. The following transactions, which did not have an impact on the value of the Company’s direct interests, were alsoconcluded:• on 1 March 2012, following the entry of an additional investor, Poste Italiane SpA’s interest in Telma-Sapienza Scarl was

reduced from 32.18% to 30.20%;• on 28 September 2012 Italia Logistica Srl, FS Logistica SpA and SDA Express Courier SpA signed an agreement that came

into effect on 1 October 2012, on the basis of which Italia Logistica Srl transferred its “FS-Omnia Logistica” unit to FS Lo-gistica SpA. At the same time, SDA Express Courier SpA acquired the remaining 50% of Italia Logistica Srl from FS Logis-tica SpA. As a result, from 1 October 2012 Italia Logistica Srl is a wholly owned subsidiary of SDA Express Courier SpA.

The impairment tests required by the related accounting standards have been conducted in order to identify any evidenceof impairment, where applicable. The tests carried out at 31 December 2012 were based on projections contained in thethree-year plans for the relevant cash generating units (companies or their subsidiaries) for the period 2013-201515. Datafrom the last year of the plan have been used to project cash flows for subsequent years over an indefinite time, and theresulting value was then discounted using the Discounted Cash Flow (DCF) method. For the determination of value in use,NOPLAT (Net operating profit less adjusted taxes) was capitalised using an appropriate growth rate and discounted usingthe related WACC (Weighted average cost of capital). An assumed growth rate of 1% was used in the tests carried outat 31 December 2012.


Additions Reductions AdjustmentsBalance at Subscrip- Sales, Balance at1 January tions/Capital Acquisi- liquidations, 31 December

Investments 2012 contributions tions mergers Reval. (Impair.) 2012

In subsidiaries

Banca del Mezzogiorno-MedioCreditoCentrale SpA 139,978 - - - - - 139,978BancoPosta Fondi SpA SGR 12,000 - - - - - 12,000CLP ScpA 263 - - - - - 263Cons. Servizi di Telefonia Mobile ScpA 61 - - - - - 61EGI SpA 191,410 - - - - - 191,410Mistral Air Srl 12,269 - - - - (12,269) -PatentiViaPoste ScpA - 84 - - - - 84Poste Energia SpA 120 - - - - - 120Poste Tributi ScpA 1,808 - - - - - 1,808PosteTutela SpA 818 - - - - - 818Poste Vita SpA 868,481 - - - - - 868,481Postecom SpA 12,789 - - - - - 12,789Postel SpA 124,375 - - - - - 124,375PosteMobile SpA 71,030 - - - - - 71,030PosteShop SpA 5,815 - - - - - 5,815SDA Express Courier SpA 45,805 - - - - (45,805) -Total subsidiaries 1,487,022 84 - - - (58,074) 1,429,032

In associatesTelma-Sapienza Scarl 980 - - - - - 980Total associates 980 - - - - - 980

Total 1,488,002 84 - - - (58,074) 1,430,012

7.3 - Movements in investments for the year ended 31 December 2012

15. 2013-2017 for the company SDA Express Courier SpA.


354

Based on the available prospective information and the results of the impairment tests conducted, the value of the invest-ment in SDA Express Courier SpA has been written off. Similarly, as a result of factors arising in late 2012, which haveresulted in elements of uncertainty regarding the reliability of previous guidance for Mistral Air Srl, the full value of this in-vestment has also been written off (note 31.1). In the case of both companies, Poste Italiane SpA has given a commit-ment to cover accumulated losses at 31 December 2012.

The following table shows a list of investments in subsidiaries and associates at 31 December 2012:


Carrying Carrying Difference betweenShare Profit/(Loss) amount of Share of amount at equity and

Name % interest capital(1) for the year equity equity 31 Dec 2012 carrying amount

In subsidiaries

Banca del Mezzogiorno-MedioCreditoCentrale SpA 100 132,509 7,145 145,569 145,569 139,978 5,591BancoPosta Fondi SpA SGR 100 12,000 8,683 84,791 84,791 12,000 72,791CLP ScpA 51 516 - 516 263 263 -Consorzio per i Servizi di Telefonia Mobile ScpA(2) 51 120 - 120 61 61 -EGI SpA 55 103,200 (498) 441,480 242,814 191,410 51,404Mistral Air Srl 100 530 (8,242) (5,949) (5,949) - (5,949)PatentiViaPoste ScpA(3) 69.65 120 - - - 84 (84)Poste Energia SpA 100 120 198 1,159 1,159 120 1,039Poste Tributi ScpA 70 2,583 - 2,583 1,808 1,808 -PosteTutela SpA 100 153 1,091 10,382 10,382 818 9,564Poste Vita SpA(2) 100 866,608 265,485 2,060,082 2,060,082 868,481 1,191,601Postecom SpA 100 6,450 5,120 47,600 47,600 12,789 34,811Postel SpA 100 20,400 6,027 129,825 129,825 124,375 5,450PosteMobile SpA 100 32,561 18,088 79,100 79,100 71,030 8,070PosteShop SpA 100 2,582 310 4,756 4,756 5,815 (1,059)SDA Express Courier SpA 100 56,339 (50,470) (6,820) (6,820) - (6,820)In associates

Telma-Sapienza Scarl(3) 30.20 1,623 - - - 980 (980)(1) Consortium fund in the case of consortia. The registered offices of subsidiaries and associates are all located in Rome.(2) These figures have been calculated under IFRS, and may not be consistent with those included in the financial statements prepared in accordance with

the Civil Code and Italian GAAP.(3) Figures unavailable.

7.4 - List of investments in subsidiaries and associates



8 - FINANCIAL ASSETS ATTRIBUTABLE TO BANCOPOSTA

Financial assets attributable to BancoPosta break down as follows at 31 December 2012 and 2011:

The operations in question regard the financial services provided by the Company pursuant to Presidential Decree 144/2001,which from 2 May 2011 are attributable to the ring-fenced capital, and which relate to the management of postal currentaccounts deposits, carried out in the name of BancoPosta but subject to statutory restrictions on the investment of theliquidity in compliance with the applicable legislation, and the management of collections and payments on behalf of thirdparties. These include the collection of postal savings (savings books and savings certificates), carried out on behalf of Cas-sa Depositi e Prestiti and the MEF, and services delegated by Public Sector entities. These transactions involve the useof cash advances from the Italian Treasury and the recognition of receivables awaiting financial settlement. The specificagreement with the MEF16 requires BancoPosta to provide daily statements of all cash flows, with a delay of two bankworking day with respect to the transaction date.

RECEIVABLES

Receivables break down as follows:



Non-current Current Non-current CurrentItem Note assets assets Total assets assets Total

Receivables - 7,817,432 7,817,432 - 8,754,179 8,754,179Held-to-maturity financial assets 11,807,059 2,241,009 14,048,068 13,616,562 747,331 14,363,893

Fixed income instruments [8.8] 11,807,059 2,241,009 14,048,068 13,616,562 747,331 14,363,893Available-for-sale financial assets 21,714,895 741,073 22,455,968 12,691,923 772,764 13,464,687

Fixed income instruments [8.8] 21,685,543 741,073 22,426,616 12,669,254 772,764 13,442,018Equity instruments 29,352 - 29,352 22,669 - 22,669

Derivative financial instruments - 12,157 12,157 68,772 17,642 86,414Cash flow hedges - 12,157 12,157 68,772 4,798 73,570Fair value through profit or loss - - - - 12,844 12,844

Total 33,521,954 10,811,671 44,333,625 26,377,257 10,291,916 36,669,173

8.1 - Financial assets attributable to BancoPosta



Amounts deposited with the MEF - 5,416,414 5,416,414 - 7,060,499 7,060,499MEF on behalf of the Italian Treasury - 1,325,394 1,325,394 - 793,537 793,537Other financial receivables - 1,075,624 1,075,624 - 900,143 900,143

Total - 7,817,432 7,817,432 - 8,754,179 8,754,179

8.2 - Financial receivables attributable to BancoPosta

16. The agreement in question, which was signed on 8 May 2009 – and extended as supplemented with additional clauses in September 2011, February2012 and March 2013 – was renewed until 31 December 2013.


356

Amounts deposited with the MEF

As provided for in the specific agreement with the MEF, which is currently being renewed17, these deposits relate tothe investment of public customers’ current account deposits with the MEF and earn a variable rate of return, calcu-lated on a basket of government bonds and money market indices, in line with the European Commission’s Decisionof 16 July 2008. Compared to 31 December 2011, following the different payment methods for the new form of property tax (IMU), thebalance of this item does not reflect the funds credited to the postal current accounts of local authorities, unlike the fundsgenerated by payment of the old property tax (ICI).

MEF on behalf of the Italian Treasury

Balance of cash flows for advances

The balance of cash flows for advances represents the net amount receivable as a result of transfers of deposits and ex-cess liquidity, less advances from the MEF to meet the cash requirements of BancoPosta.




Balance of cash flows for advances - 1,699,094 1,699,094 - 1,439,513 1,439,513Balance of cash flows from management of postal savings - (178,678) (178,678) - (358,238) (358,238)Amounts payable due to theft - (159,708) (159,708) - (160,224) (160,224)Amounts payable for operational risks - (35,314) (35,314) - (127,514) (127,514)

Total - 1,325,394 1,325,394 - 793,537 793,537

8.3 - MEF on behalf of the Italian Treasury



Net advances - 1,700,950 1,700,950 - 1,445,858 1,445,858MEF postal current accounts and other payables - (673,149) (673,149) - (680,713) (680,713)Ministry of Justice - Orders for payment - 697 697 - (3,024) (3,024)MEF - State pensions - 670,596 670,596 - 677,392 677,392

Total - 1,699,094 1,699,094 - 1,439,513 1,439,513

8.4 - Balance of cash flows for advances




Balance of cash flows from management of postal savingsThis item represents the balance of deposits less withdrawals during the last two days of the period and cleared early inthe following period. The balance at 31 December 2012 consists of €318,427 thousand payable to Cassa Depositi e Presti-ti (€434,939 thousand at 31 December 2011), net of an amount of €139,749 thousand receivable from the MEF for out-flows on its behalf (€76,701 thousand at 31 December 2011).

Amounts payable due to theftThe Company is liable to the MEF on behalf of the Italian Treasury for losses resulting from theft and fraud. This liabilityderives from cash withdrawals from the Treasury to make up for the losses resulting from these criminal acts, in order toensure that post offices can continue to operate. Movements in this liability during the period are as follows:

During 2012 the Company made repayments of €4,004 thousand to the Treasury for thefts that took place up to 31 De-cember 2011 and repayments of €2,328 thousand for thefts during the first half of 2012. A further €1,093 thousand wasrepaid following rulings by the Italian Court of Auditors in respect of thefts occurring up to 31 December 1993.

Amounts payable for operational risks These payables regard the portion of advances obtained to fund the operations of BancoPosta, relating to advances fromthe MEF for transactions for which there were insufficient funds, and for which reversal is certain or probable. Movements in these payables are as follows:


Note 2012 2011


Amounts payable for thefts during the year [31.1] 6,909 6,778Repayments made (7,425) (7,053)


8.5 - Movements in amounts payable due to theft

2012 2011


New payables for operational risks 2,272 9,462Operational risks that did not occur (2,860) (1,337)

(588) 8,125Repayments made (95,226) -Reclassifications from provisions for disputes 3,614 4,981


8.6 - Movements in amounts payable to the Italian Treasury for operational risks


358

Other financial receivables

Guarantee deposits, totalling €517,265 thousand, relate to sums provided to counterparties of asset swap transactions(with collateral provided by specific Credit Support Annexes) as part of the cash flow and fair value hedging policy.Other amounts to be charged to customers primarily regard:• cheques and other post office securities settled through the clearing house, totalling €112,099 thousand (€3,475 thou-

sand at 31 December 2011);• the use of debit cards issued by BancoPosta, totalling €103,214 thousand (€11,139 thousand at 31 December 2011); • amounts due from commercial partners, totalling €27,549 thousand (€21,689 thousand at 31 December 2011), for the

collection of Postepay top-ups (prepayments) and payments of bills by payment slip.

The increase in “Other amounts to be charged to customers” on the comparable amount at 31 December 2011 was main-ly due to the settlement of transactions occurring on 31 December 2012, a day where the interbank market was closed,in early 2013. Items awaiting settlement with the banking system relate to debit card payments made at post offices, totalling €19,998thousand (€37,026 thousand at 31 December 2011), and ATM withdrawals using third-party debit cards, totalling €2,062thousand (€2,031 thousand at 31 December 2011).

INVESTMENTS IN SECURITIES

Investments in securities relate to investments in fixed income euro area government securities with a nominal valueof €35,378,500 thousand, consisting of Italian government securities. In compliance with the 2007 Budget Law, from2007 the Company is required to invest the funds raised from deposits paid into postal current accounts by private cus-tomers in euro area government securities. As a result, the composition of this portfolio aims to replicate the financialstructure of deposits paid into postal current accounts by private customers. Trend analysis for forecasting and pruden-tial purposes is based on an appropriate statistical model developed for Poste Italiane SpA by a leading market opera-tor. An Asset & Liability Management system has been developed to manage the relationship between customer de-posits and investments.



Guarantee deposits 517,265 503,880Other amounts to be charged to customers 246,417 39,884Cheques drawn on third parties to be debited to customer accounts 148,333 233,407BancoPosta ATM withdrawals to be debited to customer accounts 134,616 70,379Items awaiting settlement with the banking system 22,060 39,057Other receivables 6,934 13,536

Total 1,075,624 900,143

8.7 - Other financial receivables



Movements in investments in securities in 2011 and 2012 are as follows:

In connection with the refinancing operation initiated by the European Central Bank in February 2012, BancoPosta enteredinto two three-year repurchase agreements with two different financial institutions, totalling €5 billion. The proceeds wereused to buy Italian government bonds with a total nominal value of €5,000 million (€2,450 million in ordinary BTPs and€2,550 million in inflation-linked BTPs, classified as AFS), with a view to anticipating the renewal of bonds maturing in thenext three years.At 31 December 2012 the fair value of the held-to-maturity portfolio, accounted for at amortised cost, is €14,515,849 thou-sand (including €220,480 thousand in accrued daily interest payments). Securities with a nominal value of €6,485,299 thousand are encumbered as follows:• €6,246,310 thousand used as collateral for repurchase agreements entered into through to 31 December 2012 (note 20.1);• €238,989 thousand used as collateral for asset swaps (with collateral provided by specific Credit Support Annexes) as

part of the cash flow and fair value hedging policy and repurchase agreements (collateral provided for by specific Glob-al Master Repurchase Agreements).

The fair value of the available-for-sale portfolio is €22,426,616 thousand (including €282,277 thousand in accrued daily in-terest payments). The overall fair value gain of €3,208,007 thousand for the period is recognised in the relevant equity re-serve (€2,994,626 thousand), relating to the portion of the portfolio not hedged by fair value hedges, and through profitor loss (€213,381 thousand) in relation to the hedged portion.


HTM AFS FVPL Total

Nominal Carrying Nominal Fair Nominal Fair Nominal CarryingSecurities value amount value value value value value amount


Purchases 1,300,000 1,225,677 5,873,200 5,768,963 - - 7,173,200 6,994,640Sales (50,000) (50,576) (3,838,500) (3,824,282) - - (3,888,500) (3,874,858)Redemptions (1,522,000) (1,522,000) (746,500) (746,500) - - (2,268,500) (2,268,500)Transfers to equity - (44,557) - (114,189) - - - (158,746)Increase/(Decrease) in accrued income - (14,103) - 2,163 - - - (11,940)Change in amortised cost - 1,239 - 23,242 - - - 24,481Fair value changes through profit or loss - - - 407,960 - - - 407,960Fair value changes through equity - - - (2,610,907) - - - (2,610,907)


Purchases 185,000 199,674 7,595,000 7,622,447 3,275,000 3,240,395 11,055,000 11,062,516Sales - - (1,380,000) (1,388,188) (3,275,000) (3,240,395) (4,655,000) (4,628,583)Redemptions (520,000) (520,000) (544,700) (544,700) - - (1,064,700) (1,064,700)Transfers to equity - - - 31,520 - - - 31,520Increase/(Decrease) in accrued income - (3,189) - 8,889 - - - 5,700Change in amortised cost - 7,690 - 46,623 - - - 54,313Fair value changes through profit or loss - - - 213,381 - - - 213,381Fair value changes through equity - - - 2,994,626 - - - 2,994,626


8.8 - Movements in investment securities


360

INVESTMENTS IN EQUITY INSTRUMENTS

Equity instruments include:• €28,019 thousand relating to the fair value of 75,628 class B shares in Mastercard Incorporated (75,628 shares with a

fair value of €21,682 thousand at 31 December 2011). These equity instruments are not quoted on a regulated marketbut may be converted into an equal number of class A shares, which are listed on the New York Stock Exchange, if dis-posal is desired;

• €1,216 thousand relating to the fair value of 11,144 class C shares in Visa Incorporated (11,144 shares with a fair val-ue of €870 thousand at 31 December 2011). These equity instruments are not quoted on a regulated market but maybe converted into an equal number of class A shares, which are listed on the New York Stock Exchange, if disposal isdesired;

• €117 thousand regarding the historical cost of the 8.637% interest in Eurogiro Holding A/S, the value of which is un-changed with respect to the previous year.

Fair value gains during the period amount to €6,683 thousand and have been recognised in the relevant equity reserve(note 17).


Movements in derivative financial instruments are as follows:



Cash flow hedges Fair value hedges FVPL

Forward purchases Asset swaps Asset swaps Forward purchases Forward sales Total

Note nominal fair value nominal fair value nominal fair value nominal fair value nominal fair value nominal fair value

Balance at 1 January 2011 720,000 (13,700) 2,073,750 (7,340) 2,950,000 18,744 - - - - 5,743,750 (2,296)

Increases/(Decreases)(*) 3,190,000 (79,933) 1,710,000 (68,177) 750,000 (417,249) - - - - 5,650,000 (565,359)

Discontinued CFHs (1,050,000) (5,911) - - - - 1,050,000 5,911 - - - -

Gains/(Losses) through profit or loss(**) - - - (450) - (552) - - - - - (1,002)

Transactions settled(***) (2,060,000) 68,263 (250,000) (46,588) - 9,513 - - - - (2,310,000) 31,188

Balance at 31 December 2011 800,000 (31,281) 3,533,750 (122,555) 3,700,000 (389,544) 1,050,000 5,911 - - 9,083,750 (537,469)

Increases/(Decreases)(*) 1,625,000 121,303 - 80,400 - (225,547) - 60,535 2,225,000 (6,520) 3,850,000 30,171

Discontinued CFHs (575,000) (47,858) - - - - 575,000 47,858 - - - -

Gains/(Losses) through profit or loss(**) - - - (368) - (592) - - - - - (960)

Transactions settled(***) (1,050,000) (30,007) (950,000) (169,476) - 11,566 (1,625,000) (114,304) (2,225,000) 6,520 (5,850,000) (295,701)

Balance at 31 December 2012 800,000 12,157 2,583,750 (211,999) 3,700,000 (604,117) - - - - 7,083,750 (803,959)

of which:

Derivative assets 800,000 12,157 - - - - - - - - 800,000 12,157

Derivative liabilities [20.1] - - 2,583,750 (211,999) 3,700,000 (604,117) - - - - 6,283,750 (816,116)(*) Increases/(Decreases) refer to the nominal value of new transactions and movements in the fair value of the overall portfolio during the period.(**) Gains and losses through profit or loss refer to any ineffective components of hedges, recognised in other income and other expenses from financial

and insurance activities.(***) Transactions settled include forward transactions settled, accrued differentials and the extinguishment of asset swaps linked to securities sold.



In the year under review, in accordance with its cash flow hedge policy, the Company entered into the following trans-actions:• the settlement of forward purchases outstanding at 31 December 2011 with a nominal value of €800,000 thousand;• the execution of new forward purchase agreements with a nominal value of €1,050,000 thousand (cash flow hedges

of forecast transactions), of which €250,000 thousand were settled as at 31 December 2012;• additional forward purchases with a nominal value of €575,000 thousand (cash flow hedges of forecast transactions)

and subsequent reclassification of these transactions to derivative financial instruments at fair value through profit or loss,following early extinguishment and resulting discontinuation18 of the hedges in the year under review.

The effective portion of these instruments recorded an overall fair value gain of €201,703 thousand during the year, whichis reflected in the cash flow hedge reserve.Following changed market conditions, and to stabilise the benefits of cash flow hedges, in July 2012 the Company extin-guished early €950 million in asset swaps originally entered into to hedge the variable returns on CCTeus. As a result of this,the balance of the cash flow hedge reserve, determined by the cumulative increase in value of the extinguished asset swaps,will be released to profit or loss during the remaining life of the CCTeus originally hedged, thereby raising their return. As a result of fluctuations in market rates, the fair value hedges in place, which are held to limit the price volatility of cer-tain available-for-sale fixed rate instruments, saw their effective portion record a negative change of €225,547 thousand,whilst the hedged securities (note 8.8) have recorded a fair value gain of €213,381 thousand, with the difference of€12,166 thousand due to paid or accruing differentials. Finally, with regard to derivative financial instruments measured at fair value through profit or loss, the Company: • settled forward purchases with a total nominal value of €1,625,000 thousand associated with the discontinuation of cash

flow hedges in 2011 and 2012 through forward sales of the same amount;• entered into and settled securities purchase and resale transactions totalling €600,000 thousand.

These transactions had a net positive effect of €101,916 thousand on profit or loss for the year.


18. Discontinuation of the application of hedge accounting following a decision by management, or due to the early sale or extinguishment of the hedgedor hedging instrument, and the consequent application of a different accounting treatment, as required by the relevant IFRS.


362

9 - FINANCIAL ASSETS

At 31 December 2012 and 2011 financial assets outside the ring-fence are as follows:


LoansLoans refer entirely to amounts due from Group companies, and break down as follows:

Non-current portion:• €540,000 thousand relating to four subordinated loans issued to Poste Vita SpA, in order to bring the subsidiary’s cap-

italisation into line with expected growth in earned premiums, in compliance with the specific regulations governing theinsurance sector. These loans include an irredeemable loan of €250,000 thousand disbursed on 18 April 2008; a loan of€90,000 thousand with a term to maturity of up to 5 years disbursed on 24 June 2010; a loan of €50,000 thousandwith a term to maturity of up to 5 years; and an irredeemable loan of €150,000 thousand disbursed on 20 September2011;

• €1,200 thousand relating to the non-current portion of a 5-year loan, repayable in six-monthly instalments paid in arrears,granted to Postel SpA on 20 May 2009 in order to fund the purchase of capital goods.

Current portion:• €226,082 thousand in short-term loans repayable by the end of 2013 and overdrafts on intercompany current accounts

granted to subsidiaries, paying interest on an arm’s length basis, as described in table 9.2.




Loans and receivables 661,251 510,200 1,171,451 760,928 516,060 1,276,988Loans 541,200 226,082 767,282 545,280 222,796 768,076Receivables 120,051 284,118 404,169 215,648 293,264 508,912

Available-for-sale financial assets 501,530 10,052 511,582 427,670 103,933 531,603Equity instruments 4,500 - 4,500 4,500 - 4,500Fixed income instruments 497,030 5,807 502,837 423,170 5,775 428,945Other investments - 4,245 4,245 - 98,158 98,158

Total 1,162,781 520,252 1,683,033 1,188,598 619,993 1,808,591

9.1 - Financial assets



Receivables

Receivables break down as follows:

At 31 December 2012 the fair value of receivables, amounting to €354,020 thousand, due from the MEF, for the repay-ment of loans accounted for as liabilities, is €360,347 thousand. At 31 December 2011 the fair value of this receivablewas €477,201 thousand compared to the carrying amount of €482,711 thousand. The carrying amount of other receiv-ables in this category approximates to fair value.Receivables due from the MEF, amounting to €354,020 thousand, regard the residual principal to be repaid on loans account-ed for in liabilities, and which, in accordance with the laws that authorised the relevant loans, are to be repaid by the MEF.This receivable is represented by the amortised cost19 of a receivable with a nominal value of €368,605 thousand, which isexpected to be collected by 2016. During 2012 the Company collected receivables with a nominal value of €143,771 thou-sand and estimated accrued finance income on the present value of the receivables to be €15,080 thousand. On the basis of the laws referred to below, these receivables are non-interest-bearing as they relate to loans for whichonly the principal is to be repaid by the government, with the exception of the loan linked to Law 887/8420.



Intercompany IntercompanyName Loans accounts Total Loans accounts Total

Direct subsidiaries

Mistral Air Srl 3,012 11,838 14,850 3,005 7,077 10,082Poste Energia SpA - 2,048 2,048 - 2,868 2,868Postel SpA 4,086 90,106 94,192 5,280 87,892 93,172PosteShop SpA - 1,537 1,537 - - -Postecom SpA - - - - 3,779 3,779SDA Express Courier SpA 25,098 84,055 109,153 20,028 86,901 106,929

32,196 189,584 221,780 28,313 188,517 216,830Accrued interest on non-current loans 4,302 - 4,302 5,966 - 5,966

Total 36,498 189,584 226,082 34,279 188,517 222,796

9.2 - Current portion of loans and receivables



Due from MEF 107,052 246,968 354,020 202,809 289,535 492,344repayment of loans accounted for in liabilities 107,052 246,968 354,020 202,809 279,902 482,711repayment of interest for 2010 on loan (Law 887/84) - - - - 9,633 9,633

Due from buyers of service accommodation 12,999 - 12,999 12,839 - 12,839Due from others - 37,626 37,626 - 4,406 4,406Provisions for doubtful debts - (476) (476) - (677) (677)

Total 120,051 284,118 404,169 215,648 293,264 508,912

9.3 - Receivables

19. The amortised cost of the non-interest bearing receivable in question was calculated on the basis of the present value obtained using the risk-free in-terest rate applicable at the date from which the incorporation of Poste Italiane SpA took effect (1 January 1998). The receivable is thus increased eachyear by the amount of interest accrued and reduced by any amounts collected.

20. Interest was originally to be paid on this loan, but payments were suspended between 2001 and 2006, as a result of changes to the government’s budg-et. Interest accrued to 31 December 2011 was, instead, paid to Poste Italiane SpA from 2007.


364

The nominal value of these receivables is as follows:

These receivables represent repayments of loans formerly disbursed by Cassa Depositi e Prestiti, in accordance with theabove laws, to the former Post and Telecommunications Office in order to fund investments between 1975 and 1993. Onconversion of the former Public Entity into a joint-stock company, the accounts payable to Cassa Depositi e Prestiti (theprovider of the loans) and the accounts receivable from the MEF, to which the relevant laws assigned the burden of re-payment, were posted in the accounts. Poste Italiane SpA is liable for interest expense through to full repayment of theloans. The difference of €142,188 thousand between the nominal value of the receivable and the nominal value of thedebt of €226,417 thousand (note 21.2), corresponding to its amortised cost, was due to the repayment of the principalinstalment that matured in 2012 and is not yet collected. Other receivables, amounting to €37,626 thousand, include:• guarantee deposits, totalling €37,150 thousand, accounted for in current assets, in favour of counterparties with whom

the Company has entered into asset swaps (with collateral provided by specific Credit Support Annexes), in connectionwith the fair value hedging policies adopted (note 9.6);

• €476 thousand due from a counterparty declared bankrupt in 2008 and written off in the same year, resulting from ear-ly extinguishment of two interest rate swaps in accordance with the related contracts terms.


Available-for-sale financial assets break down as follows:


Legislation Nominal value of receivable

Law 227/75 mechanisation of postal service 13,214Law 39/82 subsequent changes to postal service 202,333Law 887/84 151,705Law 41/86 1,353

Total 368,605


Equity instruments 4,500 4,500Fixed income instruments 502,837 428,945

Fiduciary deposits - 94,466Mutual investment funds 4,245 3,692

Other investments 4,245 98,158Total 511,582 531,603

9.4 - Available-for-sale financial assets



Movements during the year are as follows:

Equity instruments

This item refers to the historical cost of the 15% interest in Innovazione e Progetti ScpA, which is in liquidation. The val-ue is unchanged with respect to the previous year.


This item, with a fair value of €502,837 thousand, regards investments in BTPs with a total nominal value of €500,000thousand, which is unchanged with respect to 31 December 2011. Of these, instruments with a value of €375,000 thou-sand have been hedged using asset swaps designated as fair value hedges, as described in note 9.6. All these securitiesare encumbered investments used as collateral for repurchase agreements (note 21.3).

Other investments

This item relates to units of equity mutual investment funds with a fair value of €4,245 thousand (€3,692 thousand at 31December 2011).On 5 July 2012 the deposit established in 2002 by the Company expired and its balance of €93,550 thousand was dulycollected.


2012 2011

Fixed FixedEquity income Other Equity income Other

Note instruments instruments investments Total instruments instruments investments Total

Balance at 1 January 4,500 428,945 98,158 531,603 4,500 471,791 95,928 572,219

Additions/Disbursements - - - - - 99,225 - 99,225FV gains and losses through equity [17.1] - 44,555 48 44,603 - (75,979) 2,089 (73,890)FV gains and losses through profit or loss - 28,973 - 28,973 - 33,115 - 33,115Change in amortised cost - 333 - 333 - (354) - (354)Accrued income - 5,807 - 5,807 - 5,776 411 6,187Sales/Redemptions/Settlement of accrued income - (5,776) (93,961) (99,737) - (104,629) (270) (104,899)

Balance at 31 December 4,500 502,837 4,245 511,582 4,500 428,945 98,158 531,603



366


Movements in derivative assets and liabilities are as follows:

At 31 December 2012 the fair value21 of the outstanding derivative financial instruments used in fair value hedges repre-sents a loss of €40,074 thousand, consisting of nine asset swaps used as fair value hedges in 2010 to protect the valueof BTPs with a nominal value of €375 million against movements in interest rates. These instruments have enabled theCompany to sell the fixed rate on the BTPs of 3.75% and purchase a variable rate.

10 - TRADE RECEIVABLES

Trade receivables break down as follows:


2012 2011

Fair value Fair valueCash flow Fair value through Cash flow Fair value through

Note hedges hedges profit or loss Total hedges hedges profit or loss Total

Balance at 1 January - (9,531) - (9,531) - 22,933 - 22,933

Increases/(Decreases) - (34,348) - (34,348) - (37,191) - (37,191)Income/(Expenses) through profit or loss - 7 - 7 - 10 - 10Transactions settled - 3,798 - 3,798 - 4,717 - 4,717

Balance at 31 December - (40,074) - (40,074) - (9,531) - (9,531)

of which:Derivative assets - - - - - - - -Derivative liabilities [21.1] - (40,074) - (40,074) - (9,531) - (9,531)

9.6 - Movements in derivate financial instruments



Customers 138,703 1,001,350 1,140,053 181,555 1,243,271 1,424,826

Subsidiaries - 186,999 186,999 - 271,567 271,567

Associates - 4,325 4,325 - 5,502 5,502

MEF - 761,742 761,742 - 1,310,277 1,310,277

Trade receivables attributable to Poste Italiane 138,703 1,954,416 2,093,119 181,555 2,830,617 3,012,172

Customers - 1,143,304 1,143,304 - 350,208 350,208

Subsidiaries - 74,959 74,959 - 60,907 60,907

MEF - 277,605 277,605 - 355,045 355,045

Trade receivables attributable to BancoPosta RFC - 1,495,868 1,495,868 - 766,160 766,160

Total trade receivables 138,703 3,450,284 3,588,987 181,555 3,596,777 3,778,332

10.1 - Trade receivables

21. The fair value of these derivative instruments is based on the present value of expected cash flows deriving from the differentials to be exchanged.



RECEIVABLES DUE FROM CUSTOMERS


Amounts due from customers outside the ring-fence

Ministries and Public Sector entities

These items primarily regard amounts due from the following entities:• Presidenza del Consiglio dei Ministri - Dipartimento dell’Editoria (Cabinet Office - Publishing department): €233,997 thou-

sand, with a nominal value of €250,809 thousand, relating to publisher tariff subsidies for the years from 2001 to 2010.The receivable is accounted for at its present value, in accordance with the relevant standards and information available,to take account of the time it is expected to take to collect the amount; accordingly, €135,589 thousand (with a nomi-nal value of €152,401 thousand) is classified in non-current assets;

• Ministero dello Sviluppo Economico (Ministry for Economic Development): €61,442 thousand, including €60,870 thou-sand as reimbursement of the costs associated with the management of property, vehicles and security, of which €3,212thousand relates to the amount accrued during the year;

• Equitalia group: €44,957 thousand, including €42,089 thousand for the notification of tax assessments;• Roma Capitale (Municipality of Rome): €44,440 thousand, primarily in relation to the delivery of administrative notices;• Comune di Milano (Municipality of Milan): €43,759 thousand, primarily for the delivery of administrative notices;• Tax authorities: €31,240 thousand, primarily arising from the delivery of unfranked mail (€18,859 thousand) and the pro-

vision of integrated mail services (€7,830 thousand);• Ministero della Giustizia (Ministry of Justice): €24,831 thousand, arising from the delivery of administrative notices

(€21,754 thousand) and the postage of unfranked mail (€3,077 thousand);• Regione Lazio (Lazio Regional Authority): €24,141 thousand, primarily for the delivery of administrative notices;




Ministries and Public Sector entities 135,589 576,300 711,889 176,941 835,201 1,012,142

Overseas counterparties - 217,495 217,495 - 219,007 219,007

Unfranked mail delivered on behalf of third parties 23,114 100,205 123,319 24,614 112,744 137,358

Users of telegraphic services - 31,991 31,991 - 40,253 40,253

Other trade receivables - 300,636 300,636 - 242,590 242,590

Provisions for doubtful debts (20,000) (225,277) (245,277) (20,000) (206,524) (226,524)

Customers attributable to Poste Italiane 138,703 1,001,350 1,140,053 181,555 1,243,271 1,424,826

Ministries and Public Sector entities - 108,871 108,871 - 103,627 103,627

Cassa Depositi e Prestiti - 948,046 948,046 - 149,606 149,606

Overdrawn current accounts - 125,875 125,875 - 126,645 126,645

Amounts due for other BancoPosta services - 93,574 93,574 - 96,447 96,447

Provisions for doubtful debts - (133,062) (133,062) - (126,117) (126,117)

Customers attributable to BancoPosta RFC - 1,143,304 1,143,304 - 350,208 350,208

Total customers 138,703 2,144,654 2,283,357 181,555 1,593,479 1,775,034

10.2 - Receivables due from customers


368

• Ministero dell’Interno (Ministry of Internal Affairs): €19,976 thousand, including €13,895 thousand for integrated notifi-cation services and €6,066 thousand as payment for the franking of mail on credit;

• Istituto Nazionale di Statistica (Italian office for national statistics): €14,951 thousand regarding the delivery and collec-tion of the package for the 2011 national census.

Overseas counterparties

This item includes €217,108 thousand for postal services carried out for overseas postal operators, and €387 thousandrelating to international telegraphic services.

Unfranked mail delivered on behalf of third parties

This item regards receivables deriving from the delivery of unfranked mail on behalf of third parties, primarily regardingbulk mail. Collection of these receivables is delegated to the authorised agents who provide the service.

Users of telegraphic services

These receivables arise on telegrams ordered by telephone (€20,021 thousand) and other telegraphic services (€11,970thousand).

Other trade receivables

This item includes:• receivables deriving from unfranked mail on own behalf (€101,922 thousand);• receivables related to Posta Target services (€30,537 thousand);• receivables related to the Posta Service service (€16,711 thousand);• receivables deriving from parcel post operations (€15,845 thousand);• receivables generated by the Posta Easy service (€15,119 thousand).

Provisions for doubtful debts attributable to Poste Italiane


Balance at Net Deferred Balance at Net Deferred Balance at1 Jan 2011 provisions revenues Uses 31 Dec 2011 provisions revenues Uses 31 Dec 2012

Overseas postal operators 10,167 (3,072) - - 7,095 (3,539) - - 3,556Public Sector entities 112,758 (2,353) 3,212 - 113,617 14,827 3,212 (102) 131,554Private customers 101,128 (7,664) 502 - 93,966 10,247 - (9,349) 94,864

224,053 (13,089) 3,714 - 214,678 21,535 3,212 (9,451) 229,974

Interest on late payments 7,398 6,039 - (1,591) 11,846 7,643 - (4,186) 15,303

Provisions for doubtful debtsattributable to Poste Italiane 231,451 (7,050) 3,714 (1,591) 226,524 29,178 3,212 (13,637) 245,277

10.3 - Movements in provisions for doubtful debts to Poste Italiane



Provisions regarding amounts due from Public Sector entities regard amounts that may be partially unrecoverable as a re-sult of legislation restricting public spending, delays in payment and problems at debtor entities.

Amounts due from customers of BancoPosta RFC

Ministries and Public Sector entities

These items primarily regard amounts due from the following entities:• €76,920 thousand due from the Istituto Nazionale per la Previdenza Sociale (INPS, the National Institute of Social Secu-

rity), of which €61,335 thousand due for the payment of pensions and attributable entirely to the year under review;• €19,137 thousand due from the Ministero della Giustizia (Ministry of Justice) for the payment service provided by Ban-

coPosta for legal system expenses;• €11,087 thousand due from the tax authorities, primarily deriving from the payment of tax refunds (€7,395 thousand)

and the collection of government taxes (€2,787 thousand).

Cassa Depositi e Prestiti

This item consists of €927,490 thousand in fees and commissions for deposit-taking activities for the year, a sum thatwas collected in full in January 2013 and, for the reminder, of fees and commissions for previous years.

Overdrawn current accounts

These are amounts due for temporarily overdrawn current accounts largely due to recurring bank charges, including accu-mulated sums in the process of being recovered, which have largely been written down.

Amounts due for other BancoPosta services

This item relates to amounts due on insurance and banking services, personal loans, overdrafts and mortgages sold onbehalf of third parties, totalling €68,530 thousand.

Provisions for doubtful debts attributable to BancoPosta



Public Sector entities 40,306 (16,878) - - 23,428 627 - - 24,055Private customers 93,593 8,769 - - 102,362 6,032 - - 108,394

133,899 (8,109) - - 125,790 6,659 - - 132,449

Interest on late payments 151 202 - (26) 327 298 - (12) 613

Provisions for doubtful debtsattributable to BancoPosta 134,050 (7,907) - (26) 126,117 6,957 - (12) 133,062

10.4 - Movements in provisions for doubtful debts attributable to BancoPosta


370

Provisions regarding amounts due from Public Sector entities also regard amounts due from legal persons previously con-trolled by the State. Provisions for doubtful debts relating to private customers almost entirely regard the risk of not re-covering numerous individually immaterial amounts due from overdrawn current account holders.

RECEIVABLES DUE FROM DIRECT AND INDIRECT SUBSIDIARIES

Trade receivables due from subsidiaries are as follows:

These trade receivables include:• Postel SpA: mainly relating to receivables deriving from the delivery of Bulk Mail by Poste Italiane SpA and collected by

the subsidiary (€119,281 thousand);• Poste Vita SpA: largely regarding fees deriving from the sale of insurance policies through Poste Italiane SpA’s post of-

fices and attributable to BancoPosta RFC (€62,958 thousand).



Direct subsidiaries

BancoPosta Fondi SpA SGR 3,597 3,820CLP ScpA 9,506 16,277Consorzio per i Servizi di Telefonia Mobile ScpA 1,729 475EGI SpA 992 1,156Mistral Air Srl 1,152 785Poste Energia SpA 152 580Poste Tributi ScpA 4,293 3,165PosteTutela SpA 226 221Poste Vita SpA 72,954 59,023Postecom SpA 905 1,045Postel SpA 133,875 214,205PosteMobile SpA 19,135 13,469PosteShop SpA 1,563 8,677SDA Express Courier SpA 5,178 4,245Banca del Mezzogiorno-MedioCredito Centrale SpA 415 916

Indirect subsidiaries

Address Software Srl 4 8Docutel SpA 4 7Italia Logistica Srl 2,045 1,561Kipoint SpA 15 266Poste Assicura SpA 3,958 2,193PostelPrint SpA 195 315Uptime SpA(1) 65 65Total 261,958 332,474

of which attributable to BancoPosta RFC 74,959 60,907(1) Joint venture.

10.5 - Receivables due from subsidiaries



RECEIVABLES DUE FROM THE MEF

This item relates to trade receivables due from the Ministry of the Economy and Finance, as a result of commercial trans-actions. The following table shows a breakdown:

Universal Service subsidies include €349,888 thousand accrued for the year under review, €250,092 thousand for the bal-ance of the payment due under the 2009-2011 Contratto di Programma (Planning Agreement) and €12,011 thousand, €24,640thousand and €8,663 thousand for payments due in relation to 2008, 2006 and 2005, respectively. In December 2012,following the decision of the European Commission on the compatibility with EU regulations on state aid of the Contrat-to di Programma for 2009-2011, total payments received amounted to €519,461 thousand and the payment of €323,987thousand made by the MEF in December 2011 – which had been recorded in “Liabilities for advance payments received”– was released. In addition, in February 2013 total payments received under the Contratto di Programma for 2009-2011amounted to €200,362 thousand.Electoral subsidies include €9,782 thousand accrued in 2012, with the remainder attributable to previous years. At 31 De-cember 2011 the repayment of the majority of these receivables were funded only in part in the State budget.Payment due for the distribution of euro coins refers to the supply and delivery of euro converters, performed on behalfof the Presidenza del Consiglio dei Ministri (Cabinet Office). At 31 December 2012 these receivables have not been fund-ed by the State budget.The remuneration of current account deposits refers entirely to amounts accruing in 2012 and largely relates to the de-posit of funds deriving from accounts opened by Public Sector entities.Payments for delegated services relate to fees for treasury services performed by BancoPosta on behalf of the State inaccordance with a special agreement with the MEF. €28,350 thousand relates to amounts accruing in 2012, whilst thebalance of €7,972 thousand relates to amounts due for 2008 and 2007.



Universal Service 645,294 1,211,432Publisher tariff and electoral subsidies 159,924 161,067Payment for distribution of euro coins 6,026 6,026Other 4,474 6,492Provisions for doubtful debts due from the MEF (53,976) (74,740)Receivables due from the MEF attributable to Poste Italiane 761,742 1,310,277

Remuneration of current account deposits 249,040 326,467Payment for delegated services 36,322 36,322Other 215 228Provisions for doubtful debts due from the MEF (7,972) (7,972)Receivables due from the MEF attributable to BancoPosta RFC 277,605 355,045

Total 1,039,347 1,665,322

10.6 - Receivables due from the MEF


Provisions attributable to Poste Italiane 72,855 1,885 - - 74,740 (9,045) - (11,719) 53,976Provisions attributable to BancoPosta RFC - 7,972 - - 7,972 - - - 7,972

Total provisions 72,855 9,857 - - 82,712 (9,045) - (11,719) 61,948

10.7 - Movements in provisions for doubtful debts due from the MEF


372

Provisions for doubtful debts due from the MEF take account of the potential impact of legislation and other policies re-garding the government’s management of the public finances, which could affect the collectability of the receivables atthe time of recognition on the basis of legislation, contracts and agreements in force. The provisions reflect the best es-timate of unrecoverable amounts in view of the fact that these receivables have not been funded by the State budget. In2012 a part of these provisions was released to profit or loss due to the likely collection of items considered originally tobe doubtful.

11 - OTHER RECEIVABLES AND ASSETS





Receivables from fixed-term contract settlements 225,917 88,027 313,944 217,717 83,113 300,830

Amounts due from social security agencies and pension funds (excluding fixed-term contracts settlements) - 89,207 89,207 - 89,649 89,649

Accrued income and prepaid expenses from trading transactions and other assets - 14,814 14,814 - 16,904 16,904

Amounts that cannot be drawn due to court rulings - 13,032 13,032 - - -

Prepaid taxes - 6,314 6,314 - 828 828

Other amounts due from subsidiaries - 193,619 193,619 - 19,281 19,281

Sundry receivables 6,012 52,245 58,257 6,038 38,823 44,861

Provisions for doubtful debts due from others (1,268) (35,704) (36,972) (1,392) (28,280) (29,672)

Other receivables and assets attributable

to Poste Italiane 230,661 421,554 652,215 222,363 220,318 442,681

Prepaid taxes - 233,937 233,937 - 240,166 240,166

Amounts due from account holders for stamp duty paid on their behalf 172,745 181,993 354,738 - 6,430 6,430

Amounts that cannot be drawn due to court rulings - 72,496 72,496 - 99,179 99,179

Amounts due from social security agencies and pension funds (excluding fixed-term contracts settlements) - 314 314 - 242 242

Other amounts due from subsidiaries - 21 21 - 30 30

Sundry receivables - 43,855 43,855 - 32,752 32,752

Provisions for doubtful debts due from others - (19,175) (19,175) - (24,958) (24,958)

Other receivables and assets attributable

to BancoPosta RFC 172,745 513,441 686,186 - 353,841 353,841

Total other receivables and assets 403,406 934,995 1,338,401 222,363 574,159 796,522

11.1 - Other receivables and assets



Other receivables and assets outside the ring-fence

Amounts due from staff under fixed-term contracts settlements consist of salaries to be recovered following the agree-ments of 13 January 2006, 10 July 2008, 27 July 2010 and 18 May 2012 between Poste Italiane SpA and the trade unions,regarding the re-employment by court order of staff previously employed on fixed-term contracts. As illustrated in the fol-lowing table, at 31 December 2012 these receivables relate to the present value of amounts due from staff and the for-mer pension fund, IPOST, and INPS, with a present value totalling €313,944 thousand. Amounts due from staff and theamount due from INPS for pension contributions related to the agreement of 18 May 2012 are recoverable in the form ofvariable instalments, the last of which is due in 2038. Under an agreement reached with the former IPOST on 23 Decem-ber 2009, contributions relating to the agreements of 2006 and 2008 are to be recovered in equal half yearly payments,the last of which is due in 2014.

Other receivables due from subsidiaries refer almost entirely to Poste Italiane SpA as the consolidating entity in the taxconsolidation arrangement. They break down as follows.



Non-current Current Nominal Non-current Current NominalItem assets assets Total value assets assets Total value

Receivablesdue from staff under agreement of 2006(1) 13,050 8,279 21,329 23,613 20,281 14,017 34,298 37,710due from staff under agreement of 2008(2) 89,956 22,540 112,496 129,364 106,288 23,629 129,917 151,719due from staff under agreement of 2010(3) 56,553 12,573 69,126 90,821 64,484 17,781 82,265 106,943due from staff under agreement of 2012(4) 46,005 14,886 60,891 75,911 - - - -due from former IPOST(5) 13,530 27,686 41,216 41,529 26,664 27,686 54,350 55,372due from INPS(6) 6,823 2,063 8,886 11,120 - - - -

Total 225,917 88,027 313,944 217,717 83,113 300,830

(1) Discounted on the basis of the forward interest rate curve for government securities in issue at 30 June 2006.(2) Discounted on the basis of the forward interest rate curve for government securities in issue at 31 December 2008 in the case of individual agreements

entered into in 2008, and on the basis of the forward interest rate curve for government securities in issue at 30 June 2009 for individual agreements en-tered into in the first half of 2009.

(3) Discounted on the basis of the forward interest rate curve for government securities in issue at 31 December 2010 in the case of individual agreementsentered into in 2010, and on the basis of the forward interest rate curve for government securities in issue at 30 June 2011 for individual agreements en-tered into in the first half of 2011.

(4) Discounted on the basis of the forward interest rate curve for government securities in issue at 31 December 2012.(5) Discounted on the basis of the forward interest rate curve for government securities in issue at 31 December 2009.(6) Discounted on the basis of the forward interest rate curve for government securities in issue at 31 December 2012.

11.2 - Receivables from fixed-term contracts settlements


Direct subsidiaries

Banca del Mezzogiorno-MedioCredito Centrale SpA 2 -CLP ScpA 3 -EGI SpA 97 -PatentiViaPoste ScpA 49 -Poste Vita SpA 193,084 18,929Postecom SpA 169 34Postel SpA 17 84PosteMobile SpA 103 84PosteShop SpA 87 150SDA Express Courier SpA 8 -Total 193,619 19,281

11.3 - Other amounts due from subsidiaries


374

The non-current portion of sundry receivables, totalling €6,012 thousand, regards guarantee deposits paid to suppliers andthird-party guarantee deposits held in savings books in the Company’s name.

Movements in provisions for doubtful debts are as follows:

Other receivables and assets attributable to BancoPosta RFC

Prepaid taxes primarily include advances paid to the tax authorities, including €209,615 thousand in stamp duty to be col-lected virtually in 2013, and €24,320 thousand as withholding tax on interest paid to current account holders for 2012.Stamp duty receivable from third parties, totalling €354,738 thousand, consists of: • €181,993 thousand in stamp duty attributable to the holders of postal savings books that the Company collects virtual-

ly, in accordance with the laws;• €172,745 thousand in stamp duty attributable to holders of interest-bearing postal savings certificates for the year end-

ed 31 December 2012, introduced by article 19 of Law Decree 201/2011 converted as amended by Law 214/2011 inthe manner provided for by the MEF Decree of 24 May 201222. For this last item, the corresponding amount was en-tered in “Other taxes payable” (note 23.4), until expiration or early extinguishment of the interest-bearing postal savingscertificates, the date on which the tax will be paid to the tax authorities.

Amounts that cannot be drawn due to court rulings include €59,417 thousand in amounts seized and not assigned to cred-itors in the process of recovery and €13,079 thousand in amounts stolen from the Company in December 2007 as a re-sult of an attempted fraud currently deposited with an overseas bank, which may only be recovered once the legal for-malities are completed.Other receivables due from subsidiaries regards amounts due from Poste Tutela SpA.Movements in provisions for doubtful debts are as follows:


Balance at Net Balance at Net Balance at1 Jan 2011 provisions Uses 31 Dec 2011 provisions Uses 31 Dec 2012

Public Sector entities for sundry services 10,467 (406) - 10,061 (910) - 9,151Amounts due under fixed-term contract settlements 2,189 - - 2,189 - - 2,189Other receivables 11,754 5,668 - 17,422 8,826 (616) 25,632Provisions attributable to Poste Italiane 24,410 5,262 - 29,672 7,916 (616) 36,972

11.4 - Movements in provisions for doubtful debts due from others attributable to Poste Italiane


Balance at Net Balance at Net Balance at1 Jan 2011 provisions Uses 31 Dec 2011 provisions Uses 31 Dec 2012

Public Sector entities for sundry services 11,005 110 - 11,115 (5,947) - 5,168Other receivables 13,122 721 - 13,843 164 - 14,007Provisions attributable to BancoPosta RFC 24,127 831 - 24,958 (5,783) - 19,175

11.5 - Movements in provisions for doubtful debts due from others attributable to BancoPosta



12 - CASH AND DEPOSITS ATTRIBUTABLE TO BANCOPOSTA

Cash at post offices, relating exclusively to BancoPosta RFC, regards cash deposits on postal current accounts, postalsavings products (interest-bearing postal certificates and post office savings books) or advances obtained from the Ital-ian Treasury to fund post office operations. This cash may only be used in settlement of these obligations. Cash and cashequivalents in hand are held at post offices (€898,004 thousand) and companies that provide cash transportation serv-ices whilst awaiting transfer to the Italian Treasury (€1,576,208 thousand). Bank deposits relate to BancoPosta RFC‘soperations and include amounts deposited in an account with the Bank of Italy to be used in interbank settlements, to-talling €693,270 thousand.

13 - CASH AND CASH EQUIVALENTS


BANK DEPOSITS AND AMOUNTS HELD AT THE ITALIAN TREASURY

Bank deposits include €25,606 thousand that cannot be drawn due to court rulings regarding various disputes. In Decem-ber 2012, following the decision of the European Commission on the compatibility with EU regulations on State aid of theContratto di Programma (Planning Agreement) for 2009-2011, the deposit of €323,987 thousand established with theMEF in December 2011 was released.



Cash and cash equivalents in hand 2,474,212 2,263,847Cheques 798 320Bank deposits 704,691 295,827Total 3,179,701 2,559,994

12.1 - Cash and deposits attributable to BancoPosta


Bank deposits and amounts held at the Italian Treasury 42,469 367,329Cash and cash equivalents in hand 2,332 2,523

Cash and cash equivalents attributable to Poste Italiane 44,801 369,852

Deposits with the MEF 1,397,125 829,399Cash and cash equivalents in hand 7,712 7,882Bank deposits 8,637 1,670

Cash and cash equivalents attributable to BancoPosta RFC 1,413,474 838,951

Total cash and cash equivalents 1,458,275 1,208,803

13.1 - Cash and cash equivalents


376

DEPOSITS WITH THE MEF

Cash deposited in postal current accounts is subject to the same investment requirements as the deposits of BancoPos-ta’s private current account holders. In the agreement with the MEF regarding treasury services carried out by BancoPos-ta, which was renewed in March 2013 and is valid until 31 December 2013 (note 8), a portion of private current accountdeposits may be deposited in a specific account held at the MEF (the “Buffer Account”), with the objective of ensuringflexibility with regard to investments in view of daily movements in amounts payable to current account holders. Thesedeposits are remunerated at a variable rate calculated on the basis of the ECB’s Main Refinancing Operations (MRO) rate.At 31 December 2012 the cash balance available in the Buffer Account with the MEF refers to customer deposits sub-ject to investment requirements but not yet invested.

14 - NON-CURRENT ASSETS HELD FOR SALE

This item, regarding assets outside the ring-fence, breaks down as follows:

These assets refer to industrial buildings for which the related sales process has been completed at a total price of over €283thousand. Recognition of this item has not resulted in charges in profit or loss. At 31 December 2012 the buildings original-ly held for sale, for which no sale materialised after the preliminary agreement, were reclassified to non-current assets.


2012 2011


Cost 12,610 6,060Accumulated depreciation (5,577) (2,631)Impairments (465) (465)



Purchases - -Reclassifications of non-current assets(1) (6,320) 3,791Disposals(2) (119) (187)Reclassification from provisions for other risks and charges - -

Total movements (6,439) 3,604


Cost 225 12,610Accumulated depreciation (96) (5,577)Impairments - (465)

Carrying amount 129 6,568


Cost (12,244) 6,843Accumulated depreciation 5,459 (3,052)Accumulated impairments 465 -

Total (6,320) 3,791

Disposals(2)

Cost (141) (293)Accumulated depreciation 22 106Accumulated impairments - -

Total (119) (187)

14.1 - Non-current assets held for sale



15 - SHARE CAPITAL

The share capital consists of 1,306,110,000 ordinary shares with a par value of €1 each owned by the MEF, the soleshareholder. At 31 December 2012 all the shares in issue are fully subscribed and paid up. No preference shares have been issuedand the Company does not hold treasury shares.

16 - SHAREHOLDER TRANSACTIONS

The General Meeting of shareholders held on 6 June 2012 approved the payment of dividends totalling €350,000 thou-sand in November, based on a dividend per share of €0.27.

17 - RESERVES

Reserves break down as follows:


BancoPosta Cash flowLegal RFC Fair value hedge

reserve reserve reserve reserve Total

Balance at 1 January 2011 186,991 - (193,803) (37,618) (44,430)

Increases/(Decreases) in fair value during the year - - (2,675,515) (148,110) (2,823,625)Tax effect of changes in fair value - - 869,131 47,918 917,049Transfers to profit or loss - - (68,553) (71,034) (139,587)Tax effect of transfers to profit or loss - - 18,218 22,872 41,090

Gains/(Losses) recognised directly in equity - - (1,856,719) (148,354) (2,005,073)Attribution of remaining profit for 2010 38,948 - - - 38,948Creation of BancoPosta RFC reserve - 1,000,000 - - 1,000,000Balance at 31 December 2011 225,939 1,000,000 (2,050,522) (185,972) (1,010,555)

Increases/(Decreases) in fair value during the year - - 3,045,912 201,703 3,247,615Tax effect of changes in fair value - - (977,466) (65,123) (1,042,589)Transfers to profit or loss - - 11,455 (111,623) (100,168)Tax effect of transfers to profit or loss - - (3,693) 35,795 32,102

Gains/(Losses) recognised directly in equity - - 2,076,208 60,752 2,136,960Attribution of remaining profit for 2011 37,183 - - - 37,183

Balance at 31 December 2012 263,122 1,000,000 25,686 (125,220) 1,163,588

of which attributable to BancoPosta RFC - 1,000,000 52,816 (125,220) 927,596

17.1 - Reserves


378


BANCOPOSTA RFC RESERVE

As required by Law23, in order to identify ring-fenced capital for the purposes of applying the Bank of Italy’s prudential re-quirements to BancoPosta’s operations and for the protection of creditors, at the General Meeting held on 14 April 2011Poste Italiane SpA’s shareholder approved the creation of ring-fenced capital to be used exclusively in relation to Banco-Posta’s operations (BancoPosta Ring-fenced Capital or BancoPosta RFC), as governed by Presidential Decree 144 of 14March 2001, and established the assets and contractual rights to be included in the ring-fence as well as By-laws govern-ing its organisation, management and control (note 2.2). BancoPosta RFC was provided originally with an initial reserve of€1 billion through the attribution of Poste Italiane SpA’s retained earnings.

FAIR VALUE RESERVE

The fair value reserve regards movements in the fair value of available-for-sale financial assets, for which, during 2012,fair value gains totalling €3,045,912 thousand included:• €3,001,309 thousand regarding the net fair value gain on available-for-sale financial assets attributable to BancoPosta

RFC, consisting of €2,994,626 thousand in gains on securities (note 8.8) and €6,683 thousand in gains on equity instru-ments;

• €44,603 thousand regarding the net fair value gain on available-for-sale financial assets outside the ring-fence, as de-scribed in note 9.5.

CASH FLOW HEDGE RESERVE

The cash flow hedge reserve reflects movements in the fair value of the effective portion of cash flow hedges outstand-ing. In 2012 net fair value gains of €201,703 thousand are attributable to the value of BancoPosta’s derivative financial in-struments, as described in note 8.9.

23. Art. 2, paragraphs 17-octies et seq. of Law 10 of 26 February 2011, converting Law Decree 225 of 29 December 2010.



18 - PROVISIONS FOR RISKS AND CHARGES

Movements in provisions for risks and charges are as follows:


Balance at Finance Released to Balance at Item 31 Dec 2010 Provisions costs profit or loss Uses 31 Dec 2011

Provisions for disputes with third parties 158,310 140,821 531 (19,618) (8,854) 271,190Provisions for disputes with staff(1) 464,460 132,206 - (19,850) (119,654) 457,162Provisions for personnel expenses 162,797 351,211 - (104,735) (58,062) 351,211Provisions to the solidarity fund 58,706 - - (58,706) - -Provisions for taxation/social security contributions 7,787 - - - - 7,787Other provisions 105,295 2,341 - (11,846) (543) 95,247

957,355 626,579 531 (214,755) (187,113) 1,182,597

Provisions for tax consolidation liabilities 14,853 2,655(2) - - (2,712) 14,796Provisions attributable to Poste Italiane 972,208 629,234 531 (214,755) (189,825) 1,197,393

Provisions for disputes with third parties 45,353 7,000 246 (183) (2,057) 50,359Provisions for disputes with staff(1) 4,601 748 - - (2,158) 3,191Provisions for personnel expenses 2,548 5,297 - (1,483) (1,065) 5,297Provisions for non-recurring charges 217,496 24,733 - (5,571) (12,277) 224,381Provisions for expired and statute barred postal savings certificates 19,579 - (1,316) (5,409) (505) 12,349Provisions attributable to BancoPosta RFC 289,577 37,778 (1,070) (12,646) (18,062) 295,577

Total provisions for liabilities and charges 1,261,785 667,012 (539) (227,401) (207,887) 1,492,970

Overall analysis of provisions:- non-current portion 395,303 504,940- current portion 866,482 988,030

1,261,785 1,492,970

(1) Net provisions of €101,163 thousand for personnel expenses and €11,941 thousand for service costs (legal assistance).(2) These provisions are offset by a reduction in current tax liabilities.

18.1 - Movements in provisions for risks and charges in the year ended 31 December 2011


380

Provisions for disputes with third parties regard the present value of expected liabilities deriving from different types oflegal and out-of-court dispute with suppliers and third parties, the related legal expenses, and penalties and indemnitiespayable to customers. Provisions for the year of €96,318 thousand reflect the estimated value of new liabilities measuredon the basis of expected outcomes. A reduction of €49,048 thousand relates to the non-occurrence of liabilities identifiedin the past, whilst a reduction of €34,126 thousand regards the value of disputes settled.

Provisions for disputes with staff regard liabilities that may arise following labour litigation and disputes of various type.Net uses of €19,003 thousand, net of provisions for legal expenses, relate to an update of the estimate of the liabilitiesand the related legal expenses, taking account of both the overall value of negative outcomes in terms of litigation andthe application of Law 183 of 4 November 2010 (“Collegato lavoro”), which has introduced a cap on current and futurecompensation payable to an employee in the event of “court-imposed conversion” of a fixed-term contract. Uses of€99,229 thousand include amounts used to cover the cost of settling disputes, including €26,300 thousand in the formof asset seizures by the Company’s creditors.

Provisions for personnel expenses are made to cover expected liabilities arising in relation to the cost of labour. They haveincreased by €127,410 thousand to reflect the estimated value of new liabilities and decreased as a result of the non-oc-currence of liabilities identified in the past (€66,499 thousand) and the value of disputes settled (€244,502 thousand).


Balance at Finance Released to Balance atItem 31 Dec 2011 Provisions costs profit or loss Uses 31 Dec 2012

Provisions for disputes with third parties 271,190 91,286 1,189 (46,521) (33,273) 283,871

Provisions for disputes with staff(1) 457,162 121,347 - (140,027) (98,297) 340,185

Provisions for personnel expenses 351,211 125,584 - (64,400) (241,304) 171,091

Provisions for restructuring charges - 190,000 - - - 190,000

Provisions for taxation/social security contributions 7,787 - - - (188) 7,599Other provisions 95,247 3,636 - (23,700) (9,946) 65,237

1,182,597 531,853 1,189 (274,648) (383,008) 1,057,983

Provisions for tax consolidation liabilities 14,796 4,404(2) - - (5,007) 14,193Provisions attributable to Poste Italiane 1,197,393 536,257 1,189 (274,648) (388,015) 1,072,176

Provisions for disputes with third parties 50,359 5,032 310 (2,527) (853) 52,321

Provisions for disputes with staff(1) 3,191 427 - (750) (932) 1,936

Provisions for personnel expenses 5,297 1,826 - (2,099) (3,198) 1,826

Provisions for non-recurring charges 224,381 17,501 - (18,107) (10,503) 213,272

Provisions for expired and statute barredpostal savings certificates 12,349 - 509 - (201) 12,657Provisions attributable to BancoPosta RFC 295,577 24,786 819 (23,483) (15,687) 282,012

Total provisions for liabilities and charges 1,492,970 561,043 2,008 (298,131) (403,702) 1,354,188

Overall analysis of provisions:- non-current portion 504,940 503,474- current portion 988,030 850,713

1,492,970 1,354,188

(1) Net provisions of €31,038 thousand for personnel expenses and €12,035 thousand for service costs (legal assistance).(2) These provisions are offset by a reduction in current tax liabilities.

18.2 - Movements in provisions for risk and charges in the year ended 31 December 2012



Provisions for restructuring charges reflect the estimated costs to be incurred by the Company for early retirement incen-tives, under the current redundancy scheme for employees leaving the Company by 31 December 2014.

Provisions for taxation/social security contributions have been made to cover potential future tax liabilities.

Other provisions cover probable liabilities of various type, including: estimated liabilities deriving from the risk that specif-ic legal actions to be undertaken in order to reverse seizures of the Company’s assets may be unable to recover the re-lated amounts; claims for rent arrears on properties used free of charge by the Company, and claims for payment of ac-crued interest expense due to certain suppliers. Provisions of €3,636 thousand for the year primarily regard the latter twotypes of liability. The decrease in provisions during 2012 was due to the reclassification of liabilities for seizures to provi-sions for disputes with staff.

Provisions for tax consolidation losses represent the Company’s potential debt to Group companies included in the taxconsolidation, equal to 50% of the economic benefit deriving from tax losses for the year transferred by such companies.In accordance with the Group’s rules for consolidation, this amount is attributed to these companies, from the tax yearfor which they contributed tax losses to be included in the consolidation arrangement, provided that there is reasonablecertainty that they will produce sufficient future taxable income to enable them to recover the related deferred tax assets.Should such condition not occur, the provisions will be taken to Poste Italiane SpA’s profit or loss as a tax consolidationgain. Net provisions of €4,404 thousand made during 2012 almost entirely reflect the tax losses transferred to the Groupby the subsidiaries SDA Express Courier SpA and Mistral Air Srl. Provisions of €5,007 thousand were used during the pe-riod.

Provisions for non-recurring charges relate to operational risks attributable to BancoPosta RFC. They regard, among oth-er things, the liabilities arising from the reconstruction of operating ledger entries at the time of Poste Italiane SpA’s in-corporation, liabilities deriving from the provision of delegated services for social security agencies, fraud, compensationand adjustments to income for previous years and estimated risks for costs and charges to be incurred as a result of seizuresof accounts held with BancoPosta. Provisions for the year of €17,501 thousand primarily regard the latter two types of li-ability. Uses of €10,503 thousand refer to liabilities identified or settled during the year. The release of €18,107 thousandto profit or loss reflects the non-occurrence of liabilities identified in the past. Provisions are based on the present valueof the identified liabilities.

Provisions for expired and statute barred postal savings certificates held by BancoPosta have been made to cover the costof redeeming certificates relating to specific issues, the value of which was recognised in revenue in profit or loss in theyears in which the certificates became invalid. The provisions were made in response to the Company’s decision to re-deem such certificates even if expired and statute barred. At 31 December 2012 the provisions represent the present val-ue of total liabilities, based on a nominal value of €21,764 thousand, expected to be progressively settled by 2043.

19 - EMPLOYEE TERMINATION BENEFITS

Following the reform of supplementary pension provision, from 1 January 2007 the Company must pay vested employeetermination benefits into a supplementary pension fund or into a Treasury Fund set up by INPS (should the employee haveexercised the specific option provided for by the new legislation). These benefits qualify as a defined contribution plan andthus represent an expense to be recognised at nominal value in personnel expenses. Employee termination benefits vest-ing up to 31 December 2006 remain with the Company and continue to represent accumulated liabilities qualifying as adefined benefit plan, for which actuarial calculation is necessary.



382

The following movements in employee termination benefits took place in 2012 and 2011:

The interest component is recognised in finance costs.

The current service cost, which is no longer included in the employee termination benefits managed by the Company, isrecognised in personnel expenses.During 2012 net uses of provisions for employee termination benefits amounted to €93,700 thousand, of which €88,421thousand relates to benefits paid, €5,090 thousand to substitute tax and €189 thousand to transfers to a number ofGroup companies.

The main actuarial assumptions applied in calculating employee termination benefits are as follows:

The applicable discount rate, which was relatively decoupled from movements in the spreads applicable to Italian govern-ment securities, was determined using the same criteria used at 31 December 2011. The effects of the reduction of thediscount rate during the year are reflected in the actuarial losses incurred.


2012 2011

Balance at 1 January 1,162,602 1,297,781

interest component 56,455 62,597effect of actuarial gains/(losses) (273,308) (62,236)

Provisions for the year 329,763 361Uses for the year (93,700) (133,538)Reductions due to fixed-term contracts settlement of 2010 - (2,002)Balance at 31 December 1,398,665 1,162,602

of which attributable to BancoPosta RFC 18,848 15,408

19.1 - Movements in provisions for employee termination benefits

2012 2011

Discount rate 2.69% 4.60%Average staff turnover24 (summary data) 0.65% 0.93%

24. Frequency of early termination of employment due to resignations and dismissals.



20 - FINANCIAL LIABILITIES ATTRIBUTABLE TO BANCOPOSTA


PAYABLES DERIVING FROM POSTAL CURRENT ACCOUNTS

These payables include net amounts accrued at 31 December 2012 and settled with customers in January 2013. The bal-ance includes amounts due to Poste Italiane Group companies, totalling €98,886 thousand (€108,248 thousand at 31 De-cember 2011), with €25,435 thousand deposited in postal current accounts by Poste Vita SpA (€20,415 thousand at 31December 2011).

BORROWINGS


At 31 December 2012 financial institutions borrowings amount to €5,565,822 thousand and regard repurchase agreementswith a nominal value of €5,517,543 thousand, entered into with major financial institutions. These liabilities consist of:• €2,524,694 thousand (of which €24,694 thousand in accrued interest) related to the three-year loan obtained in Febru-

ary 2012 from Banca IMI SpA – of which more in note 8.8 and in the paragraph devoted to liquidity risk in note 3 – ata spread negotiated with the lenders over the REFI rate25;

• €2,523,542 thousand (of which €23,542 thousand in accrued interest) related to the loan obtained in February 2012 fromCassa Depositi e Prestiti – and repayable in instalments, i.e. €807,533 thousand on 4 September 2013, €807,533 thou-sand on 6 August 2014, and €908,476 thousand on 26 February 2015, of which more in note 8.8 and in the paragraphdevoted to liquidity risk in note 3 – at a spread negotiated with the lenders over the REFI rate;

• €517,586 thousand (of which €44 thousand in accrued interest) related to ordinary funding by BancoPosta RFC via re-purchase agreement transactions with primary financial institutions, in order to optimise the match between investmentand short-term movements in current account deposits by BancoPosta’s private customers.

At 31 December 2012 the fair value of repurchase agreements amounts to €5,609,595 thousand.




Payables deriving from postal current accounts - 40,018,626 40,018,626 - 37,252,267 37,252,267Borrowings 4,200,000 1,365,822 5,565,822 - 1,988,550 1,988,550

Financial institutions borrowings 4,200,000 1,365,822 5,565,822 - 1,988,550 1,988,550Derivative financial instruments 826,251 (10,135) 816,116 594,492 29,390 623,882

Cash flow hedges 228,436 (16,437) 211,999 210,650 16,756 227,406Fair value hedges 597,815 6,302 604,117 383,842 5,701 389,543Fair value through profit or loss - - - - 6,933 6,933

Other financial liabilities - 2,321,285 2,321,285 - 2,387,155 2,387,155

Total 5,026,251 43,695,598 48,721,849 594,492 41,657,362 42,251,854

20.1 - Financial liabilities attributable to BancoPosta



384


Movements in derivative financial instruments during 2012 are described in note 8.9. Net fair value losses on the current por-tion of these instruments, which includes income from differentials accruing at 31 December 2012, total €816,116 thousand.


Amounts due on prepaid cards relate to amounts due to Postepay (€735,209 thousand) and Pensione (€8,005 thousand)cardholders.

Amounts due on domestic and international money transfers represent the exposure to third parties for:• domestic postal orders totalling €335,229 thousand (€378,269 thousand at 31 December 2011);• domestic and international transfers totalling €396,482 thousand (€410,955 thousand at 31 December 2011);• Moneygram transfers totalling €27 thousand (€2,418 thousand at 31 December 2011).

Cashed cheques represent the exposure to customers for cheques paid into post office savings books but not yet credited. Endorsed checks represent the exposure to customers for endorsed checks in circulation.Tax collection and road tax payables relate to amounts due to collection agents, the tax authorities and regional authori-ties for payments made by customers.Amounts to be credited to customers largely relate to:• amounts to be paid to the beneficiaries of direct debits, totalling €40,392 thousand;• amounts in the process of payment in relation to maturing insurance policies issued by Poste Vita SpA, totalling €11,066

thousand, and units of UCIs (Collective Investment Undertakings) issued by BancoPosta SGR SpA, totalling €800 thousand; • amounts to be paid for BancoPosta promotions, totalling €5,896 thousand;• payments of bills by payment slip in the process of being credited to beneficiaries’ accounts, totalling €5,567 thousand;• amounts payable to the subsidiaries Poste Vita SpA and Poste Assicura SpA, amounting to €4,141 thousand and €7

thousand, respectively, in the form of premiums collected on their behalf.

The item “Other amounts payable to third parties” refers mainly to payments to be made to third parties due to endorsedcheques issued. Payables deriving from items in process include amounts available to customers in relation to paymentsmade on behalf of public entities and other forms linked to BancoPosta’s operations.




Prepaid cards - 743,214 743,214 - 724,539 724,539Domestic and international money transfers - 731,738 731,738 - 791,642 791,642Cashed cheques - 335,869 335,869 - 300,574 300,574Endorsed cheques 172,968 172,968 - 211,694 211,694Tax collection and road tax - 122,727 122,727 - 102,388 102,388Amounts to be credited to customers - 118,119 118,119 - 133,846 133,846Other amounts payable to third parties - 56,480 56,480 - 59,354 59,354Guarantee deposits - - - - 9,520 9,520Payables for items in process - 40,170 40,170 - 53,598 53,598

Total - 2,321,285 2,321,285 - 2,387,155 2,387,155

20.2 - Other financial liabilities



21 - FINANCIAL LIABILITIES

Financial liabilities outside the ring-fence are as follows:

BORROWINGS

Borrowings are unsecured and are not subject to financial covenants, which would require the Company to comply withfinancial ratios or maintain a certain rating. Bank borrowings are subject to standard negative pledge clauses26.

Bonds

The bonds with a nominal value of €750 million, issued in 2002 and listed on the Luxembourg Stock Exchange, were re-deemed in full at maturity in July 2012.

Amounts due to Cassa Depositi e Prestiti for loans

This item refers to fixed rate loans issued to the Company by Cassa Depositi e Prestiti. The laws authorising the financ-ing also establish the methods of repayment, as shown below:




Borrowings 516,975 1,151,446 1,668,421 676,417 1,580,134 2,256,551Bonds - - - - 769,841 769,841Amounts due to Cassa Depositi e Prestiti for loans 116,975 109,442 226,417 226,417 306,305 532,722Financial institutions borrowings 400,000 1,042,004 1,442,004 450,000 483,686 933,686Other borrowings - - - - 20,302 20,302

Derivative financial instruments 37,491 2,583 40,074 8,525 1,006 9,531Financial liabilities due to subsidiaries - 396,338 396,338 - 465,781 465,781Other financial liabilities 509 16,269 16,778 712 1,558 2,270

Total 554,975 1,566,636 2,121,611 685,654 2,048,479 2,734,133

21.1 - Financial liabilities

Loans to be repaid Loans with principal Loans with principalin full by to be repaid and interest to be Total

Legislation Poste Italiane by MEF repaid by MEF(1) loans

Law 227/75 (service accommodation) - 8,612 - 8,612Law 39/82 (subsequent changes to postal service) - 118,654 - 118,654Law 887/84 - - 98,119 98,119Law 41/86 - 1,032 - 1,032

Total - 128,298 98,119 226,417

(1) From 2001, the interest portion was derecognised from the State budget and charged instead to Poste Italiane SpA’s profit or loss. From 2006 interestwas attributed to the Company.

21.2 - Detail of loans

26. A commitment given to creditors by which a borrower undertakes not to give senior security to other lenders ranking pari passu with the pre-existingcreditors, unless the same degree of protection is offered to them also.


386

The fair value of the loans is €235,381 thousand (€533,136 thousand at 31 December 2011).The outstanding principal assigned by law to the Ministry of the Economy and Finance is offset by a receivable, recog-nised as a financial asset due from the MEF. Collection of this receivable is based on the repayment schedules for theloans (note 9.3).



At 31 December 2012 outstanding repurchase agreements totalling €488,864 thousand regard securities with a total nom-inal value of €488,569 thousand, executed during the period under review with the aim of maximising returns and meet-ing short-term liquidity requirements.At 31 December 2012 the fair value of repurchase agreements amounts to €488,673 thousand. The carrying amounts ofthe other financial liabilities approximate to their fair value.Drawdowns on total committed and uncommitted lines of credit amount to €300,000 thousand, out of a total of €1,311,355thousand. These lines of credit are unsecured.


Movements in derivative financial instruments during 2012 are described in note 9.6.




Variable rate loan from DEPFA Bankmaturing 30 September 2013 - 250,000 250,000 250,000 - 250,000EIB fixed rate loan maturing 11 April 2018 200,000 - 200,000 200,000 - 200,000EIB fixed rate loan maturing 23 March 2019 200,000 - 200,000 - - -Repurchase agreements - 488,864 488,864 - 430,977 430,977Short-term borrowings - 300,000 300,000 - 50,000 50,000Accrued interest expense - 3,140 3,140 - 2,709 2,709

Total 400,000 1,042,004 1,442,004 450,000 483,686 933,686

21.3 - Financial institutions borrowings



FINANCIAL LIABILITIES DUE TO SUBSIDIARIES

These liabilities relate to intercompany current accounts paying interest at market rates and break down as follows:


This item includes €15,374 thousand, accounted for in current liabilities, received from counterparties with which theCompany has entered into repo transactions for fixed income securities (collateral provided by specific Global Master Re-purchase Agreements) (note 21.3).



Inter- Inter-company company

Name Loans accounts Total Loans accounts Total

Direct subsidiaries

BancoPosta Fondi SpA SGR - 4,304 4,304 - 10,201 10,201CLP ScpA - 11 11 - 61 61EGI SpA - 215,371 215,371 - 211,016 211,016Poste Tributi ScpA - 552 552 - 551 551PosteTutela SpA - 9,836 9,836 - 5,682 5,682Poste Vita SpA - 101,471 101,471 - 202,820 202,820Postecom SpA - 500 500 - - -PosteMobile SpA - 64,293 64,293 - 33,988 33,988PosteShop SpA - - - - 1,462 1,462

Total - 396,338 396,338 - 465,781 465,781

21.4 - Financial liabilities due to subsidiaries


388

ANALYSIS OF NET DEBT/(FUNDS)

The Company’s net debt/(funds) at 31 December 2012 and 31 December 2011 is as follows:

Cash and cash equivalents includes €1,266,408 thousand in customer deposits which are required to be invested and havenot yet been invested, and a total of €25,606 thousand restricted pending court rulings regarding various disputes.


of which of which Balance at related party Balance at ) related party

Item Note 31 Dec 2012 transactions 31 Dec 2011) transactions

Financial liabilities attributable to BancoPosta [20.1] 48,721,849 42,251,854

Postal current account deposits 40,018,626 98,886 37,252,267 108,248Financial institutions borrowings 5,565,822 2,523,542 1,988,550 55,389Derivative financial instruments 816,116 - 623,882 -Other financial liabilities 2,321,285 4,148 2,387,155 18,820

Financial liabilities [21.1] 2,121,611 2,734,133

Bonds - - 769,841 -Loans from Cassa Depositi e Prestiti 226,417 226,417 532,722 532,722Financial institutions borrowings 1,442,004 - 933,686 -Other borrowings - - 20,302 -Derivative financial instruments 40,074 - 9,531 -Other financial liabilities 413,116 396,338 468,051 465,781

Financial assets attributable to BancoPosta [8.1] (44,333,625) (36,669,173)

Receivables (7,817,432) (6,741,808) (8,754,179) (7,854,036)Held-to-maturity financial assets (14,048,068) - (14,363,893) -Available-for-sale financial assets (22,455,968) - (13,464,687) -Derivative financial instruments (12,157) - (86,414) -

Financial assets [9.1] (1,683,033) (1,808,591)

Loans and receivables (1,171,451) (1,121,302) (1,276,988) (1,260,421)Available-for-sale financial assets (511,582) - (531,603) -

Net financial liabilities/(assets) 4,826,802 6,508,223

Cash and deposits attributable to BancoPosta [12.1] (3,179,701) - (2,559,994) -

Cash and cash equivalents [13.1] (1,458,275) (1,397,125) (1,208,803) (829,399)

Net debt/(funds) 188,826 2,739,426

21.5 - Net debt/(funds)



22 - TRADE PAYABLES


AMOUNTS DUE TO SUPPLIERS



Amounts due to suppliers 864,584 934,070Amounts due to subsidiaries 327,169 371,176Prepayments and advances from customers 211,632 546,695Other trade payables 13,746 15,806

Total 1,417,131 1,867,747


22.1 - Trade payables


Italian suppliers 725,862 785,256Overseas suppliers 11,162 5,561Overseas counterparties(1) 127,560 143,253

Total 864,584 934,070


(1) The amount due to overseas counterparties regards fees payable to overseas postal operators and companies in return for postal and telegraphic servic-es received.

22.2 - Amounts due to suppliers


390

AMOUNTS DUE TO SUBSIDIARIES


PREPAYMENTS AND ADVANCES FROM CUSTOMERS

This item refers to amounts received from customers as prepayment for the following services to be rendered:



Direct subsidiaries

CLP ScpA 75,741 86,851Consorzio per i Servizi di Telefonia Mobile ScpA 13,810 9,227EGI SpA 477 1,696Mistral Air Srl 397 392Poste Energia SpA 18,109 19,369Poste Tributi ScpA 1,361 1,285PosteTutela SpA 22,593 41,090Poste Vita SpA 16 17Postecom SpA 77,937 42,135Postel SpA 2,853 2,905PosteMobile SpA 41,199 64,801PosteShop SpA 49 230SDA Express Courier SpA 2,904 23,645


Poste Assicura SpA 1 -PostelPrint SpA 69,421 77,351Italia Logistica Srl 178 66Kipoint SpA 123 116

Total 327,169 371,176


22.3 - Amounts due to subsidiaries


Advances from MEF (note 10.6) - 323,987Overseas counterparties 87,023 92,697Automated franking 81,608 86,412Unfranked mail 17,281 26,294Postage-paid mailing services 9,478 9,038Other services 16,242 8,267

Total 211,632 546,695

of which attributable to BancoPosta RFC 218 302

22.4 - Prepayments and advances from customers



23 - OTHER LIABILITIES


AMOUNTS DUE TO STAFF

These items primarily regard accrued amounts that have yet to be paid at 31 December 2012. The following table showsa breakdown:




Amounts due to staff - 608,922 608,922 - 602,596 602,596Social security payables 48,882 380,162 429,044 51,541 369,931 421,472Other tax liabilities 172,745 229,181 401,926 - 158,022 158,022Amounts due to MEF - 12,140 12,140 - 12,140 12,140Other amounts due to subsidiaries - 10,880 10,880 - 7,990 7,990Sundry payables 63,299 45,036 108,335 75,896 45,342 121,238Accrued expenses and deferred income from trading transactions 18,179 18,568 36,747 6,306 23,462 29,768

Total 303,105 1,304,889 1,607,994 133,743 1,219,483 1,353,226

of which attributable to BancoPosta RFC 227,810 145,750 373,560 65,581 92,152 157,733

23.1 - Other liabilities


Fourteenth month salaries 238,024 230,788Incentives 171,702 174,798Accrued vacation pay 67,497 77,924Other amounts due to staff 131,699 119,086

Total 608,922 602,596


23.2 - Amounts due to staff


392

SOCIAL SECURITY PAYABLES


Amounts due to the former pension fund, IPOST, relate to pension and social security contributions due to the instituteon behalf of the Company’s employees, calculated on salaries paid and accrued as of 31 December 2012, as reported inamounts payable to staff.

Amounts due to the Istituto Nazionale per la Previdenza Sociale (INPS, the National Institute of Social Security) primarilyrelate to amounts accrued for, and not yet paid at 31 December 2012.

Amounts due to the Istituto Nazionale per l’Assicurazione contro gli Infortuni sul Lavoro (INAIL, the National Occupation-al Injury Compensation Authority) relate to injury compensation paid to employees of the Company for injuries occurringup to 31 December 1998. The original amount of the payable was €82,633 thousand, and is repayable over a period ofthirty years from 31 December 1999, in accordance with an amortisation schedule considering fixed annual instalmentsand an annual interest rate of 2.5%.

Amounts payable to pension funds relate to sums due to FondoPoste and other pension funds following the decision bycertain employees to join a supplementary fund.

OTHER TAX LIABILITIES

Other tax liabilities break down as follows:




Former IPOST - 257,481 257,481 - 246,177 246,177INPS - 38,470 38,470 - 39,437 39,437INAIL 48,882 2,659 51,541 51,541 2,595 54,136Pension fund - 71,843 71,843 - 66,431 66,431Amounts due to the Solidarity Fund - - - - 1,132 1,132Other agencies - 9,709 9,709 - 14,159 14,159

Total 48,882 380,162 429,044 51,541 369,931 421,472

of which attributable to BancoPosta RFC - 5,029 5,029 - 4,278 4,278

23.3 - Social security payables



Withholding tax on employees’ and consultants’ salaries - 121,502 121,502 - 99,054 99,054Withholding tax on postal current accounts - 44,154 44,154 - 24,320 24,320Stamp duty 172,745 40,612 213,357 - 14,155 14,155Substitute tax - 492 492 - 2,670 2,670Other taxes due - 22,421 22,421 - 17,823 17,823

Total 172,745 229,181 401,926 - 158,022 158,022

of which attributable to BancoPosta RFC 172,745 97,469 270,214 - 43,654 43,654

23.4 - Other tax liabilities



Withholding tax on employees’ and consultants’ salaries relates to amounts paid to the tax authorities by the Company inJanuary and February 2013.

Withholding tax due on postal current accounts refers to amounts withheld by BancoPosta RFC on interest accrued dur-ing the year on current accounts.

Stamp duty, including €36,723 thousand attributable to BancoPosta RFC, is payable to the tax authorities as duty collect-ed virtually after the adjustment made in 2013 pursuant to note 3-bis of art. 13 of the Tariffs provided for by PresidentialDecree 642/1972. The non-current portion of the stamp duty relates to the amount accrued at 31 December 2012 on in-terest-bearing postal savings certificates outstanding pursuant to the new law referred to in note 11 (“Other receivablesand assets attributable to BancoPosta RFC”).

Substitute tax represents the balance payable by the Company, as the withholding agent, on the revaluation of employeetermination benefits in 2012.

Other taxes due primarily include urban waste tax of €8,412 thousand.

AMOUNTS DUE TO THE MEF

Amounts due to the MEF, which do not regard BancoPosta RFC, amount to €12,140 thousand and relate to pensions paidby the Ministry to former employees of Poste Italiane SpA for the period 1 January 1994 to 31 July 1994.

OTHER AMOUNTS DUE TO SUBSIDIARIES

This item primarily regards the amount payable by Poste Italiane SpA, as the consolidating entity, to subsidiaries in returnfor the transfer of tax credits for advance payments, withholding taxes paid and tax paid overseas, less IRES payable bysubsidiaries to the Company, and the benefit linked to the tax losses transferred from Mistral Air Srl and SDA ExpressCourier SpA during 2012.



Direct subsidiaries

EGI SpA 36 36Mistral Air Srl 638 279Poste Vita SpA 1,137 771Postel SpA 175 175SDA Express Courier SpA 8,472 6,506


Poste Assicura SpA 70 70PostelPrint SpA 352 153

Total 10,880 7,990

of which attributable to BancoPosta RFC - -

23.5 - Other amounts due to subsidiaries


394

SUNDRY PAYABLES


Sundry payables attributable to BancoPosta’s operations primarily relate to transactions effected in previous years in theprocess of settlement.Guarantee deposits primarily relate to amounts collected from customers as a guarantee of payment for services (postage-paid mailing services, the use of post office boxes, lease contracts, telegraphic service contracts, etc.).

ACCRUED EXPENSES AND DEFERRED INCOME FROM TRADING TRANSACTIONS

The nature and composition of accrued expenses and deferred income is as follows:

Deferred income outside the ring-fence primarily regards:• €12,448 thousand in grants approved by the competent public authorities in favour of the Company, whose matching

costs have not been incurred yet;• €5,671 thousand (of which €5,356 thousand relates to income to be recognised after 2012) relating to the Company’s

advance collection of the rental on a thirty-year lease of a pneumatic postal structure in Rome.

Deferred income attributable to BancoPosta RFC regards the following:• €7,395 thousand in fees on Postamat cards collected in advance;• €6,981 thousand relating to income to be recognised in future years as a result of the Gran Premio BancoPosta loyalty

programme, which grants award credits to customers to reward loyalty. Recognition of the related revenue is deferreduntil the Company has fulfilled its obligations to deliver awards to customers or, if the award credits must be used with-in a limited period of time, until the credits are no longer valid, in accordance with IFRIC 13.




Sundry payables attributable to BancoPosta 55,065 21,517 76,582 65,581 17,833 83,414Guarantee deposits 8,234 152 8,386 10,315 141 10,456Other - 23,367 23,367 - 27,368 27,368

Total 63,299 45,036 108,335 75,896 45,342 121,238

of which attributable to BancoPosta RFC 55,065 21,669 76,734 65,581 17,974 83,555

23.6 - Sundry payables



Accrued expenses - 2,674 2,674 - 3,069 3,069Deferred income 18,179 15,894 34,073 6,306 20,393 26,699

Total 18,179 18,568 36,747 6,306 23,462 29,768

of which attributable to BancoPosta RFC - 14,376 14,376 - 18,674 18,674

23.7 - Accured expenses and deferred income



24 - REVENUE FROM SALES AND SERVICES

Revenue from sales and services of €9,206,306 thousand breaks down as follows:

POSTAL SERVICES

Revenue from postal services breaks down as follows:

Unfranked mail relates to revenue from the mailing of correspondence by clients from the post office network, includingthose conducted using the Bulk Mail formula.

Automated franking by third parties or at post offices relates entirely to the Company, and includes revenue from the mail-ing of correspondence franked by customers or at post offices using a franking machine.

Stamps relates to the sale of stamps through post offices and authorised outlets, and sales of stamps used for frankingon credit.

Integrated services include revenue from the delivery of administrative notices and fines, amounting to €215,696 thou-sand, the integrated notification service for legal process carried out on behalf of UNEP (Notifications, Enforcements andComplaints Offices), totalling €28,629 thousand, and revenue deriving from the agreement with the tax authorities regard-ing bulk and registered services, amounting to €2,212 thousand.



Postal services 3,800,528 4,240,148BancoPosta services 5,319,157 5,140,733Other sales of goods and services 86,621 86,733

Total 9,206,306 9,467,614

24.1 - Revenue from sales and services


Unfranked mail 1,387,515 1,495,058Automated franking by third parties and at post offices 1,055,868 1,183,754Stamps 336,995 416,687Integrated services 246,537 280,158Postage-paid mailing services 167,642 161,930Overseas mail and parcels 112,295 117,438Telegrams and online services 51,432 55,242Census services 6,071 74,647Other postal services 76,512 74,828

Total market revenues 3,440,867 3,859,742

Universal Service compensation 349,888 357,101Electoral subsidies(1) 9,773 23,305

Total revenues 3,800,528 4,240,148

(1) Subsidies for tariffs discounted in accordance with the law.

24.2 - Postal services


396

Postage-paid mailing services regard revenue from the delivery of publications and mail-order goods on behalf of publish-ers who benefit from preferential rates, as provided for by Law 46 of 27 February 2004, which converted Law Decree 353of 24 December 2003.

Overseas mail and parcels relates to revenue from the international exchange of mails and parcels.

Telegrams and online services primarily relate to the telegram service provided by phone or at post offices, and amount-ing to €27,377 thousand and €9,656 thousand, respectively.

Universal Service compensation relates to amounts paid by the MEF to cover the costs of fulfilling the USO, which theCompany continued to render in 2012, pending renewal of the Contratto di Programma (Planning Agreement) for thethree-year period 2012-2014 by Poste Italiane SpA, the MEF and the Ministry for Economic Development. Revenue of €349,888thousand was recognised by applying the pre-existing subsidy cap mechanism, on the basis of the best estimate of thelikely compensation that can be reasonably expected under current negotiations.

Electoral subsidies relate to amounts paid by the State to cover reductions and preferential prices granted to election can-didates under Law 515/93. This amount has been budgeted for only in part by the MEF.

BANCOPOSTA SERVICES

This revenue breaks down as follows:



Income from investment of postal current account deposits 1,773,297 1,628,775Fees for collection of postal savings deposits 1,649,115 1,504,050Commissions on payment of bills by payment slip 572,591 594,794Other revenue from current account services 480,153 482,091Insurance brokerage 233,151 262,707Distribution of loan products 156,246 166,754Income from delegated services 152,907 179,244Fees for issue and use of prepaid cards 97,557 95,796Money transfers 63,785 70,735Commissions from securities trading 44,883 89,048Securities custody 19,649 21,437Distribution of investment funds 12,593 10,793Other products and services 63,230 34,509

Total 5,319,157 5,140,733

24.3 - BancoPosta services



Income from the investment of postal current account deposits breaks down as follows.

Income from investments in securities

Interest income on securities derives from the investment of deposits paid into postal current accounts by private cus-tomers and from the repurchase agreement transaction described in note 20. The total includes the impact of the inter-est rate hedge described in note 8.9.

Income from deposits held with the MEF

Remuneration of postal current account deposits represents accrued interest for the year on amounts deposited by Pub-lic Sector entities and, to a lesser extent, returns on amounts deposited in the so-called Buffer account with the MEF, asdescribed in note 13. The variable rate used to calculate remuneration of the above deposits and the rate used to calcu-late interest on the Buffer Account are those provided for in the specific agreements with the MEF, which are currentlybeing renewed.

Net remuneration of own liquidity recognised in finance income and costs

Net remuneration of own liquidity recognised in finance income and costs (note 13) is shown separately in finance incomeand costs (note 32.1), unlike income from the investment of third-party deposits by BancoPosta.

Fees for the collection of postal savings deposits

Fees for the collection of postal savings deposits relate to the remuneration for the provision of Postal Savings Certificatesissue and redemption of and payments into and withdrawals from Post Office Savings Books. This service is provided byPoste Italiane SpA on behalf of Cassa Depositi e Prestiti under the Agreement of 3 August 2011, covering the three-yearperiod 2011-2013, as amended on 13 December 2012.

Other revenue from current account services primarily relates to charges on current accounts, amounting to €185,816 thou-sand, fees on amounts collected and on statements of account sent to large customers, amounting to €117,652 thousand,annual fees on debit cards, amounting to €61,134 thousand, and related transactions, amounting to €62,181 thousand.



Income from investments in securities 1,520,373 1,316,621Interest income on held-to-maturity financial assets 598,816 605,147Interest income on available-for-sale financial assets 869,581 659,802Interest income on securities held for trading 544 -Interest income on asset swaps of available-for-sale financial assets 51,432 51,672

Income from deposits held with the MEF 256,659 332,900Remuneration of current account deposits (deposited with the MEF) 256,659 332,900

Net remuneration of own liquidity recognised in finance income and costs (3,735) (20,746)

Total 1,773,297 1,628,775

24.4 - Income from investment of postal current accounts deposits


398

Revenue from insurance brokerage derives primarily from fees receivable from the subsidiaries Poste Vita and Poste As-sicura, in return for the sale of insurance policies (€232,615 thousand).

Revenue from the distribution of loan products relate to commissions received by the Company on the placement of per-sonal loans and mortgages on behalf of third parties (€156,246 thousand).

Income from delegated services primarily regards amounts received for the payment of pensions paid by INPS (€81,570thousand), and for the provision of treasury services on the basis of the agreement between the Company and the MEF(€57,320 thousand).

Revenue from money transfers primarily includes commissions collected on domestic money orders (€39,367 thousand),Moneygram transfers (€15,216 thousand) and Eurogiros (€4,363 thousand).

Commissions from securities trading relate to income from the placement of corporate and government bonds in the pri-mary market (€36,354 thousand), and proceeds from the execution of purchase and sell orders on the secondary marketon behalf of customers (€8,529 thousand).

Revenue generated by the distribution of investment funds does not include management fees which, in accordance withthe EU’s Markets in Financial Instruments Directive (Directive 2004/39/EC, “MiFID”), are attributable entirely to the fundmanager, BancoPosta Fondi SpA SGR.

OTHER SALES OF GOODS AND SERVICES

This relates to income from ordinary activities that is not directly attributable to the specific Postal services and Banco-Posta segments. The main components are: fees received for collecting applications for residence permits and other per-mits, totalling €34,707 thousand (€32,646 thousand in 2011), income from call centre services, amounting to €4,799thousand (€4,889 thousand in 2011) and income from the provision of ancillary franking and packaging services, totalling€2,172 thousand (€3,838 thousand in 2011).




25 - OTHER INCOME FROM FINANCIAL ACTIVITIES

Other income from BancoPosta RFC’s operations consists of the following:

26 - OTHER OPERATING INCOME

This item primarily regards the following:



Income from financial instruments at fair value through profit or loss 102,038 12,867Fair value gains - 12,843Realised gains 102,038 24

Income from held-to-maturity securities - 170Realised gains - 170

Income from available-for-sale financial assets 50,398 107,890Realised gains 50,398 107,890

Income from cash flow hedges 7 30Fair value gains 7 30

Income from fair value hedges 23 37Fair value gains 23 37

Foreign exchange gains 2,080 2,252Unrealised gains 97 353Realised gains 1,983 1,899

Other income 1,140 1,447

Total 155,686 124,693

25.1 - Other income from financial activities


Gains on disposals 3,774 41,790Increases to estimates for previous years 83,878 77,286Recovery of contract expenses and other recoveries 9,070 12,610Lease rentals 12,385 12,882Recovery of cost of seconded staff 3,429 5,982Grants 3,279 1,810Other income 7,465 14,119

Total 123,280 166,479

26.1 - Other operating income


400

GAINS ON DISPOSALS

LEASE RENTALS

Under the relevant lease agreements, tenants usually have the right to break off the lease with six months’ notice. Giv-en the resulting lack of certainty, the expected revenue flows from these leases are not referred to in these notes. Nosignificant extraordinary maintenance costs were transferred to tenants via increases in rents.



Gains on disposal of property and land used in operations 1,351 22,506Gains on disposal of investment property 1,946 6,166Gains on disposal of other operating assets 477 5,331Gains on sale of investments - 7,787

Total 3,774 41,790

For the purposes of reconciliation with the statement of cash flows, in 2012 this item amounts to €1,849 thousand, after losses of €1,925 thousand (note31). In 2011, net gains, after losses of €1,156 thousand, amounted to €40,634 thousand.

26.2 - Gains on disposals


Rental income from investment property 2,311 3,010Residential properties 2,311 3,010

Rental income on commercial property 7,258 6,489Intercompany rentals 2,916 2,137Antenna sites 1,336 1,048Other rental income 3,006 3,304

Recovery of expenses, transaction costs and other income(1) 2,816 3,383

Total 12,385 12,882

(1) This item primarily regards the recovery of expenses incurred directly by Poste Italiane SpA and passed on to tenants. This category does not include ex-traordinary maintenance costs.

26.3 - Lease rentals



27 - COST OF GOODS AND SERVICES


SERVICES




Services 1,411,460 1,413,932Lease expense 309,504 305,878Raw, ancillary and consumable materials and goods for resale 122,736 117,593Interest expense 277,393 108,779

Total 2,121,093 1,946,182

27.1 - Cost of goods and services


Transport of mail, parcels and forms 262,364 293,289Routine maintenance and technical assistance 180,577 176,014Personnel services 160,880 150,584Energy and water 136,710 126,055Outsourcing fees and other external service charges 133,636 120,937Telecommunications and data transmission 90,654 91,197Transport of cash 84,546 86,260Mail, telegraph and telex 68,088 79,979Printing and enveloping services 67,337 68,889Cleaning, waste disposal and security 65,402 65,447Credit and debit card fees and charges 53,651 49,934Consultants’ fees and legal expenses 22,321 29,668Advertising and promotions 28,486 26,447Automated services from the Department of Land Transportation 29,991 20,741Insurance premiums 14,701 14,337Agent commissions and other 10,326 12,371Securities custody and management fees 1,579 1,572Remuneration of Statutory Auditors 211 211

Total 1,411,460 1,413,932

27.2 - Services


402

Details of the remuneration paid to the Statutory Auditors are provided below:

LEASE EXPENSE

Lease expense breaks down as follows:

Real estate leases relate almost entirely to the buildings from which the Company operates (post offices, Delivery Logis-tics Centres and Sorting Centres). Under the relevant lease agreements, rents are increased annually on the basis of theprice index published by the Istituto Nazionale di Statistica (ISTAT, the Italian Office for National Statistics). Lease termsare generally six years, renewable for a further six. Renewal is assured from the clause stating that the lessor “waivesthe option of refusing renewal on expiry of the first term”, by which the lessor, once the agreement has been signed,cannot refuse to renew the lease, except in cases of force majeure. Poste Italiane SpA has the right to withdraw fromthe contract at any time, giving six months’ notice, in accordance with the standard lease contract.

RAW, ANCILLARY AND CONSUMABLE MATERIALS AND GOODS FOR RESALE




Remuneration 150 151Expenses 61 60

Total 211 211

27.3 - Remuneration of Statutory Auditors


Property rentals 171,223 167,344Lease rentals 162,672 158,614Ancillary costs 8,551 8,730

Vehicle leases 82,796 82,271Equipment hire and software licenses 49,352 50,744Other lease expense 6,133 5,519

Total 309,504 305,878

27.4 - Lease expense


Fuels and lubricants 58,541 52,002Stationery and printed matter 29,218 30,521Printing of postage and revenue stamps 13,565 15,232Consumables and goods for resale 21,412 19,838

Total 122,736 117,593

27.5 - Raw, ancillary and consumable materials and goods for resale



INTEREST EXPENSE

This item refers to interest paid on customer deposits, amounting to €224,916 thousand, and interest paid on repurchaseagreements, totalling €52,477 thousand. No interest is paid on ordinary postal current accounts. Interest payable on “Ban-coPostaClick” and “BancoPostaPiù” accounts varies from 0.25% to 2%. Special terms and conditions are applied to cer-tain accounts to reward customer loyalty.

28 - OTHER EXPENSES FROM FINANCIAL ACTIVITIES

Other expenses relating to BancoPosta RFC’s operations consist of the following:

29 - PERSONNEL EXPENSES

Personnel expenses include the cost of staff seconded to other organisations. The recovery of such expenses, determinedby the relevant chargebacks, is posted to other operating income. Personnel expenses break down as follows:



Expenses from financial instruments at fair value through profit or loss 136 6,963Fair value losses - 6,933Realised losses 136 30

Expenses from cash flow hedges 376 480Fair value losses 376 480

Expenses from fair value hedges 614 589Fair value losses 614 589

Foreign exchange losses 334 449Unrealised losses 151 5Realised losses 183 444

Other expenses 12 450

Total 1,472 8,931

28.1 - Other expenses from financial activities

For the year ended For the year endedItem Note 31 December 2012 31 December 2011

Wages and salaries 4,089,866 4,153,736Social security contributions 1,131,387 1,158,665Provisions for employee termination benefits: supplementary pension funds and INPS 259,431 253,434Agency staff 3,468 2,578Remuneration and expenses paid to Directors 2,440 2,506Redundancy payments 207,629 286,894Net provisions (reversals) for disputes with staff [18.2] (31,038) 101,163Provisions to the solidarity fund [18.2] - (58,706)Provisions for restructuring charges [18.2] 190,000 -Other staff costs/(cost recoveries) (112,745) (164,549)Total expenses 5,740,438 5,735,721

Income from fixed-term contract settlements (82,042) (54,715)

Total 5,658,396 5,681,006

29.1 - Personnel expenses


404

Details of the remuneration and expenses paid to Directors are provided below:

Expenses relating to employee termination benefits are described in note 19.

Net provisions for disputes with staff and provisions for restructuring charges are described in note 18.2.

Cost recoveries primarily regard revised estimates for previous years.

Income from the fixed-term contract settlements and settlements with agency staff have resulted from the terms of theagreement reached on 18 May 2012 between Poste Italiane SpA and the trade unions, regarding the re-employment bycourt order of staff previously employed by the Company on fixed-term contracts, or the mandatory hiring of personneloriginally employed as agency staff. The agreement enabled the Company to enter into individual agreements with 3,097staff employed at 18 May 2012 by virtue of a provisional court order. Under the individual agreements, each signatory elect-ed not to enforce the legal and financial aspects of the court order requiring their re-employment and approximately 2,720employees agreed to return, without interest, in variable instalments the remuneration paid for periods not worked andwhich the Company had already charged to profit or loss in previous years. These amounts total approximately €99 mil-lion; the present value of this amount, €82,042 thousand, has been recognised in profit or loss for the year. The presentvalue was calculated on the basis of the expected cash flows deriving from collection of the amounts due under the in-dividual agreements (based on the forward yield curve for government securities at 31 December 2012).

The following table shows the Company’s average and year-end headcounts by category:

Taking account of staff on flexible contracts, the average number of full-time equivalent staff in 2012 is 142,229 (144,434in 2011).




Total 2,440 2,506

29.2 - Remuneration and expenses paid to Directors

Average workforce Year-end workforce

Category 2012 2011 31 Dec 2012 31 Dec 2011

Executives 577 584 586 556Middle managers (A1) 5,853 5,788 5,867 5,783Middle managers (A2) 7,938 7,890 8,055 7,806Grades B, C, D 121,773 124,111 120,934 121,485Grades E, F 4,294 4,321 3,435 4,005

Total permanent workforce(*) 140,435 142,694 138,877 139,635

(*) Data is expressed in full-time equivalent terms.

29.3 - Workforce data



30 - DEPRECIATION, AMORTISATION AND IMPAIRMENTS




Property, plant and machinery 323,900 330,828Properties used in operations 98,209 96,862Plant and machinery 108,612 114,083Industrial and commercial equipment 12,489 13,552Leasehold improvements 29,549 30,093Other assets 75,041 76,238

Impairments/Recoveries/Adjustments of property, plant and equipment 33,869 3,427

Depreciation of investment property 4,861 5,120

Impairments/Recoveries/Adjustments of investment property 129 (801)

Amortisation and impairments of intangible assets 162,788 136,879Industrial patents and intellectual property rights 162,785 136,875Concessions, licenses, trademarks and similar rights 3 4

Total 525,547 475,453

30.1 - Depreciation, amortisation and impairments


406

31 - OTHER OPERATING COSTS

Other operating costs break down as follows:



Net provisions and losses on doubtful debts (uses of provisions) 21,285 (5,237)Provisions for receivables due from customers 28,194 (21,198)Provisions for receivables due from MEF [10.7] (9,045) 9,857Provisions for sundry receivables 2,133 6,093Losses on receivables 3 11

Occurrence of operational risks 23,922 25,185Thefts during the year [8.5] 6,909 6,778Reversal of BancoPosta assets, net of recoveries 2,193 8,125Other operating losses of BancoPosta 14,820 10,282

Net provisions for risks and charges made/(used) 26,600 132,268for disputes with third parties 47,270 128,020for non-recurring charges incurred by BancoPosta [18.2] (606) 19,162for expired and statute barred postal savings certificates [18.2] - (5,409)for other risks and charges [18.2] (20,064) (9,505)

Losses 1,925 1,156

Other taxes and duties 59,550 44,988Municipal property tax 26,461 15,970Urban waste tax 10,194 9,914Other 22,895 19,104

Revised estimates and assessments for previous years 16,980 21,280

Impairments of investments [7.3] 58,074 7,200

Other recurring expenses 27,389 27,031

Total 235,725 253,871

31.1 - Other operating costs



32 - FINANCE INCOME/(COSTS)

FINANCE INCOME



Income from subsidiaries(1) 26,988 30,573Interest on receivables 23,774 26,970Interest on intercompany current accounts 3,214 3,603

Income from available-for-sale financial assets 14,438 36,514Interest on fiduciary deposit(1) 629 1,522Interest on fixed income instruments(1) 19,114 18,679Accrued differentials on fair value hedges(1) (5,376) (4,075)Realised gains - 20,318Dividends from other investments 71 70

Other finance income(1) 46,368 65,798Interest from the MEF(2) 7,525 108Remuneration of Poste Italiane SpA’s liquidity 3,735 20,746Finance income on discounted receivables(3) 34,278 43,119Overdue interest 7,670 7,489Impairment of amounts due as overdue interest (7,603) (6,241)Other 763 577

Foreign exchange gains 2,901 2,439

Total 90,695 135,324

(1) For the purposes of reconciliation with the statement of cash flows, for 2012 these items amount to €87,723 thousand (€112,497 thousand in 2011). (2) Interest income from the MEF regards interest accrued on the loan under Law 887/84 to cover the interest expense arising from the loans provided by

Cassa Depositi e Prestiti (described in note 8.3). (3) Finance income on discounted receivables includes: €15,079 thousand in accrued interest on the amount due from the MEF (note 9.3), €9,447 thousand

in interest on amounts due for the publisher tariff subsidies described in note 10.2, and €9,752 thousand in interest on amounts due from staff and theformer IPOST under the fixed-term contract settlements of 2006, 2008 and 2010 (note 11.2).

32.1 - Finance income


408

FINANCE COSTS

33 - INCOME TAX EXPENSE

The effective tax rate for 2012 is 22.03%, as resulting from the total of the IRES tax rate (26.13%) and the IRAP tax rate(25.08%), net of the extraordinary effects of the recognition of the refund of taxes paid in previous years, totalling €270,299thousand (down 29.18%).



Finance costs on financial liabilities 52,081 78,907on bonds 19,534 39,067on loans from Cassa Depositi e Prestiti 14,329 19,903on financial institutions borrowings 15,981 12,964on other borrowings - 1,601paid to MEF 109 152on amounts payable to subsidiaries 2,128 5,220

Finance costs on provisions for employee termination benefits [19.1] 56,455 62,597

Finance costs on provisions for risks [18.2] 2,008 (539)

Other finance costs 2,592 2,228

Foreign exchange losses(1) 1,891 3,311

Total 115,027 146,504

(1) For the purposes of reconciliation with the statement of cash flows, for 2012 finance costs, before foreign exchange losses, amount to €113,136 thou-sand (€143,193 thousand in 2011).

32.2 - Finance costs

For the year ended 31 December 2012 For the year ended 31 December 2011

Item IRES IRAP Total IRES IRAP Total

Current tax expense 220,274 230,653 450,927 435,671 286,880 722,551Deferred tax income 32,530 1,709 34,239 (24,603) (410) (25,013)Deferred tax expense (10,785) 9 (10,776) (5,326) (167) (5,493)

Total 242,019 232,371 474,390 405,742 286,303 692,045

Income tax for previous years

following change in legislation (270,299) - (270,299) - - -

33.1 - Income tax expense




33.2 - Reconciliation between theoretical tax charge at statutory rate and effective tax charge for IRES

For the year ended 31 Dec 2012 For the year ended 31 Dec 2011


Profit before tax 926,336 1,390,583

Theoretical tax charge 254,742 27.5% 382,410 27.5%

Effects of increases/(decreases) on theoretical tax charge

Impairments of investments 15,970 1.72% 1,980 0.14%

Exempt gains on financial assets - - (7,344) -0.53%

Non-deductible contingent liabilities 5,902 0.64% 7,809 0.56%

Non-deductible taxes 7,277 0.79% 4,392 0.32%

Net provisions for risks and charges and impairments of receivables 13,407 1.45% 31,411 2.26%

Taxation for previous years (4,105) -0.44% (12,690) -0.91%

Deduction from IRES of IRAP on personnel expenses (54,807) -5.92% - 0.00%

Other 3,633 0.39% (2,226) -0.16%Effective tax charge 242,019 26.13% 405,742 29.18%

Refund of IRES for previous years following change in legislation (270,299) -29.18% - -

33.3 - Reconciliation between theoretical tax charge at statutory rate and effective tax charge for IRAP

For the year ended 31 Dec 2012 For the year ended 31 Dec 2011


Profit before tax 926,336 1,390,583


Effect of increases/(decreases) on theoretical tax chargeNon-deductible personnel expenses 190,143 20.53% 198,812 14.30%Net provisions for risks and charges and impairment of receivables 703 0.08% 6,853 0.49%Non-deductible contingent liabilities 1,037 0.11% 14,498 1.04%Finance costs and income 765 0.08% 574 0.04%Non-deductible taxes 1,209 0.13% 755 0.05%Taxation for previous years (9,416) -1.02% (1,166) -0.08%Other 5,596 0.60% 202 0.01%



410

CURRENT TAX ASSETS AND LIABILITIES


Under IAS 12 - “Income Taxes”, IRES and IRAP credits are offset against the corresponding current tax liabilities, whenapplied by the same tax authority to the same taxable entity, which has a legally enforceable right to offset and intendsto exercise this right. Current tax assests not offset at 31 December 2012, totalling €496,753 thousand, primarily includes:• €272,872 thousand (of which €2,573 thousand attributable to subsidiaries) in tax credits, recognised in 2012, related to

the IRES refund arising from the overpayment of IRAP on non-deductible personnel expenses under Law Decree 201/2011in the years from 2007 to 2011. As described in note 2.4, the relevant positive effect of €270,299 thousand was deter-mined on the basis of a prudent assessment and taking into account the absence of consistent interpretations of thenew legislation. The future availability of clear interpretations and specific operating instructions might generate furtherpositive effects in future, with reference, in particular, to the years prior to 2007, for which claims for rebates have beensubmitted;

• €185,404 thousand representing the tax credit resulting from the balance of IRES and IRAP prepayments and IRESwithholding tax incurred, less provisions for IRES and IRAP expense for the year;

• €37,702 thousand due to the payment of increased tax expense as a result of the non-deductibility of 10% of IRAP be-tween 2004 and 2007.


Current taxes for the year ended 31 Dec 2012 Current taxes for the year ended 31 Dec 2011

IRES IRAP IRES IRAPItem Assets/(Liabilities) Assets/(Liabilities) Total Assets/(Liabilities) Assets/(Liabilities) Total

Balance at 1 January (25,583) (8,267) (33,850) 14,447 755 15,202

Payments of 553,634 302,842 856,476 444,201 277,854 722,055prepayments for the current year 491,818 290,710 782,528 427,448 277,854 705,302balance payable for the previous year 61,816 12,132 73,948 16,753 - 16,753

Provisions to profit or loss for (220,274) (230,653) (450,927) (435,671) (286,880) (722,551)current tax expense (234,170) (230,835) (465,005) (449,567) (287,056) (736,623)realignment(*) 13,896 182 14,078 13,896 176 14,072

Refund of IRES for previous yearsfollowing change in legislation 270,299 - 270,299 - - -

Provisions to equity 75,160 - 75,160 (17,082) 4 (17,078)

Tax consolidation (238,298) - (238,298) (50,017) - (50,017)

Other 17,893(**) - 17,893 18,539(**) - 18,539

Balance at 31 December 432,831 63,922 496,753 (25,583) (8,267) (33,850)

of which:Current tax assets 432,831 63,922 496,753 38,459 18 38,477Current tax liabilities - - - (64,041) (8,285) (72,326)

of which attributable to BancoPosta RFCCurrent tax assets 18,200 - 18,200 - - -Current tax liabilities - (10,538) (10,538) (6,515) (2,569) (9,084)

(*) The re-alignment is due to the impact of the differences between the carrying amounts of assets and liabilities and their tax bases arising after adoptionof IAS/IFRS in 2009, which became deductible in five equal annual instalments from 2009 and in the subsequent four years following payment of therelevant substitute tax. The positive effect on current tax liabilities is offset by the net negative impact of the release of deferred tax assets and liabili-ties, as described in notes 33.7 and 33.8.

(**) Primarily due to tax credits deriving from withholding tax paid on fees.

33.4 - Movements in current tax assets/(liabilities)



DEFERRED TAX ASSETS AND LIABILITIES

The following table shows deferred tax assets and liabilities:

The nominal tax rates are 27.5% for IRES and 4.20% for IRAP (+/- 0.92% resulting from regional surtaxes and/or reliefand +0.15% as a result of additional surtaxes levied in regions with a health service deficit). The Company’s average statu-tory rate for IRAP is 4.57%.

Movements in deferred tax assets and liabilities are shown below:

The balance of deferred tax assets and liabilities recognised in equity consists of the tax effects of the change in reservesdescribed in note 17.1.The following table shows a breakdown of movements in deferred tax assets and liabilities according to principal eventthat generated the movement:



Deferred tax assets 800,858 1,578,468Deferred tax liabilities (325,223) (68,883)

Total 475,635 1,509,585

of which attributable to BancoPosta RFCDeferred tax assets 441,759 1,180,943Deferred tax liabilities (309,865) (43,943)

33.5 - Deferred taxes

Item 2012 2011

Balance at 1 January 1,509,585 520,977

Deferred tax income/(expenses) recognised in profit or loss (23,463) 30,506Deferred tax income/(expenses) recognised in equity (1,010,487) 958,102

Balance at 31 December 475,635 1,509,585

33.6 - Movements in deferred tax assets and liabilities

Financial Contra Provisions Trade Investment assets and asset for risk and and other Personnelproperties liabilities accounts charges receivables expenses Other Total

Balance at 1 January 2011 13,055 236,656 111,632 263,037 16,624 6,891 12,353 660,248

Income/(Expenses) recognised in profit or loss 440 - (31,912) 67,714 16 - 2,949 39,207

Income/(Expenses) recognised in profit or losson realignment - (5,952) (27) (378) (5,539) (2,298) - (14,194)Income/(Expenses) recognised in equity - 893,207 - - - - - 893,207

Balance at 31 December 2011 13,495 1,123,911 79,693 330,373 11,101 4,593 15,302 1,578,468

Income/(Expenses) recognised in profit or loss 255 - 356 (33,416) (4) - 12,770 (20,039)

Income/(Expenses) recognised in profit or losson realignment - (5,952) (28) (383) (5,541) (2,296) - (14,200)Income/(Expenses) recognised in equity - (743,371) - - - - - (743,371)

Balance at 31 December 2012 13,750 374,588 80,021 296,574 5,556 2,297 28,072 800,858

33.7 - Movements in deferred tax assets

Item


412

Deferred tax assets represent the benefit expected to derive from reductions in future current tax expense as a result ofdeductible temporary differences arising between the tax bases of assets and liabilities and their carrying amounts. Theyprimarily reflect temporary differences arising between the tax bases of financial assets and liabilities and their carryingamounts, as a result of application of IAS 39 (€374,588 thousand). The reduction during the period is primarily due to themovements in the fair value reserve described in note 17.1. Deferred tax assets also reflect the expected benefit of thefuture deductibility of provisions (€296,574 thousand), of contra asset accounts (€80,021 thousand), of accumulated de-preciation of investment property (€13,750 thousand), of the impairment of trade and other receivables (€5,556 thousand),and of accrued amounts payable to staff (€2,297 thousand).

Deferred tax liabilities reflect the benefit obtained as the result of a lower current tax charge due to taxable temporary dif-ferences arising between the tax bases of assets and liabilities and their carrying amounts. These taxes primarily relateto temporary differences arising between the tax bases of financial assets and liabilities and their carrying amounts, as aresult of application of IAS 39 (€311,142 thousand). Deferred tax liabilities also derive from the deferral of gains (€13,334thousand) and taxable temporary differences between the tax bases and carrying amounts of property, plant and equip-ment (€747 thousand).

At 31 December 2012 and 2011 deferred tax assets and liabilities recognised directly in equity are as follows:


Discounted Financial employee

assets and Deferred terminationItem liabilities PPE gains benefits Other Total

Balance at 1 January 2011 109,165 4,273 25,833 - - 139,271

Expenses/(Income) recognised in profit or loss - (2,284) (3,087) - - (5,371)

Expenses/(Income) recognised in profit or loss on realignment (122) - - - - (122)

Expenses/(Income) recognised in equity (64,895) - - - - (64,895)

Balance at 31 December 2011 44,148 1,989 22,746 - - 68,883

Expenses/(Income) recognised in profit or loss - (1,242) (9,412) - - (10,654)

Expenses/(Income) recognised in profit or loss on realignment (122) - - - - (122)

Expenses/(Income) recognised in equity 267,116 - - - - 267,116

Balance at 31 December 2012 311,142 747 13,334 - - 325,223

33.8 - Movements in deferred tax liabilities

Increase/(Decrease) in equity


Fair value reserve for available-for-sale financial assets (981,159) 887,313Cash flow hedge reserve for hedging derivatives (29,328) 70,789

Total (1,010,487) 958,102

33.9 - Deferred tax assets and liabilities recognised in equity



34 - RELATED PARTY TRANSACTIONS

IMPACT OF RELATED PARTY TRANSACTIONS ON THE FINANCIAL POSITIONAND RESULTS OF OPERATIONS

The impact of related party transactions on the financial position and results of operations is shown in the following ta-bles from 34.1 to 34.4.


Balance at 31 December 2011BancoPosta’s Other Cash and BancoPosta’s

financial Financial Trade receivables cash financial Financial Trade OtherName assets assets receivables and assets equivalents liabilities liabilities payables liabilitiesDirect subsidiariesBanca del Mezzogiorno-MedioCreditoCentrale SpA - - 916 - - 67,338 - - -BancoPosta Fondi SpA SGR - - 3,820 - - 742 10,201 - -CLP ScpA - - 16,277 - - 14 61 86,851 -Consorzio Servizi Telefonia Mobile ScpA - - 475 - - 55 - 9,227 -EGI SpA - - 1,156 - - 9,974 211,016 1,696 36Mistral Air Srl - 10,082 785 - - 99 - 392 279Poste Energia SpA - 2,868 580 - - 24 - 19,369 -Poste Tributi ScpA - - 3,165 - - 878 551 1,285 -PosteTutela SpA - - 221 30 - 4,108 5,682 41,090 -Poste Vita SpA - 545,911 59,023 18,929 - 39,710 202,820 17 771Postecom SpA - 3,779 1,045 34 - 25,796 - 42,135 -Postel SpA - 98,507 214,205 84 - 4,950 - 2,905 175PosteMobile SpA - - 13,469 84 - 16,850 33,988 64,801 -PosteShop SpA - - 8,677 150 - 2,638 1,462 230 -SDA Express Courier SpA - 106,929 4,245 - - 1,403 - 23,645 6,506Indirect subsidiariesAddress Software Srl - - 8 - - 5 - - -Docutel SpA - - 7 - - - - - -Italia Logistica Srl(1) - - 1,561 - - 6 - 66 -Kipoint SpA - - 266 - - - - 116 -Poste Assicura SpA - - 2,193 - - 834 - - 70Poste Link Scrl - - - - - - - - -PostelPrint SpA - - 315 - - 7,033 - 77,351 153Uptime SpA(1) - - 65 - - - - - -AssociatesConsorzio ANAC - - - - - - - - -Docugest SpA - - 5,502 - - - - - -Telma-Sapienza Scarl - - - - - - - - -Related parties external to the GroupMinistry of the Economy and Finance 7,854,036 492,344 1,832,196 21,482 829,399 - - 452,845 12,140Direct relations 7,854,036 492,344 1,748,033 10,367 829,399 - - 323,987 12,140Agencies and other local offices - - 84,163 11,115 - - - - -Former General Procurement Office of the State - - - - - - - 128,858 -

Cassa Depositi e Prestiti group - - 149,606 - - - 532,722 - -Arcus SpA - - - - - - - - -Cinecittà Luce SpA - - - - - - - - -CONI Servizi - - 263 - - - - 6 -Consap SpA - - 1 - - - - 24 -Consip SpA - - - - - - - - -Enav SpA - - 45 - - - - - -EUR SpA - - - - - - - 242 -Expo 2015 SpA - - - - - - - - -Fondoposte pension fund - - 163 - - - - - 52,027Anas group - - 83 - - - - - -Enel group - - 69,847 - - - - 1,027 13,550Eni group - - 2,079 - - - - 16,828 -Equitalia group - - 32,946 - - - - 1,024 -Ferrovie dello Stato group - - 4,138 - - - - 129 -Finmeccanica group - - 1,218 - - - - 46,315 -Fintecna group - - 12 - - - - 1 -Gestore dei Servizi Elettrici group - - - - - - - - -Invitalia group - - 122 - - - - - -Istituto Poligrafico Zecca dello Stato group - - 8 - - - - 449 -Italia Lavoro group - - - - - - - - -RAI group - - 3 - - - - 3 -Sace group - - - - - - - - -Sogei group - - - - - - - - -Sogin group - - - - - - - 5 -Rete Autostradale Mediterranee SpA - - - - - - - - -Sicot Srl - - - - - - - - -Soc. Svil.po Mercato F.di Pensione SpA (MEFOP) - - 2 - - - - - -Sogesid SpA - - - - - - - - -STMicroelectronics Holding N.V. - - - - - - - - -Studiare Sviluppo Srl - - - - - - - - -Provisions for doubtful debts from external related parties - - (104,528) (16,017) - - - - -

Total 7,854,036 1,260,420 2,326,180 24,776 829,399 182,457 998,503 890,074 85,707

(1) Joint venture.



414

At 31 December 2012 total provisions for risks and charges made to cover probable liabilities resulting from transactionswith related parties external to the Group arising on trading relations amount to €68,445 thousand (€54,735 thousand at31 December 2011).


Balance at 31 December 2012BancoPosta’s Other Cash and BancoPosta’s

financial Financial Trade receivables cash financial Financial Trade OtherName assets assets receivables and assets equivalents liabilities liabilities payables liabilities

Direct subsidiariesBanca del Mezzogiorno-MedioCreditoCentrale SpA - - 415 2 - 1,313 - - -BancoPosta Fondi SpA SGR - - 3,597 - - 3,965 4,304 - -CLP ScpA - - 9,506 3 - 195 11 75,741 -Consorzio Servizi Telefonia Mobile ScpA - - 1,729 - - 141 - 13,810 -EGI SpA - - 992 97 - 8,894 215,371 477 36Mistral Air Srl - 14,850 1,152 - - 665 - 397 638PatentiViaPoste ScpA - - - 49 - - - - -Poste Energia SpA - 2,048 152 - - 544 - 18,109 -Poste Tributi ScpA - - 4,293 - - 425 552 1,361 -PosteTutela SpA - - 226 21 - 14,377 9,836 22,593 -Poste Vita SpA - 544,294 72,954 193,084 - 29,576 101,471 16 1,137Postecom SpA - - 905 169 - 7,172 500 77,937 -Postel SpA - 95,400 133,875 17 - 1,760 - 2,853 175PosteMobile SpA - - 19,135 103 - 29,049 64,293 41,199 -PosteShop SpA - 1,537 1,563 87 - 2,771 - 49 -SDA Express Courier SpA - 109,153 5,178 8 - 758 - 2,904 8,472

Indirect subsidiariesAddress Software Srl - - 4 - - 5 - - -Docutel SpA - - 4 - - 1 - - -Italia Logistica Srl - - 2,045 - - 6 - 178 -Kipoint SpA - - 15 - - 80 - 123 -Poste Assicura SpA - - 3,958 - - 861 - 1 70PostelPrint SpA - - 195 - - 475 - 69,421 352Uptime SpA(1) - - 65 - - - - - -

AssociatesDocugest SpA - - 4,324 - - - - - -Telma-Sapienza Scarl - - - - - - - - -

Related parties external to the GroupMinistry of the Economy and Finance 6,741,808 354,020 1,148,786 21,137 1,397,125 - - 110,300 12,140Direct relations 6,741,808 354,020 1,101,295 9,768 1,397,125 - - - 12,140Agencies and other local offices - - 47,491 11,369 - - - 540 -Former General Procurement Office of the State - - - - - - - 109,760 -

Cassa Depositi e Prestiti group(2) - - 948,075 - - 2,523,542 226,417 - -Arcus SpA - - 1 - - - - - -Cinecittà Luce SpA - - - - - - - - -CONI Servizi - - 179 - - - - - -Consap SpA - - - - - - - 24 -Consip SpA - - - - - - - - -Enav SpA - - 6 - - - - - -EUR SpA - - - - - - - 387 -Expo 2015 SpA - - - - - - - 7,201 -Fondoposte pension fund - - 130 - - - - - 57,203Anas group - - 74 - - - - 1 -Enel group - - 51,922 - - - - 10,801 -Eni group - - 1,993 - - - - 15,654 -Equitalia group - - 44,957 - - - - 1,620 -Ferrovie dello Stato group - - 1,387 - - - - 136 -Finmeccanica group - - 383 - - - - 35,311 -Gestore dei Servizi Elettrici group - - 14 - - - - - -Invitalia group - - 156 - - - - - -Istituto Poligrafico Zecca dello Stato group - - 109 - - - - 356 -Italia Lavoro group - - 2 - - - - - -RAI group - - 1 - - - - 120 -Sogei group - - 14 - - - - - -Sogin group - - - - - - - 5 -Rete Autostradale Mediterranee SpA - - - - - - - - -Sicot Srl - - - - - - - - -Soc. Svil.po Mercato F.di Pensione SpA (MEFOP) - - 2 - - - - - -Sogesid SpA - - - - - - - - -STMicroelectronics Holding N.V. - - - - - - - - -Studiare Sviluppo Srl - - - - - - - - -Provisions for doubtful debts from external related parties - - (83,380) (10,070) - - - - -

Total 6,741,808 1,121,302 2,381,093 204,707 1,397,125 2,626,575 622,755 509,085 80,223

(1) Joint venture.(2) In November 2012 Cassa Depositi e Prestiti acquired 100% of Sace SpA and Fintecna SpA.






Capital expenditure Current expenditureRevenue Other Property, Cost of Other

from sales operating Finance plant and Intangible goods and Personnel operating FinanceName and services income income equipment assets services expenses costs costs

Direct subsidiariesBanca del Mezzogiorno-MedioCreditoCentrale SpA 31 892 - - - 164 - - -BancoPosta Fondi SpA SGR 12,061 249 - - - 8 - 3 117CLP ScpA 715 112 - 3,372 640 151,170 - 351 1Consorzio Servizi Telefonia Mobile ScpA 25 49 - 1 26 13,941 - 110 -EGI SpA 188 252 - 324 - 7,382 18 50 1,762Mistral Air Srl 261 46 193 - - 289 - - -Poste Energia SpA 83 1,047 27 308 9 101,660 - 20 21Poste Tributi ScpA 1,437 278 - - - 145 - 1,132 5PosteTutela SpA 188 1,000 - - - 94,821 - 67 42Poste Vita SpA 268,338 256 26,279 - - 790 - 7 3,075Postecom SpA 348 2,896 7 17 30,466 57,530 360 10 38Postel SpA 14,465 9,491 1,978 - - 135 300 9 -PosteMobile SpA 13,591 386 - - - 65,015 4 40 158PosteShop SpA 5,623 1,265 38 - - 46 105 925 1SDA Express Courier SpA 1,476 721 2,051 - - 49,099 699 222 -

Indirect subsidiariesAddress Software Srl 11 - - - - - - - -Docutel SpA 4 - - - - - - - -Italia Logistica Srl(1) 37 402 - - - - - 27 -Kipoint SpA 15 - - - - 246 - - -Poste Assicura SpA 10,432 22 - - - 365 - - -Poste Link Scrl - - - - - - - - -PostelPrint SpA 160 993 - 36 2,643 124,089 - 469 -Uptime SpA(1) 15 - - - - - - - -AssociatesConsorzio ANAC - - - - - - - - -Docugest SpA 179 - - - - - - - -Telma Sapienza Scarl - - - - - - - - -Related parties external to the GroupMinistry of the Economy and Finance 888,840 1,898 39,630 - - - - 9,563 152Direct relations 781,017 14 39,630 - - - - 9,858 152Agencies and other local offices 107,823 1,884 - - - - - (295) -Former General Procurement Office of the State - - - - - - - - -

Cassa Depositi e Prestiti group 1,504,313 - 148 - - - - - 19,903Arcus SpA - - - - - - - - -Cinecittà Luce SpA 8 - - - - - - - -CONI Servizi 580 287 - - - 70 - - -Consap SpA 109 - - - - - - - -Consip SpA - - - - - - - - -Enav SpA 133 64 - - - - - - -EUR SpA - - - - - 730 - - -Expo 2015 SpA - - - - - - - - -Fondoposte pension fund 50 418 - - - - 28,749 - -Anas group 756 15 - - - - - - -Enel group 135,620 759 - 3 - 1,198 - 190 -Eni group 28,131 45 - - - 32,164 - - -Equitalia group 57,526 35 - - - 775 - - -Ferrovie dello Stato group 2,049 8 - - - 1,452 - - -Finmeccanica group 94 1 - 8,797 7,155 47,000 - - -Fintecna group 236 - - - - - - - -Gestore dei Servizi Elettrici group 359 - - - - - - - -Invitalia group 225 - - - - - - - -Istituto Poligrafico Zecca dello Stato group 1,131 16 - - - 8,009 - 2 -Italia Lavoro group 3 - - - - - - - -RAI group 10,042 2 - - - - - - -Sace group 163 - - - - - - - -Sogei group 19 - - - - - - - -Sogin group 2 - - - - 5 - - -Rete Autostradale Mediterranee SpA - - - - - - - - -Sicot Srl 50 - - - - - - - -Soc. Svil.po Mercato F.di Pensione SpA (MEFOP) 4 - - - - 3 - - -Sogesid SpA - - - - - - - -STMicroelectronics Holding N.V. 23 - - - - - - - -Studiare Sviluppo Srl - - - - - - - - -Total 2,960,149 23,905 70,351 12,858 40,939 758,301 30,235 13,197 25,275

(1) Joint venture.

34.3 - Impact of related party transactions on the results of operations


416



Capital expenditure Current expenditureRevenue Other Property, Cost of Other

from sales operating Finance plant and Intangible goods and Personnel operating FinanceName and services income income equipment assets services expenses costs costs

Direct subsidiariesBanca del Mezzogiorno-MedioCredito Centrale SpA 450 605 - - - 238 - - - BancoPosta Fondi SpA SGR 13,684 351 - - - 1 - - 32 CLP ScpA 1,019 697 1 3,845 1,524 188,169 - 1,723 - Consorzio Servizi Telefonia Mobile ScpA 20 - - (1) 177 14,240 - 122 - EGI SpA 159 153 - - - 6,582 1 48 492 Mistral Air Srl 279 46 227 - - 285 - - - PatentiViaPoste ScpA - - - - - - - - - Poste Energia SpA 89 129 18 317 161 109,702 - - 5 Poste Tributi ScpA 2,970 358 - - - 2 - 1,264 1 PosteTutela SpA 186 3,451 - - - 93,704 - 61 16 Poste Vita SpA 236,703 334 22,825 - - 1,544 58 366 1,472 Postecom SpA 236 2,021 15 2,255 40,178 80,408 223 (10) 3 Postel SpA 14,755 1,116 1,787 - - 36 147 291 - PosteMobile SpA 20,419 464 - - - 83,751 54 (17) 107 PosteShop SpA 1,900 190 38 - - 30 25 42 1 SDA Express Courier SpA 1,197 870 2,076 - - 93 707 74 - Indirect subsidiariesAddress Software Srl 4 - - - - - - - - Docutel SpA 4 - - - - - - - - Italia Logistica Srl 34 402 - - - - - 108 - Kipoint SpA 16 - - - - 206 - - - Poste Assicura SpA 9,849 20 - - - 458 - - - PostelPrint SpA 193 213 - - 5,089 117,505 - 467 - Uptime SpA(1) 15 1 - - - - - - - AssociatesDocugest SpA 105 - - - - - - - - Telma-Sapienza Scarl - - - - - - - - - Related parties external to the GroupMinistry of the Economy and Finance 778,844 753 22,605 - - 2,182 - (15,249) 109 Direct relations 683,590 17 22,605 - - - - (9,046) 109 Agencies and other local offices 95,254 736 - - - 2,182 - (6,203) - Former General Procurement Office of the State - - - - - - - - -

Cassa Depositi e Prestiti group(2) 1,649,761 - - - - 23,542 - - 14,329 Arcus SpA - - - - - - - - - Cinecittà Luce SpA 6 - - - - - - - -CONI Servizi 683 287 - - - 71 - - - Consap SpA 175 - - - - - - - - Consip SpA - - - - - - - - - Enav SpA 115 63 - - - - - - - EUR SpA - - - - - 1,801 - - - Expo 2015 SpA - 92 - - - - - - - Fondoposte pension fund 51 462 - - - - 32,555 - - Anas group 695 14 - - - - - - - Enel group 130,113 24 - - - 1,359 - 164 - Eni group 23,527 39 - - - 39,921 - - - Equitalia group 8,843 - - - - 1,709 - - - Ferrovie dello Stato group 1,448 4 - - - 1,543 - 1 - Finmeccanica group 81 1 - 1,568 5,384 45,518 - - - Gestore dei Servizi Elettrici group 566 8 - - - - - 3 - Invitalia group 277 - - - - - - - - Istituto Poligrafico Zecca dello Stato group 874 25 - - - 10,002 - 1 - Italia Lavoro group - - - - - - - - - RAI group 7,794 2 - - - 118 - - - Sogei group 18 - - - - - - - - Sogin group 1 - - - - - - - - Rete Autostradale Mediterranee SpA - - - - - - - - - Sicot Srl 44 - - - - - - - - Soc. Svil.po Mercato F.di Pensione SpA (MEFOP) 2 - - - - - - - - Sogesid SpA - - - - - - - - - STMicroelectronics Holding N.V. 21 - - - - - - - - Studiare Sviluppo Srl - - - - - - - - -

Total 2,908,225 13,195 49,592 7,984 52,513 824,720 33,770 (10,541) 16,567


34.4 - Impact of related party transactions on the results of operations



In 2012 net provisions for risks and charges made to cover probable liabilities resulting from transactions with related par-ties external to the Company arising on trading transactions amount to €17,892 thousand (€3,329 thousand in 2011). The nature of the principal transactions with related parties external to the Company is summarised below.• Amounts received from the MEF relate primarily to payment for carrying out the USO, the management of postal cur-

rent accounts, as reimbursement for electoral tariff reductions and subsidies, and as payment for delegated services,integrated e-mail services, the franking of mail on credit, and for collection of tax returns.

• Amounts received from CDP SpA primarily relate to payment for the collection of postal savings deposits.• Amounts received from the Enel group primarily relate to payment bulk mail shipments, unfranked mail, franking of mail

on credit and postage paid mailing services, etc. The costs incurred primarily relate to the supply of gas.• Amounts received from the Equitalia group primarily relate to payment for the integrated notification service and for un-

franked mail. The costs incurred primarily relate to electronic transmission of tax collection data.• Amounts received from the ENI group relate primarily to payment for mail shipments, etc. The costs incurred relate to

the supply of fuel for motorcycles and vehicles and the supply of gas.• Purchases from the Finmeccanica group primarily relate to the supply, by Selex Elsag SpA, of equipment, maintenance and

technical assistance for mechanised sorting equipment, and systems and IT assistance regarding the creation of documentstorage facilities, specialist consulting and software maintenance, and the supply of software licences and of hardware.

KEY MANAGEMENT PERSONNEL

Key management personnel consist of Directors and managers at the first organisational level of Poste Italiane SpA. Therelated remuneration, gross of expenses and social security contributions, is as follows:

No loans were granted to key management personnel during 2012; at 31 December 2012 the Company does not reportreceivables in respect of loans granted to key management personnel.

TRANSACTIONS WITH STAFF PENSIONS FUNDS

Poste Italiane SpA and its subsidiaries that apply the National Collective Labour Contract are members of the FondopostePension Fund, the national supplementary pension fund for non-managerial staff. As indicated in article 14, paragraph 1of Fondoposte’s By-laws, the representation of members among the various officers and boards (the General Meeting ofdelegates, the Board of Directors, Chairman and Deputy Chairman, Board of Statutory Auditors) is shared equally betweenthe workers and the companies that are members of the Fund. The Fund’s Board of Directors takes decisions including:• the general criteria for the allocation of risk in terms of investments and investment policies;• the choice of fund manager and custodian bank.


34.5 - Remuneration of key management personnelFor the year ended For the year ended

Item 31 December 2012 31 December 2011

Remuneration paid in short/medium term 14,116 14,943Post-employment benefits 462 4,755

Total 14,578 19,698


418

35 - OTHER INFORMATION

POSTAL SAVINGS DEPOSITS

The following table provides a breakdown of postal savings deposits collected in the name of and on behalf of Cassa De-positi e Prestiti, by category:

The above amounts include interest accrued that has not been settled.

COMMITMENTS

Purchase commitments given by Poste Italiane SpA are summarised below:

Future commitments with respect to property leases (note 27.4), which may generally be broken off with six months’ no-tice, break down as follows according to due date:



Post office savings books 98,777,506 92,614,043Interest-bearing Postal Certificates 213,269,999 208,187,134

Cassa Depositi e Prestiti 137,519,514 129,013,927MEF 75,750,485 79,173,207

Total 312,047,505 300,801,177

35.1 - Postal savings deposits


Property, plant and equipment 48,136 55,954Investment property 14 52Intangible assets 37,604 46,751Goods and services 672,698 739,146Property leases 572,494 580,106

Total 1,330,946 1,422,009

35.2 - Purchase commitments


Lease rentals due:

Within 12 months 161,573 153,833Between 2 and 5 years after end of reporting date 350,870 357,490After 5 years 60,051 68,783

Total 572,494 580,106

35.3 - Property lease commitments



GUARANTEES

Personal guarantees issued by Poste Italiane SpA are as follows:

During the year Poste Italiane SpA issued a guarantee of €20,554 thousand in the interests of the newly-established sub-sidiary, PatentiViaPoste ScpA.

THIRD-PARTY ASSETS

Third-party assets include the value of goods belonging to the subsidiary PosteShop SpA, and the value of SIM cards andscratch cards belonging to the subsidiary PosteMobile SpA, sold through post offices.

ASSETS IN THE PROCESS OF ALLOCATION

At 31 December 2012 the Company had paid a total of €369,317 thousand in claims on behalf of the Ministry of Justice(€308,844 thousand at 31 December 2011), for which, under the agreement between Poste Italiane SpA and the MEF, ithas already been reimbursed by the Italian Treasury, whilst awaiting acknowledgement of the relevant account receivablefrom the Ministry of Justice.

LITIGATION

On 20 November 2012 the Court of Naples acquitted the Company of charges made by the Prosecutors’ Office in thatcity in 2008 for the alleged violation of certain provisions of Legislative Decree 231/2001.



Sureties and other guarantees issued

by Poste Italiane SpA in the interests of subsidiaries in favour of third parties 21,254 700by banks in the interests of Poste Italiane SpA in favour of third parties 89,153 73,046letters of patronage issued by Poste Italiane SpA in the interests of subsidiaries 4,218 2,041

Total 114,625 75,787

35.4 - Guarantees


Bonds subscribed by customers held at third-party banks(*) 16,449,062 20,283,396Other assets 23,606 25,506

Total 16,472,668 20,308,902

(*) In addition to 284 million in financial instruments other than bonds (about 222 million at 31 December 2011).

35.5 - Third-party assets


420

TAX DISPUTES

On 27 April 2012 the Regional Tax Office for Large Taxpayers (Direzione Regionale del Lazio - Settore Controlli, Con-tenzioso e Riscossione - Ufficio Grandi Contribuenti) began an audit of the Company’s IRES, IRAP, VAT and withholdingtaxes for the 2009 fiscal year. The audit forms part of the normal two-yearly controls of so-called “large taxpayers” re-quired by art. 42 of Law 388 of 23 December 2000. The audit is currently underway.


European CommissionActing on the European Commission’s Decision of 16 July 2008 regarding state aid, and in accordance with instructionsfrom the Company’s shareholder, on 15 January 2009 Poste Italiane SpA paid the amount due to the MEF. Poste ItalianeSpA’s appeal is pending before the European Community Court. In 2012 the debate phase ended. The Court of first in-stance of the European Communities is likely to hand down a decision in 2013.

Antitrust AuthorityThe investigation launched on 15 October 2009, in relation to deregulated postal services (in order “to determine whetherthe Company’s actions entailed an abuse of a dominant market position pursuant to art. 82 of the EC Treaty”, with specif-ic reference to the Posta Time product and participation in certain tenders), came to an end on 15 December 2011, withthe application of a fine of €39 million to be paid by Poste Italiane SpA. The Company immediately appealed before LazioRegional Administrative Court which, on 11 January 2012, rejected the application for interim relief and fixed a date for thehearing on the merits. On 4 April 2012, Lazio Regional Administrative Court upheld the appeal brought by Poste ItalianeSpA and cancelled the Authority’s fine. The court’s decision was filed on 26 June 2012. On 25 October 2012 the AntitrustAuthority appealed the decision of the Regional Administrative Court. The Company continues to act prudently with respectto the risks associated with this case in making provisions for risks and charges for the year ended 31 December 2012.On 14 March 2012 the Antitrust Authority launched an investigation of Poste Italiane SpA to establish if the Company hasabused its dominant position in the deregulated postal services market. The procedure aims to determine whether or notPoste Italiane provides individual customers with services for which it does not charge VAT, thereby benefitting from an un-justified competitive advantage in being able to offer services exempt from value added tax. In June 2012 Poste ItalianeSpA submitted its commitments to the Authority. On 4 February 2013 the Authority released the results of its investiga-tion, where it noted that the national VAT legislation is not in keeping with that of the EU which, as such, must be disap-plied while the Company may not be punished for its conduct prior to this decision. However, the Antitrust Authority con-tinues to hold that Poste Italiane SpA has committed an abuse of its dominant position in the market for postal services,applying discounts – due to the non-application of VAT – that its competitors could not match. Therefore, following the endof the proceedings, the Company must cease and desist from any such abuse. This date, which was originally scheduledfor 4 February 2013, has been extended until 30 April 2013.On 28 June 2012 the Antitrust Authority launched an investigation of the Company for alleged unfair commercial prac-tices in relation to advertisement of the Paccocelere Internazionale (International Express Parcel) service, requesting ad-ditional information. On 18 July 2012 Poste Italiane submitted a report in reply to the Authority’s requests. The investiga-tion, where Poste Italiane submitted briefs and commitments, ended on 19 December 2012. The minimum fine levied,amounting to €45 thousand, was paid on 6 February 2013. Finally, on 5 November 2012 the Antitrust Authority launched an investigation of the Company for unfair commercial prac-tices, requesting also information in relation to the advertisement of a 4% gross return on BancoPosta Più and BancoPos-ta Click accounts in December 2011 - March 2012. In particular, the Authority challenged the manner with which theterms and conditions of the accounts were advertised. The end of the proceedings is scheduled for 3 June 2013.




AGCom (ITALIAN COMMUNICATIONS AUTHORITY)

Law Decree 201 of 6 December 2011, converted into Law 214 of 22 December 2011, has transferred responsibility forregulation and supervision of the postal sector from the Ministry of Economic Development to the Italian CommunicationsAuthority (AGCom). In 2012 AGCom launched a number of investigations of the postal sector, some of which were com-pleted while others are pending. Of the latter, particularly important are those concerning the performance of the Univer-sal Service and compensation for the relevant expenses: analysis and application of the allocation mechanism and assess-ment of the net cost of the service for 2011, according to the criteria laid down by EU Directive 2008/6/EC; setting of theprice cap for services falling within the scope of the USO; and evaluation of the General Terms and Conditions of service.Moreover, the following are still pending: a public consultation related to draft regulations governing the settlement of dis-putes deriving from complaints in the postal sector, and the definition of standards designed to take account of the pre-vailing needs of tourists, so as to reschedule the opening hours of post offices in the summer months.

Bank of ItalyIn February 2012 the Bank of Italy began an inspection of the Company in accordance with art. 54 of Legislative Decree385/93, with respect to the activities of BancoPosta. The inspection ended on 24 August 2012 and the report was sub-mitted on 12 November 2012. On 14 December 2012 Poste Italiane SpA submitted its considerations to the regulator. During the year Poste Italiane SpA also underwent inspections by the “Department of external relations and general af-fairs” within the Bank of Italy’s Supervision Unit (“Servizio rapporti esterni e affari generali” dell’Area Vigilanza) to verifythe compliance of BancoPosta’s activities. The areas reviewed included, among others, anti-money-laundering, the trans-parency of contractual terms and conditions and fair trade issues. The outcome of the inspections was notified to the Com-pany in a letter dated 18 December 2012. The Company submitted its own considerations to the Bank of Italy, in reply tothis letter, on 13 March 2013.Lastly, on 18 April 2012 the Financial Reporting Unit (Unità di Informazione Finanziaria, or UIF) of the Bank of Italy began an in-spection of Poste Italiane SpA with reference to BancoPosta RFC, pursuant to article 47, paragraph 1 of Legislative Decree231/07 relating to the reporting of alleged money-laundering transactions. The inspection was completed in October 2012. Fol-lowing the inspection, the Unit identified six failures to report suspicious transactions, in addition to five such failures uncov-ered and notified by the Finance Police in 2012. The Company sent a defence brief to the MEF for every notification received.Overall, at 31 December 2012, there are twenty pending proceedings before the MEF, including fourteen for failures to reportsuspicious transactions and six in relation to violations of the rules governing limits on the use of cash and bearer instruments.

DISCLOSURE OF FEES PAID TO THE INDEPENDENT AUDITORS

In 2009 Poste Italiane SpA has voluntarily adopted guidelines governing the procedures for awarding contracts to the In-dependent Auditors or companies within its network. The guidelines also require the Company to provide a summary ofthe contracts awarded.The following table shows fees, broken down by type of service, payable to PricewaterhouseCoopers SpA and compa-nies within its network for 2012 and 2011.


Fees(*)

Item Entity providing the service 2012 2011

Audit PricewaterhouseCoopers SpA 1,050 1,050PricewaterhouseCoopers Network - -

Voluntary audits or audit-related services PricewaterhouseCoopers SpA 55 55PricewaterhouseCoopers Network 113 -

Services other than audit PricewaterhouseCoopers SpA - -PricewaterhouseCoopers Network 620 670

Total 1,838 1,775

(*) The above amounts do not include incidental expenses and charges.

35.6 - Disclosure of fees paid to Independent Auditors


422

The services other than audit mainly relate to a long-term contract, awarded by Poste Italiane SpA via a tender process,for monitoring the quality of the Priority Mail and Posta Target services.

36 - EVENTS AFTER THE END OF THE REPORTING PERIOD

Other events after the end of the reporting period are described in the above notes. No other material events have tak-en place after 31 December 2012.

37 - BANCOPOSTA’S SEPARATE REPORT

BancoPosta RFC’s Separate Report is an integral part of the financial statements and is attached below. BancoPosta RFC contributed net profit of €342,662 thousand to the Company’s profit for the year ended 31 December2012, totalling €722,245 thousand. BancoPosta RFC’s By-laws state that “In view of the absence of minority interests inBancoPosta RFC, on approval of Poste Italiane SpA’s financial statements, the General Meeting shall – at the recommen-dation of the Board of Directors – vote on the appropriation of the Company’s profit for the year, and in particular:• the share attributable to BancoPosta RFC, as indicated in the Separate Report, taking account of specific regulatory as-

pects and, above all, the need to comply with prudential capital adequacy requirements and thus,• the remaining share, including the portion of the above profit not appropriated to BancoPosta RFC.

Poste Italiane SpA’s statement of financial position includes a supplementary statement showing the separate componentsof the ring-fenced capital, prepared pursuant to art. 2, paragraph 17-undecies of Law 10, which converted Law Decree225 of 29 December 2010 into law. This states that “the assets and contractual rights included in BancoPosta’s ring-fenced capital shall be shown separately in the Company’s statement of financial position”. Intersegment relations betweenBancoPosta RFC and the Poste Italiane functions outside the ring-fence are disclosed in BancoPosta RFC’s Separate Re-port (prepared pursuant to article 17-undecies of the same legislation), where they are shown in detail and in full, togeth-er with the income and expenses that generated them, in accordance with the same accounting standards and, whereapplicable, in accordance with Bank of Italy Circular 262 - Banks’ Financial Statements: Layout and Presentation.The application of these regulations, whilst in compliance with the same accounting standards, better described in Part Aof the Separate Report, requires the use of a different basis of presentation for certain components of profit or loss andthe statement of financial position compared with the basis of presentation adopted for Poste Italiane SpA’s statutory fi-nancial statements, as described in note 2.1 above. In this regard, the following table shows a reconciliation of the components of BancoPosta RFC’s equity, as shown in theCompany’s statement of financial position and in the Separate Report.




Actuarial gains and losses on defined benefit plans, which in the Company’s financial statements are accounted for in re-tained earnings, are accounted for in the valuation reserves in the Separate Report (Item 130 of Liabilities).


Item in Separate Report 130 160 200Valuation Net profit

Item in supplementary statement reserves Reserves for period

Reserves 927,596 (72,404) 1,000,000 -Reserve for BancoPosta RFC 1,000,000 - 1,000,000 -Fair value reserve 52,816 52,816 - -Cash flow hedge reserve (125,220) (125,220) - -

Retained earnings 596,969 (2,021) 256,328 342,662Net profit for period 598,990 - 256,328 342,662Actuarial gains/(losses) on defined benefit plans (2,021) (2,021) - -

Total 1,524,565 (74,425) 1,256,328 342,662

37.1 - Reconcilation of separate equity



424-544 BANCOPOSTA SEPARATE REPORT 2012:Layout 1 23/09/13 14:52 Pagina 424

POSTE ITALIANE SPA - BANCOPOSTA RFCSEPARATE REPORT

FOR THE YEAR ENDED 31 DECEMBER 2012 STATEMENTS AND NOTES

ANNUALREPORT2012



426

FINANCIAL STATEMENTS 430

STATEMENT OF FINANCIAL POSITION 430

INCOME STATEMENT 431

STATEMENT OF COMPREHENSIVE INCOME 432

STATEMENT OF CHANGES IN EQUITY 433

STATEMENT OF CASH FLOWS 434

NOTES 436

PART A – ACCOUNTING POLICIES 436A.1 – General 436

Section 1 – Declaration of compliance with international financial reporting standards 436

Section 2 – Basis of preparation 436Section 3 – Events after the end of the reporting period 437Section 4 – Other information 437

A.2 – Part relating to principal financial statement items 4441 – Financial assets held for trading 4442 – Available-for-sale financial assets 4443 – Held-to-maturity financial assets 4454 – Loans and receivables 4466 – Hedges 446

11 – Deferred and current taxation 44712 – Provisions for risks and charges 44813 – Due to banks, Due to customers and Debt securities

in issue 44814 – Financial liabilities held for trading 44816 – Foreign currency transactions 44917 – Other information 449

A.3 – Information on fair value 452A.3.1 Transfers between portfolios 452A.3.2 Fair value hierarchy 452A.3.3 Information on “day one profit/loss” 452

CONTENTS



427

PART B – Information on the statement of financial position 453

ASSETS 453Section 1 – Cash and cash equivalents – Item 10 453Section 2 – Financial assets held for trading – Item 20 453Section 3 – Financial assets designated at fair value – Item 30 455Section 4 – Available-for-sale financial assets – Item 40 455Section 5 – Held-to-maturity financial assets – Item 50 457Section 6 – Due from banks – Item 60 459Section 7 – Due from customers – Item 70 459Section 8 – Hedging derivatives – Item 80 461Section 9 – Adjustments for changes in hedged financial

assets portfolio – Item 90 462Section 10 – Investments – Item 100 462Section 11 – Property, plant and equipment – Item 110 462Section 12 – Intangible assets – Item 120 462Section 13 – Tax assets and liabilities – Assets Item 130

and Liabilities Item 80 462Section 14 – Non-current assets (or disposal groups) held

for sale/discontinued operations and related liabilities– Assets Item 140 and Liabilities Item 90 466

Section 15 – Other assets – Item 150 466

LIABILITIES 468Section 1 – Due to banks – Item 10 468Section 2 – Due to customers – Item 20 469Section 3 – Debt securities in issue – Item 30 469Section 4 – Financial liabilities held for trading – Item 40 470Section 5 – Financial liabilities designated at fair value – Item 50 470Section 6 – Hedging derivatives – Item 60 471Section 7 – Adjustments for changes in hedged financial

liabilities portfolio – Item 70 471Section 8 – Tax liabilities – Item 80 471Section 9 – Liabilities included in non-current assets held

for sale and discontinued operations – Item 90 472Section 10 – Other liabilities – Item 100 472

BancoPosta RFC – Separate Report


428


Section 11 – Employee termination benefits – Item 110 473Section 12 – Provisions for risks and charges – Item 120 474Section 13 – Redeemable shares – Item 140 475Section 14 – Equity – Items 130, 150, 160, 170, 180, 190 and 200 475Other information 476

PART C – Information on the income statement 478Section 1 – Interest – Items 10 and 20 478Section 2 – Fees and commissions – Items 40 and 50 480Section 3 – Dividends and similar income – Item 70 482Section 4 – Profits/(Losses) on trading – Item 80 482Section 5 – Fair value adjustments in hedge accounting – Item 90 483Section 6 – Profits/(Losses) on disposal or repurchase – Item 100 483Section 7 – Profits/(Losses) on financial assets and liabilities

designated at fair value – Item 110 484Section 8 – Net losses/recoveries on impairment – Item 130 484Section 9 – Administrative expenses – Item 150 484Section 10 – Net provisions for risks and charges – Item 160 485Section 11 – Net losses/recoveries on property, plant

and equipment – Item 170 486Section 12 – Net losses/recoveries on intangible assets – Item 180 486Section 13 – Other operating income/(expenses) – Item 190 486Section 14 – Profits/(Losses) on investments – Item 210 486Section 15 – Profits/(Losses) on fair value valuation of property,

plant and equipment and intangible assets – Item 220 486

Section 16 – Impairment of goodwill – Item 230 486Section 17 – Profits/(Losses) on disposal of investments – Item 240 487Section 18 – Taxes on income from continuing operations

– Item 260 487Section 19 – Income/(Loss) after tax from discontinued

operations – Item 280 488Section 20 – Other information 488Section 21 – Earnings per share 488


429


PART D – Comprehensive income 489

PART E – Information on risks and related hedging policies 490Section 1 – Credit risk 491Section 2 – Market risk 500Section 3 – Liquidity risk 520Section 4 – Operational risks 528

PART F – Information on Equity 529Section 1 – BancoPosta RFC’s Equity 529Section 2 – Equity and capital ratios 530

PART G – Business combinations 531

PART H – Related party transactions 531

PART I – Share-based payment arrangements 536

PART L – Segment information 536


430


FINANCIAL STATEMENTSSTATEMENT OF FINANCIAL POSITIONat 31 December

Assets (€) 2012 2011

10. Cash and cash equivalents 3,180,533,120 2,496,880,72320. Financial assets held for trading - 12,843,57530. Financial assets designated at fair value - -40. Available-for-sale financial assets 22,455,968,111 13,464,686,84950. Held-to-maturity financial assets 14,048,067,568 14,363,892,60260. Due from banks 593,289,707 665,154,50570. Due from customers 9,821,176,550 9,486,296,13780. Hedging derivatives 12,156,652 73,569,95390. Adjustments for changes in hedged financial assets portfolio (+/-) - -100. Investments - -110. Property, plant and equipment - -120. Intangible assets - -

of which:- goodwill - -

130. Tax assets: 459,958,927 1,180,943,198a) current 18,200,233 -b) deferred 441,758,694 1,180,943,198

140. Non-current assets (or disposal groups) held for sale and discontinued operations - -150. Other assets 1,237,227,598 735,456,548

Total assets 51,808,378,233 42,479,724,090

Liabilities and equity (€) 2012 2011

10. Due to banks 3,483,754,328 2,371,706,58320. Due to customers 43,462,104,436 38,450,197,23630. Debt securities in issue - -40. Financial liabilities held for trading - 6,932,97050. Financial liabilities designated at fair value - -60. Hedging derivatives 816,115,812 616,949,45970. Adjustments for changes in hedged financial liabilities portfolio (+/-) - -80. Tax liabilities: 320,402,584 53,026,210

a) current 10,537,722 9,083,628b) deferred 309,864,862 43,942,582

90. Liabilities included in non-current assets held for sale and discontinued operations - -100. Other liabilities 1,900,576,872 1,590,096,646110. Employee termination benefits 18,847,975 15,408,226120. Provisions for risks and charges: 282,011,702 295,576,736

a) post-employment benefits - -b) other provisions 282,011,702 295,576,736

130. Valuation reserves (74,425,476) (2,176,497,613)140. Redeemable shares - -150. Equity instruments - -160. Reserves 1,256,327,637 1,000,000,000170. Share premium reserve - -180. Share capital - -190. Treasury shares (-) - -200. Profit/(Loss) for the year (+/-) 342,662,363 256,327,637

Total liabilities and equity 51,808,378,233 42,479,724,090


431Statement of financial position | Income statement


INCOME STATEMENT

For the period For the year ended 2 May 2011 to

Income/(Expense) (€) 31 December 2012 31 December 2011

10. Interest and similar income 1,782,746,789 1,142,083,84020. Interest and similar expense (281,742,836) (78,600,023)30. Net interest income 1,501,003,953 1,063,483,817

40. Fee and commission income 3,541,121,486 2,347,634,39950. Fee and commission expense (43,536,667) (26,430,348)60. Net fee and commission income 3,497,584,819 2,321,204,051

70. Dividends and similar income 70,658 52,61080. Profits/(Losses) on trading 103,647,662 7,836,72290. Fair value adjustments in hedge accounting (959,876) (653,598)100. Profits/(Losses) on disposal or repurchase of: 50,398,431 74,956,079

a) loans and advances - -b) available-for-sale financial assets 50,398,431 74,786,394c) held-to-maturity financial assets - 169,685d) financial liabilities - -

110. Profits/(Losses) on financial assets/liabilities designated at fair value - -120. Net interest and other banking income 5,151,745,647 3,466,879,681

130. Net losses/recoveries on impairment of: (1,173,611) 6,430,231a) loans and advances (1,173,611) 6,430,231b) available-for-sale financial assets - -c) held-to-maturity financial assets - -d) other financial transactions - -

140. Net income from banking activities 5,150,572,036 3,473,309,912

150. Administrative expenses: (4,584,883,880) (2,991,028,300)a) personnel expenses (80,420,209) (56,819,785)b) other administrative expenses (4,504,463,671) (2,934,208,515)

160. Net provisions for risks and charges (2,395,176) (12,390,689)170. Net losses/recoveries on property, plant and equipment - -180. Net losses/recoveries on intangible assets - -190. Other operating income/(expenses) (17,119,686) (12,886,702)200. Operating expenses (4,604,398,742) (3,016,305,691)

210. Profits/(Losses) on investments - -220. Profits/(Losses) on fair value valuation of property, plant and equipment and intangible assets - -230. Impairment of goodwill - -240. Profits/(Losses) on disposal of investments - -250. Income/(Loss) before tax from continuing operations 546,173,294 457,004,221

260. Taxes on income from continuing operations (203,510,931) (200,676,584)270. Income/(Loss) after tax from continuing operations 342,662,363 256,327,637

280. Income/(Loss) after tax from discontinued operations - -

290. Profit/(Loss) for the year 342,662,363 256,327,637


432


STATEMENT OF COMPREHENSIVE INCOME


Income/(Expense) (€) 31 December 2012 31 December 2011

10. Profit/(Loss) for the year 342,662,363 256,327,637

Other components of comprehensive income after taxes

20. Available-for-sale financial assets 2,043,871,193 (1,852,699,235)30. Property, plant and equipment - -40. Intangible assets - -50. Hedges of foreign investments - -60. Cash flow hedges 60,752,097 (91,112,056)70. Foreign exchange differences - -80. Non-current assets held for sale - -90. Actuarial profits/(losses) on defined benefit plans (2,551,153) 529,101100. Share of valuation reserve attributable to equity-accounted investments - -110. Total other components of comprehensive income after taxes 2,102,072,137 (1,943,282,190)

120. Comprehensive income (Items 10+110) 2,444,734,500 (1,686,954,553)


433Statement of comprehensive income | Statement of changes in equity


STATEMENT OF CHANGES IN EQUITY

At 31 December 2012Share capital Reserves

Share Profit/ordinary other premium retained Valuation Equity Treasury (Loss)

(€) shares shares reserve earnings other(*) reserves instruments shares for the year Equity

Closing balances at 31 December 2011 - - - - 1,000,000,000 (2,176,497,613) - - 256,327,637 (920,169,976)

Adjustments to opening balances - - - - - - - - - -

Opening balances at 1 January 2012 - - - - 1,000,000,000 (2,176,497,613) - - 256,327,637 (920,169,976)

Attribution of retained earnings

Reserves - - - 256,327,637 - - - - (256,327,637) -

Dividends and other attributions - - - - - - - - - -


Movements in reserves - - - - - - - - - -

Equity-related transactions - - - - - - - - - -

Issuance of new shares - - - - - - - - - -

Purchase of treasury shares - - - - - - - - - -

Payment of extraordinary dividends - - - - - - - - - -

Movements in equity instruments - - - - - - - - - -

Derivatives on own shares - - - - - - - - - -

Stock options - - - - - - - - - -

Comprehensive income for the year - - - - - 2,102,072,137 - - 342,662,363 2,444,734,500

Equity at 31 December 2012 - - - 256,327,637 1,000,000,000 (74,425,476) - - 342,662,363 1,524,564,524(*) BancoPosta RFC reserve.

At 31 December 2011Share capital Reserves

Share Profit/ordinary other premium retained Valuation Equity Treasury (Loss)

(€) shares shares reserve earnings other(*) reserves instruments shares for the year Equity

Opening balances at 2 May 2011 - - - - 1,000,000,000 (233,215,423) - - - 766,784,577

Attribution of retained earnings - - - - - - - - - -

Reserves - - - - - - - - - -

Dividends and other attributions - - - - - - - - - -

Movements during the period - - - - - - - - - -

Movements in reserves - - - - - - - - - -

Equity-related transactions - - - - - - - - - -

Issuance of new shares - - - - - - - - - -

Purchase of treasury shares - - - - - - - - - -

Payment of extraordinary dividends - - - - - - - - - -

Movements in equity instruments - - - - - - - - - -

Derivatives on own shares - - - - - - - - - -

Stock options - - - - - - - - - -

Comprehensive income for the period - - - - - (1,943,282,190) - - 256,327,637 (1,686,954,553)

Equity at 31 December 2011 - - - - 1,000,000,000 (2,176,497,613) - - 256,327,637 (920,169,976)(*) BancoPosta RFC reserve.


434


STATEMENT OF CASH FLOWS - Indirect method


(€) 31 December 2012 31 December 2011

A. OPERATING ACTIVITIES

1. Cash flow from operations 582,158,730 289,545,691

- profit/loss for the year (+/-) 342,662,363 256,327,637- gains/(losses) on financial assets held for trading

and on assets and liabilities designated at fair value (-/+) 55,512 (6,816,208)- gains/(losses) on hedging activities (-/+) 959,876 653,598- net losses/recoveries on impairment (+/-) 1,173,611 (6,430,231)- net losses/recoveries on property, plant and equipment (+/-) - -- net provisions and other expenses/(income) (+/-) 390,370,723 321,616,131- unpaid taxes and duties (+) 1,206,246 18,788,947- net losses/recoveries on disposal groups after tax (+/-) - -- other adjustments (+/-) (154,269,601) (294,594,183)

2. Cash flow from/(used for) financial assets (6,401,425,571) (415,259,719)

- financial assets held for trading - -- financial assets designated at fair value - -- available-for-sale financial assets (5,691,071,680) (234,846,123)- due from banks: on demand 78,875,173 (88,190,359)- due from banks: other (7,065,888) (375,710,490)- due from customers (336,054,024) 301,508,160- other assets (446,109,152) (18,020,907)

3. Cash flow from/(used for) financial liabilities 6,182,593,135 196,034,976

- due to banks: on demand 69,127,752 (29,406,696)- due to banks: other 1,042,919,993 1,648,630,400- due to customers 5,011,907,201 (1,479,249,546)- debt securities in issue - -- financial liabilities held for trading - -- financial liabilities designated at fair value - -- other liabilities 58,638,189 56,060,818

Net cash flow from/(used for) operating activities 363,326,294 70,320,948

B. INVESTING ACTIVITIES

1. Cash flow from 520,000,000 1,107,555,159

- disposal of investments - -- dividends received on investments - -- disposal of held-to-maturity financial assets 520,000,000 1,107,555,159- disposal of property, plant and equipment - -- disposal of intangible assets - -- disposal of business division - -

2. Cash flow used for (199,673,897) (705,405,251)

- acquisition of investments - -- acquisition of held-to-maturity financial assets (199,673,897) (705,405,251)- acquisition of property, plant and equipment - -- acquisition of intangible assets - -- acquisition of business division - -

Net cash flow from/(used for) investing activities 320,326,103 402,149,908

C. FINANCING ACTIVITIES

- issuance/purchase of own shares - -- issuance/purchase of equity instruments - -- dividends and other payments - -

Net cash flow from/(used for) financing activities - -

NET CASH FLOW GENERATED/(USED) DURING THE YEAR 683,652,397 472,470,856

KEY:(+) from(-) used for


435Statement of cash flows


RECONCILIATION


Item (€) 31 December 2012 31 December 2011

Cash and cash equivalents at beginning of the year 2,496,880,723 2,024,409,867Net cash flow generated/(used) during the year 683,652,397 472,470,856Cash and cash equivalents: foreign exchange effect - -

Cash and cash equivalents at end of the year 3,180,533,120 2,496,880,723


436


NOTES

PART A – ACCOUNTING POLICIES

A.1 – GENERAL

Section 1 – Declaration of compliance with international financial reporting standards

BancoPosta has presented separate financial statements since 31 December 2011. The statements are in compliance withthe International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”)and endorsed for application in the European Union by European Regulation (EC) 1606/2002 of 19 July 2002 as transposedinto Italian law by Legislative Decree 38 of 20 February 2005 regarding the introduction of IFRS into Italian legislation. Theterm “IFRS” means all International Financial Reporting Standards, all International Accounting Standards (“IAS”), and allinterpretations of the International Financial Reporting Interpretations Committee (“IFRIC”) previously known as the Stand-ing Interpretations Committee (“SIC”) endorsed for application in the European Union by EU Regulations issued prior to 27March 2013, the date on which the Board of Directors of Poste Italiane SpA approved the BancoPosta Separate Report.BancoPosta’s Separate Report is, where applicable, also in conformity with Bank of Italy Circular 262 of 22 December 2005- Banks’ Financial Statements: Layouts and Preparation, as amended.

Section 2 – Basis of preparation

This Separate Report relates to the year ended 31 December 2012. The functional currency is the euro. The Report con-sists of the statement of financial position, the income statement, the statement of comprehensive income, the state-ment of changes in equity, the statement of cash flows and the explanatory notes. The statement of financial position,income statement and statement of comprehensive income consists of numbered line items and lettered line sub-items.Nil balances have also been presented in the statement of financial position, income statement and statement of com-prehensive income for the sake of completeness. The statement of cash flows has been prepared using the indirectmethod1. All figures in the notes are stated in thousands of euro. Notes and account analysis have not been included fornil balances.Income statement comparatives refer to the period between 2 May 2011, the date of creation of BancoPosta RFC, and31 December 2011, the end of BancoPosta RFC’s first reporting period for the purposes of its Separate Report. Certainreclassifications have been made in the notes to assure consistency of comparatives with 2012 figures. The Separate Report forms an integral part of Poste Italiane SpA’s financial statements and has been prepared on a go-ing concern basis in that BancoPosta’s operations are certain to continue in the foreseeable future. BancoPosta’s account-ing policies, described in the Separate Report, are the same as those adopted by Poste Italiane SpA and are relevant toall of BancoPosta RFC’s operations.



437Notes

The unbundling of BancoPosta’s assets and liabilities from those of Poste Italiane SpA is only partly comparable to otherring-fenced capital solutions and in particular to the provisions of the Italian Civil Code in this respect. Indeed, BancoPos-ta is not expected to meet the requirements of arts. 2447-bis, et seq., of the Italian Civil Code or of other special purposeentities, in that it has not been established for a single specific business but rather, pursuant to Presidential Decree 144of 14 March 2001, for several types of financial activities to be regularly carried out for an unlimited period of time. Art.2, paragraphs 17-octies, et seq., of Legislative Decree 225 of 29 December 2010 does not impose the 10% limit on Ban-coPosta’s equity, waiving the provisions of Italian Civil Code unless otherwise expressly stated as applicable. Indeed, atthe date of approving this Separate Report, there were no similar cases in the market nor generally accepted practicesproviding specific guidance on BancoPosta’s particular circumstances for the interpretation and application of Bank of ItalyCircular 262 - Banks’ Financial Statements: Layouts and Preparation. The Separate Report has consequently been preparedby interpreting applicable legislation and relevant best practice. Any future revisions to guidance and interpretations willbe incorporated to the extent consistent with accounting standards and/or regulation as in force from time to time.

Section 3 – Events after the end of the reporting period

Events after the end of the reporting period have all been described in the notes and no other material events occurredsubsequent to 31 December 2012.

Section 4 – Other information

4.1 Separate accounts

The resolution approved by Poste Italiane SpA’s shareholder at the Extraordinary General Meeting of 14 April 2011 to cre-ate legally ring-fenced capital for BancoPosta (from now on: “BancoPosta RFC”) became effective on 2 May 2011. Theresulting capital is aimed at BancoPosta’s operations only, assuring the regular settlement of its obligations and servingas regulatory capital for the Bank of Italy. The same shareholder resolution approved BancoPosta RFC’s By-laws and es-tablished an initial reserve of €1 billion through attribution of Poste Italiane SpA’s retained earnings.

Nature of assets, contractual rights and authorisationsBancoPosta’s assets, contractual rights and authorisations pursuant to notarial deed were conferred on BancoPosta RFCexclusively by Poste Italiane SpA without third-party contributions. BancoPosta’s operations consist of those listed in Pres-idential Decree 144 of 14 March 2001, as amended2, namely:• the collection of savings from the public in accordance with art. 11, paragraph 1 of Legislative Decree 385/1993 of 1

September 1993 – Consolidated Banking Law (Testo Unico Bancario or” TUB”) and all related and consequent activities;• the collection of savings through postal securities and deposits;• payment services, including the issuance of electronic cards and other payment instruments pursuant to art. 1, paragraph

2, letter f) numbers 4) and 5), TUB;• foreign exchange brokerage services;• promotion and placement to the public of loans issued by approved banks and financial brokers;• investment and related services pursuant to art. 12, Presidential Decree 144/2001; • debt collection services;• professional gold trading, on own behalf or on behalf of third parties, in accordance with the requirements of Law 7 of

17 January 2000.


2. As revised on the issuance of Law Decree 179 of 18 October 2012 converted into law with amendments by Law 221 of 17 December 2012.


438


All of the assets and rights arising out of various contracts, agreements and legal transactions related to the above activ-ities have also been conferred on BancoPosta RFC3.

Cost and revenue allocationGiven the fact that Poste Italiane is a single legal entity, the Company’s general accounting system maintains its uniformcharacteristics and capabilities. In this context, the general principles governing administrative and accounting aspects ofBancoPosta RFC are as follows: • identification of transactions in Poste Italiane SpA’s general ledgers relating to BancoPosta’s ring-fenced operations which

are then extracted for recording in BancoPosta’s separate ledgers;• allocation to BancoPosta of all relevant revenue and costs. In particular the services rendered by the different functions


• settlement of all incoming and outgoing third party payments by the Poste Italiane SpA Finance function; • allocation of income taxes based on BancoPosta’s separate income statement after adjusting for deferred taxation; • reconciliation of BancoPosta’s separate books to Poste Italiane’s general ledger.

Separate General Operating Guidelines have been developed and approved by Poste Italiane SpA’s Board of Directorswhich, in implementation of BancoPosta RFC’s By-laws, identify the services provided by Poste Italiane SpA functions toBancoPosta and determine the manner in which they are remunerated. Costs are allocated to BancoPosta by transfer pric-ing as determined with reference to:• market prices for similar services, i.e., the free market comparable price method; or,• cost plus a mark-up, i.e., the cost plus method, when market prices are not available for the particular type of serv-

ices provided by Poste Italiane SpA. Costs are determined by unbundling total costs incurred with the application ofthe same process used for Universal Postal Service purposes in the related regulatory accounting records, which aresubject to independent audit. The mark-up is determined taking into account the market prices of BancoPosta’s prin-cipal services.

3. All assets, contractual rights and authorisations were conferred on BancoPosta as required to engage in following types of operations:a. Contracts for the collection of savings from the public (e.g., postal current accounts) and related services (e.g., issuance of postal cheques, pay-

ment of bills by payment slip, credit cards, collections and payments services, direct debits);b. Contracts for the provision of payment services including the issuance, management and sale of payment cards, including prepaid cards (e.g.,

“postamat”, “Postepay”), and money transfers (e.g., post office money orders); c. Investment services contracts (e.g., brokerage, distribution and investment advisory services) and related services (e.g., securities custody);d. Agreements with Cassa Depositi e Prestiti SpA in connection with collection of savings through postal securities and deposits;e. Agreements with approved banks and brokers for the promotion and lending to the public (e.g., mortgages, personal loans);f. Agreements with approved banks and brokers for acquiring and payment services;g. Agreements with approved brokers to promote and place financial instruments, bancassurrance and insurance products (e.g., share, bond and mu-

tual fund subscriptions, life and non-life insurance);h. Other agreements relating to BancoPosta services;i. Contracts and related legal arrangements with BancoPosta employees belonging to a separate cost centre;j. Contracts with suppliers to the BancoPosta costs centre and related legal arrangements;k. Shares and investments in companies, consortia, payment/credit card issuers or money transfer service companies;l. Euro zone government securities, held pursuant to art. 1, paragraph 1097 of Law 296 of 27 December 2006, and related valuation reserves;m. Accounts payable (e.g., postal current accounts) and receivable in connection with the above points;n. Intersegment accounts payable and receivable respectively to and from Poste Italiane;o. Deferred tax assets and liabilities relating to BancoPosta;p. Post office and bank account cash balances associated with BancoPosta business;q. Buffer Account at the Treasury, Ministry of the Economy and Finance;r. Cash deposits at the Treasury, Ministry of the Economy and Finance relating to Public Sector balances held in post offices;s. Cash and cash equivalent in connection with BancoPosta operations;t. Litigation relating to BancoPosta and associated settlements;u. Provisions in connection with BancoPosta RFC’s contractual and legal obligations.


439Notes

The services provided by Poste Italiane to BancoPosta are subdivided into three macro areas in accordance with theirnature:• commercial activities, represented by the sale of BancoPosta products and services to all customer segments;• support services, represented by CIO (Chief Information Office), real estate, call centre, postal services and financial serv-

ices in connection with BancoPosta’s cash management;• staff services, represented by the provision of coordination and management support services across all areas of

business.

Finally, the General Operating Guidelines provide for the management of operating losses; the Guidelines prescribe thatany operating losses be deducted from payments made to the relevant Poste Italiane function outside the ring-fence.The general policies and instructions contained in the General Operating Guidelines for transfer pricing are detailed in sep-arate Operating Instructions (or Internal Operating Guidelines), jointly developed by BancoPosta and other Poste ItalianeSpA functions. Operating Instructions have been developed for, among other things, service levels and transfer prices. Theybecame effective on approval of the General Operating Guidelines by Poste Italiane SpA’s Board of Directors. Transfer pricesare determined by the application of fixed rates plus a variable component used to reflect the achievement of qualitative/quan-titative and performance objectives. These prices are reviewed annually as part of the planning and budget process. The following table includes a summary of the Poste Italiane functions outside the ring-fence that engage in the trans-actions under discussion, reported by different macro-area of activity, with a brief indication of how transfer prices aredetermined.


Commercial

activities

Support services

Staff services

Function

Sales network


Real Estate

Finance

Postal Services

Call Centre



Security & Safety

Legal Affairs

External Relations

Purchasing

Internal Auditing

Allocation key

Fixed component: Cost + mark-up + price capVariable component in accordance with business targetsachieved and service level

Fixed component: Cost + mark-upVariable component determined with reference to themaintenance of operating performance

Determined with reference to floorspace, property appraisalsand maintenance costs

Cost + mark-up

Standard rate times number of items handled

Number and type of calls

Actual internal costs; external costs plus a mark-up


440

Finally, the interest paid on the intersegment accounts between BancoPosta RFC and the Poste Italiane functions outsidethe ring-fence used for settlements between the two entities was the average six month auction yield of BOT placed bythe MEF, which was the same rate paid by the MEF on the relevant Buffer Account, until 30 November 2011. Interestfrom 1 December 2011 was the rate paid by the European Central Bank on Main Refinancing Operations.The cost of the services rendered by Poste Italiane functions outside the ring-fence, and the revenue earned from the latterby BancoPosta, contribute to BancoPosta’s results. The relevant transactions, profit and loss and balance sheet amounts, gen-erated by these relationships are only recorded in BancoPosta’s Separate Report. In Poste Italiane SpA’s comprehensive ac-counts intersegment transactions are on the other hand eliminated, and are not presented. The accounting treatment adopt-ed is similar to that provided for by accounting standards regulating the preparation of consolidated financial statements.

ObligationsPoste Italiane SpA’s liability, pursuant to art. 2, paragraph 17-nonies of Law Decree 225 of 29 December 2010 convertedinto law by Law 10, to creditors of BancoPosta is limited to the ring-fenced capital, represented by the assets and con-tractual rights originally allocated or arisen after the separation. Poste Italiane’s liability is, however, unlimited with respectto claims arising from actions in tort relating to the management of BancoPosta or for transactions for which no indica-tion was made that the obligation was taken specifically by BancoPosta RFC. The By-laws approved at the ExtraordinaryGeneral Meeting of Poste Italiane SpA’s shareholder on 14 April 2011 provide that BancoPosta RFC’s equity shall be suf-ficient to support the risk inherent in its operations.

4.2 Accounting standards and interpretations effective from 1 January 2012 or soon thereafter

Accounting standards and interpretations effective from 1 January 2012

IFRS 7 - “Financial Instruments: Disclosures - Transfers of Financial Assets”, adopted by EU Regulation 1205/2011, wasapplicable from 1 January 2012. It requires the publication of increased information on transfers of financial assets. Thedisclosures required by this amendment are provided in “Part E - Information on risks and related hedging policies”. Amendments to IAS 1 - “Presentation of Financial Statements: Presentation of Other Comprehensive Income”, were en-dorsed for application in the European Union from 1 July 2012 through the publication of EU Regulation 475/2012, whichhas, however, not yet been transposed into Italian regulations through incorporation into Bank of Italy Circular 262 - Banks’Financial Statements: Layouts and Preparation. The current wording of the Circular already provides for the reporting of in-come statement items in two separate statements: the “Income statement” and the “Statement of comprehensive income”.“Part D - Comprehensive income” requires the disclosure of detailed gains and losses recognised in the statement of com-prehensive income, separately showing the tax effect and any amounts reclassified to the income statement.Finally, EU Regulation 1256/2012 of 29 December 2012 has adopted, among other things, the amendment to IFRS 7 - “Fi-nancial Instruments: Disclosures - Offsetting Financial Assets and Financial Liabilities”, retroactively abolishing section 13- Derecognition from 1 July 2011.


At the date of approval of this Separate Report, the IASB had issued the following accounting standards, interpretationsand amendments, which were endorsed by the European Union for application from 1 January 2013:• IAS 19 - “Employee benefits” amended by EU Regulation 475/2012;• IAS 12 -“Income Taxes - Deferred Tax: Recovery of Underlying Assets” amended by EU Regulation 1255/2012;• IFRS 1 - “First-time Adoption of International Financial Reporting Standards - Severe Hyperinflation and Removal of Fixed



ulation 183/2013.



441Notes

The following accounting standards, interpretations and amendments are, on the other hand, applicable from 1 January 2014:• IAS 27 - “Separate Financial Statements” adopted by EU Regulation 1254/2012;• IAS 28 - “Investments in Associates and Joint Ventures” adopted by EU Regulation 1254/2012;• IFRS 10 - “Consolidated Financial Statements” adopted by EU Regulation 1254/2012;• IFRS 11 - “Joint Arrangements” adopted by EU Regulation 1254/2012;• IFRS 12 - “Disclosure of Interests in Other Entities” adopted by EU Regulation 1254/2012;• IAS 32 - “Financial Instruments: Presentation - Offsetting Financial Assets and Financial Liabilities” adopted by EU Reg-

ulation 1256/2012.

The potential effect of the accounting standards, amendments and interpretations is currently being examined and assessed.Finally, at the date of approval of this Separate Report, the IASB has issued the following accounting standards, interpre-tations and amendments, which have yet to be endorsed by the European Union and which, in certain cases, are still atthe consultation stage. These include the following:• IFRS 9 - “Financial Instruments”, as part of the review of the existing IAS 39; • a number of Exposure Drafts, also as part of the review of the existing IAS 39, have been issued regarding Amortised

Cost and Impairment, Fair Value Option for Financial Liabilities and Hedge Accounting;• Exposure Draft “Improvements to IFRS” as part of the annual programme of general improvements and review of IFRS; • Exposure Draft “Transition Guidance” regarding the introduction of amendments to IFRS 10, IFRS 11 and IFRS 12;• Exposure Draft “Investment Companies”; • Exposure Draft “Measurement of Non-financial Liabilities” as part of the review of the existing IAS 37 regarding the recog-



of insurance contracts;• Exposure Draft “Leases” as part of the review of the existing IAS 17, regarding the accounting treatment of leases;• Interpretation on “Levies Charged by Public Authorities on Entities that Operate in a Specific market”;• Interpretation on ”Put Options Written on Non-Controlling Interests”;• Exposure Draft “IAS 28 - Equity Method: Share of Other Net Asset Changes”;• Exposure Draft “IAS 16 - Property, Plant and Equipment” and “IAS 38 - Intangible Assets - Clarification of Acceptable


tures: Sale of Contribution of Assets between an Investor and its Associate or Joint Venture”;• Exposure Draft “IFRS 11 - Joint Arrangements: Acquisition of an Interest in a Joint Operation”.• Exposure Draft “IAS 36 - Recoverable Amount Disclosures for Non-Financial Assets”.

The potential impact of the accounting standards, amendments and interpretations due to come into effect is currentlybeing examined and assessed.



442

4.3 Supervisory authorities

Antitrust AuthorityOn 5 November 2012 the Antitrust Authority launched an investigation of Poste Italiane SpA in relation to alleged unfaircommercial practices by BancoPosta RFC. The Authority also requested information in relation to the advertisement of a4% gross return on BancoPosta Più and BancoPosta Click accounts in December 2011 - March 2012. In particular, the Au-thority challenged the manner with which the terms and conditions of the accounts were advertised. The end of the pro-ceedings is scheduled for 3 June 2013.

Bank of ItalyFinally, as part of its routine supervisory activities, on 17 February 2012 the Bank of Italy began an inspection of Banco-Posta RFC in accordance with art. 54 of Legislative Decree 385/93. The inspection ended on 24 August 2012 and the re-port was submitted on 12 November 2012. On 14 December 2012 BancoPosta RFC submitted its considerations to theregulator.During the year Poste Italiane SpA also underwent inspections by the “Department of external relations and general af-fairs” within the Bank of Italy’s Supervision Unit (“Servizio rapporti esterni e affari generali” dell’Area Vigilanza) to verifythe compliance of BancoPosta RFC’s activities. The areas reviewed included, among others, anti-money-laundering, thetransparency of contractual terms and conditions and fair trade issues. The outcome of the inspections was notified tothe Company in a letter dated 18 December 2012. BancoPosta RFC submitted its own considerations to the Bank of Italy,in reply to this letter, on 13 March 2013.Lastly, on 18 April 2012 the Financial Reporting Unit (Unità di Informazione Finanziaria, or UIF) of the Bank of Italy beganan inspection pursuant to article 47, paragraph 1 of Legislative Decree 231/07, relating to the reporting of alleged money-laundering transactions. The inspection was completed in October 2012. Following the inspection, the Unit identified sixfailures to report suspicious transactions, in addition to five such failures uncovered and notified by the Finance Police in2012. BancoPosta RFC sent a defence brief to the MEF for every notification received. Overall, at 31 December 2012,there are twenty pending proceedings before the MEF, including fourteen for failures to report suspicious transactions andsix in relation to violations of the rules governing limits on the use of cash and bearer instruments.

4.4 Reputational risk

BancoPosta RFC’s business is by its nature exposed to elements of reputational risk, associated mainly with the place-ment of investment products issued by third-party credit institutions, such as real estate mutual funds and index-linkedbonds, and/or insurance policies issued by the subsidiary Poste Vita SpA.In this respect, in July 2008, in accordance with the Markets in Financial Instruments Directive by the EU (Directive2004/39/EC, “MiFID”), Poste Italiane SpA has adopted the “consulting service” model.As mentioned below in Part E of these notes, the crisis of recent years has had profound effects on the performance ofall the financial instruments on the market, above all on the value of Italian government securities, which account for allof BancoPosta’s investments, as well as the performance of the real estate market and the products related to it. Eventhough Poste Italiane SpA has developed over time prudential policies in the customers’ best interests, entailing the se-lection of domestic and foreign issuers solely with investment grade ratings, the situation has prompted even closer scruti-ny, at Company and Group level, so as to ensure full awareness of the performance of the products placed and the risksfor customers.



443Notes

4.5 Supplementary statement of financial position showing intersegment amounts


of which of whichAssets (€) At 31 December 2012 intersegment At 31 December 2011 intersegment

10. Cash and cash equivalents 3,180,533,120 - 2,496,880,723 -20. Financial assets held for trading - - 12,843,575 -30. Financial assets designated at fair value - - - -40. Available-for-sale financial assets 22,455,968,111 - 13,464,686,849 -50. Held-to-maturity financial assets 14,048,067,568 - 14,363,892,602 -60. Due from banks 593,289,707 - 665,154,505 -70. Due from customers 9,821,176,550 246,430,909 9,486,296,137 110,649,88580. Hedging derivatives 12,156,652 - 73,569,953 -90. Adjustments for changes in hedged

financial assets portfolio (+/-) - - - -100. Investments - - - -110. Property, plant and equipment - - - -120. Intangible assets - - - -

of which: - - -- goodwill - - - -

130. Tax assets: 459,958,927 - 1,180,943,198 -a) current 18,200,233 - - -b) deferred 441,758,694 - 1,180,943,198 -

140. Non-current assets (or disposal groups) held for sale and discontinued operations - - - -

150. Other assets 1,237,227,598 - 735,456,548 -

A Total assets 51,808,378,233 246,430,909 42,479,724,090 110,649,885

of which of whichLiabilities and equity (€) At 31 December 2012 intersegment At 31 December 2011 intersegment

10. Due to banks 3,483,754,328 - 2,371,706,583 -20. Due to customers 43,462,104,436 119,445,875 38,450,197,236 256,743,61930. Debt securities in issue - - - -40. Financial liabilities held for trading - - 6,932,970 -50. Financial liabilities designated at fair value - - - -60. Hedging derivatives 816,115,812 - 616,949,459 -70. Adjustments for changes in hedged

financial liabilities portfolio (+/-) - - - -80. Tax liabilities: 320,402,584 - 53,026,210 -

a) current 10,537,722 - 9,083,628 -b) deferred 309,864,862 - 43,942,582 -

90. Liabilities included in non-current assetsheld for sale and discontinued operations - - - -

100. Other liabilities 1,900,576,872 389,714,527 1,590,096,646 308,889,514110. Employee termination benefits 18,847,975 - 15,408,226 -120. Provisions for risks and charges: 282,011,702 - 295,576,736 -

a) post-employment benefits - - - -b) other provisions 282,011,702 - 295,576,736 -

130. Valuation reserves (74,425,476) - (2,176,497,613) -140. Redeemable shares - - - -150. Equity instruments - - - -160. Reserves 1,256,327,637 - 1,000,000,000 -170. Share premium reserve - - - -180. Share capital - - - -190. Treasury shares (-) - - - -200. Profit/(Loss) for the year (+/-) 342,662,363 - 256,327,637 -B Total liabilities and equity 51,808,378,233 509,160,402 42,479,724,090 565,633,133

A-B Net intersegment amounts (262,729,493) (454,983,248)


444

A.2 – PART RELATING TO PRINCIPAL FINANCIAL STATEMENT ITEMS

The following notes have been numbered in accordance with instructions contained in Bank of Italy Circular 262/2005. Omit-ted numbers denote information not of relevance to the Separate Report.

1 – Financial assets held for trading

a) recognition

Financial assets held for trading are initially recognised on the settlement date for debt and equity securities, whereas, forderivative contracts, on the subscription date. Financial assets are initially recognised at fair value which is generally theprice paid. Any movements in fair value occurring between the trade and settlement dates are recognised in the Sepa-rate Report.

b) classification

This category includes debt and equity instruments acquired primarily to obtain a short-term profit as the result of move-ments in their prices and the positive value of derivative contracts unless designated as hedging instruments.

c) measurement and recognition of gains and losses

Financial assets held for trading are recognised at fair value with any movements in fair value recognised in profit or loss,in line item 80 - Profits/(Losses) on trading. Derivatives are accounted for either as assets or liabilities depending onwhether their fair value is positive or negative.

d) derecognition

Financial assets are derecognised when the contractual rights to the cash flows from those financial assets lapse or whenthe financial asset is sold and all risks and rewards relating to the financial asset are substantially transferred.

2 – Available-for-sale financial assets

a) recognition

Available-for-sale financial assets are initially recognised on the settlement date at fair value which is generally the pricepaid. Any movements in fair value occurring between the trade and settlement dates are recognised in the Separate Re-port. If, exceptionally, recognition is the result of the reclassification of held-to-maturity assets, recognition is at fair valueat the time of the reclassification. Any difference in the initial amount at which debt securities are recognised and the amountof repayments is amortised over the term of the security.

b) classification

Available-for-sale financial assets are non-derivative financial instruments specifically allocated to this category or whichcannot be classified into any other category described in paragraphs 1, 3 and 4.

c) recognition and measurement

Available-for-sale financial assets are recognised at fair value through equity. Gains and losses are only recognised inprofit or loss when the assets are actually sold, extinguished or when it is determined that cumulative losses, previ-ously recognised in equity, will not be recovered in the future. If, only for debt securities, fair value subsequently in-creases as a result of an occurrence subsequent to the recognition of an impairment in profit or loss, fair value is re-



445Notes


instated, also through profit or loss. Income arising on debt securities through the application of the amortised cost method4

is recognised in profit or loss similar to the accounting treatment of foreign exchange gains and losses whereas for-eign exchange gains and losses on available-for-sale equity instruments are recognised in a separate equity reserve.

d) derecognition

Available-for-sale financial assets are derecognised when the contractual rights to the cash flows of those financial assetslapse or on the disposal of the financial asset and all risks and rewards relating to the financial asset are substantially trans-ferred. Any securities received as part of a transaction entailing subsequent re-sale and the delivery of securities as partof a transaction entailing their subsequent repurchase are not either recognised or derecognised.

3 – Held-to-maturity financial assets

a) recognition

Held-to-maturity financial assets are initially recognised on the settlement date. They are initially recognised at fair valuewhich is generally the price paid. When recognition in this category arises in connection with the reclassification of avail-able-for-sale financial assets, the fair value of the asset at the date of reclassification is deemed to be the asset’s amor-tised cost.

b) classification

Held-to-maturity financial assets are non-derivative financial instruments with payments that are fixed or can be determinedand with fixed maturities which BancoPosta RFC has the intention and ability to hold until maturity.

c) measurement and recognition of gains and losses

Held-to-maturity financial assets are measured at amortised cost using the effective interest method adjusted for any im-pairments. Any gains or losses are recognised in profit or loss in line item 10 - Interest and similar income. In the eventthat there is objective evidence of an impairment, the impairment loss recognised is the amount that would equate thecarrying amount to the present value of the projected cash flows. Any impairment loss is then recognised in profit or loss.If, subsequently, the reasons giving rise to the impairment cease to exist, the impairments are reversed to reinstate theamortised cost that would have been the carrying amount if there had been no impairment.

d) derecognition

Held-to-maturity financial assets are derecognised when the contractual rights to the cash flows of those financial assetslapse or on the disposal of the financial asset and all risks and rewards relating to the financial asset are substantially trans-ferred. Any securities received as part of a transaction entailing subsequent re-sale and the delivery of securities as partof a transaction entailing their subsequent repurchase are not either recognised or derecognised.

4. The amortised cost of a financial asset or liability is the amount recognised initially, less principal repayments and plus or minus accumulated amortisa-tion, using the effective interest method, of the difference between the initial amount and the maturity amount, after reductions for impairment and in-solvency. The effective interest rate is the rate that exactly discounts contractual (or expected) future cash payments or receipts over the expected lifeof the asset or liability to its initial carrying amount. Calculation of amortised cost must also include external costs and income directly attributable tothe asset or liability on initial recognition.


446


4 – Loans and receivables

a) classification and recognition

Loans and advances are non-derivative, unlisted financial instruments largely consisting of deposits at the MEF, which areexpected to generate income of fixed amounts or which can be determined. Receivables relate to operations and are tradein nature. Loans and advances are recognised on settlement whereas receivables are recognised on the relevant invoicedate.

b) measurement and recognition of gains and losses

Receivables, loans and advances are carried at amortised cost determined using the effective interest method adjustedfor any impairment. Impairments are recognised as described in the note on held-to-maturity financial assets.

c) derecognition

Receivables, loans and advances are derecognised when the contractual rights to the cash flows of those financial assetslapse or on disposal of the financial asset and all risks and rewards relating to the financial asset are substantially trans-ferred.

6 – Hedges…………………………a) classification and recognition

Derivative hedges are initially recognised on conclusion of the relevant contract. There are two types of hedge:• fair value hedges reduce or eliminate exposure to risk that could potentially cause movements in the fair value of a recog-

nised balance sheet item;• cash flow hedges reduce or eliminate exposures to fluctuations in future cash flows attributable to specific risks asso-

ciated with recognised balance sheet items.


Derivative instruments are recognised on the contract date at fair value and, unless qualifying for hedge accounting, anysubsequent movements in fair value are separately recognised in profit or loss. If, on the other hand, they qualify forhedge accounting, any subsequent movements in fair value are recognised in accordance with the accounting treatmentdescribed below. The relationship between the hedged exposure together with the risk management objective, hedgingstrategy and methods for determining effectiveness are documented for each derivative financial instrument qualifying forhedge accounting. The verification of a hedge’s effectiveness is made on the acquisition of the derivative instruments aswell as during their term. • Fair value hedgesMovements in the fair value of fair value hedges of recognised assets and liabilities or off-balance sheet irrevocable com-mitments5 are recognised in profit or loss together with the movements in carrying amount of the hedged asset, liabilityor the off-balance sheet irrevocable commitment. If the hedge is not highly effective or variations between the hedgedasset or liability and the hedge are not fully offset, the ineffective portion is a loss or gain which is separately recognisedin line item 90 - Fair value adjustments in hedge accounting.



447Notes


• Cash flow hedgesMovements, subsequent to initial recognition, in the fair value of the derivative instrument serving as a cash flow hedge6

are, for only the effective portion, recognised in a separate equity reserve (Cash flow hedge reserve). A hedging transac-tion is generally considered highly effective if, both at inception of the hedge and on an ongoing basis, movements in theexpected future cash flows of the hedged item are substantially offset by movements in the fair value of the hedging in-strument. Amounts accumulated in equity are reclassified to profit or loss in the periods when the hedged item will af-fect profit or loss.

In the case of hedges associated with a highly probable forecast transaction (such as the forward purchase of fixed in-come debt securities), the reserve is reclassified to profit or loss in the period or in the periods in which the asset or lia-bility, subsequently accounted for and connected to the above transaction, will affect profit or loss (as, for example, anadjustment to the return on the security).

Movements in the fair value of the ineffective portion of hedges are immediately recognised in profit or loss for the rele-vant year in line item 90 - Fair value adjustments in hedge accounting. If, during the term of a derivative, the realisationof the originally projected cash flows is no longer considered to be highly probable, the portion of the cash flow reserveattributable to that instrument is immediately taken to profit or loss in line item 80 – Profits/(Losses) on trading, for therelevant year. Inversely, if the derivative is sold or no longer qualifies as an effective hedge, the accumulated balance onthe cash flow hedge reserve is taken to profit or loss in the manner described on the disposal of the derivative or fromthe date it ceased to qualify for hedge accounting.

11 – Deferred and current taxation

Current income tax expense (IRES and IRAP) is based on the best estimate of taxable profit for the period and the relat-ed regulations, applying the rates in force. The impact of the reforms recently introduced by Law Decree 201 of 6 De-cember 2011, which permit companies, from 2012, to deduct IRAP paid on personnel expenses in full from the IRES taxbase, and to apply for a refund of the IRES overpaid in previous years, has been assessed on a prudent basis, taking in-to account the absence of consistent interpretations and specific best practice. Deferred tax assets and liabilities are cal-culated on all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts, us-ing tax rates that are expected to apply when the related deferred tax assets are realised or the deferred tax liabilities aresettled. Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be availableagainst which the temporary differences can be utilised.Current and deferred taxes are recognised in profit or loss, with the exception of taxes charged or credited directly to eq-uity, in which case the tax effect is recognised directly in equity.BancoPosta RFC is not a separate legal person and is not either directly or indirectly assessable to taxes. BancoPosta’sshare of taxes on Poste Italiane SpA’s overall income is charged to BancoPosta RFC based on the profit or loss present-ed in this Separate Report adjusted for deferred taxation. The adjustments include:• for IRES, the computation takes all permanent and temporary changes in BancoPosta’s operations into account. Any items

not directly relating to BancoPosta are included in the Poste Italiane computation;• for IRAP, the computation is made in the same way, except that taxes relating to net and gross employment costs are

allocated to BancoPosta RFC using the standard unbundling techniques for the regulatory books of the mandatory Uni-versal Postal Service, as examined by Poste Italiane SpA’s independent auditors as part of the statutory audit.



448

Tax assets and liabilities presented in the Separate Report will be settled directly with the Poste Italiane functions outsidethe ring-fence through the intercompany account.

12 – Provisions for risks and charges

Provisions for risks and charges are recorded to cover losses that are either probable or certain to be incurred, for which,however, there is an uncertainty as to the amount or as to the date on which they will occur. Provisions for risks and chargesare made when the entity has a present (legal or constructive) obligation as a result of a past event, and it is probable thatan outflow of resources will be required to settle the obligation. Provisions are measured on the basis of management’sbest estimate of the use of resources required to settle the obligation. The value of the liability is discounted at a rate thatreflects current market values and takes into account the risks specific to the liability. In rare cases, where disclosure ofsome or all of the information regarding the risks in question can be expected to prejudice seriously BancoPosta RFC’sposition in a dispute or in ongoing negotiations with third parties, BancoPosta RFC exercises the option granted by therelevant accounting standards to provide limited disclosure.

13 – Due to banks, Due to customers and Debt securities in issue


BancoPosta RFC has no treasury shares in portfolio. Due to banks and Due to customers consist of funding provided bycustomers and obtained from the interbank market. These financial liabilities are recognised at fair value on the date ofreceipt of the funds. Fair value is normally the amount received.


Due to banks and Due to customers are measured at amortised cost employing the effective interest method. The carry-ing amounts of payables are restated in the event of a change in projected cash flows which can be reliably estimated. Therestated carrying amount is the present value of projected cash flows discounted at the original internal rate of return.

c) derecognition

Financial liabilities are derecognised when repaid or in the event that BancoPosta RFC transfers all liabilities and chargesassociated with the relevant instrument.

14 – Financial liabilities held for trading


Financial liabilities held for trading consist either of derivatives which do not qualify for classification as hedging instrumentsin accordance with accounting standards or originally obtained as a hedge which was subsequently discontinued. Finan-cial liabilities held for trading are recognised on the derivative contract date.

b) measurement

Financial liabilities held for trading are carried at fair value though profit or loss. Derivatives are accounted for either as as-sets or liabilities depending on whether their fair value is positive or negative.

c) derecognition

Financial liabilities held for trading are derecognised on the cessation of rights to the cash flows associated with the li-ability.



449Notes

d) recognition of gains and losses

Gains and losses arising from movements in the fair value of financial liabilities held for trading are recognised in line item80 in the income statement - Profits/(Losses) on trading.

16 – Foreign currency transactions

a) recognition

Foreign currency transactions are initially recognised in the functional currency by translating the foreign currency amountat the transaction date spot rate.

b) classification, measurement, derecognition and recognition of gains and losses

Foreign currency items are translated at each reporting date as shown below: • monetary items at closing exchange rates; • non-monetary items are recognised at their historical cost translated at the transaction date spot rate; • non-monetary items designated at fair value at closing exchange rates.

Foreign exchange differences realised on settlement or translation differences arising from the use of exchange rates oth-er than the rate used to translate the item on initial recognition are recognised in profit or loss in line item 80 - Profits/(Loss-es) on trading.

17 – Other information

Revenue recognition

Revenue is recognised at the fair value of the consideration received, net of rebates and discounts, and in accordancewith the accruals basis of accounting. Specifically:• interest is evenly accrued over time at the contractual rate of interest or, for items carried at amortised cost, the effec-

tive interest rate;• dividends are recognised when the right to receive payment is established, which generally corresponds with approval

of the distribution by the shareholders of the investee company; • service fee income is recognised in accordance with the underlying contracts in the period in which the services are

rendered. Fees, less associated costs, are recognised on a percentage of completion basis to the extent that thereis reasonable certainty that they will be paid. Fees on services provided on behalf of or to the Government are recog-nised at the amount actually payable pursuant to statute or contract and are at all times consistent with Public Fi-nance requirements.

Fair value of financial instruments

The fair value of financial instruments listed on active markets is determined as the closing price quoted on the date ofmeasurement. The fair value of financial instruments that are not traded on an active market is based on prices quotedby external dealers, or on internal valuation techniques that result in an estimate of what the transaction price would havebeen on the measurement date in an arm’s length exchange motivated by normal business considerations. The Compa-ny uses valuation models based primarily on financial variables taken from the market, taking account, where possible, ofprices in recent transactions and quoted market prices for substantially similar instruments, and of any related credit risk.Financial assets held by BancoPosta RFC, for which it is not possible to reliably determine fair value as explained above,are few in number and are measured at cost adjusted for impairment.



450


Related parties

Related parties within the Poste Italiane Group are the Poste Italiane functions outside the ring-fence and Poste ItalianeSpA’s direct and indirect subsidiaries and associates. Related parties external to the Group regard the MEF and entitiescontrolled by the MEF as well as Poste Italiane SpA’s key management personnel. The State and Public Sector entitiesother than the MEF are not classified as related parties. Related party transactions do not include those deriving from fi-nancial assets and liabilities represented by instruments traded on organised markets.

Impairment/Recoveries of loans and receivables

BancoPosta RFC is prohibited by Presidential Decree 144 of 14 March 2001 from making loans to customers. Impairmentsof receivables and their reversal, consequently, relate exclusively to unpaid trade receivables. Impairments and recoveriesare made with reference to assessments of credit risk based on past experience with analogous receivables, analysis ofpast due and current items, payment history, losses and payments and current and forecast market trends. Given the un-predictability of the method and timing of the settlement of accounts receivables by the government and the Public Sec-tor, including the MEF, and notwithstanding the legal enforceability of BancoPosta RFC’s claims, provisions for doubtfuldebts are the best measure of impairment or legislation restricting government spending.

Employee benefits

Post-employment benefits are of two types: defined contribution plans and defined benefit plans. Under defined contribu-tion plans the contributions payable are recognised in profit or loss when incurred, measured at the payable amount. Un-der defined benefit plans, given that the benefit to be paid can only be quantified after the termination of employment, therelated impact on profit or loss and the statement of financial position is recognised on the basis of actuarial calculations.

Post-employment benefits: defined benefit plans

Defined benefit plans include employee termination benefits payable to employees in accordance with article 2120 of theItalian Civil Code, Benefits vesting up to 31 December 20067, which are covered by the reform of supplementary pensionprovision, must, from 1 January 2007, be paid into a supplementary pension fund or into a Treasury Fund set up by INPS.A company’s liabilities deriving from defined benefit plans thus only regard provisions made up to 31 December 2006.The amount to be paid upon termination of employment (TFR) in the future is projected and discounted using the project-ed unit credit method to account for the time value of money prior to the liability being settled. The liability recognised inthe Separate Report is based on calculations performed by independent actuaries. The calculation takes account of termi-nation benefits accrued for the period of service to date and is based on actuarial assumptions. These primarily regard theuse of interest rates, with a maturity consistent with the expected maturity for the liability, and employee turnover. Dueto the fact that BancoPosta RFC has no obligation with respect to employee termination benefits vesting subsequent to31 December 2006, future salary development is irrelevant. Actuarial gains and losses at each reporting date arising fromthe difference between the carrying amount of the liability and the present value of BancoPosta RFC’s obligations are recog-nised directly in equity.

Post-employment benefits: defined contribution plans

The benefits payable to staff on termination of employment are recognised as liabilities when BancoPosta RFC is demon-strably committed to terminating the employment of an employee or group of employees before the normal retirementdate, or to offer termination benefits to the employee or group of employees to encourage voluntary redundancy. The abovebenefits are recognised immediately in personnel expenses given that they are not capable of generating future econom-ic benefits for BancoPosta RFC.

7 Where, following entry into effect of the new legislation, the employee has not exercised any option regarding the investment of vested staff termina-tion benefits, the Company has remained liable to pay the benefits until 30 June 2007, or until the date, between 1 January 2007 and 30 June 2007,on which the employee exercised a specific option. Where no option was exercised, from 1 July 2007 vested staff termination benefits have been paidinto a supplementary pension fund.


451Notes

Classification of costs for services provided by Poste Italiane SpA

Service costs charged by Poste Italiane functions outside the ring-fence, which include a portion of the fees paid includ-ed in the transfer prices charged in accordance with the operating guidelines for Poste Italiane’s commercial network, arenormally recognised in line item 150 b) - Other administrative expenses.

Use of estimates

Preparation of the Separate Report requires management to apply accounting standards and methods that are at timesbased on complex judgements and estimates, linked to historical experience, and assumptions that are considered rea-sonable and realistic under the related circumstances. Use of these estimates and assumptions influences the amountsreported in the financial statements, with reference to the statement of financial position, the income statement, thestatement of comprehensive income and the statement of cash flows, as well as the notes. The estimates and assump-tions are periodically reviewed and the impact of any changes reflected in the financial statements for the period in whichthe estimated is revised, if the revision only influences the current period, or also in future periods if the revision influ-ences the current and future periods.This section provides a description of accounting treatments that, more than others, require the use of subjective esti-mates and for which a change in the conditions underlying the assumptions used could have a material impact on Ban-coPosta RFC’s Separate Report.

• Deferred tax assets

The recognition of deferred tax assets is based on the expectation of taxable income in future years. Assessments of ex-pected taxable income depend on factors which may change over time, impacting on the valuation of the deferred tax as-sets in the Separate Report.

• Fair value of unquoted financial instruments

The fair value of financial instruments that are not traded on an active market is based on prices quoted by external deal-ers or on internal valuation techniques which estimate the transaction price on the measurement date in an arm’s lengthexchange motivated by normal business considerations. The valuation models are primarily based on market variables, con-sidering, where possible, the prices in recent transactions and quoted market prices for substantially similar instruments,and any related credit risk.



452

A.3 – INFORMATION ON FAIR VALUE

A.3.1 Transfers between portfolios

There were no transfers between portfolios.

A.3.2 Fair value hierarchy

A.3.3 Information on “day one profit/loss”

Not applicable.


A.3.2.1 Accounting portfolios by fair value level

At 31 December 2012 At 31 December 2011Financial assets/(liabilities) at fair value Level 1 Level 2 Level 3 Level 1 Level 2 Level 3

1. Financial assets held for trading - - - - 12,844 -2. Financial assets designated at fair value - - - - - -3. Available-for-sale financial assets 22,426,616 29,235 117 13,442,018 22,552 1174. Hedging derivatives - 12,157 - - 73,570 -

Total 22,426,616 41,392 117 13,442,018 108,966 117

1. Financial liabilities held for trading - - - - 6,933 -2. Financial liabilities designated at fair value - - - - - -3. Hedging derivatives - 816,116 - - 616,949 -

Total - 816,116 - - 623,882 -

Financial assets

Held- Designated at Available- for-trading fair value for-sale Hedging

1. Opening balance - - 117 -

2. Increases - - - -

2.1 Purchases - - - -2.2 Profit recognition: - - - -

2.2.1 Profit or loss - - - -- of which gains - - - -

2.2.2 Equity - - - -2.3 Transfers from other levels - - - -2.4 Other increases - - - -

3. Decreases - - - -

3.1 Disposals - - - -3.2 Repayments - - - -3.3 Impairment recognition: - - - -

3.3.1 Profit or loss - - - -- of which losses - - - -

3.3.2 Equity - - - -3.4 Transfers to other levels - - - -3.5 Other decreases - - - -

4. Closing balance - - 117 -

A.3.2.2 Increase/(Decrease) for the year in financial assets measured at fair value (Level 3)


453Notes

PART B – INFORMATION ON THE STATEMENT OF FINANCIAL POSITION

ASSETS…………………..

Section 1 – Cash and cash equivalents – Item 10

The sub-item “Cash” includes €2,479,552 thousand (€2,283,782 thousand at 31 December 2011) in cash at post officecounters and companies that provide cash transportation services, consisting of cash deposits on postal current accounts,postal savings products (interest-bearing postal certificates and post office savings books) or advances obtained from theItalian Treasury to fund post office operations. This cash may only be used in settlement of these obligations. Cash also includes banknotes totalling €7,711 thousand (€7,882 thousand at 31 December 2011).

Section 2 – Financial assets held for trading – Item 20

BancoPosta RFC held no financial instruments in the trading book at 31 December 2012.



a) Cash 2,487,263 2,291,664

b) Central Banks deposits 693,270 205,217

Total 3,180,533 2,496,881

1.1 Cash and cash equivalents: analysis

2.1 Financial assets held for trading: analysis

Balance at 31 December 2012 Balance at 31 December 2011Transaction type/Amounts Level 1 Level 2 Level 3 Level 1 Level 2 Level 3

A. On balance sheet assets

1. Debt securities - - - - - -1.1 Structured securities - - - - - -1.2 Other debt securities - - - - - -

2. Equity instruments - - - - - -3. UCIs - - - - - -4. Loans - - - - - -

4.1 Repurchase agreements - - - - - -4.2 Other - - - - - -

Total A - - - - - -

B. Derivative instruments

1. Financial derivatives - - - - 12,844 -1.1 Held for trading - - - - 12,844 -1.2 Associated with fair value option - - - - - -1.3 Other - - - - - -

2. Credit derivatives - - - - - -2.1 Held for trading - - - - - -2.2 Associated with fair value option - - - - - -2.3 Other - - - - - -

Total B - - - - 12,844 -

Total (A+B) - - - - 12,844 -


454


Transaction type/Amounts Balance at 31 December 2012 Balance at 31 December 2011

A. ON BALANCE SHEET ASSETS

1. Debt securities - -

a) Governments and Central Banks - -b) Other public entities - -c) Banks - -d) Other issuers - -

2. Equity instruments - -

a) Banks - -b) Other issuers: - -

- insurance companies - -- finance companies - -- non-finance companies - -- other - -

3. UCIs - -

4. Loans - -

a) Governments and Central Banks - -b) Other public entities - -c) Banks - -d) Other entities - -

Total A - -

B. DERIVATIVE INSTRUMENTS

a) Banks - 12,844- fair value - 12,844

b) Customers - -- fair value - -

Total B - 12,844

Total (A+B) - 12,844

2.2 Financial assets held for trading: by borrower/issuer

)

Debt Equitysecurities instruments UCIs Loans ) Total)

A. Opening balance - - - - -

B. Increases 3,241,175 35 6 - 3,241,216

B.1 Purchases 3,240,631 35 6 - 3,240,672B.2 Increases in fair value - - - - -B.3 Other increases 544 - - - 544

C. Decreases (3,241,175) (35) (6) - (3,241,216)

C.1 Disposals (3,241,175) (35) (6) - (3,241,216)C.2 Repayments - - - - -C.3 Decreases in fair value - - - - -C.4 Transfers to other portfolios - - - -C.5 Other decreases - - - - -

D. Closing balance - - - - -

2.3 Financial assets held for trading: movements during the year


455Notes

Debt securities were traded during the year in order to invest temporary excess funds in the “Buffer” Account. Profits orlosses on such transactions are reported in Part C, Table 4.1. Executing orders on behalf of certain customers, BancoPos-ta RFC entered into transactions to acquire and immediately dispose of debt securities and equities.

Section 3 – Financial assets designated at fair value – Item 30

No financial assets are held in portfolio at fair value through profit or loss (the so-called fair value option).

Section 4 – Available-for-sale financial assets – Item 40

Debt securities carried at fair value total €22,426,616 thousand (€282,277 thousand of which being accrued interest). Equity instruments comprise:• €28,019 thousand relating to the fair value of 75,628 class B shares in Mastercard Incorporated (75,628 shares with a

fair value of €21,682 thousand at 31 December 2011). These equity instruments are not quoted on a regulated marketbut may be converted into an equal number of class A shares, which are listed on the New York Stock Exchange, if dis-posal is desired;

• €1,216 thousand relating to the fair value of 11,144 class C shares in Visa Incorporated (11,144 shares with a fair val-ue of €870 thousand at 31 December 2011). These equity instruments are not quoted on a regulated market but maybe converted into an equal number of class A shares, which are listed on the New York Stock Exchange, if disposal isdesired;

• €117 thousand representing the historical cost, unchanged since acquisition, of an 8.637% shareholding in Eurogiro Holding A/S.


4.1 Available-for-sale financial assets: analysis

Balance at 31 December 2012 Balance at 31 December 2011Transaction type/ Amounts Level 1 Level 2 Level 3 Level 1 Level 2 Level 3

1. Debt securities 22,426,616 - - 13,442,018 - -

1.1 Structured securities - - - - - -1.2 Other debt securities 22,426,616 - - 13,442,018 - -

2. Equity instruments - 29,235 117 - 22,552 117

2.1 At fair value - 29,235 - - 22,552 -2.2 At cost - - 117 - - 117

3. UCIs - - - - - -

4. Loans - - - - - -

Total 22,426,616 29,235 117 13,442,018 22,552 117


456



1. Debt securities 22,426,616 13,442,018

a) Governments and Central Banks 22,426,616 13,442,018b) Other public entities - -c) Banks - -d) Other issuers - -

2. Equity instruments 29,352 22,669

a) Banks - -b) Other issuers: 29,352 22,669

- insurance companies - -- finance companies 29,352 22,669- non-finance companies - -- other - -

3. UCIs - -

4. Loans - -


Total 22,455,968 13,464,687

4.2 Available-for-sale financial assets: by borrower/issuer


1. Micro-fair value hedged financial assets 3,769,900 3,025,591

a) Rate risk 3,769,900 3,025,591b) Price risk - -c) Foreign exchange risk - -d) Credit risk - -e) Multiple risks - -

2. Micro-cash flow hedged financial assets 2,752,086 2,920,600

a) Rate risk 2,752,086 2,920,600b) Foreign exchange risk - -c) Other - -

Total 6,521,986 5,946,191

4.3 Micro-hedged available-for-sale financial assets


457Notes

In connection with the refinancing operation initiated by the European Central Bank in February 2012, BancoPosta enteredinto two three-year repurchase agreements with two different financial institutions, totalling €5 billion. The proceeds wereused to buy Italian government bonds with a total nominal value of €5,000 million (€2,450 million in ordinary BTPs and€2,550 million in inflation-linked BTPs, classified as available-for-sale), with a view to anticipating the renewal of bondsmaturing in the next three years.There was a net increase in the fair value of debt securities, for which a fair value hedge was not arranged, during theperiod under review of €3,208,007 thousand, €2,994,626 thousand of which was recognised in a separate equity reserve,whereas a €213,381 thousand gain on the hedged portion was recognised in profit or loss (Part C, Table 5.1).There was a €6,683 thousand net gain in the fair value of equity instruments during the period, which was recognised inspecific equity reserve.

Section 5 – Held-to-maturity financial assets – Item 50


Debt Equity securities instruments UCIs Loans ) Total)

A. Opening balance 13,442,018 22,669 - - 13,464,687

B. Increases 10,962,661 6,683 - - 10,969,344

B.1 Purchases 7,622,446 - - - 7,622,446B.2 Increases in fair value 3,208,007 6,683 - - 3,214,690B.3 Recoveries - - - - -

- through profit or loss - - - - -- through equity - - - - -

B.4 Transfers from other portfolios - - - - -B.5 Other increases 132,208 - - - 132,208

C. Decreases (1,978,063) - - - (1,978,063)

C.1 Disposals (1,386,675) - - - (1,386,675)C.2 Repayments (544,700) - - - (544,700)C.3 Decreases in fair value - - - - -C.4 Impairments - - - - -

- through profit or loss - - - - -- through equity - - - - -

C.5 Transfers to other portfolios - - - - -C.6 Other decreases (46,688) - - - (46,688)

D. Closing balance 22,426,616 29,352 - - 22,455,968

4.4 Available-for-sale financial assets: movements during the year

5.1 Held-to-maturity financial assets: analysis

Balance at 31 December 2012 Balance at 31 December 2011Carrying Fair value Carrying Fair valueamount Level 1 Level 2 Level 3 amount Level 1 Level 2 Level 3

1. Debt securities 14,048,068 14,515,849 - - 14,363,893 13,174,718 - -

- structured - - - - - - - -- other 14,048,068 14,515,849 - - 14,363,893 13,174,718 - -

2. Loans - - - - - - - -


458

At 31 December 2012 the fair value of the held-to-maturity portfolio, accounted for at amortised cost, is €14,515,849 thou-sand (including €220,480 thousand in accrued daily interest payments). Securities with a nominal value of €6,485,299 thousand are encumbered as follows:• €6,246,310 thousand, carried at an amortised cost of €6,282,443 (Part E, Section 1 - Credit Risk, Table C.2.1), were de-

livered to counterparties for use as collateral for repurchase agreements entered into through to 31 December 2012;• €238,989 thousand, carried at an amortised cost of €243,201 thousand (Part B, Other Information, Table 2), were de-

livered to counterparties for use as collateral for asset swaps (with collateral provided by specific Credit Support Annex-es), as part of the cash flow and fair value hedging policy and repurchase agreements (collateral provided for by specif-ic Global Master Repurchase Agreements).



1. Debt securities 14,048,068 14,363,893

a) Governments and Central Banks 14,048,068 14,363,893b) Other public entities - -c) Banks - -d) Other issuers - -

2. Loans - -


Total 14,048,068 14,363,893

5.2 Held-to-maturity financial assets: by borrower/issuer

Debt securities Loans Total

A. Opening balance 14,363,893 - 14,363,893

B. Increases 225,275 - 225,275

B.1 Purchases 199,674 - 199,674B.2 Recoveries - - -B.3 Transfers from other portfolios - - -B.4 Other increases 25,601 - 25,601

C. Decreases (541,100) - (541,100)

C.1 Disposals - - -C.2 Repayments (520,000) - (520,000)C.3 Impairments - - -C.4 Transfers to other portfolios - - -C.5 Other decreases (21,100) - (21,100)

D. Closing balance 14,048,068 - 14,048,068

5.4 Held-to-maturity financial assets: movements during the year


459Notes

Section 6 – Due from banks – Item 60

Time deposits at banks are collateral for amounts paid to asset swap counterparties (collateral required by specific Cred-it Support Annexes) as part of BancoPosta RFC’s fair value hedge policy.

Section 7 – Due from customers – Item 70



A. Loans and advances to Central Banks 24 24

1. Time deposits - -2. Compulsory reserves - -3. Reverse repurchase agreements - -4. Other 24 24

B. Loans and advances to banks 593,266 665,131

1. Current accounts and demand deposits 12,664 91,5392. Time deposits 517,265 503,8803. Other loans: 63,337 69,712

3.1 Reverse repurchase agreements - -3.2 Finance leases - -3.3 Other 63,337 69,712

4. Debt securities - -4.1 Structured securities - -4.2 Other debt securities - -

Total (carrying amount) 593,290 665,155

Total (fair value) 593,290 665,155

6.1 Due from banks: analysis


Non-performing Non-performingAssets Assets

Transaction type/Amounts Performing purchased Other Performing purchased Other

1. Current accounts 18,773 - - 25,362 - -2. Reverse repurchase agreements - - - - - -3. Term loans - - - - - -4. Credit cards, personal and salary loans - - - - - -5. Finance leases - - - - - -6. Factoring - - - - - -7. Other transactions 9,802,404 - - 9,460,934 - -8. Debt securities - - - - - -

8.1 Structured securities - - - - - -8.2 Other debt securities - - - - - -

Total (carrying amount) 9,821,177 - - 9,486,296 - -

Total (fair value) 9,821,177 - - 9,486,296 - -

7.1 Due from customers: analysis


460


“Current accounts”, which are net of provisions for doubtful debts, consists primarily of temporarily overdrawn currentaccounts primarily because of the debit of recurring bank charges.“Other transactions” consists primarily of: • €5,662,360 thousand, €245,946 thousand of which in accrued interest (€7,372,921 thousand at 31 December 2011, of

which €312,422 thousand in accrued interest) in deposits at the MEF of postal current account deposits by Public Sec-tor entities made under the terms of a specific agreement, which is currently being renewed8;

• €1,400,220 thousand, €3,095 thousand of which in accrued interest (€839,800 thousand at 31 December 2011, ofwhich €10,401 thousand in accrued interest) in deposits at the MEF (the “Buffer“ Account) under the terms of anagreement with the MEF for treasury services9;

• a deposit of €1,325,394 thousand (€793,537 thousand at 31 December 2011) at the Italian Treasury which was the netof the following movements:– net advances of €1,699,094 thousand (€1,439,513 thousand at 31 December 2011) representing the net amount re-

ceivable as a result of transfers of deposits and excess liquidity, less advances from the MEF to meet cash require-ments;

– net postal savings outflows payable of €178,678 thousand (payable of €358,238 thousand at 31 December 2011), whichis the balance of deposits less withdrawals during the last two days of the year and cleared early in the following year.The balance at 31 December 2012 consists of a €318,427 thousand (€434,939 thousand at 31 December 2011)payable to Cassa Depositi e Prestiti, less €139,749 thousand (€76,701 thousand at 31 December 2011) receivablefrom the MEF for outflows on its behalf;

– payables in connection with thefts of €159,708 thousand (€160,224 thousand at 31 December 2011). There is a lia-bility to the MEF on behalf of the Italian Treasury for losses resulting from theft and fraud. This liability derives fromthe cash withdrawals from the Treasury to make up for the resultant losses, in order to ensure that post offices cancontinue to operate;

– payables of €35,314 thousand (€127,514 thousand at 31 December 2011) for operational risks, relating to advancesfrom the MEF for transactions for which there were insufficient funds;

• €927,490 thousand in fees and commissions receivable during the year in connection with postal savings and fully paidin January 2013;

• €246,431 thousand (€110,650 thousand at 31 December 2011) in amounts receivable from Poste Italiane functions out-side the ring-fence, €245,098 thousand (€57,037 thousand at 31 December 2011) of which relate to Poste ItalianeSpA’s Finance function’s intersegment account, used for the processing of payments to and from third parties.


9. The agreement in question, which was signed on 8 May 2009 – and extended as supplemented with additional clauses in September 2011, February2012 and March 2013 – was renewed until 31 December 2013.


461Notes

Section 8 – Hedging derivatives – Item 80



Non-performing Non-performingAssets Assets

Transaction type/Amounts Performing purchased Other Performing purchased Other

1. Debt securities - - - - - -

a) Governments - - - - - -b) Other public entities - - - - - -c) Other issuers: - - - - - -

- non-finance companies - - - - - -- finance companies - - - - - -- insurance companies - - - - - -- other - - - - - -

2. Loans to: 9,821,177 - - 9,486,296 - -

a) Governments 8,456,666 - - 9,069,965 - -b) Other public entities 85,335 - - 63,741 - -c) Other entities 1,279,176 - - 352,590 - -

- non-finance companies 255,887 - - 119,062 - -- finance companies 938,891 - - 135,970 - -- insurance companies 66,882 - - 72,885 - -- other 17,516 - - 24,673 - -

Total 9,821,177 - - 9,486,296 - -

7.2 Due from customers: borrowers/issuers

8.1 Hedging derivatives by type of hedge and level

Fair value at 31 December 2012Notional


amount(*) at amount(*) atLevel 1 Level 2 Level 3 31 Dec 2012 Level 1 Level 2 Level 3 31 Dec 2011

A. Financial derivatives - 12,157 - 801,149 - 73,570 - 1,242,030

1) Fair value - - - - - - - -2) Cash flow - 12,157 - 801,149 - 73,570 - 1,242,0303) Net foreign investment - - - - - - - -

B. Credit derivatives - - - - - - - -

1) Fair value - - - - - - - -2) Cash flow - - - - - - - -

Total - 12,157 - 801,149 - 73,570 - 1,242,030

(*) The settlement price of derivatives with exchange of principal (securities or other assets) is given below, as required by Bank of Italy Circular 262/2005.


462

Section 9 – Adjustments for changes in hedged financial assets portfolio – Item 90

No macro-hedges have been arranged at the reporting date.

Section 10 – Investments – Item 100

There are no investments in subsidiaries, joint ventures or companies subject to significant influence.

Section 11 – Property, plant and equipment – Item 110

BancoPosta does not own property, plant and equipment either for operating or investment purposes.

Section 12 – Intangible assets – Item 120

There are no intangible assets.

Section 13 – Tax assets and liabilities – Assets Item 130 and Liabilities Item 80

Due to the fact that BancoPosta is not separately assessed for taxes, tax assets and liabilities are determined, as requiredby BancoPosta RFC’s By-laws, with reference to this Separate Report and are settled through the intersegment accountwith Poste Italiane functions outside the ring-fence, which remains the only party assessable for taxes.


8.2 Hedging derivatives by hedged portfolio and type of hedge

Fair value Cash flowMicro

Interest rate Foreign Credit Price Multiple Net foreignTransaction type/Type of hedge risk exchange risk risk risk risk Macro Micro Macro investment

1. Available-for-sale financial assets - - - - - x - x x2. Loans - - - x - x - x x3. Held-to-maturity financial assets x - - x - x - x x4. Portfolio x x x x x - x - x5. Other transactions - - - - - x - x -

Total assets - - - - - - - - -

1. Financial liabilities - - - x - x - x x2. Portfolio x x x x x - x - x

Total liabilities - - - - - - - - -

1. Expected transactions x x x x x x 12,157 x x2. Portfolio of financial assets and financial liabilities x x x x x - x -


463Notes

Movements in current tax assets and liabilities are shown below:

Deferred tax assets and liabilities are analysed below:


Current taxes for the year ended 31 Dec 2012 Current taxes for the year ended 31 Dec 2011

IRES IRAP IRES IRAPDescription Assets/(Liabilities) Assets/(Liabilities) Total Assets/(Liabilities) Assets/(Liabilities) Total

Opening balance (6,515) (2,569) (9,084) - - -

Payments of 118,706 77,190 195,896 99,404 70,019 169,423prepayments for the current year 112,192 73,605 185,797 99,404 70,019 169,423balance payable for the previous year 6,514 3,585 10,099 - - -

Provisions to profit or loss for (123,921) (85,159) (209,080) (118,216) (72,592) (190,808)current tax expense (123,922) (87,349) (211,271) (118,216) (72,592) (190,808)adjustments to prior period taxes 1 2,190 2,191 - - -

IRES credit for previous years followingchange in law 12,454 - 12,454 - - -

Provisions to equity 968 - 968 (167) 4 (163)

Other(*) 16,508 - 16,508 12,464 - 12,464

Closing balance 18,200 (10,538) 7,662 (6,515) (2,569) (9,084)

of which:Current tax assets 18,200 - 18,200 - - -

Current tax liabilities - (10,538) (10,538) (6,515) (2,569) (9,084)

(*) Primarily tax withholdings on fee income.

13.1 Deferred tax assets: analysis

Financial assets and Hedging Provisions for Provisions for risksliabilities derivatives doubtful debts and charges

Total TotalDescription IRES IRAP IRES IRAP IRES IRAP IRES IRAP IRES IRAP

Deferred tax assets through profit or loss 100 - - - 26,844 - 55,754 9,203 82,698 9,203Deferred tax assets through equity 817,168 140,553 112,049 19,272 - - - - 929,217 159,825

2011 total 817,268 140,553 112,049 19,272 26,844 - 55,754 9,203 1,011,915 169,028

Deferred tax assets through profit or loss 87 - - - 26,015 - 50,589 8,236 76,691 8,236Deferred tax assets through equity 208,274 34,612 97,708 16,238 - - - - 305,982 50,850

2012 total 208,361 34,612 97,708 16,238 26,015 50,589 8,236 382,673 59,086


464


13.2 Deferred tax liabilities: analysis

Financial assets Hedging and liabilities derivatives Total Total

Description IRES IRAP IRES IRAP IRES IRAP

Deferred tax liabilities through profit or loss 176 - - - 176 -

Deferred tax liabilities through equity 803 87 36,584 6,293 37,387 6,380

2011 total 979 87 36,584 6,293 37,563 6,380

Deferred tax liabilities through profit or loss 88 - - - 88 -

Deferred tax liabilities through equity 218,673 36,275 47,015 7,814 265,688 44,089

2012 total 218,761 36,275 47,015 7,814 265,776 44,089


1. Opening balance 91,901 101,829

2. Increases 1,219 32,736

2.1 Deferred tax assets recognised in the year 1,219 32,172a) relating to previous years - -b) due to changes in accounting policies - -c) write-backs - -d) other 1,219 32,172

2.2 New taxes or tax rate increases - 5642.3 Other increases - -

3. Decreases (8,193) (42,664)

3.1 Deferred tax assets derecognised in the year (7,905) (42,664)a) reversals (7,905) (42,664)b) write-down of non-recoverable items - -c) due to changes in accounting policies - -d) other - -

3.2 Reduction of tax rate (288) -3.3 Other decreases - -

4. Closing balance 84,927 91,901

13.3 Movements in deferred tax assets through profit or loss


465Notes



1. Opening balance (176) (235)

2. Increases - -

2.1 Deferred tax liabilities recognised in the year - -a) relating to previous years - -b) due to changes in accounting policies - -c) other - -

2.2 New taxes or tax rate increases - -2.3 Other increases - -

3. Decreases 88 59

3.1 Deferred tax liabilities derecognised in the year 88 59a) reversals 88 59b) due to changes in accounting policies - -c) other - -

3.2 Reduction of tax rate - -3.3 Other decreases - -

4. Closing balance (88) (176)

13.4 Movements in deferred tax liabilities through profit or loss


1. Opening balance 1,089,042 218,662

2. Increases 20,713 870,380

2.1 Deferred tax assets recognised in the year 20,713 860,581a) relating to previous years - -b) due to changes in accounting policies - -c) other 20,713 860,581

2.2 New taxes or tax rate increases - 9,7992.3 Other increases - -

3. Decreases (752,924) -

3.1 Deferred tax assets derecognised in the year (751,247) -a) reversals (18,721) -b) write-down of non-recoverable items - -c) due to changes in accounting policies - -d) other (732,526) -

3.2 Reduction of tax rate (1,677) -3.3 Other decreases - -

4. Closing balance 356,831 1,089,042

13.5 Movements in deferred tax assets through equity


466

The net charge or credit to profit or loss due to movements in deferred tax assets and liabilities through equity is the taxeffect on reserves described in Part D, less a €968 thousand decrease in current taxes.

13.7 Other information

There is no information in addition to that presented in this note.

Section 14 – Non-current assets (or disposal groups) held for sale/discontinued operations and related liabilities – Assets Item 140 and Liabilities Item 90

There were no disposal groups/discontinued operations at the reporting date.

Section 15 – Other assets – Item 150



1. Opening balance (43,767) (107,383)

2. Increases (296,927) (22,659)

2.1 Deferred tax liabilities recognised in the year (296,927) (22,268)a) relating to previous years - -b) due to changes in accounting policies - -c) other (296,927) (22,268)

2.2 New taxes or tax rate increases - (391)2.3 Other increases - -

3. Decreases 30,917 86,275

3.1 Deferred tax liabilities derecognised in the year 30,778 86,275a) reversals 30,112 86,275b) due to changes in accounting policies - -c) other 666 -

3.2 Reduction of tax rate 139 -3.3 Other decreases - -

4. Closing balance (309,777) (43,767)

13.6 Movements in deferred tax liabilities through equity


Tax assets other than those included in item 130 233,937 240,166Current account cheques being settled, drawn on other banks 143,797 213,819Items in process 437,778 173,242

- items in transit between local branches 21,033 11,039- other 416,745 162,203

Other items 421,716 108,230

Total 1,237,228 735,457

15.1 Other assets: analysis


467Notes

Tax assets primarily include advances paid to the tax authorities, including €209,615 thousand in stamp duty to be col-lected virtually in 2013, and €24,320 thousand as withholding tax on interest paid to current account holders for 2012.The sub-item “Other”, under “Items in process”, includes:• €237,578 thousand (€81,278 thousand at 31 December 2011) to be debited to customer accounts for withdrawals from

post office and bank ATMs and trade POS;• customer postal cheques of €111,282 thousand in collection at banks; • amounts due from commercial partners, totalling €27,549 thousand (€21,689 thousand at 31 December 2011) for the

collection of Postepay top-ups (prepayments) and the payment of bills by payment slip;• unsettled debit card payments made at post offices, totalling €19,998 thousand (€37,026 thousand at 31 December 2011); • account charges and custody fees of €6,680 thousand (€8,080 thousand at 31 December 2011) to be debited to cus-

tomers.

The net increase in “Items in process” to be debited to customers with respect to the amount at 31 December 2011 wasmainly due to the settlement of transactions occurring on 31 December 2012, a day where the interbank market was closed,in early 2013.“Other items” include:• €181,993 thousand in stamp duty attributable to the holders of postal savings books that BancoPosta RFC collects vir-

tually, as required by law; • €172,745 thousand in stamp duty attributable to holders of interest-bearing postal savings certificates for the year end-

ed 31 December 2012, introduced by article 19 of Law Decree 201/2011 converted as amended by Law 214/2011 inthe manner provided for by the MEF Decree of 24 May 201210. For this last item, the corresponding amount was en-tered in “Other taxes payable” (Part B, Table 10.1), until expiration or early extinguishment of the interest-bearing postalsavings certificates, the date on which the tax will be paid to the tax authorities;

• a total of €54,107 thousand (€86,100 thousand at 31 December 2011) in the process of recovery but which is not avail-able since the related amounts have been seized and have not yet been assigned to creditors of the Poste Italiane func-tions outside the ring-fence. Any losses on realisation of collateral are for the account of the Poste Italiane functions out-side the ring-fence.




468

LIABILITIES

Section 1 – Due to banks – Item 10

€3,042,281 thousand was due to banks at 31 December 2012 (€1,988,550 thousand at 31 December 2011) under theterms of repurchase agreements. In detail:• €2,524,695 thousand (of which €24,695 thousand in accrued interest) related to the three-year loan obtained in Febru-

ary 2012 from Banca IMI SpA (described in Part, B, Table 4.4 and Parte E, Section 3 - Liquidity Risk) remunerated at aspread negotiated with the lenders over the REFI rate11;

• €517,586 thousand (of which €44 thousand in accrued interest) relates to ordinary funding by BancoPosta RFC via re-purchase agreement transactions with primary financial institutions, in order to optimise the match between invest-ments and short-term movements in current account deposits by BancoPosta’s private customers.

BancoPosta RFC has access, in relation to its overnight operations, to uncommitted lines of credit of €680 million andoverdraft arrangements of €81 million provided to the Parent Company, Poste Italiane SpA, both undrawn at 31 Decem-ber 2012.



1. Due to Central Banks - -

2. Due to banks 3,483,754 2,371,707

2.1 Current accounts and demand deposits 440,390 371,2632.2 Time deposits - 9,5202.3 Loans 3,042,281 1,988,550

2.3.1 Repurchase agreements 3,042,281 1,988,5502.3.2 Other - -

2.4 Obligations to repurchase equity instruments - -2.5 Other payables 1,083 2,374

Total 3,483,754 2,371,707

Fair value 3,507,680 2,371,707

1.1 Due to banks: analysis



469Notes

Section 2 – Due to customers – Item 20

“Current accounts and demand deposits” includes €51,115 thousand (€188,413 thousand at 31 December 2011) inamounts payable, being the balances on postal current accounts held by Poste Italiane SpA outside the ring-fence.

Time deposits consists of deposits made by private and corporate customers.

“Loans, Repurchase agreements” (including accrued interest of €23,542 thousand) relates to a loan obtained in February2012 from Cassa Depositi e Prestiti and repayable in instalments, i.e. €807,533 thousand on 4 September 2013, €807,533thousand on 6 August 2014, and €908,476 thousand on 26 February 2015 (as described in Part B, Table 4.4 and Part E,Section 3 - Liquidity Risk), remunerated at a spread negotiated with the lenders over the REFI rate.

“Loans, Other” refers to an amount due to the Poste Italiane functions outside the ring-fence in connection with the cre-ation of BancoPosta RFC.

“Other payables” primarily consists of amounts due to the holders of Postepay cards of €735,209 thousand (€717,878thousand at 31 December 2011), domestic postal orders totalling €335,229 thousand (€378,269 thousand at 31 Decem-ber 2011), endorsed cheques of €171,885 thousand (€209,657 thousand at 31 December 2011) and amounts payable toPensione cardholders, totalling €8,005 thousand (€6,661 thousand at 31 December 2011).

Section 3 – Debt securities in issue – Item 30

BancoPosta RFC has no securities in issue.



1. Current accounts and demand deposits 38,779,709 37,069,3962. Time deposits 840,190 -3. Loans 2,591,873 68,331

3.1 Repurchase agreements 2,523,542 -3.2 Other 68,331 68,331

4. Obligations to repurchase equity instruments - -5. Other payables 1,250,332 1,312,470

Total 43,462,104 38,450,197

Fair value 43,481,950 38,450,197

2.1 Due to customers: analysis


470

Section 4 – Financial liabilities held for trading – Item 40

BancoPosta RFC held no financial instruments in the trading book at 31 December 2012.

Section 5 – Financial liabilities designated at fair value – Item 50

No financial liabilities are held in portfolio designated at fair value through profit or loss (the so-called fair value option).


4.1 Financial liabilities held for trading: analysis


Transaction type/ Nominal or Fair value Fair Nominal or Fair value FairAmounts notional value Level 1 Level 2 Level 3 value(*) notional value Level 1 Level 2 Level 3 value(*)

A. On balance sheet liabilities

1. Due to banks - - - - - - - - - -2. Due to customers - - - - - - - - - -3. Debt securities - - - - - - - - - -

3.1 Bonds - - - - - - - - - -3.1.1 Structured - - - - x - - - - x3.1.2 Other - - - - x - - - - x

3.2 Other securities - - - - - - - - - -3.2.1 Structured - - - - x - - - - x3.2.2 Other - - - - x - - - - x

Total A - - - - - - - - - -

B. Derivative instruments

1. Financial derivatives - - - - - - - 6,933 - -1.1 Trading x - - - x x - 6,933 - x1.2 Associated with

fair value option x - - - x x - - - x1.3 Other x - - - x x - - - x

2. Credit derivatives - - - - - - - - - -2.1 Trading x - - - x x - - - x2.2 Associated with

fair value option x - - - x x - - - x2.3 Other x - - - x x - - - x

Total B x - - - x x - 6,933 - x

Total (A+B) - - - - - - - 6,933 - -

(*) Fair value excludes movements in value due to changes in issuers’ credit ratings subsequent to the issue date.


471Notes

Section 6 – Hedging derivatives – Item 60

Section 7 – Adjustments for changes in hedged financial liabilities portfolio – Item 70

No macro-hedges had been arranged at the reporting date.

Section 8 – Tax liabilities – Item 80

Please refer to Assets, Section 13.


6.1 Hedging derivatives by type of hedge and hierarchical level



value(*) at amount(*) atLevel 1 Level 2 Level 3 31 Dec 2012 Level 1 Level 2 Level 3 31 Dec 2011

A. Financial derivatives - 816,116 - 6,283,750 - 616,949 - 6,762,234

1) Fair value - 604,117 - 3,700,000 - 389,543 - 3,700,0002) Cash flow - 211,999 - 2,583,750 - 227,406 - 3,062,2343) Net foreign investment - - - - - - - -

B. Credit derivatives - - - - - - - -

1) Fair value - - - - - - - -2) Cash flow - - - - - - - -

Total - 816,116 - 6,283,750 - 616,949 - 6,762,234

(*) The settlement price of derivatives with exchange of principal (securities or other assets) is given below, as required by Bank of Italy Circular 262/2005.

6.2 Hedging derivatives by hedged portfolio and type of hedge

Fair value Cash flowMicro

Interest rate Foreign Credit Price Multiple Net foreignTransaction type/Type of hedge risk exchange risk risk risk risk Macro Micro Macro investment

1. Available-for-sale financial assets 604,117 - - - - x 211,999 x x2. Loans - - - x - x - x x3. Held-to-maturity financial assets x - - x - x - x x4. Portfolio x x x x x - x - x5. Other transactions - - - - - x - x -

Total assets 604,117 - - - - - 211,999 - -

1. Financial liabilities - - - x - x - x x2. Portfolio x x x x x - x - x

Total liabilities - - - - - - - - -

1. Expected transactions x x x x x x - x x2. Portfolio of financial assets and liabilities x x x x x - x - -


472

Section 9 – Liabilities included in non-current assets held for sale and discontinuedoperations – Item 90

There were no such liabilities at the reporting date.

Section 10 – Other liabilities – Item 100

“Tax liabilities other than those included in item 80” include:• €122,727 thousand (€102,388 thousand at 31 December 2011) regarding taxes and road tax payable to collection agents,

the tax authorities and regional authorities for payments made by customers;• €172,745 thousand in stamp duty accrued to 31 December 2012 on outstanding interest-bearing postal savings certifi-

cates holders in accordance with the new requirements referenced in Part B, Table 15.1;• €44,154 thousand (€24,320 thousand at 31 December 2011) in tax withholdings on current account interest payments

to customers;• €36,723 thousand (€11,650 thousand at 31 December 2011) in stamp duty payable to the tax authorities in virtual form;• €280 thousand (€768 thousand at 31 December 2011) in VAT and other indirect taxes payable.

“Trade payables” includes €67 thousand (€75 thousand at 31 December 2011) for services rendered by third parties paidfor by the Poste Italiane functions outside the ring-fence.“Items in process, other” include:• domestic and international bank transfers of €315,976 thousand (€273,962 thousand at 31 December 2011);• amounts to be paid to the beneficiaries of debits pre-authorised, by customers, totalling €44,907 thousand (€46,207

thousand at 31 December 2011);• unpaid postal cheques of €39,962 thousand (€36,102 thousand at 31 December 2011);• amounts in the process of payment in relation to maturing insurance policies issued by the subsidiary Poste Vita SpA,

totalling €11,066 thousand (€20,272 thousand at 31 December 2011);• amounts collected on behalf of and payable to the subsidiaries Poste Vita SpA, BancoPosta Fondi SGR SpA and Poste

Assicura SpA, totalling €4,141 thousand, €22 thousand and €7 thousand, respectively;• payables of €6,018 thousand (€10,846 thousand at 31 December 2011) to holders of interest-bearing postal certificates

and post office savings books;• payables in connection with promotions of €5,896 thousand (€9,558 thousand at 31 December 2011);• payments of bills by payment slip in the process of being credited to beneficiaries’ accounts, totalling €5,567 thousand



Amounts due to Poste Italiane SpA for services rendered 387,498 303,972Amounts due to customers 82,412 138,340Tax liabilities other than those included in item 80 392,944 146,045Trade payables 61,950 58,385Accrued expenses and deferred income 14,376 18,673Due to employees 12,243 11,857Items in process 882,140 838,402

- amounts to be credited to postal savings books 340,306 300,574- items in transit between local branches 15,242 10,914- other 526,592 526,914

Other items 67,014 74,423

Total 1,900,577 1,590,097

10.1 Other liabilities: analysis


473Notes

(€9,072 thousand at 31 December 2011);• payables due to Poste Italiane functions outside the ring-fence, totalling €2,148 thousand (€4,841 thousand at 31 De-

cember 2011);• customer pledges to BancoPosta, totalling €4,443 thousand (€3,266 thousand at 31 December 2011).

“Other items” relate to items in the process of allocation.

Section 11 – Employee termination benefits – Item 110

Following the reform of supplementary pensions, from 1 January 2007 companies with over 50 employees must pay vest-ed employees’ termination benefits into a supplementary pension fund or a Treasury Fund established by INPS (providedthat the employee has so requested as permitted by legislation). These benefits qualify as a defined contribution plan andthus represent a charge to be recognised at nominal value in personnel expenses. Employee termination benefits vestingup to 31 December 2006 remain with the company and continue to represent accumulated liabilities qualifying as a de-fined benefit plan, for which actuarial calculation is necessary.

The movements on employee termination benefits during the year under review are shown below:

The costs provided for employee termination benefits are accrued interest for the year (interest cost) on the amount ofthe obligation at the date of the reform (Part C, Table 9.1).Increases were caused by transfers of €673 thousand (€444 thousand at 31 December 2011) from certain Group com-panies and actuarial losses of €3,519 thousand (gains of €730 thousand at 31 December 2011) recognised as a releasefrom equity reserves (Part D).€939 thousand (€669 thousand at 31 December 2011) of the total uses of the provisions for employee termination ben-efits were for benefit payments plus substitute tax payments of €68 thousand (€48 thousand at 31 December 2011). The other decreases were a result of transfers to certain Group companies (€293 thousand at 31 December 2011).

The key actuarial assumptions underlying the computation of employee termination benefits were:

The applicable discount rate, which was relatively decoupled from movements in the spreads applicable to Italian govern-



A. Opening balance 15,408 16,074

B. Increases 4,944 1,074

B.1 Provisions for year 752 542B.2 Other increases 4,192 532

C. Decreases (1,504) (1,740)

C.1 Benefits paid (1,007) (717)C.2 Other decreases (497) (1,023)

D. Closing balance 18,848 15,408

11.1 Employee termination benefits: movements during the year

2012

Discount rate 2.69%Inflation rate 2.00%Average employee turnover(*) 0.65%(*) Frequency of dismissals resulting in the early termination of employment.


474

ment securities, was determined using the same criteria used at 31 December 2011. The effects of the reduction of thediscount rate during the year are reflected in the actuarial losses incurred.

Section 12 – Provisions for risks and charges – Item 120

Other provisions are described in 12.4, below.

“B.1 Provisions for the year” includes provisions for personnel expenses of €1,826 thousand. Other decreases relate totransfers to the income statement during the year as a result of the derecognition of prior year liabilities, including a€2,099 thousand provision for personnel expenses.



1. Provisions for retirement benefits - -2. Other provisions 282,012 295,577

2.1 legal litigation 54,257 53,5502.2 personnel expenses 1,826 5,2972.3 other 225,929 236,730

Total 282,012 295,577

12.1 Provisions for risks and charges: analysis

Provisions for retirement benefits Other provisions Total

A. Opening balance - 295,577 295,577

B. Increases - 25,605 25,605

B.1 Provisions for the year - 25,096 25,096B.2 Increases due to passage of time - 509 509B.3 Increases due to changed discount rates - - -B.4 Other increases - - -

C. Decreases - (39,170) (39,170)

C.1 Uses during the year - (15,687) (15,687)C.2 Decreases due to changed discount rates - - -C.3 Other decreases - (23,483) (23,483)

D. Closing balance - 282,012 282,012

12.2 Provisions for risks and charges: movements during the year


475Notes

Provisions for disputes with third parties regard the present value of expected liabilities deriving from different types oflegal and out-of-court disputes with suppliers and third parties, the related legal expenses, and penalties and compensa-tion payable to customers.

Provisions for disputes with staff regard liabilities that may arise following labour litigation and disputes of various type.Provisions for personnel expenses are made to cover expected liabilities arising in relation to the cost of labour.

Provisions for non-recurring charges relate to operational risks attributable to BancoPosta RFC. They regard, among oth-er things, the liabilities arising from the reconstruction of operating ledger entries at the time of Poste Italiane SpA’s in-corporation, liabilities deriving from the provision of delegated services for social security agencies, fraud, compensationand adjustments to income for previous years and estimated risks for costs and charges to be incurred as a result of seizuresof accounts held with BancoPosta. Provisions are based on the present value of the identified liabilities.

Provisions for expired and statute barred postal savings certificates held by BancoPosta have been made to cover the costof redeeming certificates relating to specific issues, the value of which was recognised in revenue in profit or loss in theyears in which the certificates became invalid. The provisions were made in response to the Company’s decision to re-deem such certificates even if expired and statute barred. At 31 December 2012 the provisions represent the present val-ue of total liabilities, based on a nominal value of €21,764 thousand, expected to be progressively settled by 2043.

Section 13 – Redeemable shares – Item 140

Not applicable.

Section 14 – Equity – Items 130, 150, 160, 170, 180, 190 and 200

14.4 Revenue reserves: other information

Other revenue reserves include the initial reserve of €1 billion provided to BancoPosta RFC on its creation.


Description Balance at 31 December 2012 Balance at December 2011

Legal litigation 54,257 53,550

Provisions for disputes with third parties 52,321 50,359Provisions for disputes with staff 1,936 3,191

Provisions for personnel expenses 1,826 5,297

Other provisions 225,929 236,730

Provisions for non-recurring charges 213,272 224,381Provisions for expired and statute barred postal savings certificates 12,657 12,349

Total 282,012 295,577

12.4 Provisions for risks and charges - Other provisions


476

Other information

The irrevocable commitments to disburse funds that are certain to be disbursed relate to forward purchases of securitieswith a nominal value of €800,000 thousand, for which a settlement amount has been determined.

Held-to-maturity financial assets carried at amortised cost relate to securities provided as collateral to counterparties ofnegative fair value hedging asset swaps and repos concluded by BancoPosta RFC.

Amounts due from banks relate to time deposits collateralising counterparties of negative fair value hedging asset swaps.


Guarantee/Commitment Balance at 31 December 2012 Balance at 31 December 2011

1) Financial guarantees issued - -

a) Banks - -b) Customers - -

2) Trade guarantees issued - -

a) Banks - -b) Customers - -

3) Irrevocable commitments to disburse funds 801,149 1,781,584

a) Banks 801,149 1,781,584i) certain disbursement 801,149 1,781,584ii) uncertain disbursement - -

b) Customers - -i) certain disbursement - -ii) uncertain disbursement - -

4) Commitments underlying credit derivatives: protection sales - -

5) Assets pledged as collateral of third party commitments - -

6) Other commitments - 232,676

Total 801,149 2,014,260

1. Guarantees and commitments

Portfolio Balance at 31 December 2012 Balance at 31 December 2011

1. Financial assets held for trading - -2. Financial assets designated at fair value - -3. Available-for-sale financial assets - -4. Held-to-maturity financial assets 243,201 -5. Due from banks 517,265 503,8806. Due from customers - -7. Property, plant and equipment - -

2. Assets pledged as collateral for liabilities and commitments


477Notes

The “Custody and administration of third-party securities deposited with third parties”, accounted at nominal value, relateto customers’ securities held at primary market operators and, to a much lesser extent, securities received as collateral.Except for securities received as collateral, orders received from customers are executed by qualified, designated creditinstitutions.

“Other transactions” include the principal of postal savings deposits accepted for and on behalf of Cassa Depositi e Presti-ti and the MEF.


Service Amount

1. Execution of orders on behalf of customers -

a) Purchase -1. settled -2. not settled -

b) Sales -1. settled -2. not settled -

2. Portfolio management -

a) Individual -b) Collective -

3. Custody and administration of securities 52,446,342

a) Third party securities in custody: related to depository bank operations (excluding portfolio management) -1. securities issued by the reporting bank -2. other securities -

b) Third party securities in custody (excluding portfolio management): other 17,067,8131. securities issued by the reporting bank -2. other securities 17,067,813

c) Third-party securities deposited with third parties 17,067,813d) Own securities deposited with third parties 35,378,529

4. Other transactions 235,391,938

a) Postal savings books 97,311,740b) Interest-bearing postal certificates 138,080,198

4. Brokerage and management on behalf of third parties


478

PART C – INFORMATION ON THE INCOME STATEMENT

Income statement comparatives relate to the period from 2 May 2011, the date of creation of BancoPosta RFC, to 31 De-cember 2011.

Section 1 – Interest – Items 10 and 20

“Due from customers, Loans” includes interest income of €4,271 thousand relating to interest earned on the interseg-ment account with the Poste Italiane functions outside the ring-fence.

1.3 Interest and similar income: other information

Not applicable.


For the periodDebt Other For the year ended 2 May 2011 to

Asset/Technical form securities Loans transactions 31 December 2012 31 December 2011

1. Financial assets held for trading 544 - - 544 -2. Available-for-sale financial assets 869,581 - - 869,581 449,3713. Held-to-maturity financial assets 598,816 - - 598,816 406,2154. Due from banks - 1,145 - 1,145 1,2695. Due from customers - 261,228 - 261,228 248,0996. Financial assets designated at fair value - - - - -7. Hedging derivatives x x 51,433 51,433 37,1308. Other assets x x - - -

Total 1,468,941 262,373 51,433 1,782,747 1,142,084

1.1 Interest and similar income: analysis

For the periodFor the year ended 2 May 2011 to

Differential 31 December 2012 31 December 2011

A. Positive hedge differentials 63,599 42,935B. Negative hedge differentials (12,166) (5,805)

C. Net (A-B) 51,433 37,130

1.2 Interest and similar income: hedge differentials


479Notes

“Due to customers, Debts” includes interest expense of €4,337 thousand payable on postal current accounts held at PosteItaliane SpA but outside the ring-fence (€3,735 thousand) and interest payable to Poste Italiane in connection with thecreation of BancoPosta RFC (€602 thousand).


For the periodOther For the year ended 2 May 2011 to

Liability/Technical form Debts Securities transactions 31 December 2012 31 December 2011

1. Due to Central Banks - x - - -2. Due to banks (28,948) x - (28,948) (11,942)3. Due to customers (252,795) x - (252,795) (66,658)4. Debt securities in issue x - - - -5. Financial liabilities held for trading - - - - -6. Financial liabilities designated at fair value - - - - -7. Other liabilities and provisions x x - - -8. Hedging derivatives x x - - -

Total (281,743) - - (281,743) (78,600)

1.4 Interest and similar expense: analysis


480

Section 2 – Fees and commissions – Items 40 and 50



Service/Amounts 31 December 2012 31 December 2011

a) Guarantees issued - -b) Credit derivatives - -c) Management, brokerage and advisory services 2,126,425 1,404,678

1. Financial instrument trading - -2. FX trading 446 3093. Portfolio management - -

3.1 Individual - -3.2 Collective - -

4. Securities custody and administration 19,670 14,2025. Depository banking - -6. Securities placements 48,946 65,9187. Order receipt and transmission 8,508 5,3418. Advisory services - -

8.1 Relating to investments - -8.2 Relating to financial structuring - -

9. Distribution of services to third parties: 2,048,855 1,318,9089.1 Portfolio management - -

9.1.1 Individual - -9.1.2 Collective - -

9.2 Insurance products 233,150 147,3739.3 Other products 1,815,705 1,171,535

d) Collection and payments services 1,159,752 778,069e) Securitisation servicing - -f) Factoring services - -g) Tax collection - -h) Multilateral trading services - -i) Current account maintenance and management 248,455 160,182j) Other services 6,489 4,705

Total 3,541,121 2,347,634

2.1 Fee and commission income: analysis


481Notes

“Own counters” means Poste Italiane SpA’s post office network.

“Management, brokerage and advisory services: financial instrument trading” relates to fees retroceded to qualified finan-cial institutions for the execution of orders received from customers.



Channel/Amounts 31 December 2012 31 December 2011

A. Own counters: 2,097,801 1,384,826

1. Portfolio management - -2. Securities placements 48,946 65,9183. Third-party products and services 2,048,855 1,318,908

B. Off-site: - -

1. Portfolio management - -2. Securities placements - -3. Third-party products and services - -

C. Other distribution channels: - -

1. Portfolio management - -2. Securities placements - -3. Third-party products and services - -

2.2 Fee and commission income by product and service distribution channel


Service/Amounts 31 December 2012 31 December 2011

a) Guarantees received - -b) Credit derivatives - -c) Management, brokerage and advisory services: (1,801) (1,102)

1. Financial instrument trading (222) (436)2. FX trading - -3. Portfolio management: - -

3.1 Own - -3.2 For third parties - -

4. Securities custody and administration (992) (653)5. Financial instrument placements (587) (13)6. Off-site marketing of financial instruments, products and services - -

d) Collection and payments services (40,881) (24,884)e) Other services (855) (444)

Total (43,537) (26,430)

2.3 Fee and commission expense: analysis


482

Section 3 – Dividends and similar income – Item 70

Section 4 – Profits/(Losses) on trading – Item 80


For the year ended For the period31 December 2012 2 May 2011 to 31 December 2011

UCIs UCIsAsset/Income Dividends distributions Dividends distributions

A. Financial assets held for trading - - - -B. Available-for-sale financial assets 71 - 53 -C. Financial assets designated at fair value - - - - D. Investments - x - x

Total 71 - 53 -

3.1 Dividends and similar income: analysis

Trading Trading Net Gains income Losses losses income/(loss)

Asset-Liability/Profit component (A) (B) (C) (D) [(A+B) - (C+D)]

1. Financial assets held for trading - 104,020 - (316) 103,704

1.1 Debt securities - 102,037 - (121) 101,9161.2 Equity instruments - - - (3) (3)1.3 UCIs - - - (11) (11)1.4 Loans - - - - -1.5 Other - 1,983 - (181) 1,802

2. Financial liabilities held for trading - - - - -

2.1 Debt securities - - - - -2.2 Debts - - - - -2.3 Other - - - - -

3. Financial assets and liabilities: foreign exchange differences x x x x (56)

4. Derivative instruments - - - - -

4.1 Financial derivatives: - - - - -- on debt securities and interest rates - - - - -- on equity instruments and share indices - - - - -- on foreign exchange and gold x x x x -- other - - - - -

4.2 Credit derivatives - - - - -

Total - 104,020 - (316) 103,648

4.1 Profits/(Losses) on trading: analysis


483Notes

Section 5 – Fair value adjustments in hedge accounting – Item 90

Section 6 – Profits/(Losses) on disposal or repurchase – Item 100



Profit component/Amounts 31 December 2012 31 December 2011

A. Income on:

A.1 Fair value hedge derivatives - -A.2 Hedged financial assets (fair value) 213,381 473,176A.3 Hedged financial liabilities (fair value) - -A.4 Cash flow hedge derivatives 7 147A.5 Foreign currency assets and liabilities - -

Gross hedging income (A) 213,388 473,323

B. Cost of:

B.1 Fair value hedge derivatives (213,973) (473,765)B.2 Hedged financial assets (fair value) - -B.3 Hedged financial liabilities (fair value) - -B.4 Cash flow hedge derivatives (375) (212)B.5 Foreign currency assets and liabilities - -

Gross hedging cost (B) (214,348) (473,977)

C. Net hedging income (A – B) (960) (654)

5.1 Fair value adjustments in hedge accounting: analysis


Net NetAsset-Liability/Profit component Profit Loss profit Profit Loss profit

Financial assets

1. Due from banks - - - - - -2. Due from customers - - - - - -3. Available-for-sale financial assets 50,398 - 50,398 74,786 - 74,786

3.1 Debt securities 50,398 - 50,398 54,468 - 54,4683.2 Equity instruments - - - 20,318 - 20,3183.3 UCIs - - - - - -3.4 Loans - - - - - -

4. Held-to-maturity financial assets - - - 170 - 170

Total assets 50,398 - 50,398 74,956 - 74,956

Financial liabilities

1. Due to banks - - - - - -2. Due to customers - - - - - -3. Debt securities in issue - - - - - -

Total liabilities - - - - - -

6.1 Profits/(Losses) on disposal or repurchase: analysis


484

Section 7 – Profits/(Losses) on financial assets and liabilities designated at fair value – Item 110

Not applicable.

Section 8 – Net losses/recoveries on impairment – Item 130

Section 9 – Administrative expenses – Item 150


8.1 Net losses/recoveries on impairment of loans and advances: analysis

Impairment losses Recoveries For the yearAsset-Liability/ Specific Specific Collective endedProfit component Write-off Other Collective Interest Other Interest Other 31 Dec 2012

A. Due from banks - - - - - - - -

- Loans - - - - - - - -- Debt securities - - - - - - - -

B. Due from customers - - (8,421) - - - 7,247 (1,174)

Non-performing loans purchased - - - - - - - -- Loans - - - - - - - -- Debt securities - - - - - - - -Other amounts owing - - (8,421) - - - 7,247 (1,174)- Loans - - (8,421) - - - 7,247 (1,174)- Debt securities - - - - - - - -

C. Total - - (8,421) - - - 7,247 (1,174)


Expense/Amounts 31 December 2012 31 December 2011

1) Employees (80,400) (56,751)a) wages and salaries (58,524) (39,567)b) social security (14,880) (10,305)c) employee termination benefits (3,838) (2,466)d) social security costs - -e) provision for employee termination benefits (752) (542)f) provisions for post-employment benefits - -

- defined contribution plans - -- defined benefit plans - -

g) payments to external supplementary pension funds: (534) (338)- defined contribution plans (534) (338)- defined benefit plans - -

h) cost of share-based payments - -i) other employee benefits (1,872) (3,533)

2) Other active personnel (20) (69)3) Directors and Statutory Auditors - -4) Retirees - -5) Recovery of employment costs of staff seconded to other companies - -6) Refund of costs of third party employees seconded to the company - -

Total (80,420) (56,820)

9.1 Personnel expenses: analysis


485Notes

9.4 Other employee benefits

They are primarily redundancy payments.

The cost of services provided by Poste Italiane functions outside the ring-fence relates to those services described in PartA - Accounting Policies, A.1, Section 4 - Other Information.

Section 10 – Net provisions for risks and charges – Item 160



Employees 1,757 1,747

a) executives 45 45b) middle managers 388 357c) other employees 1,324 1,345

Other employees - 1

Total 1,757 1,748

(*) Full time equivalents. The average number of employees at 31 December 2011 relates to the period from 2 May 2011, the date of creation of BancoPos-ta RFC, to 31 December 2011.

9.2 Average number of staff by category(*)


Expense/Amounts 31 December 2012 31 December 2011

1) Cost of services provided by Poste Italiane SpA: (4,419,914) (2,879,330)- commercial services (4,036,202) (2,640,756)- support services (322,730) (201,332)- staff services (60,982) (37,242)

2) Cost of goods and non-professional services: (51,196) (33,120)- printing and postage (45,803) (29,985)- credit and debit card supply services (5,393) (3,135)

3) Advisory and other professional services (32,771) (21,306)4) Taxes, penalties and duties (154) (23)5) Other expenses (429) (430)

Total (4,504,464) (2,934,209)

9.5 Other administrative expenses: analysis

Asset-Liability/Profit component Provisions Reversal Net provision

Provisions for legal litigation (5,770) 3,277 (2,493)Provisions for risks and charges (18,009) 18,107 98

Total (23,779) 21,384 (2,395)

10.1 Net provisions for risks and charges: analysis


486

Section 11 – Net losses/recoveries on property, plant and equipment – Item 170

Not applicable.

Section 12 – Net losses/recoveries on intangible assets – Item 180

Not applicable.

Section 13 – Other operating income/(expenses) – Item 190

“Other charges” relates primarily to post office operating losses.

Section 14 – Profits/(Losses) on investments – Item 210

Not applicable.

Section 15 – Profits/(Losses) on fair value valuation of property, plant and equipmentand intangible assets – Item 220

Not applicable.

Section 16 – Impairment of goodwill – Item 230

Not applicable.




1. Burglaries and theft (6,909) (4,549)2. Other charges (19,374) (16,682)

Total (26,283) (21,231)

13.1 Other operating expenses: analysis



1. Statute barred money orders 4,385 5,1382. Other operating income 4,778 3,206

Total 9,163 8,344

13.2 Other operating income: analysis


487Notes

Section 17 – Profits/(Losses) on disposal of investments – Item 240

Not applicable.

Section 18 – Taxes on income from continuing operations – Item 260

Due to the fact that BancoPosta is not separately assessed to taxation, income tax charges and refunds are determined,as required by BancoPosta RFC’s By-laws, with reference to this Separate Report and are settled through the interseg-ment account with the Poste Italiane functions outside the ring-fence, which remains the only party assessable for taxes.

€12,454 thousand of the increase over the preceding period was due to the recognition in 2012 of an IRES refund receiv-able as a result of the overpayment of IRES in 2011, for the period 2 May to 31 December 2011, following the non-de-duction of IRAP on personnel expenses, pursuant to Law Decree 201. The amount has been assessed on a prudent ba-sis, taking into account the absence of consistent interpretations and specific best practice.




1. Current taxes (-) (211,271) (190,808)2. Increase/(Decrease) in current taxes of prior period taxation (+/-) 14,645 -3. Reduction in current taxes (+) - -4. Increase/(Decrease) in deferred tax assets (+/-) (6,973) (9,928)5. Increase/(Decrease) in deferred tax liabilities (+/-) 88 59

6. Taxation for the year (-) (-1+/-2+3+/-4+/-5) (203,511) (200,677)

18.1 Taxes on income from continuing operations: analysis



Income before tax 546,173 457,004


Effects of increases/(decreases) on theoretical tax chargeExempt gains on financial assets - 0.00% (5,310) -1.16%Non-deductible contingent liabilities 360 0.07% 278 0.06%Non-deductible taxes - 0.00% - 0.00%Net provisions for liabilities and charges and impairments of receivables 1,346 0.25% 8,784 1.92%Taxation for previous years 30 0.01% 51 0.01%Deduction from IRES of IRAP on personnel expenses (12,454) -2.28% - 0.00%2012 deduction of IRAP paid on personnel expenses per Law Decree 201/2011 (19,941) -3.65% - 0.00%Other (2,155) -0.39% (2,208) -0.48%


18.2 Reconciliation between theoretical tax charge at statutory rate and effective tax charge


488

The reduction in the tax rate for the year under review was almost entirely due to the application of the provisions of LawDecree 201 of 2011 regarding the deductibility of IRAP paid on personnel expenses from IRES.

Section 19 – Income/(Loss) after tax from discontinued operations – Item 280

Not applicable.

Section 20 – Other information

All information has been presented above.

Section 21 – Earnings per share

Not applicable.




Income before tax 546,173 457,004Theoretical tax charge 24,960 4.57% 21,616 4.73%Personnel expenses 59,141 10.83% 49,789 10.89%Other 2,026 0.37% 2,001 0.44%



489Notes

PART D – COMPREHENSIVE INCOME

ANALYSIS OF COMPREHENSIVE INCOME


Items Gross amount Tax on income Net amount

10. Profit/(Loss) for the year x x 342,662

Other components of comprehensive income

20. Available-for-sale financial assets: 3,012,765 (968,894) 2,043,871a) changes in fair value 3,001,309 (963,990) 2,037,319b) reversal to profit or loss 11,456 (3,692) 7,764

- impairments - - -- realised gains/(losses) 11,456 (3,692) 7,764

c) other movements - (1,212) (1,212)30. Property, plant and equipment - - -40. Intangible assets - - -50. Hedges of foreign investments: - - -

a) changes in fair value - - -b) reversal to profit or loss - - -c) other movements - - -

60. Cash flow hedges: 90,080 (29,328) 60,752a) changes in fair value 201,703 (64,798) 136,905b) reversal to profit or loss (111,623) 35,796 (75,827)c) other movements - (326) (326)

70. Foreign exchange differences: - - -a) movements in carrying amounts - - -b) reversal to profit or loss - - -c) other movements - - -

80. Non-current assets held for sale: - - -a) changes in fair value - - -b) reversal to profit or loss - - -c) other movements - - -

90. Actuarial profits/(losses) on defined benefit plans (3,519) 968 (2,551)100. Share of valuation reserve attributable

to equity-accounted investments: - - -a) changes in fair value - - -b) reversal to profit or loss - - -

- impairments - - -- realised gains/(losses) - - -

c) other movements - - -

110. Total other components of comprehensive income 3,099,326 (997,254) 2,102,072

120. Comprehensive income (Items 10+110) x x 2,444,734


490

PART E – INFORMATION ON RISKS AND RELATED HEDGING POLICIES

BancoPosta’s operations are conducted in accordance with Presidential Decree 144/2001 and have been ring-fenced since2 May 2011 under the name of BancoPosta RFC. BancoPosta RFC’s operations consist of the investment of cash held inpostal current accounts, in the name of BancoPosta but subject to statutory restrictions. Activities also include the man-agement of third party collections and remittances. BancoPosta is required to invest postal current account deposits by private customers in euro zone government securi-ties, whilst deposits by Public Sector entities are deposited with the Ministry of Finance and the Economy. In 2012 Ban-coPosta was engaged in:• the reinvestment of funds deriving from maturing government securities and in the trading of securities in order to pro-

gressively match the portfolio’s maturity profile with the investment model adopted by the Poste Italiane SpA in 2010;• the arrangement of finance in the form of repurchase agreements totalling €5 billion with two different financial insti-

tutions as part of a transaction promoted in February 2012 by the European Central Bank and invested in Italian govern-ment securities in order to roll over investments maturing over the next three years.

The new maturity profile was developed based, among other things, on a leading market operator’s statistical/economet-ric model that reflects the interest rates and maturities typical of postal current accounts. The model is also used as thebasis of investment policies in order to limit exposure to rate and liquidity risks by foreseeing mismatches caused by theneed to marry the exigencies of risk management with those of improving returns that are dependent on the continuallychanging yield curve.

Financial risk managementThe objectives of a balanced financial management and monitoring of the main risk/return profiles are carried out by or-ganisational structures operating separately and independently. In addition, specific processes are in place governing theassumption, management and control of financial risks, including the progressive introduction of appropriate informationsystems. From an organisational viewpoint, the model used consists of:• the Cross-functional Committee, set up under the BancoPosta RFC By-laws and headed by Poste Italiane SpA’s CEO.

Other permanent members are the Head of BancoPosta and the heads of the functions within Poste Italiane SpA pri-marily involved with BancoPosta. The Committee provides advice, makes recommendations and coordinates BancoPos-ta’s operations with those of other Poste Italiane functions. As a rule the Committee meets once a month to examine,at the proposal of the Head of BancoPosta, key issues relating to the management and performance of the ring-fencedcapital. Poste Italiane SpA’s CEO then takes the necessary actions based on the work of the Committee, supported bythe relevant functions;

• BancoPosta’s Risk Management function, responsible for measuring and controlling risk and duly observing the independ-ence of control functions from management. The results of these activities are examined by the Financial Risk Commit-tee of Poste Italiane SpA.

The activities of the following bodies is also important:• Poste Italiane SpA’s Finance Committee, of which the Head of BancoPosta is a member, which oversees financial strat-

egy, based on indicators referring to internal planning and the external economic/financial cycle. The Committee meetsat least on a quarterly basis and is a specialist body that advises on the analysis and identification of investment and dis-investment opportunities;

• Poste Italiane SpA’s Financial Risk Committee, which monitors risk exposure and meets at least quarterly. Its membersinclude the Head of BancoPosta’s Risk Management;

• Poste Italiane SpA’s Finance function, the work of which is regulated by separate operating guidelines, assures optimalshort and medium to long-term financial structure for BancoPosta RFC and cash management in accordance with cor-porate guidelines.



491Notes

Section 1 – Credit risk

Credit risk is intertwined with counterparty, liquidity and concentration risks as explained below.Credit risk relates to the possibility that a change in a borrower’s credit rating could result in a loss, i.e., the risk that adebtor comes into full or partial breach of its repayment obligations for principal and interest.Counterparty risk is the risk that a counterparty could default on obligations of a financial instrument during its term. Thisrisk is inherent in certain types of transaction which, for BancoPosta RFC, would be plain vanilla derivatives and repurchaseagreements.Concentration risk is related to the overexposure to specific counterparties, groups of counterparties or groups of relatedcounterparties, i.e., counterparties in the same sector or that are engaged in the same business or operate in the samegeographic region.

Qualitative information

1. GeneralPresidential Decree 144/2001 prohibits BancoPosta RFC from making loans to customers. As a result, there are no cred-it policies.The nature of BancoPosta’s operations, however, results in a considerable concentration of exposure to the Republic ofItaly as a result of its deposits at the MEF and its investments in government securities. Credit risk models, explained be-low, show, however, that for capital requirements this type of investment does not determine capital absorption.

2. Credit risk management policies

2.1 Organisational aspects

The role of BancoPosta RFC’s Risk Management function is the management and control of credit, counterparty and con-centration risks. Monitoring credit risk particularly focused on the following exposures:• euro government securities in which private customer account deposits are invested; • deposits at the MEF in which Public Sector account deposits are invested;• amounts due from the Italian Treasury as a result of depositing funds gathered less payables for advances disbursed; • suspense account items: cheque clearing, use of electronic cards, collections;• temporary current account overdrafts caused by account charges for the period, limited to those not classified as im-

paired since the accounts were in funds in early 2013; • cash collateral accounts held at other banks in accordance with agreements intended to mitigate counterparty risk (CSA

- Credit Support Annex and GMRA - Global Master Repurchase Agreement);• securities held as collateral accounts in accordance with agreements intended to mitigate counterparty risk (CSA - Cred-

it Support Annex and GMRA - Global Master Repurchase Agreement);• trade receivables payable by financial/insurance product distribution associates.

Monitoring counterparty risk particularly entails the arrangement of hedging derivatives and repurchase agreements.BancoPosta RFC’s concentration risk is monitored to limit the instability that could be caused by the default of one cus-tomer or a group of related customers to which BancoPosta has a significant credit and counterparty exposure.

2.2 Management, measurement and control systems

Credit risk is managed as follows:• minimum rating requirements for issuers/counterparties, based on the type of instrument; • concentration limits per issuer/counterparty; • monitoring of changes in the ratings of counterparties.



492


The above limits for BancoPosta RFC are set out in Poste Italiane SpA’s financial operations guidelines which also containrating limits prohibiting dealings with non-investment grade counterparties, whilst concentration limits are applied as re-quired by prudential regulations12. The standard method13, as described in Bank of Italy Circular 263/2006, is used by BancoPosta to measure credit and coun-terparty risk. Standard & Poor’s, Moody’s and Fitch are used for the computation of counterparty credit ratings. The simplified approach, as explained for Italy in Bank of Italy Circular 263/2006, is used by BancoPosta to measure coun-terparty risk. The following methods are used to estimate the risks inherent in the following types of transaction:- the current value method14 is used for plain vanilla asset swaps and forward purchases of government securities; - Credit Risk Mitigation (CRM) techniques, the Simplified Method15, are used for repurchase transactions.

Concentration risk is measured using the method described in Bank of Italy regulation (cf. Circular 263/2006, Title V,Chapter 1).

2.3 Credit risk mitigation techniques

In order to limit the counterparty risk’s exposure, BancoPosta RFC has concluded standard ISDA master agreements andspecial agreements for the mitigation of risk for Repos transactions (GMRA - Global Master Repurchase Agreement) andOTC derivatives (CSA - Credit Support Annex).In detail, the agreements provide for a netting of assets and liabilities and the pledging as collateral of cash or govern-ment securities.The collateral required under the CSA is reduced by entering into accreting asset swaps on European inflation linked Eu-ro BTPs.Another way of mitigating counterparty risk using derivatives is the provision of performance letters of credit by the headoffices of counterparty banks.The techniques used by Poste Italiane’s Finance function to mitigate credit and counterparty risk, however, are not cur-rently recognised for the purposes of capital adequacy. As a result they are only used for internal risk management pur-poses.

2.4 Impaired financial assets

There were no impaired financial assets on BancoPosta RFC’s books at 31 December 2012.

12. Prudential regulations require that weighted risk exposure be at all times be below 25% of regulatory capital. Exposures are normally the asset’s nom-inal value adjusting for any risk mitigation. Lower risk borrowers are assigned lower risk weightings.

13. The standard method entails risk weightings in accordance with the nature of the exposure and the identity of the counterparty and the counterparty’sexternal credit rating.

14. The current value method for the measurement of the risk inherent in derivatives entails summing two components: substitution cost, represented byfair value, if positive, and an add-on equal to the product of the nominal value and the probability that the fair value, if positive, increases the value or,if negative, turns positive.

15. The CRM simplified method entails, for a collateralised exposure, the substitution of the principal obligor’s risk weighting with that of the collateral.


493Notes

Quantitative information

A. Credit quality

A.1 Exposure to performing and non-performing loans: amounts, impairments, movements, economic

and geographic segment

A.1.1 Distribution of credit exposure by portfolio and credit quality by carrying amount

A.1.2 Distribution of gross and net credit exposure by portfolio and credit quality


Non- OtherPortfolio/Credit quality performing Problem Recostructed Past-due assets Total

1. Financial assets held for trading - - - - - -2. Available-for-sale financial assets - - - - 22,426,616 22,426,6163. Held-to-maturity financial assets - - - - 14,048,068 14,048,0684. Due from banks - - - - 593,290 593,2905. Due from customers - - - - 9,821,177 9,821,1776. Financial assets designated at fair value - - - - - -7. Disposal of financial assets - - - - - -8. Hedging derivatives - - - - 12,157 12,157

Total at 31 December 2012 - - - - 46,901,308 46,901,308

Total at 31 December 2011 - - - - 38,043,776 38,043,776

Non-performing Performing TotalGross Specific Net Gross Collective Net (net

Portfolio/Credit quality exposure provisions exposure exposure provisions exposure exposure)

1. Financial assets held for trading - - - x x - -2. Available-for-sale financial assets - - - 22,426,616 - 22,426,616 22,426,6163. Held-to-maturity financial assets - - - 14,048,068 - 14,048,068 14,048,0684. Due from banks - - - 593,290 - 593,290 593,2905. Due from customers - - - 9,981,385 160,208 9,821,177 9,821,1776. Financial assets designated at fair value - - - x x - -7. Disposal of financial assets - - - - - - -8. Hedging derivatives - - - x x 12,157 12,157

Total at 31 December 2012 - - - 47,049,359 160,208 46,901,308 46,901,308

Total at 31 December 2011 - - - 38,116,409 159,047 38,043,776 38,043,776


494

A.1.3 On and off-balance sheet credit exposure to banks: gross and net amounts

BancoPosta RFC has pledged securities with a fair value of €252,015 thousand as required by the agreements conclud-ed for the mitigation of counterparty risk (Global Master Repurchase Agreement “GMRA” and a Credit Risk Support An-nex “CSA”).

A.1.6 On and off-balance sheet credit exposure to customers: gross and net amounts

Off-balance sheet exposures relate to forward purchases.


Gross Specific Collective NetType of exposure/Amounts exposure provisions provisions exposure

A. ON-BALANCE SHEET EXPOSURES

a) Non-performing - - x -b) Problem - - x -c) Restructured - - x -d) Past-due - - x -e) Other assets 593,290 x - 593,290

TOTAL A 593,290 - - 593,290

B. OFF-BALANCE SHEET EXPOSURES

a) Non-performing - - x -b) Other 12,157 x - 12,157

TOTAL B 12,157 - - 12,157

TOTAL A+B 605,447 - - 605,447

Gross Specific Collective NetType of exposure/Amounts exposure provisions provisions exposure

A. ON-BALANCE SHEET EXPOSURES

a) Non-performing - - x -b) Problem - - x -c) Restructured - - x -d) Past-due - - x -e) Other assets 46,456,069 x 160,208 46,295,861

TOTAL A 46,456,069 - 160,208 46,295,861

B. OFF-BALANCE SHEET EXPOSURES

a) Non-performing - - x -b) Other 801,149 x - 801,149

TOTAL B 801,149 - - 801,149

TOTAL A+B 47,257,218 - 160,208 47,097,010


495Notes

A.2 Classification of exposures based on external and internal ratings

A.2.1 Distribution of on and off-balance sheet exposures by external rating class

The rating classes refer to the ratings of borrowers/guarantors as defined by banking supervisory authorities (cf. Circular263 of 27 December 2006 - New Regulations for the Prudential Supervision of Banks). The rating agencies used for ratingclass computations were Standard & Poor’s, Moody’s and Fitch. The respective ratings for each class are shown below:

Since 2011 the macroeconomic events that had an impact on the risk-return profiles of the Company’s financial assetswere the debt crises in certain peripheral EU countries (Greece, Ireland, Portugal and Spain), which caused spreads onEuropean government securities to widen, with a particular impact on those related to Italy’s sovereign risk, and continu-ing uncertainty related to the banking sector. In the second half of 2011, and for part of 2012, a significant number of rat-ings downgrades by the leading agencies resulted in a progressive deterioration in the weighted average rating of PosteItaliane SpA’s exposures, which, for investments other than Italian government bonds, has fallen from A at 31 December2011 to A- at 31 December 2012.The nature of BancoPosta’s operations exposes it to a substantial degree of concentration in respect of the Italian State.The concentration can be seen in Table A.2.1 under Class 3, to which Italy was downgraded by rating agencies in 2012.


External rating class Not

Exposure Class 1 Class 2 Class 3 Class 4 Class 5 Class 6 rated Total

A. On-balance sheet credit exposure 34,178 546,326 46,186,273 - 1,413 - 120,961 46,889,151

B. Derivatives - 11,359 798 - - - - 12,157

B.1 Financial derivatives - 11,359 798 - - - - 12,157B.2 Credit derivatives - - - - - - - -

C. Guarantees issued - - - - - - - -

D. Commitments to disburse funds - - 801,149 - - - - 801,149

E. Other - - - - - - - -

Total 34,178 557,685 46,988,220 - 1,413 - 120,961 47,702,457

Credit rating class Fitch Moody’s S&P

1 AAA to AA- Aaa to Aa3 AAA to AA-

2 A+ to A- A1 to A3 A+ to A-

3 BBB+ to BBB- Baa1 to Baa3 BBB+ to BBB-

4 BB+ to BB- Ba1 to Ba3 BB+ to BB-

5 B+ to B- B1 to B3 B+ to B-

6 CCC+ and below Caa1 and below CCC+ and below

Rating Agency Equivalents of Credit Rating Classes


496

A.3 Distribution of guaranteed exposures by type of guarantee

BancoPosta RFC received pledged securities with a fair value of €358,255 thousand as required by the agreements con-cluded for the mitigation of counterparty risk (Global Master Repurchase Agreement or “GMRA”) as part of a February2012 transaction promoted by the European Central Bank (Long Term Refinancing Operation 3 years).

B. Distribution and concentration of credit exposures

B.1 Distribution of on and off-balance sheet credit exposures to customers by economic sector andcarrying amount


Governments Other public entities Finance companies Insurance companies Non-finance companies Other entities

Exposures/ Net Specif. Coll. Net Specif. Coll. Net Specif. Coll. Net Specif. Coll. Net Specif. Coll. Net Specif. Coll. Counterparty expos. prov. prov. expos. prov. prov. expos. prov. prov. expos. prov. prov. expos. prov. prov. expos. prov. prov.

A. On-balance sheet exposures

A.1 Non-performing - - x - - x - - x - - x - - x - - x

A.2 Problem - - x - - x - - x - - x - - x - - x

A.3 Restructured - - x - - x - - x - - x - - x - - x

A.4 Past-due - - x - - x - - x - - x - - x - - x

A.5 Other 44,931,350 x 13,194 85,335 x 1,500 938,891 x 21,467 66,882 x 16 255,887 x 18,422 17,516 x 105,609

TOTAL A 44,931,350 - 13,194 85,335 - 1,500 938,891 - 21,467 66,882 - 16 255,887 - 18,422 17,516 - 105,609

B. Off-balance sheet transactions

B.1 Non-performing - - x - - x - - x - - x - - x - - x

B.2 Problem - - x - - x - - x - - x - - x - - x

B.3 Other non-performing assets - - x - - x - - x - - x - - x - - x

B.4 Other 801,149 x - - x - - x - - x - - x - - x -

TOTAL B 801,149 - - - - - - - - - - - - - - - - -

TOTAL (A+B) at 31 December 2012 45,732,499 - 13,194 85,335 - 1,500 938,891 - 21,467 66,882 - 16 255,887 - 18,422 17,516 - 105,609

TOTAL (A+B) at 31 December 2011 38,657,461 - 21,146 63,741 - 1,290 135,970 - 20,579 72,885 - 1,539 119,062 - 14,111 24,672 - 100,381


497Notes

B.2 Distribution of on and off-balance sheet credit exposures to customers by geographic area andcarrying amount

B.2 Distribution of on and off-balance sheet credit exposures to customers by geographic area andcarrying amount

The concentration in central Italy is due to the fact that nearly all exposures consist of Italian government securities anddeposits at the MEF.


ITALY OTHER EUROPEAN COUNTRIES AMERICAS ASIA REST OF THE WORLDExposure/ Net Coll. Net Coll. Net Coll. Net Coll. Net Coll.Geographic area expos. prov. expos. prov. expos. prov. expos. prov. expos. prov.


A.1 Non-performing - - - - - - - - - -

A.2 Problem - - - - - - - - - -

A.3 Restructured - - - - - - - - - -

A.4 Past-due - - - - - - - - - -

A.5 Other 46,292,904 160,183 2,562 21 5 1 1 - 389 3

TOTAL A 46,292,904 160,183 2,562 21 5 1 1 - 389 3


B.1 Non-performing - - - - - - - - - -

B.2 Problem - - - - - - - - -

B.3 Other non-performing assets - - - - - - - - - -

B.4 Other 801,149 - - - - - - - - -

TOTAL B 801,149 - - - - - - - - -

TOTAL (A+B) at 31 December 2012 47,094,053 160,183 2,562 21 5 1 1 - 389 3

TOTAL (A+B) at 31 December 2011 39,070,594 159,021 2,702 21 2 1 1 1 492 3

ITALY, NORTHWEST ITALY, NORTHEAST ITALY, CENTRE ITALY, SOUTH AND ISLANDS

Exposure/ Net Coll. Net Coll. Net Coll. Net Coll.Geographic area expos. prov. expos. prov. expos. prov. expos. prov.


A.1 Non-performing - - - - - - - -

A.2 Problem - - - - - - - -

A.3 Restructured - - - - - - - -

A.4 Past-due - - - - - - - -

A.5 Other 9,275 1,646 2,171 14,047 46,273,949 140,331 7,509 4,159

TOTAL A 9,275 1,646 2,171 14,047 46,273,949 140,331 7,509 4,159


B.1 Non-performing - - - - - - - -

B.2 Problem - - - - - - -

B.3 Other non-performing assets - - - - - - - -

B.4 Other - - - - 801,149 - - -

TOTAL B - - - - 801,149 - - -

TOTAL (A+B) at 31 December 2012 9,275 1,646 2,171 14,047 47,075,098 140,331 7,509 4,159

TOTAL (A+B) at 31 December 2011 1,694,754 2,558 2,291 14,106 37,365,264 137,982 8,285 4,375


498

B.3 Distribution of on and off-balance sheet credit exposures to banks by geographic area and carryingamount

B.3 Distribution of on and off-balance sheet credit exposures to banks by geographic area and carryingamount


ITALY OTHER EUROPEAN COUNTRIES AMERICAS ASIA REST OF THE WORLDExposure/ Net Coll. Net Coll. Net Coll. Net Coll. Net Coll.Geographic area expos. prov. expos. prov. expos. prov. expos. prov. expos. prov.


A.1 Non-performing - - - - - - - - - -

A.2 Problem - - - - - - - - - -

A.3 Restructured - - - - - - - - - -

A.4 Past-due - - - - - - - - - -

A.5 Other 75,211 - 518,063 - - - 15 - 1 -

TOTAL A 75,211 - 518,063 - - - 15 - 1 -


B.1 Non-performing - - - - - - - - - -

B.2 Problem - - - - - - - - - -

B.3 Other non-performing assets - - - - - - - - - -

B.4 Other 2,919 - 9,238 - - - - - - -

TOTAL B 2,919 - 9,238 - - - - - - -

TOTAL (A+B) at 31 December 2012 78,130 - 527,301 - - - 15 - 1 -

TOTAL (A+B) at 31 December 2011 450,051 - 462,943 - - - 54 - 1 -

ITALY, NORTHWEST ITALY, NORTHEAST ITALY, CENTRE ITALY, SOUTH AND ISLANDS

Exposure/ Net Coll. Net Coll. Net Coll. Net Coll.Geographic area expos. prov. expos. prov. expos. prov. expos. prov.


A.1 Non-performing - - - - - - - -

A.2 Problem - - - - - - - -

A.3 Restructured - - - - - - - -

A.4 Past-due - - - - - - - -

A.5 Other 64,004 - - - 11,205 - 2 -

TOTAL A 64,004 - - - 11,205 - 2 -


B.1 Non-performing - - - - - - - -

B.2 Problem - - - - - - - -

B.3 Other non-performing assets - - - - - - - -

B.4 Other 2,919 - - - - - - -

TOTAL B 2,919 - - - - - - -

TOTAL (A+B) at 31 December 2012 66,923 - - - 11,205 - 2 -

TOTAL (A+B) at 31 December 2011 354,239 - - - 95,810 - 2 -


499Notes

B.4 Large exposures

This note has been omitted since BancoPosta RFC has not yet received separate, specific prudential instructions in thisregard from the Bank of Italy.

C. Securitisations and disposal of assets

C.2.1 Transferred financial assets not derecognised: carrying amount and gross amount

Financial assets held at third parties but still carried by BancoPosta are government securities given as collateral for re-purchase agreements.Specifically:• €5,769 million relating to two three year loans promoted by the European Central Bank in February 2012;• €513 million relating to other repurchase agreement financings.

C.2.2 Financial liabilities matched with assets transferred but not derecognised: carrying amount


Financial assets held Financial assets Available-for-sale Held-to-maturity

for trading designated at fair value financial assets financial assets Due from banks Due from customers Total

Asset/Portfolio A B C A B C A B C A B C A B C A B C At 31 Dec 2012 At 31 Dec 2011

A. On-balance sheet assets - - - - - - - - - 6,282,443 - - - - - - - - 6,282,443 2,106,245

1. Debt securities - - - - - - - - - 6,282,443 - - - - - - - - 6,282,443 2,106,245

2. Equity instruments - - - - - - - - - x x x x x x x x x - -

3. UCIs - - - - - - - - - x x x x x x x x x - -

4. Loans - - - - - - - - - - - - - - - - - - -

B. Derivative instruments - - - x x x x x x x x x x x x x x x - -

TOTAL at 31 Dec 2012 - - - - - - - - - 6,282,443 - - - - - - - - 6,282,443 -

of which non-performing - - - - - - - - - - - - - - - - - - - -

TOTAL at 31 Dec 2011 - - - - - - 530,154 - - 1,576,091 - - - - - - - - - 2,106,245

of which non-performing - - - - - - - - - - - - - - - - - - - -

KeyA = Full recognition of financial assets transferred to third parties (carrying amount)B = Partial recognition of financial assets transferred to third parties (carrying amount)C = Partial recognition of financial assets transferred to third parties (gross amount)

Financial assets Financial assets Available-for-sale Held-to-maturityheld for designated at financial financial Due from Due from

Liability/Asset portfolio trading fair value assets assets banks customers Total

1. Due to customers - - - 2,523,542 - - 2,523,542

a) asset fully recognised - - - 2,523,542 - - 2,523,542b) asset partially recognised - - - - - - -

2. Due to banks - - - 3,042,281 - - 3,042,281

a) asset fully recognised - - - 3,042,281 - - 3,042,281b) asset partially recognised - - - - - - -

TOTAL at 31 December 2012 - - - 5,565,823 - - 5,565,823

TOTAL at 31 December 2011 - - 537,919 1,450,631 - - 1,988,550


500

Section 2 – Market risk




• fair value interest rate risk: the risk that the value of a financial instrument fluctuates as a result of movements in mar-ket interest rates;

• spread risk: the risk relating to the potential fluctuations of the prices of securities held in portfolio as a result of the de-terioration of the market’s view of an issuer’s credit worthiness;

• cash flow interest rate risk: the risk that the cash flows from a financial instrument will fluctuate because of movementsin market interest rates;

• inflation rate risk: the risk that the cash flows from a financial instrument will fluctuate because of movements in infla-tion rates.

2.1 Rate and price risks - supervisory trading book

There were no supervisory trading book assets or liabilities at 31 December 2012. Poste Italiane SpA’s financial operationsguidelines for BancoPosta RFC prohibit the acquisition of assets and liabilities with the intention to trade in accordancewith Bank of Italy Circular 155, in conjunction with Bank of Italy Circular 263 for supervisory trading books.

2.2 Rate and price risks - banking book


A. Generalities, operating procedures and rate and price risk measurement methods• Rate riskRate risk is inherent in the operations of a financial institution and can affect income (cash flow interest rate risk) and thevalue of the firm (fair value interest rate risk). Movements in interest rate can affect the cash flows associated with vari-able rate assets and liabilities and the fair value of fixed rate instruments.Cash flow interest rate risk arises from the possibility of a mismatch of types of rates, methods of indexing and maturi-ties of financial assets and liabilities which could remain until their contractual and/or expected final maturity and, conse-quently, impact on net interest income and will thus have an effect on future period earnings. This risk is of particular rel-evance to variable rate assets and liabilities or assets and liabilities which have been transformed into variable rate by fairvalue hedges. Fair value interest rate risk is inherent in market rate euro zone government securities for which a fair value hedge hasnot been arranged. BancoPosta RFC’s securities are predominantly natural fixed rate instruments or synthetic, for instanceas a result of cash flow hedge asset swaps.Interest rate risk is measured internally using the economic value method. This results in a need to develop an amortisa-tion schedule for the funding consistent with its nature and to select a time horizon and confidence levels for the esti-mates. A time horizon of 30 years is currently used for customer deposits and five years for Public Sector deposits. Thisapproach entails the computation of an ALM rate risk through the determination of asset/liability maturity gaps at a 99%confidence level. Rate risk management and mitigation is based on the conclusions of the measurement of rate risk exposure and compli-ance with financial operations guidelines as approved by Poste Italiane SpA’s Board of Directors.



501Notes

Details on the risk management model are contained in the note on financial risks in Part E. BancoPosta RFC monitors market risk, including fair value interest rate and spread risks, inherent in available-for-sale fi-nancial assets and derivative financial instruments through the computation of Value at Risk (VaR) over a time horizon ofthree days at a 99% confidence level.

• Spread riskSpread risk is inherent in euro zone government securities classified as available-for-sale financial assets. It is monitoredweekly and has become particularly important since 2011 because it was the chief cause of the decrease in the fair val-ue of the AFS portfolio. The volatility of these fair values, however, reduced in the second half of 2012 due to the reduc-tion in loan spreads and risk free rates.

• Price riskPrice risk relates to available-for-sale financial assets. The most significant of BancoPosta RFC’s financial assets exposed to price risk are the class B Mastercard Incorporatedshares and the class C Visa Incorporated shares. BancoPosta RFC monitors the price risk inherent in the shares by computing Value at Risk (VaR) over a time horizon ofthree days at a 99% confidence level.

B. Fair value hedgesBancoPosta RFC’s fair value interest rate risk hedges include entering into OTC fair value hedge asset swaps primarilywith banks for individual securities in portfolio. These derivatives cannot hedge spread risk since they hedge market in-terest rate fluctuations through rate swaps.

C. Cash flow hedgesBancoPosta RFC’s cash flow interest rate risk hedges include OTC cash flow hedge asset swaps primarily with banks forindividual securities in portfolio. The pattern of portfolio maturities results in the need to invest funds in euro government securities resulting in an expo-sure to risk of a decrease in prices as a consequence of increasing yields. BancoPosta RFC is a buyer of cash flow fore-cast hedges to hedge this type of cash flow interest rate risk.



502


1. Banking book: distribution of residual terms to maturity of financial assets and liabilities by repricing date

Currency: Euro


3 months 3-6 6 months - 1 - 5 5 - 10 Over UnspecifiedAsset-Liability/Residual term to maturity Demand or less months 1 year years years 10 years maturity

1. On-balance sheet assets 10,411,737 6,629,011 1,030,862 1,523,979 6,266,138 11,128,436 9,896,258 -

1.1 Debt securities - 6,629,011 1,030,862 1,523,979 6,266,138 11,128,436 9,896,258 -- with prepayment option - - - - - - - -- other - 6,629,011 1,030,862 1,523,979 6,266,138 11,128,436 9,896,258 -

1.2 Due from banks 591,051 - - - - - - -1.3 Due from customers 9,820,686 - - - - -

- current accounts 18,282 - - - - - - -- other loans 9,802,404 - - - - - - -

- with prepayment option - - - - - - - -- other 9,802,404 - - - - - - -

2. On-balance sheet liabilities 40,123,687 6,217,586 48,152 7,533 40,704 - - -

2.1 Due to customers 39,683,297 3,200,000 48,152 7,533 16,009 - - -

- current accounts 38,779,709 - - - - - - -

- other deposits 903,588 3,200,000 48,152 7,533 16,009 - - -

- with prepayment option - - - - - - - -

- other 903,588 3,200,000 48,152 7,533 16,009 - - -

2.2 Due to banks 440,390 3,017,586 - - 24,695 - - -

- current accounts - - - - - - - -

- other deposits 440,390 3,017,586 - - 24,695

2.3 Debt securities - - - - - - - -


- other - - - - - - - -

2.4 Other liabilities - - - - - - - -

- with prepayment option - - - - - - -

- other - - - - - - - -

3. Financial derivatives - 3,884,899 - - 2,074,853 3,203,750 5,010,000 -

3.1 With underlying securities - 801,149 - - 804,853 - - -

- Options - - - - - - - -

+ long positions - - - - - - - -

+ short positions - - - - - - - -

- Other derivatives - 801,149 - - 804,853 - - -

+ long positions - - - - 804,853 - - -

+ short positions - 801,149 - -

3.2 Without underlying securities - 3,083,750 - - 1,270,000 3,203,750 5,010,000 -

- Options - - - - - - - -



- Other derivatives - 3,083,750 - - 1,270,000 3,203,750 5,010,000 -

+ long positions - 500,000 - - 1,270,000 2,703,750 1,810,000 -

+ short positions - 2,583,750 - - - 500,000 3,200,000 -

4. Other off-balance sheet transactions - - - - - - - -

+ long positions - - - - - - - -+ short positions - - - - - - - -


503Notes


Currency: US dollars



1. On-balance sheet assets 642 - - - - - - -



- other - - - - - - - -

1.2 Due from banks 642 - - - - - - -

1.3 Due from customers - - - - - - - -


- other loans - - - - - - - -


- other - - - - - - - -

2. On-balance sheet liabilities - - - - - - - -

2.1 Due to customers - - - - - - - -


- other deposits - - - - - - - -


- other - - - - - - - -

2.2 Due to banks - - - - - - - -





- other - - - - - - - -



- other - - - - - - - -

3. Financial derivatives - - - - - - - -

3.1 With underlying securities - - - - - - - -

- Options - - - - - - - -



- Other derivatives - - - - - - - -



3.2 Without underlying securities - - - - - - - -

- Options - - - - - - - -










504


Currency: Swiss franc



1. On-balance sheet assets 1,340 - - - - - - -



- other - - - - - - - -

1.2 Due from banks 1,236 - - - - - - -

1.3 Due from customers 104 - - - - - - -

- current accounts 104 - - - - - - -

- other loans - - - - - - - -


- other - - - - - - - -


2.1 Due to customers - - - - - - - -




- other - - - - - - - -

2.2 Due to banks - - - - - - - -





- other - - - - - - - -



- other - - - - - - - -



- Options - - - - - - - -







- Options - - - - - - - -










505Notes


Currency: Sterling






- other - - - - - - - -

1.2 Due from banks 301 - - - - - - -



- other loans - - - - - - - -


- other - - - - - - - -


2.1 Due to customers - - - - - - - -




- other - - - - - - - -

2.2 Due to banks - - - - - - - -





- other - - - - - - - -



- other - - - - - - - -



- Options - - - - - - - -







- Options - - - - - - - -










506


Currency: Japanese yen






- other - - - - - - - -

1.2 Due from banks 50 - - - - - - -



- other loans - - - - - - - -


- other - - - - - - - -


2.1 Due to customers - - - - - - - -




- other - - - - - - - -

2.2 Due to banks - - - - - - - -





- other - - - - - - - -



- other - - - - - - - -



- Options - - - - - - - -







- Options - - - - - - - -










507Notes


Currency: Tunisian dinar






- other - - - - - - - -

1.2 Due from banks - - - - - - - -



- other loans - - - - - - - -


- other - - - - - - - -


2.1 Due to customers - - - - - - - -




- other - - - - - - - -

2.2 Due to banks - - - - - - - -





- other - - - - - - - -



- other - - - - - - - -



- Options - - - - - - - -







- Options - - - - - - - -










508


Currency: Other currencies






- other - - - - - - - -

1.2 Due from banks 10 - - - - - - -



- other loans - - - - - - - -


- other - - - - - - - -


2.1 Due to customers - - - - - - - -




- other - - - - - - - -

2.2 Due to banks - - - - - - - -





- other - - - - - - - -



- other - - - - - - - -



- Options - - - - - - - -







- Options - - - - - - - -










509Notes

2. Banking book: internal models and other methods of sensitivity analysis

• Fair value interest rate riskThe sensitivity of exposures to fair value interest rate risk was tested by assuming a parallel shift of the market forwardyield curve of +/- 100 bps with a floor of zero. BancoPosta RFC’s available-for-sale financial asset portfolio at 31 Decem-ber 2012 had a duration of 6.28 years (6.21 years portfolio duration at 31 December 2011) resulting in an insignificant in-crease of the portfolio’s fair value to interest rate risk as sensitised in the table below.

All of BancoPosta RFC’s investments are classified as held-to-maturity and available-for-sale financial assets. Due to thefact that HTM are initially recognised at fair value and subsequently measured at amortised cost, movements in fair val-ue have no effect on profit or loss. For AFS, on the other hand, which are measured at fair value, movements in fair val-ue are taken to a separate equity reserve which, consequently, must be continually monitored for gains and losses on meas-urement. The above sensitivity analysis relates to these assets.BancoPosta RFC’s AFS investments are comprised of the following: • fixed rate Italian government securities (ordinary BTPs) with a par value of €15,092,100 thousand (€12,221,800 thou-

sand at 31 December 2011); • inflation-linked Italian government bonds (BTP€i) purchased in 2012 and having a par value €2,800,000 thousand, which

are not hedged. These bonds provide a fixed rate of return calculated on their nominal value, as revalued on the basisof the rate of inflation since they were issued. This feature makes for a modified duration of unhedged inflation-linkedbonds, which measures price sensitivity to changes only in interest rates, greater than the modified duration of fixedrate bonds with the same tenor (e.g. BTPs);

• variable rate securities swapped into fixed rate through cash flow hedges. The latter are inflation-linked BTPs (BTP€i)with a par value of €2,583,750 thousand (€2,583,750 thousand at 31 December 2011);


Net interest and Equity other banking reserves

Change in value income before taxesAnalysis date Nominal value Fair value +100bps -100bps +100bps -100bps +100bps -100bps

2011 effects

Available-for-sale financial assetsDebt securities 15,805,550 13,442,018 (613,333) 629,928 - - (613,333) 629,928

Financial assets held for trading 550,000 12,844 (8,879) 9,053 (8,879) 9,053 - -Assets - Hedging derivatives 300,000 2,064 (5,750) 5,870 - - (5,750) 5,870Financial liabilities held for trading 500,000 (6,933) (16,769) 17,464 (16,769) 17,464 - -Liabilities - Hedging derivatives 500,000 (33,345) (27,102) 29,377 - - (27,102) 29,377

31 December 2011 variability 17,655,550 13,416,648 (671,833) 691,692 (25,648) 26,517 (646,185) 665,175

2012 effects

Available-for-sale financial assetsDebt securities 21,475,850 22,426,616 (1,143,568) 994,459 - - (1,143,568) 994,459

Financial assets held for trading - - - - - - - -Assets - Hedging derivatives 800,000 12,157 (16,225) 1,667 - - (16,225) 1,667Financial liabilities held for trading - - - - - - - -Liabilities - Hedging derivatives - - - - - - -

31 December 2012 variability 22,275,850 22,438,772 (1,159,793) 996,126 - - (1,159,793) 996,126



510


The portion of the fixed rate portfolio relating to ordinary BTPs was partially hedged against fair value interest rate riskthrough asset swaps designated as fair value hedges: – BTPs with a nominal value of €500,000 thousand were hedged against interest rate risk through IRSs designated as fair

value hedges, which took effect immediately; – 2023 and 2025 BTPs with a nominal value of €400,000 thousand were partially hedged through IRSs designated as fair

value hedges with a forward start in 2016; – 2026, 2034 and 2040 BTPs with a nominal value of €2,800,000 thousand were partially hedged through IRSs designat-


The fair value of securities forward purchases with a nominal value of €800,000 thousand at 31 December 2012 (cashflow hedges of forecast transactions) are also exposed to interest rate risk.In addition to sensitivity analysis, BancoPosta RFC monitors fair value interest rate risk by computing maximum potentialloss or VaR - Value at Risk. The results of the VaR analysis for AFS investments and derivatives are shown in the tablebelow:

• Spread riskThe sensitivity of the government securities portfolio to Italian sovereign risk is significantly greater than to movementsin risk free interest rates. This is partly due to the fact that movements in loan spreads also have an effect on the valueof variable rate securities and, above all, the fact that a hedging policy employing derivatives has not been developed forthe risk, as is the case for the pure rate component. This means that increases in interest rates caused by the swap com-ponent will result in fixed rate security losses being offset by the increase in the value of the hedging IRS (fair valuehedge strategy). If, on the other hand, the increase in rates is due to increased spreads on Italian government bonds, loss-es on government securities will not be offset by movements in other positions in the opposite direction.Sensitivity to spreads was computed by applying a +/- 100 bps shift in the yield curve for Italian government securities,which is the risk most influencing the various types of security in portfolio. A floor of zero, however, was created at a shiftof -100 bps to avoid negative interest rates for very short term paper.The sensitivity analysis are shown below.


2012

Closing VaR (323,202)Average VaR (340,470)Minimum VaR (225,962)Maximum VaR (552,154)

16. In July 2012, following changed market conditions and to stabilise the benefit of the cash flow hedging strategy, BancoPosta RFC unwound early assetswaps used to lock in a fixed interest rate for a portion of the €950,000 invested in CCTeus. As a result of the transaction, the positive balance of thecash flow hedge reserve, which reflects the increase in the value of the asset swaps, will be released to profit or loss throughout the remaining life ofthese securities, thereby boosting their return.


511Notes

In addition to sensitivity analysis BancoPosta RFC monitors fair value interest rate risk by computing maximum potentialloss or VaR - Value at Risk. The results of the VaR analysis regarding the variability of spread risk are shown below.


Net interest Equity and other reserves

Change in value banking income before taxesAnalysis date Nominal value Fair value +100bps -100bps +100bps -100bps +100bps -100bps

2011 effects

Available-for-sale financial assetsDebt securities 15,805,550 13,442,018 (1,056,555) 1,205,516 - - (1,056,555) 1,205,516

Financial assets held for trading 550,000 12,844 (8,879) 9,053 (8,879) 9,053 - -Assets - Hedging derivatives 300,000 2,064 (5,750) 5,870 - - (5,750) 5,870Financial liabilities held for trading 500,000 (6,933) (16,769) 17,464 (16,769) 17,464 - -Liabilities - Hedging derivatives 500,000 (33,345) (27,102) 29,377 - - (27,102) 29,377

31 December 2011 variability 17,655,550 13,416,648 (1,115,056) 1,267,280 (25,648) 26,517 (1,089,407) 1,240,763

2012 effects

Available-for-sale financial assetsDebt securities 21,475,850 22,426,616 (1,700,954) 1,917,415 - - (1,700,954) 1,917,415

Financial assets held for trading - - - - - - - -Assets - Hedging derivatives 800,000 12,157 (16,225) 17,294 - - (16,225) 17,294Financial liabilities held for trading - - - - - - - -Liabilities - Hedging derivatives - - - - - - - -

31 December 2012 variability 22,275,850 22,438,773 (1,717,179) 1,934,709 - - (1,717,179) 1,934,709

Fair value spread risk

Analysis date Nominal value Fair value SpreadVaR

2011 effects

Available-for-sale financial assetsDebt securities 15,805,550 13,442,018 870,269

Financial assets/liabilities held for trading 1,050,000 5,911 14,623Assets/Liabilities - Hedging derivatives 800,000 (31,281) 16,041

31 December 2011 variability 17,655,550 13,416,648 919,475

2012 effects

Available-for-sale financial assetsDebt securities 21,475,850 22,426,616 604,220

Financial assets/liabilities held for trading - - -Assets/Liabilities - Hedging derivatives 800,000 12,157 6,054

31 December 2012 variability 22,275,850 22,438,773 608,467

Spread risk - VaR analysis


512

Maximum potential loss (VaR - Value at Risk), a statistical estimation with a time horizon of three days and a confidencelevel of 99%, is also computed by BancoPosta RFC to monitor market risk. The risk analysis permits an assessment to-gether with spread risk of fair value interest rate risk. The VaR of available-for-sale assets was €559,802 thousand at 31December 2012 (€807,091 thousand at 31 December 2011) and €5,799 thousand (€29,353 thousand at 31 December2011) for the derivatives relating to forward purchases. The lower VaR than at 31 December 2011 was due to the decreasein the volatility of the variables considered, particularly spread risk.

• Cash flow interest rate riskThe sensitivity to cash flow interest rate risk at 31 December 2011 and 31 December 2012 is summarised in the tablebelow and was computed assuming a +/- 100 bps parallel shift in the market forward interest rate curve. A floor of zero,however, was created at a shift of -100 bps to avoid negative interest rates for very short term items.

Cash flow risk at 31 December 2012 was primarily inherent in the placement of Public Sector deposits with the MEF. Vari-able rate interest has been paid on those placements since 1 January 2008 calculated on a basket of Government secu-rities and money market indices as required by the agreement renewed on 10 April 2012 by Ministerial Decree to 31 De-cember 2012 and is now in the process of being renewed until 31 December 2014.


Net interest Equity reservesand other before Total

banking income taxes equityAnalysis date Nominal value +100bps -100bps +100bps -100bps +100bps -100bps

2011 effects

Due from banks 595,419 5,954 (3,628) - - 5,954 (3,628)Due from customers

- Deposits at MEF (Treasury) 7,060,499 70,605 (70,605) - - 70,605 (70,605)- Buffer deposit at MEF 829,399 8,294 (8,294) - - 8,294 (8,294)- Due from customers (Poste Italiane) 57,037 570 (570) - - 570 (570)

Available-for-sale financial assets- Debt securities 550,000 5,500 (5,500) - - 5,500 (5,500)

Due to banks (9,520) (95) 60 - - (95) 60Due to customers (Poste Italiane) (68,331) (683) 683 - - (683) 683

31 December 2011 variability 9,014,503 90,145 (87,854) - - 90,145 (87,854)

2012 effects

Due from banks 529,929 5,299 (680) - - 5,299 (680)Due from customers

- Deposits at MEF (Treasury) 5,416,414 54,164 (54,164) - - 54,164 (54,164)- Buffer deposit at MEF 1,397,125 13,971 (10,478) - - 13,971 (10,478)- Due from customers (Poste Italiane) 245,098 2,451 (1,838) - - 2,451 (1,838)

Available-for-sale financial assets- Debt securities 1,500,000 15,000 (15,000) - - 15,000 (15,000)

Due to banks 2,500,000 25,000 (25,000) - - 25,000 (25,000)Due to customers 2,500,000 25,000 (25,000) - - 25,000 (25,000)Due to customers (Poste Italiane) (68,331) (683) 512 - - (683) 512

31 December 2012 variability 14,020,235 140,203 (131,648) - - 140,203 (131,648)

Cash flow interest rate risk


513Notes

Cash flow interest rate risk primarily relates to:• a receivable of €517,265 thousand posted as cash collateral for derivative liabilities;• cash deposited with the MEF and held in the so-called Buffer Account which from 1 December 2011 earns interest based

on the Main Refinancing Operations (MRO) rate17;• a portion of the fixed rate portfolio consisting of BTPs, hedged immediately by the fair value hedges described in note

on fair value interest rate risk, with a nominal value of €500,000 thousand;• CCTeus with a nominal value of €1,000,000 thousand, whose yields have not been hedged by cash flow hedges;• bank deposits paying interest at variable rates;• two three-year borrowings totalling €5 billion on which indexed REFI18 is payable plus a spread negotiated with each of

the lenders.

• Cash flow inflation rate riskInflation rate risk at 31 December 2012 relates to government inflation indexed bonds (inflation linked BTPs) that are nothedged through the arrangement of cash flow hedges. The securities provide a fixed rate return on the nominal value ofthe security, as revalued by the rate of inflation since the issue date.

• Price riskThe sensitivity of financial instruments to price risk is analysed by sensitivity stress testing of historic volatility for the pe-riod in order to emulate potential market volatility.


Equity Change Profit reservesin value before tax before taxes

Analysis date Nominal value Fair value +100bps -100bps +100bps -100bps +100bps -100bps

2012 effects

Available-for-sale financial assetsDebt securities 2,800,000 2,998,597 197 (196) 197 (196) - -

31 December 2012 variability 2,800,000 2,998,597 197 (196) 197 (196) - -

Cash flow inflation rate risk


18. The rate at which banks are required to pay on refinancing at the ECB. It is also called the refinancing rate.


514

Notes on the shares are contained in Part B – Information on the statement of financial position, section 4.1 Available-for-sale financial assets. Although the shares are not listed on a regulated market, they are convertible on disposal into anequal number of shares regularly listed on the New York Stock Exchange. The increase in the fair value during the yearof the Mastercard shares was due to the increase in the class A price partially offset by a slight strengthening of the eu-ro against the dollar.Shares in the portfolio were sensitivity tested using similar listed shares adjusting for 2012 volatility. The shares’ price riskis also monitored daily through the computation of VaR. The sensitivity analysis are shown below:

2.3 Foreign exchange risk


A. Generalities, management policies and foreign exchange risk measurement methodsForeign exchange risk relates to losses that could be incurred on foreign currency positions, regardless of portfolio, throughfluctuations in foreign exchange rates. BancoPosta RFC is exposed to this risk principally through foreign currency bankaccounts, foreign currency holdings and Mastercard and Visa shareholdings.Foreign exchange risk is controlled by the Risk Management function using the measurement of exposure to the risk inaccordance with financial management guidelines which restrict currency trading to the foreign exchange service and in-ternational remittances.Foreign exchange risk is measured using Bank of Italy methodology (cf. Circular 263/2006, Title II, Chapter 4, Second Part,Section V). Furthermore, sensitivity stress tests are regularly conducted for the most important exposures with referenceto hypothetical levels of exchange rate flexibility for each currency position. Movements in exchange rate equal to the volatil-ity for the period are assumed to emulate market fluctuations.


Net interest Equity Change and other reservesin value banking income before taxes

Analysis date Exposure +Vol -Vol +Vol -Vol +Vol -Vol

2011 effects

Available-for-sale financial assetsEquity instruments 22,552 8,544 (8,544) - - 8,544 (8,544)

31 December 2011 variability 22,552 8,544 (8,544) - - 8,544 (8,544)

2012 effects

Available-for-sale financial assetsEquity instruments 29,235 6,710 (6,710) - - 6,710 (6,710)

31 December 2012 variability 29,235 6,710 (6,710) - - 6,710 (6,710)

Price risk

2012

Closing VaR (730)Average VaR (826)Minimum VaR (636)Maximum VaR (1,125)


515Notes

B. Foreign exchange hedges


1. Distribution of assets, liabilities and derivatives by currency

Other assets relate to foreign currencies held in post offices for Bureau de Change services.

2. Internal models and other methods of sensitivity analysis

Application of the foreign exchange rate volatilities during the period to the most important equities held by BancoPostaare shown in the following table.


Currency

US Swiss Sterling Japanese Tunisian OtherItems dollar franc yen dinar currencies

A. Financial assets 29,877 1,340 301 50 355 159

A.1 Debt securities - - - - - -A.2 Equity instruments 29,235 - - - - 117A.3 Due from banks 642 1,236 301 50 - 10A.4 Due from customers - 104 - - 355 32A.5 Other financial assets - - - - - -

B. Other assets 3,298 2,217 2,006 190 - -

C. Financial liabilities - - - - - -

C.1 Due to banks - - - - - -C.2 Due to customers - - - - -C.3 Debt securities - - - - - -C.4 Other financial liabilities - - - - - -

D. Other liabilities - - - - - -

E. Financial derivatives - - - - - -

- Options - - - - - -+ long positions - - - - - -+ short positions - - - - - -

- Other derivatives - - - - - -+ long positions - - - - - -+ short positions - - - - - -

Total assets 33,175 3,557 2,307 240 355 159

Total liabilities - - - - - -

Position (+/-) 33,175 3,557 2,307 240 355 159

Net interest Equity Change and other reserves

USD EUR in value banking income before taxesposition position +Vol -Vol +Vol -Vol +Vol -Vol

Analysis date (USD/000) (EUR/000) 260 days 260 days 260 days 260 days 260 days 260 days

2011 effects

Available-for-sale financial assetsEquity instruments 29,180 22,552 2,501 (2,501) - - 2,501 (2,501)

31 December 2011 variability 29,180 22,552 2,501 (2,501) - - 2,501 (2,501)

2012 effects

Available-for-sale financial assetsEquity instruments 38,573 29,235 2,520 (2,520) - - 2,520 (2,520)

31 December 2012 variability 38,573 29,235 2,520 (2,520) - - 2,520 (2,520)

Exchange risk - US dollar


516

2.4 Derivatives

A. Financial derivatives

A.2 Banking book: closing and average notional amounts



Underlyings/Type of derivative Over the counter Central counterparties Over the counter Central counterparties

1. Debt securities and interest rates 7,084,899 - 8,004,264 -a) Options - - - -b) Swaps 6,283,750 - 7,233,750 -c) Forwards 801,149 - 770,514 -d) Futures - - - -e) Other - - - -

2. Equity instruments and stock indices - - - -a) Options - - - -b) Swaps - - - -c) Forwards - - - -d) Futures - - - -e) Other - - - -

3. Currencies and gold - - - -a) Options - - - -b) Swaps - - - -c) Forwards - - - -d) Futures - - - -e) Other - - - -

4. Commodities - - - -

5. Other underlyings - - - -

Total 7,084,899 - 8,004,264 -

Averages 7,417,018 - n/a -

A.2.1 Hedging


Underlyings/Type of derivative Over the counter Central counterparties Over the counter Central counterparties

1. Debt securities and interest rates - - 1,011,070 -a) Options - - - -b) Swaps - - - -c) Forwards - - 1,011,070 -d) Futures - - - -e) Other - - - -

2. Equity instruments and stock indices - - - -a) Options - - - -b) Swaps - - - -c) Forwards - - - -d) Futures - - - -e) Other - - - -

3. Currencies and gold - - - -a) Options - - - -b) Swaps - - - -c) Forwards - - - -d) Futures - - - -e) Other - - - -

4. Commodities - - - -

5. Other underlyings - - - -

Total - - 1,011,070 -

Averages - - n/a -

A.2.2 Other derivatives


517Notes


Positive fair value


Book/Type of derivative Over the counter Central counterparties Over the counter Central counterparties

A. Supervisory trading book - - - -a) Options - - - -b) Interest rate swaps - - - -c) Cross currency swaps - - - -d) Equity swaps - - - -e) Forwards - - - -f) Futures - - - -g) Other - - - -

B. Banking book - hedging 12,157 - 73,570 -a) Options - - - -b) Interest rate swaps - - 71,506 -c) Cross currency swaps - - - -d) Equity swaps - - - -e) Forwards 12,157 - 2,064 -f) Futures - - - -g) Other - - - -

C. Banking book - other derivatives - - 12,844 -a) Options - - - -b) Interest rate swaps - - - -c) Cross currency swaps - - - -d) Equity swaps - - - -e) Forwards - - 12,844 -f) Futures - - - -g) Other - - - -

Total 12,157 - 86,414 -

A.3 Financial derivatives: positive gross fair value by product

Negative fair value


Book/Type of derivative Over the counter Central counterparties Over the counter Central counterparties

A. Supervisory trading book - - - -a) Options - - - -b) Interest rate swaps - - - -c) Cross currency swaps - - - -d) Equity swaps - - - -e) Forwards - - - -f) Futures - - - -g) Other - - - -

B. Banking book - hedging 816,116 - 616,950 -a) Options - - - -b) Interest rate swaps 816,116 - 583,605 -c) Cross currency swaps - - - -d) Equity swaps - - - -e) Forwards - - 33,345 -f) Futures - - - -g) Other - - - -

C. Banking book - other derivatives - - 6,933 -a) Options - - - -b) Interest rate swaps - - - -c) Cross currency swaps - - - -d) Equity swaps - - - -e) Forwards - - 6,933 -f) Futures - - - -g) Other - - - -

Total 816,116 - 623,883 -

A.4 Financial derivatives: negative gross fair value by product


518

A.7 OTC financial derivatives - Banking book: notional amount, negative and positive gross fair valueby counterparty - Contracts not falling within the scope of netting agreements

A.8 OTC financial derivatives - Banking book: notional amount, negative and positive gross fair valueby counterparty - Contracts falling within the scope of netting agreements


Governments OtherContracts not falling within the scope and Central public Finance Insurance Non-finance Otherof netting agreements Banks entities Banks companies companies companies entities

1) Debt securities and interest rates

- notional amount - - 400,578 - - - -- positive fair value - - 5,974 - - - -- negative fair value - - - - - - -- future exposure - - - - - - -

2) Equity instruments and stock indices

- notional amount - - - - - - -- positive fair value - - - - - - -- negative fair value - - - - - - -- future exposure - - - - - - -

3) Currencies and gold


4) Other


Governments OtherContracts falling within the scope and Central public Finance Insurance Non-finance Otherof netting agreements Banks entities Banks companies companies companies entities

1) Debt securities and interest rates

- notional amount - - 6,114,321 570,000 - - -- positive fair value - - 6,182 - - - -- negative fair value - - (746,831) (69,285) - - -

2) Equity instruments and stock indices

- notional amount - - - - - - -- positive fair value - - - - - - -- negative fair value - - - - - - -

3) Currencies and gold


4) Other



519Notes

A.9 Residual terms to maturity of OTC financial derivatives: notional amounts

B. Credit derivatives

Not applicable.

C. Financial and credit derivatives

C.1 OTC financial and credit derivatives: net fair value and future exposures by counterparty


1 year 1-5 OverUnderlyings/Residual term to maturity or less years 5 years Total

A. Supervisory trading book - - - -

A.1 Financial derivatives on debt securities and interest rates - - - -A.2 Financial derivatives on equity instruments and stock indices - - - -A.3 Financial derivatives on exchange rates and gold - - - -A.4 Financial derivatives on other underlyings - - - -

B. Banking book 801,149 320,000 5,963,750 7,084,899

B.1 Financial derivatives on debt securities and interest rates 801,149 320,000 5,963,750 7,084,899B.2 Financial derivatives on equity instruments and stock indices - - - -B.3 Financial derivatives on exchange rates and gold - - - -B.4 Financial derivatives on other underlyings - - - -

Balance at 31 December 2012 801,149 320,000 5,963,750 7,084,899

Balance at 31 December 2011 1,781,584 320,000 7,233,750 9,015,334

Governments Other and Central public Finance Insurance Non-finance Other

Banks entities Banks companies companies companies entities

1) Bilateral agreements financial derivatives

- positive fair value - - - - - - -- negative fair value - - (740,648) (69,285) - - -- future exposure - - 34,283 2,140 - - -- net counterparty risk - - 34,283 2,140 - - -

2) Bilateral agreements credit derivatives

- positive fair value - - - - - - -- negative fair value - - - - - - -- future exposure - - - - - - -- net counterparty risk - - - - - - -

3) Cross product agreements

- positive fair value - - - - - - -- negative fair value - - - - - - -- future exposure - - - - - - -- net counterparty risk - - - - - - -


520

Section 3 – Liquidity risk


A. Generalities, management policies and liquidity risk measurement methodsLiquidity risk is the risk that an entity may have difficulties in raising sufficient funds, at market conditions, to meet its ob-ligations deriving from financial instruments. Liquidity risk may derive from the inability to sell financial assets quickly atan amount close to fair value or the need to raise funds on excessively onerous terms. It is policy to minimise liquidity risk through:• diversification of the various forms of short-term and long-term borrowings and counterparties;• gradual and consistent distribution of the maturities of medium/long-term borrowings;• adoption of analysis models designed to monitor the maturities of assets and liabilities.

In terms of BancoPosta RFC’s specific operations, the liquidity risk regards the investment of current account deposits ineuro zone government securities. The potential risk derives from a mismatch between the maturities of investments insecurities and those of liabilities, represented by current accounts where the funds are available on demand, thus com-promising the Company’s ability to meet its obligations to current account holders. This potential mismatch between as-sets and liabilities is monitored via comparison of the maturity schedule for assets with the statistical model of the per-formance of current account deposits, in accordance with the various likely maturity schedules and assuming the progres-sive total withdrawal of deposits over a period of thirty years for private customers and within five years for Public Sectorcustomers. BancoPosta RFC closely monitors the behaviour of deposits taken in order to assure the model’s validity. In addition to postal deposits, BancoPosta also funds itself through:• short-term deposits created through spot sales and forward purchases of BTP to optimise earnings and accommodate

temporary shortfalls of current account balances or to meet cash obligations in connection with collateral contracts;• the two three-year borrowings (3 year Long Term Refinancing Operations) of €2.5 billion each arranged in connection

with the refinancing promoted by the European Central Bank in 2012. Bullet repayment of the first borrowing is envis-aged for February 2015 with prepayment permitted in any month from the second anniversary of loan disbursement.The second loan will be repaid in three instalments of €0.8, €0.8 and €0.9 billion in September 2013, August 2014 andFebruary 2015.

Correct assessment of liquidity risk means that BancoPosta RFC must consider the type of the investments created bythe financial instruments. In accordance with regulation, they are tantamount to readily convertible to cash since they canbe used as collateral for repurchase agreements. BancoPosta RFC’s maturity mismatch approach entails an analysis of the mismatch between cash in and outflows for eachtime band of the maturity ladder.BancoPosta RFC’s cash is dynamically managed by treasury for the timely and continual monitoring of private customerpostal current account cash flows and the efficient management of short-term cash shortfalls and excesses. In order toassure flexible investments in securities consistent with the dynamic nature of current accounts, BancoPosta RFC max-imises the balance held on the MEF Buffer Account within certain limits and subject to remuneration, as explained in thenote on cash flow interest rate risk. Details on the risk management model are contained in the note on financial risks at the beginning of Part E.



521Notes


1. Distribution of residual terms to maturity of financial assets and liabilities

The time distribution of financial assets and liabilities is shown below by the time period established for banks’ financialstatements (Bank of Italy Circular 262 and relevant clarifications provided by the Supervisory Authority) using accountingdata reported for the residual contractual term to maturity.Management data, such as the modelling of demand deposits and the reporting of cash and cash equivalents taking ac-count of their degree of liquidity, has, consequently, not been used.

Currency: Euro


1 - 7 7 - 15 15 days - 1-3 3-6 6 months - 1- 5 > 5 UnspecifiedAsset-Liability/Residual terms to maturity Demand days days 1 month months months 1 year years years maturity

On-balance sheet assets 10,571,945 1,062 - - 1,534,132 164,233 2,208,049 8,346,476 25,176,786 -

A.1 Government securities - 1,062 - - 1,534,132 164,233 2,208,049 8,346,476 25,176,786 -

A.2 Other debt securities - - - - - - - - - -

A.3 UCIs - - - - - - - - - -

A.4 Loans 10,571,945 - - - - - - - - -

- Banks 591,051 - - - - - - - - -

- Customers 9,980,894 - - - - - - - - -

On-balance sheet liabilities 40,631,883 789,480 111,455 316,708 - 48,152 815,333 4,200,000 - -

B.1 Deposits and current accounts 39,312,137 700,000 - - - 48,152 - - - -

- Banks 440,390 - - - - - - - - -

- Customers 38,871,747 700,000 - - - 48,152 - - - -

B.2 Debt securities - - - - - - - - - -

B.3 Other liabilities 1,319,746 89,480 111,455 316,708 - - 815,333 4,200,000 - -

Off-balance sheet transactions - - - - 907,808 1,296 108,384 800,000 - -

C.1 Financial derivatives with exchange of principal - - - - 801,149 - - 800,000 - -

- Long positions - - - - - - - 800,000 - -

- Short positions - - - - 801,149 - - - - -

C.2 Financial derivatives without exchange of principal - - - - 106,659 1,296 108,384 - - -

- Long positions - - - - 62,856 1,296 64,313 - - -

- Short positions - - - - 43,803 - 44,071 - - -

C.3 Deposits and loans to be received - - - - - - - - - -

- Long positions - - - - - - - - - -

- Short positions - - - - - - - - - -

C.4 Irrevocable commitments to disburse funds - - - - - - - - - -

- Long positions - - - - - - - - - -

- Short positions - - - - - - - - - -

C.5 Financial guarantees issued - - - - - - - - - -

C.6 Financial guarantees received - - - - - - - - - -

C.7 Credit derivatives with exchange of principal - - - - - - - - - -

- Long positions - - - - - - - - - -

- Short positions - - - - - - - - - -

C.8 Credit derivatives without exchange of principal - - - - - - - - - -

- Long positions - - - - - - - - - -

- Short positions - - - - - - - - - -


522


Currency: US dollar



On-balance sheet assets 642 - - - - - - - - -

A.1 Government securities - - - - - - - - - -


A.3 UCIs - - - - - - - - - -

A.4 Loans 642 - - - - - - - - -

- Banks 642 - - - - - - - - -

- Customers - - - - - - - - - -

On-balance sheet liabilities - - - - - - - - - -

B.1 Deposits and current accounts - - - - - - - - - -

- Banks - - - - - - - - - -

- Customers - - - - - - - - - -


B.3 Other liabilities - - - - - - - - - -

Off-balance sheet transactions - - - - - - - - - -

C.1 Financial derivatives with exchange of principal - - - - - - - - - -

- Long positions - - - - - - - - - -

- Short positions - - - - - - - - - -

C.2 Financial derivatives without exchange of principal - - - - - - - - - -

- Long positions - - - - - - - - - -

- Short positions - - - - - - - - - -


- Long positions - - - - - - - - - -

- Short positions - - - - - - - - - -


- Long positions - - - - - - - - - -

- Short positions - - - - - - - - - -




- Long positions - - - - - - - - - -

- Short positions - - - - - - - - - -


- Long positions - - - - - - - - - -

- Short positions - - - - - - - - - -


523Notes


Currency: Swiss franc



On-balance sheet assets 1,340 - - - - - - - - -



A.3 UCIs - - - - - - - - - -

A.4 Loans 1,340 - - - - - - - - -

- Banks 1,236 - - - - - - - - -

- Customers 104 - - - - - - - - -



- Banks - - - - - - - - - -

- Customers - - - - - - - - - -





- Long positions - - - - - - - - - -

- Short positions - - - - - - - - - -


- Long positions - - - - - - - - - -

- Short positions - - - - - - - - - -


- Long positions - - - - - - - - - -

- Short positions - - - - - - - - - -


- Long positions - - - - - - - - - -

- Short positions - - - - - - - - - -




- Long positions - - - - - - - - - -

- Short positions - - - - - - - - - -


- Long positions - - - - - - - - - -

- Short positions - - - - - - - - - -


524


Currency: Sterling






A.3 UCIs - - - - - - - - - -

A.4 Loans 301 - - - - - - - - -

- Banks 301 - - - - - - - - -

- Customers - - - - - - - - - -



- Banks - - - - - - - - - -

- Customers - - - - - - - - - -





- Long positions - - - - - - - - - -

- Short positions - - - - - - - - - -


- Long positions - - - - - - - - - -

- Short positions - - - - - - - - - -


- Long positions - - - - - - - - - -

- Short positions - - - - - - - - - -


- Long positions - - - - - - - - - -

- Short positions - - - - - - - - - -




- Long positions - - - - - - - - - -

- Short positions - - - - - - - - - -


- Long positions - - - - - - - - - -

- Short positions - - - - - - - - - -


525Notes


Currency: Japanese yen






A.3 UCIs - - - - - - - - - -

A.4 Loans 50 - - - - - - - - -

- Banks 50 - - - - - - - - -

- Customers - - - - - - - - - -



- Banks - - - - - - - - - -

- Customers - - - - - - - - - -





- Long positions - - - - - - - - - -

- Short positions - - - - - - - - - -


- Long positions - - - - - - - - - -

- Short positions - - - - - - - - - -

C.3 Deposits and loans to be received - - - - - - - - -

- Long positions - - - - - - - - - -

- Short positions - - - - - - - - - -


- Long positions - - - - - - - - - -

- Short positions - - - - - - - - - -




- Long positions - - - - - - - - - -

- Short positions - - - - - - - - - -


- Long positions - - - - - - - - - -

- Short positions - - - - - - - - - -


526


Currency: Tunisian dinar






A.3 UCIs - - - - - - - - - -

A.4 Loans 355 - - - - - - - - -

- Banks - - - - - - - - - -

- Customers 355 - - - - - - - - -



- Banks - - - - - - - - - -

- Customers - - - - - - - - - -





- Long positions - - - - - - - - - -

- Short positions - - - - - - - - - -


- Long positions - - - - - - - - - -

- Short positions - - - - - - - - - -


- Long positions - - - - - - - - - -

- Short positions - - - - - - - - - -


- Long positions - - - - - - - - - -

- Short positions - - - - - - - - - -




- Long positions - - - - - - - - - -

- Short positions - - - - - - - - - -


- Long positions - - - - - - - - - -

- Short positions - - - - - - - - - -


527Notes


Currency: Other currencies






A.3 UCIs - - - - - - - - - -

A.4 Loans 42 - - - - - - - - -

- Banks 10 - - - - - - - - -

- Customers 32 - - - - - - - - -



- Banks - - - - - - - - - -

- Customers - - - - - - - - - -





- Long positions - - - - - - - - - -

- Short positions - - - - - - - - - -

C.2 Financial derivatives without exchange of principal - - - - - - - - -

- Long positions - - - - - - - - - -

- Short positions - - - - - - - - - -


- Long positions - - - - - - - - - -

- Short positions - - - - - - - - - -


- Long positions - - - - - - - - - -

- Short positions - - - - - - - - - -




- Long positions - - - - - - - - - -

- Short positions - - - - - - - - - -


- Long positions - - - - - - - - - -

- Short positions - - - - - - - - - -


528

Section 4 – Operational risks


A. Generalities, management policies and operational risk measurement methodsThis regards the risk of losses resulting from inadequate or failed internal processes, people and systems, or from exter-nal events. This category of risk includes losses resulting from fraud, human error, business disruption, systems failures,breach of contract and natural disasters. Operational risk includes legal risk, but not strategic and reputational risks.BancoPosta RFC controls this risk through a newly developed methodological and organisational framework for the iden-tification, measurement and management of operational risk inherent in its products and systems.The framework is based on an integrated model for qualitative and quantitative measurement. It has, over time, permit-ted the monitoring of risk for the purposes of increasingly aware risk management.

Quantitative informationThe results of the mapping conducted in accordance with the framework show the following types of operational risks towhich BancoPosta RFC’s products were exposed at 31 December 2012:

For each type of mapped risk, the related sources of risk (internal losses, external losses, scenario analysis and risk indi-cators) have been recorded and classified in order to construct complete inputs for the integrated measurement model. Systematic measurement of the mapped risks has enabled the prioritisation of mitigation initiatives and the related attri-bution of responsibilities in order to reduce any future impact.


Event type Number of types

Internal fraud 28External fraud 51Employment practices and workplace safety 8Customers, products and business practices 26Damage caused by external events 4Business disruption and system failure 8Execution, delivery and process management 172

Total at 31 December 2012 297

Operational risk


529Notes

PART F – INFORMATION ON EQUITY

Section 1 – BancoPosta RFC’s Equity

A. Qualitative information

Art. 2, paragraphs 17-octies, et seq. of Law 10 of 26 February 2011 converting Law Decree 225 of 29 December 2010required Poste Italiane SpA to appropriate a legally separate reserve for BancoPosta to conduct its business in accordancewith Presidential Decree 144 of 14 March 2001. The purpose of such reserve is to protect creditors and to provide theregulatory capital required by supervisory authorities. BancoPosta RFC was consequently created on 14 April 2011 byshareholder resolution filed at the Companies’ Register on 2 May 2011, providing BancoPosta with assets, liabilities andcontractual rights, in addition to By-laws governing its organisation, management and control (Part A - Accounting Policies,Section 4 - Other Information). BancoPosta RFC was provided with separate capital of €1 billion appropriated from PosteItaliane SpA’s retained earnings.

B. Quantitative information


Equity accounts/Amounts Balance at 31 December 2012 Balance at 31 December 2011

1. Share capital - -2. Share premium reserve - -3. Reserves 1,256,328 1,000,000

- revenue reserves 256,328 -a) legal - -b) required by articles - -c) treasury shares - -d) other 256,328 -

- other 1,000,000 1,000,0004. Equity instruments - -5. (Treasury shares) - -6. Valuation reserves (74,425) (2,176,498)

- Available-for-sale financial assets 52,816 (1,991,055)- Property, plant and equipment - -- Intangible assets - -- Hedges of net investment in foreign operations - -- Cash flow hedges (125,220) (185,972)- Translation differences - -- Non-current assets included in disposal groups - -- Actuarial profits/(losses) on defined benefit plans (2,021) 529- Valuation reserves relating to equity accounted investments - -- Special revaluations laws - -

7. Profit/(Loss) for the year 342,662 256,328

Total 1,524,565 (920,170)

B.1 Equity: analysis


530

B.2 Valuation reserve for available-for-sale financial assets: analysis

B.3 Valuation reserve for available-for-sale financial assets: movements during the year

The gradual improvement of the Republic of Italy’s credit rating during the year led to an improvement of the price of Ital-ian government securities, generating substantial fair value gains on those classified as available-for-sale, the after taxamount of which was recognised in the Available-for-sale financial assets valuation reserve.

Section 2 – Equity and capital ratios

This note has been omitted since BancoPosta RFC has not yet received separate, specific prudential instructions in thisregard from the Bank of Italy.


Balance at 31 December 2012 Balance at 31 December 2011Asset/Amounts Positive reserve Negative reserve Positive reserve Negative reserve

1. Debt securities 488,774 (464,052) 1,241 (2,013,799)2. Equity instruments 28,094 - 21,503 -3. UCIs - - - -4. Loans - - - -

Total 516,868 (464,052) 22,744 (2,013,799)

Debt Equity securities instruments UCIs Loans

1. Opening balance (2,012,558) 21,503 - -

2. Increases 2,039,733 6,591 - -

2.1 Increases in fair value 2,030,728 6,591 - -2.2 Reversal to income statement of negative reserve: 9,005 - - -

- impairments - - - -- disposals 9,005 - - -

2.3 Other increases - - - -

3. Decreases (2,453) - - -

3.1 Decreases in fair value - - - -3.2 Impairments - - - -3.3 Reversal to income statement

of positive reserves: on disposal (1,241) - - -3.4 Other decreases (1,212) - - -

4. Closing balance 24,722 28,094 - -


531Notes

PART G – BUSINESS COMBINATIONS

No business combinations took place either during or subsequent to the period under review.

PART H – RELATED PARTY TRANSACTIONS

1. Payments to key management personnel

Key management personnel consist of Directors of Poste Italiane SpA and managers at the first organisational level of PosteItaliane SpA, whose compensation before social security and welfare charges and contributions are disclosed in note 34.5 inPoste Italiane’s financial statements and have been charged to BancoPosta RFC as part of the services provided by PosteItaliane functions outside the ring-fence. See, Part C – Notes to the income statement, Table 9.5 – Other administrative ex-penses. They have been charged in accordance with operating instructions (Part A – Accounting Policies, A1 - Section 4).



532

2. Related party disclosures


Balance at 31 December 2011Due from Due to

Financial banks and Hedging Other Financial banks and OtherName assets customers derivatives assets liabilities customers liabilities

Poste Italiane SpA - 110,650 - - - 256,744 308,889

Direct subsidiariesBanca del Mezzogiorno-MedioCredito Centrale SpA - - - - - 67,338 -BancoPosta Fondi SpA SGR - 3,181 - - - 742 -CLP ScpA - 712 - - - 14 6,009Consorzio Servizi Telefonia Mobile ScpA - - - - - 55 -EGI SpA - - - - - 9,974 -Mistral Air Srl - - - - - 98 -Poste Energia SpA - - - - - 23 -Poste Tributi ScpA - 2,151 - - - 878 -Poste Tutela SpA - - - 30 - 4,108 -Poste Vita SpA - 51,344 - - - 39,711 -Postecom SpA - - - - - 25,796 4,164Postel SpA - - - - - 4,949 -PosteMobile SpA - 1,467 - - - 16,850 383PosteShop SpA - - - - - 2,638 -SDA Express Courier SpA - - - - - 1,403 -

Indirect subsidiariesAddress Software Srl - - - - - 5 -Docutel SpA - - - - - - -Italia Logistica Srl(1) - - - - - 3 -Kipoint SpA - - - - - - 2Poste Assicura SpA - 2,052 - - - 834 -PostelPrint SpA - - - - - 7,033 22,283Uptime SpA(1) - - - - - - -

AssociatesDocugest SpA - - - - - - -Telma-Sapienza Scarl - - - - - - -

Related parties external to the GroupMinistry of the Economy and Finance - 9,070,672 - - - - -Direct relations - 9,050,450 - - - - -Agencies and other local offices - 20,222 - - - - -Former General Procurement Office of the State - - - - - - -

Cassa Depositi e Prestiti group - 149,606 - - - - -Arcus SpA - - - - - - -Cinecittà Luce SpA - - - - - - -CONI Servizi - - - - - - -Consap SpA - - - - - - -Consip SpA - - - - - - -Enav SpA - - - - - - -EUR SpA - - - - - - -Expo 2015 SpA - - - - - - -Fondo Pensione Fondoposte - - - - - - 546Anas group - - - - - - -Enel group - - - - - - 13,599Eni group - 207 - - - - -Equitalia group - 1 - - - - 1,013Ferrovie dello Stato group - - - - - - -Finmeccanica group - - - - - - -Fintecna group - - - - - - -Gestore dei Servizi Elettrici group - - - - - - -Invitalia group - - - - - - -Istituto Poligrafico Zecca dello Stato group - - - - - - -Italia Lavoro group - - - - - - -RAI group - - - - - - -Sace group - - - - - - -Sogei group - - - - - - -Sogin group - - - - - - -Rete Autostradale Mediterranee SpA - - - - - - -Sicot Srl - - - - - - -Soc. Svil.po Mercato F.di Pensione SpA (MEFOP) - - - - - - -Sogesid SpA - - - - - - -STMicroelectronics Holding N.V. - - - - - - -Studiare Sviluppo Srl - - - - - - -Provision for doubtful debts from external related parties - (39,989) - - - - -

Total - 9,352,054 - 30 - 439,196 356,888

(1) Joint venture.

Impact of related party transactions on the financial position at 31 December 2011


533Notes


Balance at 31 December 2012Due from Due to

Financial banks and Hedging Other Financial banks and OtherName assets customers derivatives assets liabilities customers liabilities

Poste Italiane SpA - 246,431 - - - 119,446 389,715

Direct subsidiariesBanca del Mezzogiorno-MedioCredito Centrale SpA - 27 - - - 1,313 -BancoPosta Fondi SpA SGR - 3,413 - - - 3,965 -CLP ScpA - 105 - - - 195 5,308Consorzio Servizi Telefonia Mobile ScpA - - - - - 141 -EGI SpA - - - - - 8,894 -Mistral Air Srl - - - - - 665 -PatentiViaPoste ScpA - - - - - - -Poste Energia SpA - - - - - 544 -Poste Tributi ScpA - 3,095 - - - 425 -Poste Tutela SpA - - - 21 - 14,377 -Poste Vita SpA - 62,958 - - - 29,576 -Postecom SpA - - - - - 7,172 5,144Postel SpA - - - - - 1,760 -PosteMobile SpA - 1,778 - - - 29,049 554PosteShop SpA - - - - - 2,771 -SDA Express Courier SpA - - - - - 758 -

Indirect subsidiariesAddress Software Srl - - - - - 5 -Docutel SpA - - - - - 1 -Italia Logistica Srl - - - - - 6 -Kipoint SpA - - - - - 80 -Poste Assicura SpA - 3,583 - - - 861 -PostelPrint SpA - - - - - 475 26,338Uptime SpA(1) - - - - - - -

AssociatesDocugest SpA - - - - - - -Telma-Sapienza Scarl - - - - - - -

Related parties external to the GroupMinistry of the Economy and Finance - 8,450,365 - - - - -Direct relations - 8,427,910 - - - - -Agencies and other local offices - 22,455 - - - - -Former General Procurement Office of the State - - - - - - -

Cassa Depositi e Prestiti group(2) - 948,046 - - - 2,523,542 -Arcus SpA - - - - - - -Cinecittà Luce SpA - - - - - - -CONI Servizi - - - - - - -Consap SpA - - - - - - -Consip SpA - - - - - - -Enav SpA - - - - - - -EUR SpA - - - - - - -Expo 2015 SpA - - - - - - -Fondo Pensione Fondoposte - - - - - - 624Anas group - - - - - - -Enel group - - - - - - 9,853Eni group - 258 - - - - -Equitalia group - - - - - - 1,617Ferrovie dello Stato group - 2 - - - - -Finmeccanica group - - - - - - -Gestore dei Servizi Elettrici group - - - - - - -Invitalia group - - - - - - -Istituto Poligrafico Zecca dello Stato group - - - - - - -Italia Lavoro group - - - - - - -RAI group - - - - - - -Sogei group - - - - - - -Sogin group - - - - - - -Rete Autostradale Mediterranee SpA - - - - - - -Sicot Srl - - - - - - -Soc. Svil.po Mercato F.di Pensione SpA (MEFOP) - - - - - - -Sogesid SpA - - - - - - -STMicroelectronics Holding N.V. - - - - - - -Studiare Sviluppo Srl - - - - - - -Provision for doubtful debts from external related parties - (34,042) - - - - -

Total - 9,686,019 - 21 - 2,746,021 439,153


Impact of related party transactions on the financial position at 31 December 2012


534


2 May 2011 - 31 December 2011Interest Interest Dividends Net Other

and similar and similar Fee Fee and similar losses/recoveries Administrative operatingName income expense income expense income on impairment expenses income/(expenses)

Poste Italiane SpA 8,292 (11,605) - - - - (2,879,330) -

Direct subsidiariesBanca del Mezzogiorno-MedioCredito Centrale SpA - (77) - - - - - -BancoPosta Fondi SpA SGR - (5) 10,793 - - - - -CLP ScpA - - - - - - (5,216) -Consorzio Servizi Telefonia Mobile ScpA - (3) - - - - - -EGI SpA - (179) - - - - - -Mistral Air Srl - (2) - - - - - -Poste Energia SpA - (3) - - - - - -Poste Tributi ScpA - (5) 1,058 - - - - -Poste Tutela SpA - (32) - - - - - -Poste Vita SpA - (527) 147,211 - - - - -Postecom SpA - (41) - - - - (2,801) -Postel SpA - (75) - - - - - -PosteMobile SpA - (192) 1,015 - - - (276) (1)PosteShop SpA - (31) - - - - - -SDA Express Courier SpA - (11) - - - - - -

Indirect subsidiariesAddress Software Srl - - - - - - - -Docutel SpA - - - - - - - -Italia Logistica Srl(1) - - - - - - - -Kipoint SpA - - - - - - (12) -Poste Assicura SpA - (7) 6,438 - - - - -PostelPrint SpA - (25) - - - - (30,487) 34Uptime SpA(1) - - - - - - - -

AssociatesDocugest SpA - - - - - - - -Telma-Sapienza Scarl - - - - - - - -

Related parties external to the GroupMinistry of the Economy and Finance 239,672 - 2,053 - - (7,972) - -Direct relations 239,672 - - - - (7,972) - -Agencies and other local offices - - 2,053 - - - - -Former General Procurement Office of the State - - - - - - - -

Cassa Depositi e Prestiti group - - 1,054,050 - - - - -Arcus SpA - - - - - - - -Cinecittà Luce SpA - - - - - - - -CONI Servizi - - - - - - - -Consap SpA - - - - - - - -Consip SpA - - - - - - - -Enav SpA - - - - - - - -EUR SpA - - - - - - - -Expo 2015 SpA - - - - - - - -Fondo Pensione Fondoposte - - - - - - (206) -Anas group - - - - - - - -Enel group - - - - - - (149) -Eni group - - - - - - - -Equitalia group - - - - - - (655) -Ferrovie dello Stato group - - - - - - - -Finmeccanica group - - - - - - - -Fintecna group - - - - - - - -Gestore dei Servizi Elettrici group - - - - - - - -Invitalia group - - - - - - - -Istituto Poligrafico Zecca dello Stato group - - - - - - (1) -Italia Lavoro group - - - - - - - -RAI group - - - - - - - -Sace group - - - - - - - -Sogei group - - - - - - - -Gruppo Sogin - - - - - - - -Rete Autostradale Mediterranee SpA - - - - - - - -Sicot Srl - - - - - - - -Soc. Svil.po Mercato F.di Pensione SpA (MEFOP) - - - - - - (3) -Sogesid SpA - - - - - - - -STMicroelectronics Holding N.V. - - - - - - - -Studiare Sviluppo Srl - - - - - - - -

Total 247,964 (12,820) 1,222,618 - - (7,972) (2,919,136) 33

(1) Joint venture.

Impact of related party transactions on the results for the period 2 May 2011 to 31 December 2011


535Notes


For the year ended 31 December 2012Interest Interest Dividends Net Other

and similar and similar Fee Fee and similar losses/recoveries Administrative operatingName income expense income expense income on impairment expenses income/(expenses)

Poste Italiane SpA 4,271 (4,337) - - - - (4,419,914) -

Direct subsidiariesBanca del Mezzogiorno-MedioCredito Centrale SpA - (238) 59 - - - - -BancoPosta Fondi SpA SGR - (1) 12,592 - - - -CLP ScpA - - - - - - (6,171) -Consorzio Servizi Telefonia Mobile ScpA - (1) - - - - -EGI SpA - (24) - - - - - -Mistral Air Srl - (1) - - - - - -PatentiViaPoste ScpA - - - - - - - -Poste Energia SpA - (1) - - - - - -Poste Tributi ScpA - (2) 1,652 - - - - -Poste Tutela SpA - (15) - - - - - -Poste Vita SpA - (1,545) 229,500 - - - - (366)Postecom SpA - (28) - - - - (5,199) -Postel SpA - (9) - - - - - -PosteMobile SpA - (60) 1,600 - - - (538) 8PosteShop SpA - (5) - - - - - -SDA Express Courier SpA - (4) - - - - - -

Indirect subsidiariesAddress Software Srl - - - - - - -Docutel SpA - - - - - - - -Italia Logistica Srl - - - - - - - -Kipoint SpA - - - - - - (12) -Poste Assicura SpA - (3) 9,169 - - - - -PostelPrint SpA - (5) - - - - (46,132) (51)Uptime SpA(1) - - - - - - - -

AssociatesDocugest SpA - - - - - - - -Telma-Sapienza Scarl - - - - - - - -

Related parties external to the GroupMinistry of the Economy and Finance 313,979 - 2,900 - - - - -Direct relations 313,979 - - - - - -Agencies and other local offices - - 2,900 - - - - -Former General Procurement Office of the State - - - - - - - -

Cassa Depositi e Prestiti group(2) - (23,542) 1,649,115 - - - - -Arcus SpA - - - - - - - -Cinecittà Luce SpA - - - - - - -CONI Servizi - - - - - - - -Consap SpA - - - - - - - -Consip SpA - - - - - - - -Enav SpA - - - - - - - -EUR SpA - - - - - - - -Expo 2015 SpA - - - - - - - -Fondo Pensione Fondoposte - - - - - - (362) -Anas group - - - - - - -Enel group - - - - - - (164) -Eni group - - 128 - - - - -Equitalia group - - - - - - (1,709) -Ferrovie dello Stato group - - 1 - - - - -Finmeccanica group - - - - - - - -Gestore dei Servizi Elettrici group - - - - - - - -Invitalia group - - - - - - - -Istituto Poligrafico Zecca dello Stato group - - - - - - (1) -Italia Lavoro group - - - - - - - -RAI group - - - - - - - -Sogei group - - - - - - - -Sogin group - - - - - - - -Rete Autostradale Mediterranee SpA - - -Sicot Srl - - - - - - - -Soc. Svil.po Mercato F.di Pensione SpA (MEFOP) - - - - - - - -Sogesid SpA - - - - - - -STMicroelectronics Holding N.V. - - - - - - - -Studiare Sviluppo Srl - - - - - - - -

Total 318,250 (29,821) 1,906,716 - - - (4,480,202) (409)


Impact of related party transactions on the results for the year ended 31 December 2012


536

PART I – SHARE-BASED PAYMENT ARRANGEMENTS

There are no share-based payment arrangements at the end of the reporting period.

PART L – SEGMENT INFORMATION

BancoPosta RFC’s operations are those regulated by Presidential Decree 144 of 14 March 2001, as amended, which aredescribed in Part A - Accounting Policies, Section 4. The economic flows and performance of the operations are reportedinternally on a regular basis to executives without identifying segments. BancoPosta RFC’s results are consequently eval-uated by executives as a single business.Furthermore, in accordance with IFRS 8.4, when separate and consolidated financial statements are combined, segmentinformation is only required for the consolidated statements.



537Notes | Attestation of the separate and consolidated financial statement for the year ended 31 December 2012

Attestation of the separate and consolidated financial statements for the yearended 31 December 2012 pursuant to art. 154-bis of Legislative Decree 58/1998

1. The undersigned, Massimo Sarmi, as Chief Executive Officer, and Alessandro Zurzolo, as Manager responsible for PosteItaliane SpA’s financial reporting, having also taken account of the provisions of art.154-bis, paragraphs 3 and 4 of Legisla-tive Decree 58 of 24 February 1998, attest to:- the adequacy with regard to the nature of the Company and- the effective application of the administrative and accounting procedures adopted in preparation of the separate and con-

solidated financial statements during 2012.

2. In this regard, it should be noted that, as highlighted in the Internal Control-Integrated framework model issued by theCommittee of Sponsoring Organizations of the Treadway Commission, which represents the international standard bodyof generally accepted principles of internal control, as expressly referred to by Confindustria (the main organization repre-senting Italian manufacturing and services companies) in its Guidelines for the role of Manager responsible for financialreporting pursuant to art.154-bis of the Consolidated Law on Finance, an internal control system, no matter how well de-signed and implemented, can only provide reasonable, not absolute, assurance that the company’s objectives will beachieved, including true and fair financial reporting.

3. We also attest that:

3.1 the separate and consolidated financial statements:

a) have been prepared in compliance with the International Financial Reporting Standards endorsed by the European Unionthrough EC Regulation 1606/2002, issued by the European Parliament and by the Council on 19 July 2002;

b) are consistent with the underlying accounting books and records;c) give a true and fair view of the financial position and results of operations of the issuer and the companies included in

the scope of consolidation.

3.2 the Directors’ Report on Operations includes a reliable analysis of the operating and financial performance and situa-tion of the issuer and the companies included in the scope of consolidation, as well as a description of the main risks anduncertainties to which they are exposed.

Rome, Italy27 March 2013

Chief Executive Officer Manager responsible for financial reporting

Massimo Sarmi Alessandro Zurzolo

(This certification has been translated from the original which was issued in accordance with Italian legislation)



538


BOARD OF STATUTORY AUDITORS’ REPORTON POSTE ITALIANE SPA’SFINANCIAL STATEMENTS FOR THE YEARENDED 31 DECEMBER 2012(A sole shareholder Company)

To the General Meeting of Shareholders of Poste Italiane SpA

The market for postal services has for some years now seen a structural decline in the volumes of mail, primarilyas a result of growing use of digital forms of communication and the presence of a range of competitors operating,above all, in the most profitable urban areas and in business customer segments (the areas of the post market of-fering the best returns). Against this backdrop, Poste Italiane has recorded a negative performance across the postalservices segment, also reflecting the difficult macroeconomic environment of recent years, characterised by a glob-al downturn affecting both countries in the euro zone and emerging nations. In contrast, however, it has achievedpositive performances in both financial services and insurance, in the latter case growing the business in a declin-ing market.

During the year ended 31 December 2012 the Board of Statutory Auditors carried out its activities in accordance with thelaw, based on the recommendations issued by the Italian Accounting Profession. In addition, from September 2012 theBoard of Directors assigned us the role of the Supervisory Board required by Legislative Decree 231/2001.

In particular, the Board of Statutory Auditors states that:

– we have verified compliance with the law and the memorandum of association and with correct corporate governanceprinciples, in accordance with art. 2403 of the Italian Civil Code;

– we attended 11 Board of Directors’ meetings during 2012 and obtained information from the Directors on the overalloperating performance and outlook, and on the most significant transactions having an impact on the results of opera-tions and financial position decided on and carried out by the Company and other Group companies during the year. Themeetings were conducted in accordance with the articles of association, the related legislation and regulations govern-ing their conduct and, in accordance with our duties, can provide reasonable assurance that the actions approved com-ply with the law, the articles of association and correct corporate governance principles. We also attended an OrdinaryGeneral Meeting;

– we held specific meetings with PricewaterhouseCoopers SpA, the independent auditors appointed pursuant to Legisla-tive Decree 39/2010, partly for the purpose of exchanging significant data and information, which did not reveal any crit-ical issues. The independent auditors were invited to participate in all meetings of the Board of Statutory Auditors, whichdid not reveal significant aspects or information to be included in this Report;

– we held specific meetings with the Supervisory Board set up under Legislative Decree 231/2001, as subsequentlyamended, in order to assess the application and revision of the Company’s organisational model, until the time that therole of this body was transferred to the Board of Statutory Auditors;

– we obtained information from the Company’s management on the operating performances of subsidiaries, which didnot reveal significant aspects or information to be included in this Report;

– we examined and oversaw the adequacy of the Company’s organisational structure, in keeping with our responsibilities,and compliance with corporate governance principles, via the gathering of information from the heads of the various func-tions, focusing particularly on examination of the internal control systems involved in combating money laundering andterrorism, in view of the high degree of risk to which the operations of the Company and the Poste Italiane Group areexposed;


539Board of Statutory Auditors’ Report

– we took note of the annual reports of the board of statutory auditors of subsidiaries, which did not reveal any aspectsworthy of note;

– we assessed the administrative and accounting system, including the capacity of such accounting system to provide afair view of operations, and compliance with correct corporate governance principles, via direct observation and thegathering of information from the heads of the various functions, from the independent auditors and from the Manag-er responsible for financial reporting;

– we monitored the planning and implementation of the initiatives adopted by the Company in order to resolve issues raisedby regulators.

The Board is not aware of the existence of transactions of an atypical and/or unusual nature with Group companies, thirdparties or related parties, and have not received any reports in this regard from the Board of Directors, the independentauditors or the head of Internal Auditing.

The Board of Statutory Auditors held 30 meetings during 2012 (with 12 meetings held in 2013 prior to preparation of thisreport). The meetings were attended by the magistrate from the Italian Court of Auditors, who is responsible for carryingout controls pursuant to art. 12 of Law 259/1958.

Based on the information obtained, the Board of Statutory Auditors deems that the Company’s activities were conductedin accordance with correct corporate governance principles and that the organisational structure, internal control systemand administrative and accounting system are, on the whole, appropriate to the Company’s requirements.

We also declare that during the year under review we did not receive reports pursuant to art. 2408 of the Italian Civil Code.

The Board of Statutory Auditors issued opinions pursuant to art. 2389 of the Italian Civil Code.

The financial statements for the year ended 31 December 2012, which have been prepared under the International Finan-cial Reporting Standards (IFRS) adopted by the European Union and contained in the related EU Regulations, report prof-it for the year of €722,245,063 (€698,538,628 for the year ended 31 December 2011), of which €342,662,363 is attrib-utable to BancoPosta RFC.

Equity at 31 December 2012, including the profit for 2012, amounts to €4,312,870,137 (€2,001,812,636 at 31 De-cember 2011), including €1,524,564,524 attributable to BancoPosta RFC. As described in the notes to the financialstatements, the increase in equity is essentially due to movements in the fair value reserve (€52,816,398), reflect-ing movements in the market value of financial assets attributable to BancoPosta, classified in available-for-sale fi-nancial assets.

In view of the fact that we were not assigned responsibility for analysing the contents of the financial statements on theirmerits, we have verified the general presentation and overall compliance with the laws relating to form and content.

The Board also verified compliance with the regulations governing preparation of the Directors’ Report on Operations. Thisdocument, to which reference should be made for any information not included in this report, provides adequate disclo-sure regarding the Company’s results of operations, financial position and cash flows, the operating performance in 2012and the outlook. Our examination has confirmed that it is consistent with the financial statements

The Board obtained information on the criteria used to determine provisions for impairments, risks and charges, and therelated uses. Close attention was given to amounts receivable from the Public Sector.

After also taking account of the attestation of the financial statements under review issued by the Chief Executive Offi-cer and the Manager responsible for financial reporting, in addition to the results of the audit procedures carried out bythe independent auditors, PricewaterhouseCoopers SpA, as described in the opinion accompanying the financial statements,dated 12 April 2013, in accordance with our duties we recommend that you approve the financial statements for the yearended 31 December 2012, as prepared by the Board of Directors.



540

Dear Shareholders,

At the General Meeting you will be asked to vote on approval of the financial statements for the year ended 31 Decem-ber 2012 and the appropriation of profit for the year. In this regard, we concur with the Board of Directors’ proposal.

Having come to the end of our three-year term of office, we thank you for your trust and express our very best wishesfor the future of the Company.

Rome, Italy12 April 2013

THE BOARD OF STATUTORY AUDITORS

Silvana Amadori - Chairwoman Ernesto Calaprice - AuditorFrancesco Ruscigno - Auditor



541Board of Statutory Auditors’ Report | Independent Auditors’ Report


INDEPENDENT AUDITORS’ REPORT


542



543Independent Auditors’ Report



POSTE ITALIANE

Registered office

viale Europa, 19000144 Rome - Italytel +39 06 5958.1fax +39 06 5958.9100e-mail [email protected]

Corporate information

Share capital: 1,306,110,000 euroRome Companies’ Register no. 97103880585Business Registration Number REA 842633Tax Code 97103880585VAT number 01114601006


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Sede legale: Viale Europa, 190 · 00144 Rome · Italy

Tel. 06.59581

www.poste.it


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Registered Offi ce: Viale Europa, 190 · 00144 Rome · Italy

Tel. 06.59581

www.poste.it


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