ANNUAL REPORT 2016 REPORT ANNUAL
bpost bpost annual report 2016
1 Contents ANNUAL REPORT 2016 REPORT ANNUAL bpost
Overview of the key figures 3 Message to the stakeholders 4 Key events 7 Financial review 8 Outlook for 2017 20 Financial consolidated statements 2016 21 Auditor’s report 91 Corporate governance statement 93
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ANNUAL REPORT 2016 REPORT ANNUAL Overview of the key figures figures Key bpost
Normalised for the year ended 31 December Evolution In million EUR 2016 2015 2014 2016-2015 Total Operating Income (Revenues) (1) 2,425.2 2,407.6 2,464.7 0.7% Profit from operating activities (EBIT) (2) 496.5 494.4 480.2 0.4% Profit for the year (consolidated – IFRS) (3) 324.1 328.1 295.5 -1.2% Operating free cash flow (4) 193.9 315.9 373.5 -38.6%
Reported for the year ended 31 December Evolution In million EUR 2016 2015 2014 2016-2015 Total Operating Income (Revenues) 2,425.2 2,433.7 2,464.7 -0.3% Profit from operating activities (EBIT) 496.5 466.1 480.2 6.5% Profit for the year (consolidated - IFRS) 346.2 309.3 295.5 12.0% bpost SA-NV net profit (unconsolidated - Belgian GAAP) 308.7 287.7 296.9 7.3% Operating Free cash flow (5) 193.9 315.9 373.3 -38.6% Net Debt / (Net Cash) (6) (492.7) (549.5) (486.2) -10.3% Basic earnings per share, in EUR 1.72 1.54 1.47 12.0% Dividend per share, in EUR 1.31 1.29 1.26 1.6% Number of employees (at year end) 26,987 26,381 27,479 2.3% Number of FTE (average) 23,708 23,847 24,631 -0.6% Number of FTE and interim (average) 24,850 24,703 25,414 0.6%
(1) Normalised total operating income represents total operating income excluding the impact of non-recurring items and is not audited. (2) Normalised EBIT represents profit from operating activities excluding the impact of non-recurring items and is not audited. (3) Normalised profit for the year represents profit for the year excluding the impact of non-recurring items and is not audited. (4) Normalised operating free cash flow for the year represents operating free cash flow for the year excluding the impact of non-recurring items and is not audited. (5) Operating free cash flow represents net cash from operating activities less net cash used in investing activities. (6) Net Debt/(Net Cash) represents interest and non-interest bearing loans less cash and cash equivalents. For further details on reconciliation of normalised and reported key figures, please refer to section “Reconciliation of Reported to Normalised Financial Metrics” of this document.
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Financial review
ANNUAL REPORT 2016 REPORT ANNUAL stakeholders Always on the move... the to Message bpost
2016 was a good year for bpost in many respects. Not simply because we were able to present strong results and keep our promises, but also because we made progress on the various cornerstones of our strategy. We showed resilience in traditional mail, achieved solid growth in parcels, laid the foundations for new future growth and remained on track with our productivity improvements. We did all of this without losing sight of our stakeholders.
bpost aspires to play a leading role in the customers to receive and send parcels. European postal market. We also have the We continued to work with a number of “bpost aspires to resources to realise that ambition. In 2016 we major shippers to enable parcel delivery further endorsed that ambition and audacity. in the evenings and at the weekend, and play a leading role we enlarged our parcel network through in the European 2016 was a year in which bpost was always on innovative solutions, allowing customers to the move, to bring our customers closer and select the solution that suits them best. postal market. to make their lives easier. Always on the move... For example, in 2016 we took a strategic We also have TO SUPPORT AND PROMOTE OUR CORE stake in Parcify and de Buren, two start-ups the resources BUSINESS, MAIL that capitalise on the promising innovative technology for last-mile delivery services to realise that In 2016 we proved that our domestic mail is with greater convenience for both senders resilient. At 5%, the decrease in our traditional and recipients. Parcify uses the geotracking ambition. In mail volumes remained under control. facility on smartphones to deliver parcels 2016 we further We achieved good results in advertising mail to recipients when and where they want. endorsed that in particular. We slowed down the decrease de Buren runs an open network of secure, here by targeting business sectors where sometimes cooled, parcel locker walls in the ambition and mail continues to be a relevant part of the Netherlands, which are accessible 24/7 using audacity.” communication mix. To this end, we respond to an app. The ultimate goal is to cover the the market trend in commercial communication whole of Belgium with 500 locker locations to combine various channels that strengthen in addition to our own parcel lockers, and to the message to consumers. The stopping power expand the current offer in the Netherlands of mail reinforces a digital message that is less from 50 to 1,000 locations. powerful, but has a greater reach. We also launched bringr, a complementary service based on an innovative collaborative TO ACHIEVE GROWTH platform app allowing smartphone users to We achieved growth on the domestic parcel find a driver for delivering goods. All these market of no less than 17.1% compared with initiatives enable us to continue building 2015. That solid growth is the consequence a hybrid network that responds to each and of a booming e-commerce sector and the every specific need of our customers. many efforts we have invested on the parcel Internationally, the acquisition of DynaGroup, market. Our acquisition strategy to strengthen which offers a range of logistical services, our service offering and the non-exclusive enables us to add more logistical solutions partnership we established in 2016 with to our service for e-commerce customers. DHL Parcel for the delivery of B2C parcels For that matter, 2016 was a challenging year at European level will certainly help us to on the international parcel market. We continue to grow. primarily focused on expanding our network We also aim to expand our proximity and and services through our subsidiary Landmark convenience offering. Global. We strengthened our international parcel strategy with the acquisition of That’s why, in 2016, we took big strides in Freight Distribution Management (Australia) our ambition to make it even easier for our and Apple Express (Canada).
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ANNUAL REPORT 2016 REPORT ANNUAL stakeholders Message to the to Message Another step within our growth and a number of additional steps to increase the bpost diversification strategy in proximity and wellbeing of our employees, such as initiatives convenience was the finalisation of the with regard to guidance for newcomers, acquisition of the Belgian activities of training, improved leave planning and balanced Lagardère Travel Retail. That enabled us to workload allocation for all. We also entered further diversify our range of products and into a new collective bargaining agreement for services to our customers and enlarge our 2016-2017. It provides for a number of major network of parcel pick-up points. measures to increase purchasing power, while agreements were also reached on measures to We also continued to enlarge our other promote employment. solutions, wherefore we mainly leverage the strength of our dense network and the trust Our customers are our raison d’être. Our aim people show in our postmen. is to bring them closer and make their lives easier. Through the density of our network of TO MAKE OUR WAY OF WORKING LEAN, post offices and post points, by offering them AGILE AND FLEXIBLE more options for receiving their parcels, by constantly introducing more innovative services We implemented our productivity and products… Those efforts paid dividends improvements in a disciplined way and in 2016 again: 87% of our customers expressed according to plan in 2016. We are right on satisfaction about bpost. schedule with our Vision 2020 project, the aim of which is to further automate sorting and set Lastly, bpost remains committed to developing down the future mail organisation. We remain its activities in a sustainable way. Our aim “2016 showed on track with the construction of the new is to be a socially responsible company. In that we can be Brussels X, our largest sorting center, where, 2016 we again placed first in the International among other things, all domestic parcels will Post Corporation’s (IPC) global environmental confident that be sorted from October 2017. The building was management ranking. We also signed the made watertight and windproof in the summer Belgian charter for the United Nations our strategy will of 2016, enabling the 25,000 m2 parcel sorting Sustainable Development Goals (UNSDG) and lead us towards hall to be finished, among other things. The we deepened our engagement by incorporating installation of the parcel sorting machine itself them into our CSR strategy. further success.” began in early 2017. All efforts to ensure the flawless Five additional MSM (Mixed Sorting Machines) implementation of our strategy were were also taken into use in 2016. The MSM is reflected in our good financial results. a highly advanced sorting machine that will Normalised turnover rose by almost one form the backbone of our future mail sorting percent (from EUR 2,407.6 million in 2015 activity. Of the planned 30 MSMs, 16 were to EUR 2,425.2 million in 2016). Operating operational by the end of 2016. Technological profit also increased. Normalised EBITDA development did not stand still in other areas increased from EUR 583.6 million in 2015 either: 70 sorting cabinets were taken into use, to EUR 586.9 million in 2016 (+0.6%). This is facilitating manual sorting by means of optical despite receiving EUR 22.9 million less in 2016 address recognition (by camera). The reform from the Belgian state for providing the services of our network to 60 mail centers continued of general economic interest (SGEI). unabated. Based on the net profit of parent company We also continue to work on other projects in bpost SA/NV, the Board of Directors was able to all other departments to make our organisation propose to the Shareholders’ Meeting payment more efficient, agile and flexible. of a gross dividend of EUR 1.31 per share in 2016, a rise compared with 2015. TO STRENGTHEN TIES WITH 2016 showed that we can be confident that our OUR STAKEHOLDERS strategy will lead us towards further success. We are a company of people, for people. Proving our relevance every day, moving forward We can count on the loyal engagement and every day and grasping our future: that means knowhow of our employees. Their wellbeing that we are always on the move to bring our is therefore a key concern for us. With that in customers closer and make their lives easier, mind, as well as the usual monitoring of stress in 2017 and the years that follow too. and engagement indicators, in 2016 we took
Françoise Masai Koen Van Gerven Chairperson of the Board CEO
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ey events ANNUAL REPORT 2016 REPORT ANNUAL Key events of the year K bpost
On March 21, 2016 bpost acquired Freight Distribution Management (FDM) FDM is specialised in providing a personalised customer service for warehousing and distributing products in Australia. On June 1, 2016 bpost acquired Apple Express and Matt’s Express The business of Apple Express and Matt’s Express consists of the last mile delivery, transportation and fulfilment services for clients in Canada and the US. On June 20, 2016 bpost launched bringr bringr is an innovative collaborative platform app allowing smartphone users to find a driver for delivering goods. In August bpost took a strategic stake in Parcify Parcify aims to reduce the number of missed parcel deliveries via its smartphone app which uses the receiver’s phone geo-tracking to deliver parcels at his preferred location and time. In September the management of bpost and the social partners approved a new collective agreement for the period 2016-2017 As in the previous collective agreement, arrangements have been made for the possible payment of a non-recurring bonus linked to the results in 2017. A series of measures to improve purchasing power have also been agreed upon. In September bpost invested in de Buren de Buren is a Dutch-based company with a network consisting of secured lockers, which are accessible 24/7 and can be managed by an app that allows a multitude of services. In October bpost was rewarded for its sustainable development initiatives For the fourth consecutive year bpost was placed first in the International Post Corporation’s (IPC) global environmental management ranking. In October Belfius, bpost and Proximus joined forces to strengthen the local economy The three companies are investing together in the Citie digital platform to support the local Belgian economy and boost our country’s position on the digital map by bringing traders, shoppers and local authorities closer together. On November 10, 2016 the Brussels Court of Appeal annulled a decision of the Belgian Competition Authority The Brussels Court of Appeal annulled a decision of the Belgian Competition Authority of 2012 concerning bpost’s pricing policy. bpost may recover a EUR 37.4 million fine paid in 2013, but the Belgian Competition Authority may still appeal the judgment before the Supreme Court. On November 30, 2016 bpost finalised the acquisition of the Belgian activities of Lagardère Travel Retail bpost acquired 100% of the shares of the Belgian subsidiaries of Lagardère Travel Retail, renamed Ubiway. In Belgium, Ubiway is active in proximity and convenience retail. In December bpost decided not to pursue an offer for PostNL and continues to explore others growth opportunities After having conducted negotiations with PostNL regarding a possible combination of the two companies through a friendly public offer by bpost on all shares of PostNL, bpost confirmed on May 29, 2016 that no agreement was reached. On November 30, 2016, bpost sent its final and improved proposal to PostNL. On December 7, 2016 PostNL rejected the proposal and bpost decided not to further pursue a combination between the two companies. In December bpost and DHL Parcel started non-exclusive cooperation in B2C parcel delivery on a pan-European level Based on this non-exclusive cooperation, both parties can better address the fast growing B2C e-commerce sector both in Belgium as well as across Europe. On December 12, 2016 bpost and DynaGroup joined forces and combined their logistical expertise DynaGroup offers a large range of logistical services and software in the Benelux. The goal of the acquisition is to strengthen the bpost parcel division with new complementary logistical knowhow. Considering that bpost has obtained control over DynaGroup in January 2017, it will be included in the consolidated figures of bpost as from 2017.
7 8 bpost ANNUAL REPORT 2016 For theyear ended31December The following tablepresents bpost’s financial results for years 2014,2015and2016: 1.1 CONSOLIDATED INCOME STATEMENT Financial review PROFIT FOR THEYEAR Income taxexpense PROFIT BEFORE TAX Share of profit of associates TOTAL OPERATING EXPENSESEXCLUDING DEPRECIATIONS/ Financial cost Other operating expenses Payroll costs Financial income Services andother goods PROFIT FROM OPERATING ACTIVITIES (EBIT) Materials cost Depreciation, amortisation TOTAL OPERATING INCOME EBITDA Other operating income AMORTISATIONS Turnover In million EUR
(1,838.4) (1,111.1) 2,425.2 2,399.4 (143.2) (665.2) 346.2 489.5 (27.6) 496.5 (60.4) (90.3) 586.9 2016 (1.7) 10.7 25.8 9.9 (1,878.5) (1,185.8) 2,433.7 2,393.4 (161.4) (645.6) 309.3 470.6 (10.9) (20.5) 466.1 (26.6) (89.1) 555.2 2015 10.2 40.3 5.3 (1,892.6) (1,199.9) 2,464.7 2,441.7 (158.6) (644.1) 295.5 454.1 (42.7) (21.3) 480.2 (27.4) (91.9) 572.0 2014 11.2 22.9 5.5 2016-2015 Evolution Evolution 153.6% 101.7% 127.4% -11.2% -91.7% -35.9% 12.0% -0.3% -2.1% -2.8% -6.3% 4.0% 6.5% 5.7% 3.0% 1.3% 0.3%
Financial review
ANNUAL REPORT 2016 REPORT ANNUAL Financial review bpost
Total operating income (revenues) Total operating income (revenues) decreased by 0.3% to EUR 2,425.2 million (compared to EUR 2,433.7 million in 2015). The evolution per product line can be summarised as follows: For the year ended 31 December Evolution In million EUR 2016 2015 2014 2016-2015 Domestic mail 1,414.4 1,464.2 1,523.0 -3.4% Transactional mail 873.3 917.6 943.2 -4.8% Advertising mail 247.8 250.9 271.4 -1.2% Press 293.2 295.6 308.4 -0.8% Parcels 379.4 340.7 307.2 11.3% Domestic parcels 181.8 161.2 151.3 12.8% International parcels 189.5 170.0 143.3 11.5% Special logistics 8.0 9.6 12.6 -16.3% Additional sources of revenues 600.1 589.0 612.5 1.9% International mail 162.0 175.7 203.7 -7.8% Value added services 103.1 96.2 95.4 7.1% Banking and financial products 192.4 205.1 207.5 -6.2% Other 142.6 112.0 106.0 27.4% Corporate (Reconciling post) 31.4 39.8 21.9 -21.1% TOTAL 2,425.2 2,433.7 2,464.7 -0.3%
Excluding the anticipated lower compensation for SGEI (EUR 22.9 million, in line with the conditions applicable as of January 1, 2016 for the 6th management contract and the press concessions), the acquisition of Ubiway (EUR 43.8 million in revenues, included in the portfolio Other) and the sale of a sizeable building in 2015 on which a capital gain of EUR 26.1 million was realised and which had been considered as non-recurring, operating income slightly decreased by EUR 3.3 million. The increase of Parcels (EUR 38.6 million) with double digit growth for both Domestic and International Parcels, the price increases in Domestic Mail (EUR 21.1 million) and the increase of Corporate (EUR 17.7 million) were slightly offset by the volume decrease of Domestic Mail (EUR 68.4 million) and the lower revenues relating to Additional Sources of Revenues (EUR 12.4 million). Revenues from Domestic Mail decreased by EUR 49.8 million to EUR 1,414.4 million in 2016. Excluding the lower compensation for SGEI (EUR 2.5 million), the underlying decline of Domestic Mail amounted to EUR 47.3 million. The price and the mix improvement had a positive impact of EUR 21.1 million, while the underlying volume decline of 5.0%, which is identical as the volume decline for 2015, impacted revenues by EUR 68.4 million. Parcels grew by EUR 38.6 million to reach EUR 379.4 million or +11.3% driven by: the good performance of the International Parcels (EUR +19.5 million), mainly due to the positive contribution from acquisitions, partially offset by lower volumes to China; excellent Domestic Parcels volume growth of 17.1% in 2016 versus 12.6% in 2015 and 7% in 2014. This increase was driven by the continued growth of e-commerce and the strong positive trend in C2C parcels (online product offering). Price increases were fully offset by the evolution of the client and product mix (faster growth of large e-tailers with high volumes and lower prices compared to smaller customers), resulting in a negative price mix effect of -3.2%.
9 10 bpost ANNUAL REPORT 2016 decreased by EUR 5.1million). (1) For theyear ended31December The cost of goods andservices increased by EUR 19.6millionor3%(excluding interim costs Services andother goods EUR 60.4 million (2015:EUR26.6million)primarilydueto theintegration of Ubiway. Materials costs, whichincludethecost of raw materials, consumables andgoods for resale, increased by EUR 33.8millionto Material costs (EUR 19.6 million) andthedepreciation andamortisation (EUR 1.2million). (EUR 18.8 million), partially offset by theincrease of thematerial cost (EUR 33.8million),services andother goods This decrease was mainlydueto thedecrease of thepayroll charges (EUR 74.8million),theother operating expenses (2015: EUR 1,967.6 million) anddecreased by EUR 39.0millioncompared to lastyear. Operating expenses, includingdepreciation, amortisation, andimpairment charges, amounted to EUR 1,928.7million Operating expenses account thisnon-recurring item total operating income of Corporate increased by EUR 17.7millionin2016. revenue recognition. In2015,thesaleof onesizeable buildinggenerated a capitalgain of EUR 26.1million.Not takinginto The evolution of total operating income of Corporate (reconciling category) was mainlyimpacted by thesales of buildingsand and EUR 10.1 million. compensation for SGEI impacted BankingandFinancialProducts aswell asOther for anamount of respectively EUR 10.3million of new decoders andmodemsfor clients of a telecom operator andCityDepot (substainable urban distribution). The lower to Speos andto thedevelopment of customised solutions andservices, suchasEuropean License Plates, thedelivery process reasonable profit margins. Value Added Services increased to EUR 103.1millioncompared to EUR 96.2millionin2015,thanks International Mail(EUR 13.7million),inturndueto thedeclineinmailvolumes andthewholesales business inorder to safeguard included intheportfolio Other), operating income decreased by EUR 12.4million.This decrease was mainlydueto thedecrease of Excluding theimpact of thelower compensation for SGEI (EUR 20.4million)andtheacquisition of Ubiway 43.8million, (EUR Total operating income from theAdditional Sources of Revenues increased by EUR 11.1millionto EUR 600.1millionin2016. TOTAL Other services Third party remuneration. fees Interim employees Consultancy Publicity andadvertising Transport costs Insurance costs Postal andtelecom costs Other goods Energy delivery Maintenance andrepairs Rent andrental costs In million EUR anticipate reorganisations andproductivity improvement programs. Interim costs are analysed together withpayroll costs, asthey are better performance indicator of humancapitalutilisation. Incertain cases of natural attrition, personnel isreplaced by interims to 665.2 118.9 217.2 2016 19.2 54.8 15.5 14.3 12.4 22.7 33.7 77.5 72.6 6.3 (1) 645.6 , thecost of goods andservices 118.3 212.6 2015 23.0 40.3 12.8 16.6 12.0 21.1 37.0 78.7 66.7 6.4 644.1 109.4 218.4 2014 19.5 36.4 19.4 18.9 13.7 21.4 37.2 75.4 68.7 5.7 2016-2015 Evolution -16.4% -14.0% 35.9% 21.6% -1.1% -8.9% -1.5% 3.0% 0.6% 2.2% 2.7% 7.4% 8.9%
Financial review
ANNUAL REPORT 2016 REPORT ANNUAL Financial review bpost
Rental costs have increased by EUR 5.9 million, or 8.9%, mainly due to higher costs for fleet and the consolidation of Ubiway. Maintenance and repairs slightly decreased by EUR 1.2 million, or 1.5%, this was mainly caused by cost savings related to maintenance costs of machines in sorting centers. Energy delivery costs have decreased by EUR 3.3 million, or 8.9% mainly due to a positive price evolution of energy costs for both vehicles and buildings. Transport costs amounted to EUR 217.2 million and excluding the impact of Ubiway, increased by EUR 2.9 million. This increase was mainly explained by growth in international parcels, lower favorable settlement of previous years’ terminal dues (EUR 0.5 million) and the settlement on terminal dues with another postal operator. Publicity and advertising costs decreased by EUR 2.3 million, or a 14.0% decline in comparison with 2015. The consultancy costs grew by EUR 2.8 million, or 21.6%, due to increased costs related to strategic corporate projects. The growth in interim costs was driven by higher use of temporary personnel (an increase of 286 FTE on average over the year; see also section payroll costs). Not taking into account the consolidation of Ubiway, third party remunerations and fees decreased by EUR 3.6 million, amongst others driven by the internalisation of newspaper delivery (=Deltamedia). Payroll costs
Payroll costs (EUR 1,111.1 million) and interims costs (EUR 54.8 million) in 2016 amounted to EUR 1,165.8 million and decreased by EUR 60.3 million, 2015 had been impacted by the provision for the Alpha social plan (EUR 54.5 million). Excluding this non- recurring item, payroll and interims costs decreased by EUR 5.8 million (payroll costs decreased by EUR 20.2 million and interims costs increased by EUR 14.5 million), or 0.5 % compared to 2015. The integration of FTE and interims of the new subsidiaries, the internalisation of newspaper delivery (= Deltamedia) and additional workforce to absorb growth of parcels volumes and solutions led to a reported average year-on-year increase of 147 FTE and generated extra costs of EUR 5.7 million. The total impact of the above mentioned items amounted to 833 FTE and interims. Therefore, the underlying average reduction in FTE and interims amounted to 686 for the year. The recruitment of auxiliary postmen created a positive mix effect of EUR 8.0 million. Additionally, a lower number of management functions due to a hiring freeze and reorganisation, created a positive mix effect of EUR 12.2 million. The indexation of salaries combined with the first impacts of the new CLA and the normal salary and merit increases, partially compensated by the impact of the tax shift, lower lay-off costs and lower provisions for bonuses, led to a negative price impact EUR 4.9 million. Besides this, costs associated with the employee benefits increased with EUR 4.1 million. Finally, the payroll costs were impacted negatively by a settlement of social charges, which was more important last year than this year (EUR 1.0 million). Other operating expenses
Other operating charges decreased by EUR 18.8 million versus last year, mainly driven by lower costs of provisions, mainly resulting from the reversal of provisions related to a terminal dues settlement with another postal operator for which the corresponding costs have been booked within the transport costs. Furthermore last year’s earn-out for Gout (EUR 2.0 million) and the higher increase of recoverable VAT (EUR 3.0 million, percentage of recoverable VAT increased from 13% in 2014 to 14% in 2015 and 18.79% in 2016) add to the decrease. Depreciation and amortisation
Depreciation, amortisation and impairment charges have increased by EUR 1.2 million, or 1.3%, to EUR 90.3 million in 2016 (2015: EUR 89.1 million).
11 12 bpost ANNUAL REPORT 2016 its non-recurring nature. represented previously fiscally paid-upcapitalin Deltamedia SA-NV andhasbeen excluded from thenormalised results due to EUR 22.2 million. The loss ontheparticipation incurred by bpost SA-NV was tax deductible uponliquidation to theextent it decreased from 34.3%in2015to 29.3%in2016.In2016Deltamedia SA-NV hasbeenliquidated, triggering a positive impact of Income taxexpense decreased from EUR 161.4millionin2015to EUR 143.2millionin2016.bpost’s effective taxrate Income taxexpense The share of results of associates relates to bpost bankandCitiedecreased by EUR 0.3millionto EUR 9.9million. Share of results of associates benefits asa result of thedecrease inthediscount rates. Net financial result decreased by EUR 11.4milliondueto increase of non-cashfinancial charges related to IAS19employee Net financial result improvements. costs (EUR 28.8millionnot takinginto account theconsolidation of Ubiway), driven by cost control measures andproductivity thanks to parcels performance (EUR 38.6million),thenormalised increase of Corporate revenues (EUR 17.7million) andlower decrease of theAdditional Sources of Revenues (EUR 12.4million,not takinginto account theconsolidation of Ubiway), EBITgrew Despite theanticipated reduced SGEI compensation (EUR 22.9million),lower Domestic Mailrevenues (EUR 47.3million)andthe the sale of a sizeable building(EUR 26.1million),EBITincreased by 2.1 EUR millionor0.4%. Excluding thenon-recurring items, i.e. in2015theaccrual related to theAlphasocial plan(EUR 54.5million)andtheimpact of EBIT
Financial review
ANNUAL REPORT 2016 REPORT ANNUAL Financial review bpost
1.2 STATEMENT OF FINANCIAL POSITION
Assets Property, plant and equipment Property, plant and equipment have increased by EUR 13.1 million from EUR 548.5 million to EUR 561.6 million. This increase was explained by: the incorporation of new subsidiaries EUR 20.1 million; acquisitions (EUR 72.7 million) related to production facilities for sorting and printing activities (EUR 23.0 million), mail and retail network infrastructure (EUR 20.4 million), ATM and security infrastructure (EUR 4.4 million), transportation related infrastructure (EUR 7.5 million), IT and other infrastructure (EUR 15.9 million) and land (EUR 1.5 million); depreciation and impairment amounted to EUR 71.4 million and slightly increased compared to last year (2015: EUR 69.4 million); transfer to assets held for sale (EUR 8.6 million) and from investment property (EUR 0.2 million). Intangible assets Intangible assets have increased by EUR 134.7 million from EUR 89.6 million to EUR 224.4 million, due to: the incorporation of new subsidiaries EUR 12.7 million; Goodwill throughout acquisitions in 2016 of EUR 128.5 million. A major part of these goodwill calculations are still provisional because purchase price allocation of some acquisitions are still under review; investments in software and licences (EUR 2.8 million), development costs capitalised (EUR 7.2 million) and other intangible assets (EUR 2.2 million); amortisation and impairments amounting to EUR 18.5 million. Investment properties Investment properties decreased from EUR 6.5 million in 2015 to EUR 6.2 million in 2016, or by 5.2% as the number of buildings, which were rented out, slightly decreased. Investments in associates Investments in associates decreased by EUR 1.4 million, or 0.4%, to EUR 373.7 million, reflecting bpost’s share of bpost bank’s profit for the amount of EUR 10.0 million, the entry in scope of Citie for EUR 0.8 million reduced by the loss of EUR 0.1 million of Citie and the decrease in the unrealised gain on the bond portfolio of bpost bank in the amount of EUR 12.0 million, reflecting an average increase of the underlying yield curve by 44 basis points (bps). End 2016, investments in associates comprised net unrealised gains in respect of the bond portfolio in the amount of EUR 166.9 million, which represented 44.7% of total investments in associates. The unrealised gains were generated by the lower level of interest rates compared to the acquisition yields of the bonds. Unrealised gains are not recognised in the Income Statement, but directly in equity in the Other Comprehensive Income caption. Deferred Tax assets Deferred tax assets amounted to EUR 48.2 million (2015: EUR 47.2 million) and mainly relate to the timing difference between the accounting and the tax value of the employee benefits. Inventories Inventories increased by EUR 25.6 million and amounted to EUR 36.7 million (2015: EUR 11.1 million), this increase is mainly due to the inventory of Ubiway per end of December amounting to EUR 25.5 million. Current trade and other receivables Current trade and other receivables increased by EUR 70.6 million to EUR 481.8 million (2015: EUR 411.2 million), driven by a rise in trade receivables of EUR 60.7 million as a result of the consolidation of Ubiway. Cash and cash equivalents Cash and cash equivalents decreased by EUR 76.8 million, or 12.5%, to EUR 538.9 million. This decrease is mainly due to the normalised free cash flow (EUR 193.9 million) being offset by the payment of EUR 262.0 million dividends.
13 14 bpost ANNUAL REPORT 2016 The increase mainlyreflects: Employee benefits increased by EUR 10.5million,or3.0%,to EUR 356.7millionin2016from 346.2million in2015. EUR As at 31December Employee benefits partially offset by the commitments relating to earnouts for deBuren. remaining 24.5% of theshares of Landmarkfrom long-term to short-term andtherevaluation of theearnoutof CityDepot, Non-current tradeandother liabilities decreased by EUR 21.4million(2015:61.7million),mainlydueto thetransfer of the Non-current tradeandother liabilities liabilities. corresponding to theloanamount to berepaid to theEuropean Investment Bankin2017,was transferred to current financial Interest-bearing loansandborrowings decreased by EUR 8.5millionto 47.7millionasanamountEUR of EUR 9.1million, Non-current interest-bearing loansandborrowings EUR 262.0 million. bpost bank’s bondportfolio andthepayment of dividends, respectively for anamount of EUR 4.8million,12.0millionand This was partially offset by thenet actuarial losses onpost-employment benefits, the fair valueadjustment in respect of agreed future purchase of theremaining shares of LandmarkandCityDepot (impact of both amounted to EUR 15.6million). December 31,2015.The increase was mainlydueto therealised profit (EUR 346.2million)andtherevaluation of thecontractually Equity increased by EUR 84.6million,or12.2%,to EUR 779.3millionasof December 31,2016from EUR 694.8millionasof Equity Equity andLiabilities amounted to EUR 308.3million(2015:297.1million). After deduction of thedeferred taxasset relating to employee benefits whichamounted to EUR 48.4million,thenet liability TOTAL Other long-term benefits Termination benefits Long-term employee benefits Post-employment benefits In million EUR an actuarial loss of EUR 5.8millionrelated to post-employment benefits, recognised through Other Comprehensive Income. financial actuarial losses of EUR 12.9millioncaused by changes inthediscount rates; additional service costs (EUR 30.5million)andinterest costs (EUR 5.7million); the Pension Saving Days benefits; Absences, to theMedical Expenses, andtheWorkers Compensation Accident Plan,partially offset by operational losses linked to operational actuarial gains (EUR 11.4million),mainlylinked to thepart-time regime (50+),to theAccumulated Compensated and part-time work benefits; the payment of benefits for anamount of EUR 33.0million,whichincluded4.3millionfor thepayment of earlyretirement (356.7) (162.8) (107.7) (82.1) 2016 (4.1) (346.2) (148.1) (108.9) (11.6) (77.7) 2015 (368.6) (151.5) (118.3) (13.3) (85.4) 2014
Financial review
ANNUAL REPORT 2016 REPORT ANNUAL Financial review bpost
Non-current provisions
Non-current provisions amounted to EUR 31.6 million (2015: EUR 29.2 million) and are in line with last year. Current provisions
Current provisions decreased to EUR 27.1 million (2015: EUR 35.0 million), mainly due to the reversal of provisions related to a terminal dues settlement with another postal operator for which the corresponding costs have been booked within the transport costs. Current trade and other liabilities
Current trade and other liabilities increased by EUR 126.4 million EUR, or 15.1%, to EUR 964.8 million in 2016. This variance is mainly due to the increase of trade payables and other payables, which respectively increased by EUR 125.9 million and EUR 32.9 million, partially offset by the decrease of the payroll and social security payables by EUR 32.4 million. The increase of the trade and other payables is mainly due to the integration of Ubiway whereas the increase of the other payables was caused by the transfer from long-term to short-term of the liability relating to the acquisition of the remaining shares of Landmark, the earn outs relating to the acquisition of FDM and Apple Express and the consolidation of Ubiway. The decline of payroll and social security payables is mainly explained by the impact in 2015 of the Alpha social plan.
15 16 bpost ANNUAL REPORT 2016 Cash generation from operating activities hadbeennegatively impacted by: Cash flow from operating activities resulted ina cashinflow ofEUR 352.6million,8.4millionless thanin2015. of EUR 52.1million in2015. In 2016,bpost generated EUR -76.2millionof net cash.This isa decrease of EUR 128.4millioncompared to thenet cashinflow 1.3 STATEMENT OFCASH FLOWS year given thehigherfinalandinterim dividends andthedividend to minorityinterests paidin2016. The cash outflow relating to financing activities amounted toEUR 270.1million,anincrease by 6.3million compared EUR to last (EUR -12.0million) andhighercapitalexpenditures (EUR -4.0million). from saleof property, plant andequipment (EUR -22.2million,as2015includedthesaleof a majorbuilding), investment securities resulting from highercashoutflows related to theacquisition of new subsidiaries andactivities (EUR -75.4million),lower proceeds Investing activities generated a cashoutflow of EUR 158.7millionin2016compared to anoutflow of EUR 45.1millionlastyear, and working capitalimproved by EUR 10.3 million. were EUR +10.0millionlower thanin2015.Excluding these elements, results of operating activities increased by EUR 16.1million Income taxpaidrelating to previous years was lower in2016compared to 2015(EUR +21.1million)andtaxprepayments in2016 the phasinginbpost bankdividend(EUR -5.0million). costs and; the payment of terminal dues (EUR -16.8million),whichwas mainlyphasingascosts were booked inprevious years intransport the net impact of Alphapay-outs (EUR -8.3million); the lower compensation andchange inpayment terms for SGEI (EUR -35.9million);
Financial review
ANNUAL REPORT 2016 REPORT ANNUAL Financial review bpost
1.4 RECONCILIATION OF REPORTED TO NORMALISED FINANCIAL METRICS
bpost also analyses the performance of its activities on a normalised basis or before non-recurring items. Non-recurring items represent significant income or expense items that due to their non-recurring character are excluded from internal reporting and performance analyses. bpost strives to use a consistent approach when determining if an income or expense item is non-recurring and if it is significant enough to be excluded from the reported figures to obtain the normalised ones. A non-recurring item is deemed to be significant if it amounts to EUR 20 million or more. All profits or losses on disposal of activities are normalised whatever the amount they represent. Reversals of provisions whose addition had been normalised from income are also normalised whatever the amount they represent. The presentation of normalised results is not in conformity with IFRS and is not audited. The normalised results may not be comparable to normalised figures reported by other companies as those companies may compute their normalised figures differently from bpost. Normalised financial measures are presented below. Income Statement related Operating income for the year ended 31 December Evolution In million EUR 2016 2015 2014 2016-2015 Total operating income 2,425.2 2,433.7 2,464.7 -0.3% Sale of sizeable building (1) (26.1) NORMALISED TOTAL OPERATING INCOME 2,425.2 2,407.6 2,464.7 0.7%
Operating expenses for the year ended 31 December Evolution In million EUR 2016 2015 2014 2016-2015 Total operating excluding depreciation. amortisation (1,838.4) (1,878.5) (1,892.6) -2.1% Social plan - Alpha project (2) 54.5 NORMALISED TOTAL OPERATING EXPENSES (1,838.4) (1,824.0) (1,892.6) 0.8% EXCLUDING DEPRECIATION. AMORTISATION
EBITDA for the year ended 31 December Evolution In million EUR 2016 2015 2014 2016-2015 EBITDA 586.9 555.2 572.0 5.7% Sale of sizeable building (1) (26.1) Social plan - Alpha project (2) 54.5 NORMALISED EBITDA 586.9 583.6 572.0 0.6%
EBIT for the year ended 31 December Evolution In million EUR 2016 2015 2014 2016-2015 Profit from operating activities (EBIT) 496.5 466.1 480.2 6.5% Sale of sizeable building (1) (26.1) Social plan - Alpha project (2) 54.5 NORMALISED PROFIT FROM OPERATING ACTIVITIES (EBIT) 496.5 494.4 480.2 0.4%
17 18 bpost ANNUAL REPORT 2016 For 2015and2016nonon-recurring cashflow statement related items were identified. acquisition of subsidiaries (net of cashacquired). of proceeds from saleof property, plant andequipment), acquisition of intangible assets, acquisition of other investments and Operating free cashflow represents net cashfrom operating activities less acquisition of property, plant andequipment (net For theyear ended31December Cash Flow Statement related (3) (2) (1) Profit (EAT) for the year ended31December NORMALISED OPERATING FREECASH FLOW Deposits received from third parties OPERATING FREECASH FLOW Net Cash used ininvesting activities Sale of sizeable building Liquidation of Deltamedia Social plan-Alphaproject Net Cash from operating activities In million EUR Profit for the year In million EUR NORMALISED PROFIT OFTHEYEAR it represents previously fiscally paid-upcapitalin Deltamedia SA-NV. In December 2016,Deltamedia SA-NV, a100%subsidiary of bpost SA-NV, hasbeenliquidated. The loss ontheparticipation incurred by bpost SA-NV was taxdeductible uponliquidation to theextent agreement hasbeenaccrued for withinthepayroll costs duringthethird quarter of 2015. departments. The agreement contains theconditions for earlyretirement anddetermines thelayoff conditions. incase certain employees are not selected for a new job. The estimated impact of this On July23.2015duringthejoint committee. bpost management andrepresentatives of theworkforce reached anagreement concerning thesocial planrelated to theAlphaproject inthesupport this gain was considered asnon-recurring. In December 2015bpost sold a sizeable buildingonwhicha capitalgain of EUR 26.1 millionwas realised. Given thenature of thegain andthefact that itexceeds thethreshold of EUR 20.0 million. (1) (3) (2) (158.7) 193.9 193.9 324.1 (22.2) 352.6 346.2 2016 2016 (0.0) 315.9 315.9 (45.1) 328.1 (17.2) 361.1 309.3 2015 2015 (0.0) 36.1 373.5 373.3 (78.2) 295.5 451.5 295.5 2014 2014 0.2 2016-2015 2016-2015 Evolution Evolution Evolution 251.8% -38.6% -38.6% 12.0% -1.2% -2.3% 0.0%
Financial review
ANNUAL REPORT 2016 REPORT ANNUAL Financial review bpost
1.5 FROM IFRS CONSOLIDATED NET PROFIT TO BELGIAN GAAP UNCONSOLIDATED NET PROFIT
For the year ended 31 December In million EUR 2016 2015 2014 IFRS Consolidated Net Profit 346.2 309.3 295.5 Results of subsidiaries and deconsolidation impacts (39.5) (11.3) (4.0) Differences in depreciation and impairments (2.6) 0.2 (3.8) Differences in recognition of provisions 0.2 (6.5) (7.4) Effects of IAS19 2.3 (17.3) 15.6 Deferred taxes 0.3 10.2 2.5 Other 1.8 3.0 (1.5) BELGIAN GAAP UNCONSOLIDATED NET PROFIT 308.7 287.7 296.9
bpost’s unconsolidated profit after taxes prepared in accordance with Belgian GAAP can be derived from the consolidated IFRS profit after taxes in two stages. The first stage consists of un-consolidating the profit after taxes under IFRS, i.e.: subtracting the results of the subsidiaries, i.e. removing the profit after tax of the subsidiaries; and eliminating any other Income Statement impact the subsidiaries had on bpost (such as impairments) and adding the dividends received from these subsidiaries. The table below sets forth the breakdown of the above mentioned impacts: For the year ended 31 December In million EUR 2016 2015 2014 Profit of the Belgian fully consolidated subsidiaries (local GAAP) (9.3) (7.0) (8.7) Profit of the international subsidiaries (local GAAP) (18.4) (7.5) (3.2) Share of results of associates (local GAAP) (11.5) (10.1) (10.3) Other deconsolidation impacts (0.3) 13.3 18.1 TOTAL (39.5) (11.3) (4.0)
The reversal of impairments on subsidiaries within bpost SA-NV in 2014 (EUR 8.0 million), partially compensated by higher dividends in 2015 explain the evolution of the other deconsolidation impacts in 2015 compared to 2014. The evolution of the other deconsolidation impacts in 2016 compared to 2015 was mainly explained by lower dividends in 2016.
The second stage consists of deriving the Belgian GAAP figures from the IFRS figures and is achieved by reversing all IFRS adjustments made to local GAAP figures. These adjustments include, but are not limited to the following: differences in the treatment of depreciation and impairments: Belgian GAAP allows different useful lives (and hence depreciation rates) for fixed assets from IFRS. Goodwill is amortised under Belgian GAAP while IFRS requires impairment testing for goodwill. IFRS also allows intangible assets to be recorded on the balance sheet under different conditions from Belgian GAAP; recognition of provisions is subject to different criteria under Belgian GAAP and IFRS; IFRS requires that all future obligations to personnel be recorded as a liability under IAS 19, whereas Belgian GAAP has no such obligation. The movements in the IFRS liability are reflected on bpost’s Income Statement under payroll costs (EUR 16.1 million in 2016 versus EUR 15.6 million in 2015) or provisions (EUR 0.2 million in 2016 versus EUR 1.1 million in 2015), except for the impact of changes in the discount rates for the future obligations, which was recorded as a financial result (negative EUR 18.7 million in 2016 versus positive EUR 0.6 million in 2015); the evolution of IAS 19 is mainly explained by the increase of the financial charges related to employee benefits in 2016, which was due to the decrease in the discount rates.
19 ANNUAL REPORT 2016 REPORT ANNUAL
Outlook for 2017 2017 for Outlook bpost
The outlook for 2017 includes the acquisitions of FDM, Apple Express, Ubiway, DynaGroup and the stakes in Parcify and de Buren. We expect revenues to slightly grow driven by: a double digit volume growth in Domestic Parcels, with a price/mix effect of around -3%; continued growth in international parcels supported by acquisitions; growing Ubiway retail revenues; partly offset by an underlying Domestic Mail volume decline between 5 and 6%. The price increase on the small user basket has not yet been approved and is therefore uncertain. The first quarter of 2017 will count 2 working days more, the second quarter of 2017 2 less, the third quarter 1 less on franking machines and 2 less on stamps and the fourth quarter 1 less on franking machines and 1 more on stamps compared to the same quarters of 2016. On the cost side, we expect a slight increase driven by: increase in transport cost reflecting growth in International Parcels; continued productivity improvements and optimised FTE mix; salary indexation expected as of July 2017; integration of acquired businesses; continued cost optimisation. This results in our ambition to have a recurring EBITDA and dividend for 2017 at the same levels as 2016. We confirm our long-term ambition of at least EUR 620.0 million EBITDA by 2020. Gross capex is expected to be around EUR 90.0 million mainly related to further Vision 2020 investments. On top of that, Ubiway capex will amount to a maximum of EUR 10.0 million.
20 21 bpost ANNUAL REPORT 2016 statements 2016 consolidated Financial
6 5 4 3 2 1 6.14 Earningspershare 6.13 Income tax/Deferred tax 6.12 Financialincome and financial cost 6.11 Payroll costs 6.10 Otheroperating expense 6.9 Otheroperating income 6.8 Turnover 6.7 Segment information 6.6 Business combinations 6.5 Riskmanagement 6.4 Summary of significant accounting policies 6.3 Significant accounting judgments and estimates 6.2 Change inaccounting 6.1 General information Notes to theconsolidated financialstatements Consolidated statement of cashflows Consolidated statement of changes inequity Consolidated statement of financialposition Consolidated statement of comprehensive income Consolidated income statement
55 54 53 53 52 52 52 49 46 39 31 30 27 27 27 26 25 24 23 22
6.33 6.32 Group companies 6.31 Related party transactions 6.30 Rights andcommitments 6.29 Contingent liabilities andcontingent assets 6.28 Provisions 6.27 Trade andother payables 6.26 Employee benefits 6.25 Financialliabilities 6.24 Cash andcashequivalents 6.23 Inventories 6.22 Trade andother receivables 6.21 Investment inassociates 6.20 Investment insecurities 6.19 Lease 6.18 Intangible assets 6.17 Assets heldfor sale 6.16 Investment property 6.15 Property, plant andequipment Events after thestatement of financial position date
84 81 80 79 78 77 67 66 66 66 64 64 63 62 60 59 58 56 88
Financial consolidated statements 22 bpost ANNUAL REPORT 2016 Earnings pershare For theyear ended31December 1. Consolidated Income Statement Non-controlling interests Owners of theparent Attributable to: PROFIT FOR THEYEAR Profit from discontinued operations PROFIT FROM CONTINUING OPERATIONS Income taxexpense PROFIT BEFORE TAX Share of profit of associates Financial cost Financial income PROFIT FROM OPERATING ACTIVITIES (EBIT) TOTAL OPERATING EXPENSES Depreciation, amortisation Other operating expenses Payroll costs Services andother goods Materials cost TOTAL OPERATING INCOME Other operating income Diluted, profit for the year attributable to ordinary equityholders of theparent Basic, profit for the year attributable to ordinary equityholders of theparent In EUR Turnover In million EUR Notes 6.13 6.12 6.12 6.10 6.11 6.9 6.8 (1,928.7) (1,111.1) 2,425.2 2,399.4 (143.2) (665.2) 346.2 346.2 489.5 (27.6) 496.5 (90.3) (60.4) 343.8 2016 (1.7) 10.7 25.8 2.5 0.0 9.9 (1,967.6) (1,185.8) 2,433.7 2,393.4 (161.4) (645.6) 309.3 309.3 470.6 (10.9) 466.1 (89.1) (20.5) (26.6) 307.0 2015 2016 10.2 40.3 1.72 1.72 2.2 0.0 5.3 (1,984.5) (1,199.9) 2,464.7 2,441.7 (158.6) (644.1) 295.5 295.5 454.1 (42.7) 480.2 (91.9) (21.3) (27.4) 293.6 2014 2015 11.2 22.9 1.54 1.54 1.9 0.0 5.5 2016-2015 Evolution Evolution 153.6% 101.7% 127.4% -12.0% -11.2% -91.7% -35.9% 12.0% 10.5% 12.0% -2.0% -0.3% -2.8% -6.3% 2014 4.0% 6.5% 1.3% 3.0% 0.3% 1.47 1.47
Financial consolidated statements 23 bpost ANNUAL REPORT 2016 For theyear ended31December of comprehensive inco 2. Consolidated statement Actuarial gains/(losses) ondefined benefit plans periods (net of tax): of (net periods NET OTHER COMPREHENSIVE INCOME/(LOSS) NOT TO BERECLASSIFIED Fair value of actuarial results ondefined benefit plans In million EUR Non-controlling interest Owners of theparent Attributable to: NET OFTAX TOTAL COMPREHENSIVE INCOME FOR THEYEAR, NET OFTAX OTHER COMPREHENSIVE INCOME/(LOSS) FOR THEYEAR, TO PROFIT ORLOSS INSUBSEQUENTPERIODS effect tax Income assets effect financial tax sale for Income available on gain (Loss) loss or profit Fair value for financialassets available for sale by associates to tax): of reclassified (net be to periods not income subsequent in comprehensive Other TO PROFIT ORLOSS INSUBSEQUENTPERIODS NET OTHER COMPREHENSIVE INCOME/(LOSS) TO BERECLASSIFIED subsequent in loss or Exchange differences ontranslation of foreign operations profit to reclassified be to income comprehensive Other OTHER COMPREHENSIVE INCOME PROFIT FOR THEYEAR
me
Notes 6.26 6.21 (14.9) (16.8) (12.0) (18.2) 331.4 346.2 328.9 2016 (5.8) (4.8) 1.9 1.0 6.2 2.5 1.9 (43.7) (43.8) (46.7) (70.7) 265.5 309.3 263.3 2015 (3.6) 24.0 0.0 6.6 2.9 2.2 0.0 (11.2) (35.9) 358.9 295.5 104.8 357.0 2014 (6.1) 63.4 62.8 69.0 0.6 5.1 1.9 0.6
Financial consolidated statements 24 bpost ANNUAL REPORT 2016 As at 31December of financialposition 3. Consolidated statement TOTAL EQUITYANDLIABILITIES TOTAL LIABILITIES Trade andother payables Income taxpayable Provisions Bank overdrafts Interest-bearing loansandborrowings Current liabilities Deferred taxliabilities Provisions Trade andother payables Employee benefits Interest-bearing loansandborrowings Non-current liabilities TOTAL EQUITY Non-controlling interests Retained earnings Foreign currency translation Reserves Issued capital Equity attributable to equityholdersof theparent Equity andliabilities TOTAL ASSETS Cash andcashequivalents Trade andother receivables Income taxreceivable Inventories Investment securities Assets heldfor sale Current assets Trade andother receivables Deferred taxassets Investment properties Investments inassociates Intangible assets Property, plant andequipment Non-current assets Assets In million EUR
Notes 6.27 6.13 6.28 6.25 6.28 6.27 6.26 6.25 6.24 6.22 6.13 6.23 6.20 6.17 6.22 6.13 6.16 6.21 6.18 6.15
4 2,290.3 1,511.0 2,290.3 1,216.8 1,033.6 1,073.5 477.3 776.3 779.3 135.5 274.2 364.0 964.8 356.7 538.9 481.8 373.7 224.4 561.6 2016 31.4 27.1 10.3 31.6 40.3 47.7 36.7 12.0 48.2 0.0 1.1 3.1 2.5 2.6 1.5 2.8 6.2 2,112.0 1,417.2 2,112.0 1,069.2 1,042.8 494.7 694.8 694.8 922.5 230.9 364.0 838.3 346.2 615.7 411.2 375.0 548.5 2015 (0.0) 99.3 39.4 35.0 29.2 61.7 56.2 11.1 47.2 89.6 0.2 1.3 0.6 9.6 1.7 0.0 3.1 2.3 6.5 2,121.8 1,440.4 2,121.8 1,144.0 552.5 681.4 681.4 977.8 887.8 229.4 364.0 782.6 368.6 562.3 398.3 416.5 565.7 2014 87.5 67.3 27.7 37.1 79.8 65.7 12.5 61.0 10.0 89.5 0.3 1.4 0.6 0.0 1.9 0.0 2.8 2.6 8.7
Financial consolidated statements 25 bpost ANNUAL REPORT 2016 The shares have nonominalvalue andare fullypaidup. (1) directly andviathe Federal HoldingandInvestment Company. At December 31,2016,theshareholding of bpost isasfollows: of which EUR 143.5milliondistributableretained earningswithinbpost SA-NV, andlegal reserves of EUR 50.8million. Other reserves perDecember 31,2016(EUR 274.2million)are composed of group reserves amounting to 223.4 EUR million, Attributable to equityholdersof theparent of changes inequity 4. Consolidated statement AS PER31DECEMBER2016 Changes duringtheyear AS PER1JANUARY 2016 AS PER1JANUARY 2014 In million EUR Profit for the year 2014 Other comprehensive income TOTAL COMPREHENSIVE INCOME Dividends (Pay-out) Other AS PER31DECEMBER2014 AS PER1JANUARY 2015 Profit for the year 2015 Other comprehensive income TOTAL COMPREHENSIVE INCOME Dividends (Pay-out) Other AS PER31DECEMBER2015 AS PER1JANUARY 2016 Profit for the year 2016 Other comprehensive income TOTAL COMPREHENSIVE INCOME Dividends (Pay-out) Other AS PER31DECEMBER2016 issued capital Authorised & Authorised & 364.0 364.0 364.0 364.0 364.0 364.0 0.0 0.0 0.0 Treasury shares 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 reserves 230.9 Other Other (48.0) 274.2 111.0 164.7 (40.0) 229.4 229.4 (44.0) 230.9 164.7 82.5 82.5 (6.3) 43.7 43.7 8.9 1.8
translation currency Foreign
0.6 1.9 2.5 1.9 0.0 0.6 0.6 0.6 0.0 0.6 0.6 0.0
200,000,944 200,000,944 Retained earnings (212.0) (101.9) (208.0) (210.0) (99.3) 244.5 135.5 343.8 101.9 191.7 (87.5) 219.5 293.6 307.0 99.3 87.5 87.5 99.3 TOTAL 3.7 1.9 2.2 0,0
(260.0) (248.0) (254.0) 694.8 (14.9) 328.9 776.3 343.8 576.9 357.0 681.4 681.4 (43.7) 263.3 694.8 293.6 307.0 Total 12.6 (4.4) 63.4 102,075,649 102,075,649 4.0 The Belgian Number of shares State controlling 0,0 interests (1)
Non- (2.0) (1.3) (0.6) (2.2) 0.0 2.5 3.1 2.5 2.6 0.0 1.9 0.0 0.0 2.2 0.0 1.9 2.2 0.0
97,925,295 97,925,295 Free float (262.0) (249.3) (254.0) equity 694.8 (14.9) 331.4 779.3 346.2 576.9 358.9 681.4 681.4 (43.7) 265.5 694.8 295.5 309.3 Total 15.2 (5.0) 0,0 63.4 1.8
Financial consolidated statements 26 bpost ANNUAL REPORT 2016 As at 31December of cashflows 5. Consolidated statement Cash andcashequivalent less bankoverdraft asof 1 NET FOREIGN EXCHANGE DIFFERENCE NET INCREASEINCASH ANDCASH EQUIVALENTS NET CASH FROM FINANCINGACTIVITIES Dividends paidto minorityinterests Dividends paid Interim dividendpaidto shareholders Payments related to borrowings andfinancinglease liabilities Financing activities NET CASH USEDININVESTINGACTIVITIES Acquisition of subsidiaries, net of cashacquired Acquisition of other investments Acquisition of intangible assets Acquisition of property, plant andequipment Proceeds from saleof property, plant andequipment Investing activities NET CASH FROM OPERATING ACTIVITIES Increase/(decrease) in provisions Deposits received from third parties Increase/(decrease) in tradeandother payables Decrease/(increase) ininventories Decrease/(increase) intradeandother receivables CAPITAL ANDPROVISIONS CASH FLOW FROM OPERATING ACTIVITIES BEFORE CHANGESINWORKING Income taxpaidonprevious years Income taxpaid Dividends received Share of profit of associates Change inemployee benefit obligations Gain onearn-outreassessment Gain onsaleof property, plant andequipment Impairment onbaddebts Depreciation andamortisation Profit before tax Operating activities In million EUR MOVEMENTS BETWEEN1 Cash andcashequivalent less bankoverdraft asof 31 ST JANUARY AND31 ST DECEMBER st January st December
Notes 6.20 6.18 6.15 6.23 6.21 6.21 6.26 6.24 6.24 6.9 6.9
4 4 4 1 (270.1) (158.7) (212.0) (130.4) (76.6) (76.2) (17.0) (48.0) (89.0) (12.0) (12.3) (72.7) 352.6 (13.1) (36.7) 407.0 (20.9) 489.5 538.9 615.5 2016 (0.4) (0.4) (2.0) (8.1) (6.6) (9.9) 27.2 89.8 0.0 1.6 2.0 0.0 4.7 (263.8) (210.0) (137.1) (45.1) (33.4) (44.0) (13.6) (13.9) (67.0) 361.1 326.4 (42.0) (10.2) (15.8) 470.6 615.5 562.0 2015 (9.8) (0.7) 53.5 52.1 49.4 89.1 24.8 1.4 0.0 0.0 0.1 0.0 1.2 5.0 0.0 9.4 (259.3) (208.0) (135.9) (78.2) 114.0 (15.5) 114.0 (40.0) (13.4) (77.6) 451.5 402.9 (11.2) (11.2) 454.1 562.0 448.0 2014 (0.2) (9.1) (2.8) (0.8) 21.8 91.9 50.3 12.3 0.0 2.2 0.0 5.0 2.1 0.0
Financial consolidated statements 27 bpost ANNUAL REPORT 2016 (1) Not yet endorsed by theEUasperdate of thisreport. have not beenappliedby bpost for thepreparation of itsconsolidated financialstatements. The following new IFRSStandards andIFRICInterpretations, issued butnot yet effective orwhichare yet to become mandatory, Standards andInterpretations issued butnot yet appliedby bpost presentation, thefinancialperformance orposition of bpost: The following new standards andamendments, entered into force asfrom January 1,2016,don’t have any effect onthe and interpretations effective asfrom January 1,2016. The accounting policies adopted are consistent withthose of theprevious financial year except for theadoption of new standards 6.2 CHANGEINACCOUNTING bpost isa limited liabilitycompany underpublic law. bpost hasitsregistered office at Muntcentrum-Centre Monnaie, 1000Brussels. Legal status bpost also carries outServices of General Economic Interest (SGEI) onbehalfof theBelgianState. and financialproducts, express delivery services, proximity and convenience services, document management and related activities. bpost, through itssubsidiaries andbusiness units, also sells a range of other products andservices, includingpostal, parcels, banking the collection, transport, sorting anddistributionof addressed andnon-addressed mail,printed documents, newspapers andparcels. bpost anditssubsidiaries (hereinafter referred to as‘bpost’) provide national andinternational mailandparcels services comprising Business activities 6.1 GENERALINFORMATION statements 6. Notes to theconsolidated financial IAS 40–Amendments –Transfers of Investment Property IFRS 2–Amendments –Classification and Measurement of Share-based Payment Transactions IAS 12–Amendments –Recognition of Deferred Tax Assets for Unrealised Losses IFRS 7–Amendments –Disclosure Initiative IFRS 9–FinancialInstruments interpretation Standard or IFRS 4–Amendments –Applying IFRS9Financialinstruments withIFRS4 IFRS 16–Leases IFRS 15–Revenue from Contracts withcustomers Annual improvements to IFRS2012-2014Cycle (issued September 2014) Annual improvements to IFRS2010-2012 IAS 1–Amendments –Disclosure Initiative IAS 16–41Amendments –Agriculture: Bearer plants IAS 16–38Amendments –Clarification of acceptable methods of depreciation andamortisation IAS 27–Amendments –Equity method inSeparate FinancialStatements IFRS 10,12&IAS28–Amendments –Investment Entities: Applying theconsolidation exception IFRS 11–Amendment –Accounting for acquisitions of interests inJoint Operations
(1)
(1) (1) (1) (1) Effective for in reporting periods starting on orafter 1 January 2018 1 January 2017 1 January 2017 1 January 2019 1 January 2018 1 January 2018 1 January 2018 1 January 2018
Financial consolidated statements 28 bpost ANNUAL REPORT 2016 International FinancialReporting Standards (IFRS) SIC As at December 31,2016,theaccounting policies of bpost are incompliance withtheIAS Standards andInterpretations appliedby bpost a material impact onthefinancialposition andincome statement of bpost. bank. However considering that bpost bankisconsolidated based onequitymethod, bpost estimates that IFRS9willnot have IFRS 9willmainlyhave animpact onbpost bank.The impact iscurrently underinvestigation by thelocalmanagement of bpost IFRS 9FinancialInstruments In 2017bpost willassess thepotential effect of IFRS16onits consolidated financialstatements. the lease liabilityandthedepreciation expense ontheright-of-use asset. asset duringthelease term (i.e. theright-of-use asset). Lessees willberequired to separately recognise theinterest expense on date of a lease, a lessee willrecognise a liabilityto make lease payments and anasset representing theright to use theunderlying leases) undera singleon-balance sheet modelsimilarto theaccounting for finance leases underIAS17. At the commencement presentation anddisclosure of leases andrequires lessees to account for allleases (except for “low-value” assets andshort-term As of January 1,2019,IAS17Leases willbereplaced by IFRS16.16sets outtheprinciples for therecognition, measurement, IFRS 16Leases service hasbeenrendered). The revenue recognition modelof bpost isalso inlinewithIFRS15asrevenues are recognised at a point intime(i.e. whenthe penalties, etc.), already inlinewithIFRS15bpost performs anestimation of thevariable consideration at contract inception. with IFRS15.Eachperformance obligation inthecontract hasa transaction price, whichinsome cases canbevariable (discounts, acts asanagent or principle, bpost willcontinue to recognise andaccount revenues inthesameway astoday whichisinline the current revenue recognition. Regarding theperformance obligation, where a distinction needs to bemadeonwhether bpost package whichcan’t bedistinct (e.g. Speos printing anddelivery of mail,nodistinct performance obligations), whichisinlinewith products. The products andservices caneitherbesold ontheirown inseparate identified contracts or together asa bundled as well astherendering of additionalsources of revenue, includingvalue addedservices, retail andbankingservices andfinancial bpost isinthebusiness of distributingmail(includingthesaleof stamps), thedistributionof parcels domestically andabroad During 2016,bpost performed a preliminary assessment of IFRS15.Nomajorimpact of IFRS15isto beexpected once rolled out. with a transaction price andrevenue isonlyrecognised whentheentity satisfies theperformance obligation(s) of the contract. account for revenue arisingfrom contracts withcustomers: theperformance obligation(s) of eachcontract needs to beassigned expects to beentitled inexchange for transferring goods orservices to a customer. IFRS15establishes a five-step model to Contracts withCustomers. UnderIFRS15,revenue isrecognised at anamount that reflects the consideration to whichanentity As of January 1,2018,theaccounting of revenues described by IAS18(Revenue) willbereplaced by IFRS15-Revenue from IFRS 15Revenue from Contracts withCustomers IFRS 13–Fair value Measurement IFRS 10,12&IAS27–Investment Entities IFRS 10,11&12–Transition Guidance IFRS 12–Disclosure of Interests inOtherEntities IFRS 11–Joint Arrangements IFRS 10–Consolidated FinancialStatements IFRS 8–Operating segments IFRS 7–FinancialInstruments: Disclosures IFRS 5–Non-current Assets Heldfor SaleandDiscontinued Operations IFRS 3–Business Combinations (Revised in2008) IFRS 3–Business Combinations (issued in2004)for acquisition completed before 1January 2010 IFRS 2–Share-based Payment / IFRIC listed below: / IFRS Standards andInterpretations
Financial consolidated statements 29 bpost ANNUAL REPORT 2016 Interpretations SIC/IFRIC International Accounting Standards (IAS) bpost hasnot earlyadopted any other standard, interpretation, oramendment that was issued, butisnot yet effective. statements are not applicableinthecontext of bpost. The other standards andinterpretations currently endorsed by theEUandeffective for thepreparation of the2016financial IAS40–Investment Property IAS39–FinancialInstruments: Recognition andMeasurement IAS38–Intangible Assets IAS37–Provisions, Contingent Liabilities andContingent Assets IAS36–Impairment of Assets IAS34–Interim FinancialReporting IAS33–Earningspershare IAS32–FinancialInstruments: Presentation IAS28–Investments inAssociates andJoint Ventures IAS27–Consolidated andSeparate FinancialStatements (Revised in2008) IAS24–Related Party Disclosures IAS23–Borrowing costs IAS21–The Effects of Changes in Foreign Exchange Rates IAS19–Employee Benefits IAS18–Revenue IAS17–Leases IAS16–Property, Plant andEquipment IAS12–Income Taxes IAS10–Events after theReporting Period IAS8–Accounting Policies, Changes inAccounting Estimates andErrors IAS7–Statement of Cash Flows IAS2–Inventories SIC 12–Consolidation –SpecialPurpose Entities IFRIC 21–Levies IFRIC 10–Interim FinancialReporting andImpairment IFRIC 4–Determining whether anArrangement contains a Lease IFRIC 1–Changes inExistingDecommissioning, Restoration andSimilarLiabilities IAS 1 –Presentation of FinancialStatements
Financial consolidated statements 30 bpost ANNUAL REPORT 2016 (1) The Towers Watson RATE:link tool isa tool designed to assist companies intheselection of discount rates that accurately reflect thecharacteristics of theirpension schemes. consideration theprobability of meeting eachperformance target andthediscount factor. value at eachreporting date. The determination of thefair value isbased ondiscounted cashflows. The key assumptions take into business combination. When thecontingent consideration meets thedefinition of a liability, itissubsequently re-measured to fair Contingent consideration, resulting from business combinations, isvalued at fair value at theacquisition date aspart of the Fair value measurement of contingent considerations Towers Watson RATE:link tool The discount rates have beendetermined by reference to market yields at thestatement of financialposition date. bpost used the received from thepensions’ administration. estimated by dividingtheannualcost for inactive membersby thenumberof inactive beneficiaries based onthe reference data For most benefits, an average cost perinactive memberisused for the valuation of thebenefits. This average cost hasbeen each year proportionally to thenumberof civilservants (full timeequivalents) andissubject to inflation. As a consequence, bpost asa publicinstitutionpays a contribution that isdefined by a programme law. The amount isadapted The financing methodology of family allowances for civil servants haschanged due to a law change (law of 19 December 2014). methodology (Projected UnitCredit) takinginto account future pensionaccrual pro-rated for pastservice. a minimum of 1.75%p.a. Asa result, bpost could remain consistent withthe2015methodology andappliedtheso-called PUC minimum return for future contributions isa percentage of theaverage past24months return on10years linearbonds with rates of return inBelgiumhasbeenremoved withthechange intheWAP/LPC law endof December 2015.Asfrom 2016, the clarification ontheminimumguaranteed return. The uncertainty with respect to thefuture evolution of theminimumguaranteed benefit obligations. Althoughthere isstillnofullclarityontheapproach, new legislation dated December 2015brought more classify asdefined benefit planswhich would require that the Projected Unit Credit method isappliedin order tomeasure the By law, defined contribution pensionplansinBelgiumare subject to minimumguaranteed rates of return. Hence, those plans a maximum of 63days. accumulated inthenotional account is25%.The balance of thecumulated un-used sickness days for civilservants islimited to is set at 75% incase of long-term illness. Thus, thepercentage of theguaranteed salary used for determining thecost of days The number of days of illness depends ontheage, identified per segment of the relevant population. The rate of guaranteed salary derived from thestatistics of theconsumption average over a mobileaverage of 3years (years 2014to 2016for December 2016). Regarding theAccumulated Compensated Absences benefit, the consumption pattern of theillness days issince December 2013 both active andinactive employees. years. bpost decidedto reflect themortality improvements by adopting anage correction of two years to the official tables, for The mortality tables used are theBelgianMortality tables MR(for males) andFR(for females) withanage adjustment of two Comprehensive Income depending onthetype of thebenefit. employee benefit liabilities, which would be reflected asanadditional pro the data become ever more stableandreliable. Actual circumstances may vary from these assumptions, givingrise to different which are updated onanannualbasis. Given theincrease of thereference database witheachyear of historical data that isadded, employee turnover, acceptance rate, mortality rates, retirement ages, discount rates, benefit increases andfuture wage increases, The key assumptions, inherent to thevaluation of employee benefit liabilities andthedetermination of thepension cost, include Employee Benefits -IAS 19 appear reasonable undertheexisting circumstances. on a continuous basisandare based onhistorically established patterns andexpectations withregards to future events that They impact thevalue of assets andliabilities. Estimates andassumptions are madeconcerning thefuture. They are re-assessed A series of significant accounting judgments underliethepreparation of IFRS compliant consolidated financialstatements. AND ESTIMATES 6.3 SIGNIFICANT ACCOUNTING JUDGMENTS corporate bonds. (1) for thedetermination of thediscount rates, considering a mixof financialandnonAA fit orcost intheIncome Statement orintheOther
Financial consolidated statements 31 bpost ANNUAL REPORT 2016 control themanagement of these companies. bpost bankandCitieare associates andare accounted for usingtheequitymethod asbpost hassignificant influence butdoes not eliminated to theextent of theinvestor’s interest intheassociate. Unrealised profits and losses resulting from transactions between aninvestor (or its consolidated subsidiaries) andassociates are the caption “Share of result of associates (equity method)”. The portion of theresult of associates attributable to bpost isincludedseparately intheconsolidated income statement under investee reduce thecarrying amount of theinvestment. the proportion of theassociate’s equity(asrestated underIFRS),includingtheresult for theperiod. Dividends received from an statement of financialposition (under thecaption “Investments inassociates”) at theclosing date at anamount corresponding to All associates are accounted for usingtheequitymethod: theparticipating interests are separately includedintheconsolidated Consistent accounting policies are appliedwithinthewholegroup, includingassociates. is held; these assumptions may berebutted ifthere isclearevidence to thecontrary. policies. Itisassumed to exist whenbpost holds at least20%of theinvestee’s voting power butnot to exist whenless than20% influence isthepower to participate inthefinancialandoperating policy decisions ofthe investee but not to control those An associate isanentity inwhichbpost hassignificant influence, butwhichisneithera subsidiary nora joint venture. Significant Associates circumstances. Consolidated financialstatements are prepared usinguniform accounting policies for like transactions and other events insimilar gains andlosses ontransactions between group companies are eliminated infull. Subsidiaries are de-consolidated from thedate onwhichcontrol ceases. Intragroup balances andtransactions, aswell asunrealised statement of financialposition theacquired assets andliabilities (at fair value), includingany goodwill arisingontheacquisition. incorporates into theconsolidated income statement thefinancialperformance of the acquiree and recognises inthe consolidated and operations of theacquiree iseffectively transferred to theacquirer. From thedate of acquisition, theparent (the acquirer) Consolidation of a subsidiary takes place from the date of acquisition, which isthedate onwhichcontrol of thenet assets currently exercisable orconvertible are considered whenassessing whether bpost controls anentity. assumptions may berebutted ifthere isclearevidence to thecontrary. The existence andeffect of potential voting rights that are from itsactivities. Control isassumed to exist whenbpost holds at least50%,plusoneshare of theentity’s voting power; these consolidated infull.Control isthepower to govern thefinancialandoperating policies of anentity inorder to obtain benefits Assets andliabilities, rights andcommitments, income andcharges of theparent andthesubsidiaries fullycontrolled are Subsidiaries The parent company andallthesubsidiaries itcontrols are includedintheconsolidation. Noexception ispermitted. Consolidation actual results may ultimately differ from those estimates. statement of financialposition date. Althoughthese estimates are based onthebest information available to themanagement, approved budget /long-term planprojections, where applicable. Judgments are based on the information available oneach All accounting estimates andassumptions that are used in preparing thefinancialstatements are consistent withbpost’s latest otherwise indicated. The consolidated financialstatements are presented inEuro (EUR)andall values are rounded to thenearest million except when described indetail inthenext paragraphs. using themeasurement basisspecified by theInternational Financial Reporting Standards (IFRS). The measurement bases are The consolidated financialstatements have beenapproved by theBoard of Directors onMarch 7,2017andhave beenprepared 6.4 SUMMARY OFSIGNIFICANT ACCOUNTING POLICIES
Financial consolidated statements 32 bpost ANNUAL REPORT 2016 impairment annually. Intangible fixed assets withindefinite useful lives are not amortised, withinbpost only goodwill andtradename, but are tested for The applicable useful lives are: Intangible assets withfinite lives are amortised ona systematic basis over theiruseful life, usingthestraight-line method. internally generated intangible assets represent mainlyITprojects. phase are charged to theIncome Statement. The expenses inrelation to thedevelopment phase are capitalised. Withinbpost, overheads) less any accumulated amortisation andless any accumulated impairment loss. The expenses inrelation to theresearch Intangible fixed assets are carried at acquisition cost (includingthe costs directly attributable to thetransaction, butnot indirect (iv) (iii) (ii) (i) An intangible asset isrecognised ontheconsolidated statement of financialposition sheet whenthe following conditions are met: Intangible assets Goodwill isnot amortised, butistested for impairment annually. acquisition event (suchasmeeting anearningstarget), thechange infair value isrecognised inprofit orloss. consideration transferred (i.e. recognised withingoodwill). Iftheamount of contingent consideration changes asa result of a post- Contingent consideration, ifany, ismeasured at fair value at thetimeof thebusiness combination andincludedinthe difference ispositive) ordirectly asa profit intheIncome Statement (ifthedifference is negative). and thefair value of theidentifiable assets, liabilities and contingent liabilities acquired isaccounted for as goodwill (ifthe Where anentity isacquired, thedifference recorded onthedate of acquisition between theacquisition cost of theinvestment Goodwill andnegative acquisition differences The bonds include: The bondportfolio of bpost bankisclassified onthebalance sheet of bpost bankas “Available-for-sale financial assets”. a dividend. income securities, revenues are recorded inprofit orloss as soon astheshareholders general meeting confirms thedistribution of For fixed income securities, interest is recognised intheIncome Statement usingthe effective interest rate method. For variable comprehensive income undera specific heading“Unrealised ordeferred gains orlosses.” Securities classified in “Available-for-sale financial assets” are measured at fair valueandchanges in fair value are recorded in other Licenses for minorsoftware IT-development costs Intangible assets fixed and/or variable income securities containing embeddedderivatives (which are accounted for separately ifnecessary). variable income securities; fixed income securities (bonds, negotiable debt instruments, sovereign loansinthe form of securities, etc.); the cost of theasset canbemeasured reliably. bpost cancontrol theresource; and it isprobable that theexpected future economic benefits that are attributable to theasset willflow tobpost; the asset isidentifiable, i.e. either separable (ifitcanbe sold, transferred, licensed) orit results from contractual orlegal rights; 5 years maximum
Useful life 3 years
Financial consolidated statements 33 bpost ANNUAL REPORT 2016 and fair value less costs to sell. Non-current assets heldfor saleare nolonger depreciated butmay beimpaired. They are stated at thelower of carrying amount condition, saleishighlyprobable andisexpected to occur withinoneyear from thedate of classification). criteria are met (active program to locate a buyer hasbeeninitiated, property isavailable for immediate saleinitspresent carrying amount isrecovered principallythrough salerather thanthrough continuing use. This isdemonstrated ifcertain strict Non-current assets are classified asassets held for saleundera separate headinginthestatement of financial position iftheir Assets heldfor sale The applicable useful lives canbefound inthetablethat isincluded insection “ The depreciation amount isallocated ona systematic basisover theuseful life of theasset, usingthestraight-line method. Investment properties are carriedat acquisition cost less any accumulated depreciation andless any impairment loss. Investment property mainlyrelates to apartments located inbuildingsused aspost offices. Investment properties the lease term. ownership of anasset) are recognised asanexpense by thelessee andasanincome by thelessor ona straight-line basisover Rentals paid/received underoperating lease (ones that donot transfer substantially alltherisksandrewards incidental to lease term. The depreciation policy for leased assets isconsistent withthat for similarassets owned. finance charge andthe reduction of theoutstandingliabilityinorder to obtain a constant rate of interest onthedebt over the included inthelease payments) or, iflower, thefair value of theleased assets. Lease payments are apportioned between the asset anda liabilityat amounts equalto thepresent value of theminimumlease payments (=sumof capitalandinterest portions A finance lease, whichtransfers substantially alltherisksand rewards incident to ownership to thelessee, is recognised asan Lease transactions of the asset at theendof itsuseful life. The applicableuseful lives are: The depreciable amount istheacquisition cost, except for vehicles. For vehicles, itistheacquisition cost less theresidual value The depreciable amount isallocated ona systematic basisover theuseful life of theasset, usingthestraight-line method. period of timeto get ready for itsintended use orsaleare capitalised aspart of thecost of theasset. Borrowing costs directly attributable to theacquisition, construction orproduction of anasset that necessarily takes a substantial benefits that willbe generated by thefixed asset, are identified as a separate element ofthe acquisition cost. to theIncome Statement. However, expenditures onmajorrepair andmajormaintenance, whichincrease thefuture economic Expenditure onrepair andmaintenance whichserve onlyto maintain, butnot increase, thevalue of fixed assets are charged impairment loss. Cost includes any directly attributable cost of bringingtheasset to working condition for itsintended use. Property, plant andequipment are carriedat acquisition cost, less any accumulated depreciation andless any accumulated Property, plant andequipment Property, plant andequipment Machines All other vehicles (cars, trucks, etc,) Bikes andmotorcycles Tractors andforklifts Fitting-out works to buildings Industrial buildings, sorting centers Network buildings Central administrative buildings Land Computer Equipment Furniture Property, plant and equipment and plant Property, ”. 5 Useful life 4 - 10 years 10 years 25 years 40 years 40 years 10 years 10 years - 5 years 4 years 5 years N/A
Financial consolidated statements 34 bpost ANNUAL REPORT 2016 Rental income arisingfrom operating leases orinvestment properties isaccounted for ona straight linebasisover thelease term. group’s right to receive thepayment isestablished. Interest income isrecognised usingtheeffective yield method andthe revenue related to dividends is recognised whenthe the services are provided. bpost also receives commissions onsales of partner products through itsnetwork. Commission income isrecorded at thetime when theservices are rendered. The remuneration of theSGEI isbased onthecontractual provisions of themanagement contract andtherevenue isrecognised is delivered. of thisprinciple, therevenue relative to thestampsaleandfrankingmachineactivity isrecognised in income at thetimemail Revenue from therendering of services isrecognised according to thestage of completion of theservices rendered. Inapplication buyer anditisprobable that theeconomic benefits associated withthetransaction willflow tothe entity. Revenue arisingfrom thesaleof goods isrecognised when bpost transfers thesignificant risksand rewards of ownership to the Revenue recognition A write-down isnecessary whenthenet realisable value at thestatement of financialposition date islower thanthe cost. condition. The allocation of fixed costs of production to the cost price isbased onnormalproduction capacity. production, excluding costs of borrowing andoverheads that donot contribute to bringingthemto the present location and condition, includingindirect production costs. Inparticular, thecost price of stamps includes thedirect andindirect costs of The cost of inventories finishedproducts comprises all costs incurred inbringinginventories to theirpresent location and value. importance whose value andcomposition remain stableover timeare stated inthestatement of financialposition at a fixed The acquisition price of interchangeable inventories isdetermined by application of theFIFO method. Inventories of minor Inventories are measured at thelower of cost andnet realisable value at thestatement of financialposition date. Inventories asset does not exceed theamount that would have beenobtained, after depreciation, hadnoimpairment beenrecorded. that prevailed at thetimeimpairment was recorded cease to exist, andsolely to theextent that thecarrying amount of the Impairment ongoodwill may never bereversed at a later date. Impairment onother fixed assets is reversed iftheinitial conditions values, but solely to theextent that theselling price of theassets inquestion islower thantheircarrying amount. CGU. Any excess isthenallocated to reduce thecarrying amount of other fixed assets of the CGU inproportion to theirbook Where animpairment isidentified, itisfirstallocated to reduce thecarrying amount of any goodwill allocated tothe group of synergies of thecombination. combination is, from theacquisition date, allocated to groups of cash-generating units, that are expected to benefit from the carried outwhenthere isanindication of impairment. For thepurpose of impairment testing, goodwill acquired ina business An impairment test iscarriedoutannuallyfor goodwill. For a CGU to whichnogoodwill isallocated, impairment test isonly other CGUs). (CGU = the smallest identifiable group of assets that generates inflows that are largely independent from thecash flows from independent cashflows, the test isperformed at thelevel of thecash-generating unit (CGU) to which theasset belongs When possible, thetests have beenperformed onindividualassets. When however itisdetermined that assets donot generate to thecash that bpost canrecover ifitcontinues to use theasset). fair value less costs of disposal (corresponding to thecashthat bpost canrecover through sale) anditsvalue inuse (corresponding An impairment loss isrecognised whenthecarrying amount of anasset exceeds itsrecoverable amount, whichisthehigherof its Impairment of assets statement of financialposition. of itscollection every five years. The stamp collection is recorded inthecaption “Other Property, Plant and Equipment” of the of liquidity. The revalued amounts are determined periodicallyonthebasisof market prices. bpost proceeds to thereevaluation The stampcollection that isowned by bpost andused durablyby itisstated at there-evaluated amount less discount for thelack Stamp collection
Financial consolidated statements 35 bpost ANNUAL REPORT 2016 Retained earningsincludetheresult of thecurrent periodasdisclosed in theIncome Statement. Other reserves comprise theresults of theprevious periods, thelegal reserve andtheconsolidated reserve. Treasury shares are deducted from equity. Movements of treasury shares donot affect theIncome Statement. Ordinary shares are classified underthecaption “issued capital”. Share capital as defined above, net of outstandingbank overdrafts. For thepurpose of theconsolidated statement of cashflows, cashandequivalents consist of cashand short-term deposits, subject to aninsignificant risk of changes in value. months asfrom acquisition date) that are highlyliquidandare readily convertible into a known amount of cashandthat are This caption includes cashinhand, at bank,values for collection, short-term investments (with maturity date not exceeding three Cash andcashequivalents values of thefinancialassets are determined by reference to publishedprice quotations inanactive market. Regular way purchases orsales of financialassets are recognised andde-recognised using settlement date accounting. The fair (4) (3) (2) (1) There are different categories of financial assets: expenses are recognised inprofit orloss ordirectly inequity. and itspurpose. A financialinstrument’s category is relevant for the way itismeasured andwhether any resulting income and Financial assets are assigned to thedifferent categories oninitial recognition, dependingonthecharacteristics of theinstrument Investment securities Prepayments andaccrued income are also presented underthiscaption. wholly orpartially doubtful oruncertain. An individualassessment of therecoverability of thereceivables ismade. Impairment isrecognised where cashsettlement is received (unless theimpact of discounting isnot significant). Receivables are initiallymeasured at theirfair value andlater at theiramortised cost, i.e. thepresent value of thecashflows to be Receivables market. After initialrecognition these are measured at amortised cost usingtheeffective interest method; loans andreceivables are non-derivative financialassets withfixed or determinable payments that are not quoted inan active cost usingtheeffective interest method; maturity dates, whichbpost hasthepositive intention andabilityto holdto maturity. These assets are measured at amortised held-to-maturity financialassets are financial assets, otherthanderivatives, with fixed or determinable payments and fixed value at eachstatement of financialposition date, changes in fair value being recognised intheIncome Statement; category “at fair value through profit orloss” at thetime of initial recognition. These financial assets are measured attheir fair financial assets held for tradinginclude(a)derivatives and (b) assets that bpost has voluntarily decided to classify inthe previously recognised inequityare recycled inprofit orloss. value recognised directly inequityuntil thefinancialassets are derecognised, at whichtimethecumulative gains orlosses nor theabilityto holdto maturity. These available-for-sale financialassets are measured at fair value, withchanges in fair controlled entities andassociates), investments inopen-endedmutualfunds andbonds that bpost hasneithertheintention one of theprevious categories, for instance investments inequityinstruments (other thanshares insubsidiaries, jointly available-for-sale financialassets constitute a residual category that includes allthefinancial assets not classified under
Financial consolidated statements 36 bpost ANNUAL REPORT 2016 context of thepost-employment benefits to cover: In application of these principles, a provision (calculated according to anactuarial method laiddown by IAS19)isset upinthe contractual orconstructive obligation (“vested rights” onthebasisof pastpractice). any planassets) inso far asbpost hasanobligation to incurthecosts inrelation to these benefits. This obligation can bea legal, Post-employment benefits are valued usinganactuarial valuation method andprovisions are set up for them (under deduction of Post-employment benefits the statement of financialposition date are includedunderthecaption “Payroll and social security payables”. Short-term benefits are recognised asan expense whenanemployee has rendered the services to bpost. Benefits not paid foron Short-term benefits Employee benefits definition used inIFRS13. The planassets related to thepost-employment benefits are measured at their fair value at theend of theperiodinsame recognised in theIncome Statement. Net interest iscalculated by applyingthediscount rate to thenet defined benefit liabilityor assets. Net interest costs are also Past service costs are recognised intheIncome Statement. the planamendment orcurtailment occurs; and(2)theentity recognises related restructuring costs inaccordance withIAS37. Past service costs resulting from a planamendment orcurtailment shouldberecognised at theearlierof thedate when(1) Service costs comprise current service costs, past-service costs, gains andlosses oncurtailments andnon-routine settlements. that of the benefits being valued. The discount rate used istheyieldof high-qualitycorporate bonds orisbased ongovernment bonds witha maturity similarto to anadditionalcredit unitto betaken into account invaluing thebenefits granted andtheobligations pertaining thereto. The calculation of theobligation isdoneusingtheprojected unitcredit method. Eachyear of service confers entitlement valuation. in theactuarial assumptions year onyear, and(2)deviations between actual costs andactuarial assumptions used for theIAS19 employee benefit obligations in conformity withIAS19. Actuarial gains andlosses inevitably appear, resulting (1)from changes Actuarial assumptions (concerning thediscount rate, mortality factor, costs of future benefits, inflation, etc.) are used to assess reclassified to profit or loss insubsequent periods. a corresponding debitorcredit to retained earningsthrough OCIintheperiodwhichthey occur. Re-measurements are not Re-measurements, comprising of actuarial gains andlosses, are recognised immediately inthestatement of financialposition with advance intheircareers). reach thedesired age to obtain thebenefits (the provision is constituted progressively, asandwhenmembers of thepersonnel accumulated service of these employees oneachstatement of financialposition date andtheprobability that thepersonnel will the future costs of potential retirees, estimated onthebasisof theemployees currently inservice, takingaccount of the the future costs relative to current retirees (aprovision representing 100%of thefuture estimated costs of those retirees);
Financial consolidated statements 37 bpost ANNUAL REPORT 2016 (during thecourse of year N+1)are established. Dividends payable inrespect of year Nare onlyrecognised asliabilities once theshareholders’ rights to receive these dividends by starting to implement theplanorby announcingitsmain features to those affected. main features of therestructuring; and(b) raisinga valid expectation to those affected that itwillcarry outthe restructuring of financialposition date. The constructive obligation shouldbedemonstrated by: (a)a detailed formal planidentifying the A provision for restructuring isonlyrecorded ifbpost demonstrates a constructive obligation to restructure at thestatement benefits expected to be received underit),thepresent obligation underthe contract is recognised asa provision. If bpost hasanonerous contract (the unavoidable costs of meeting theobligations underthecontract exceed theeconomic losses are prohibited. A provision for restoring polluted sites isrecognised ifbpost hasanobligation inthisrespect. Provisions for future operating The increase intheprovision dueto thepassage of timeisrecognised asa financial expense. Where theimpact islikely to bematerial (mainlyfor long-term provisions), theprovision isestimated ona net present value basis. (3) a reliable estimate of theamount of theobligation canbemade. (2) itisprobable (more likely thannot) that anoutflow of resources willbe required to settle theobligation; and (1) bpost hasa present (legal orconstructive) obligation asa result of pastevents; A provision isrecognised onlywhen: Provisions so far asthere isanobligation onbpost. benefits ismadein return for the termination of employment that cannolonger bewithdrawn, a provision is constituted in Where bpost terminates thecontract of a memberof itspersonnel priorto hisnormalretirement date orwhere anoffer of Termination benefits recognised in theIncome Statement. Net interest iscalculated by applyingthediscount rate to thenet defined benefit liabilityor assets. Net interest costs are Past service costs are recognised intheIncome Statement. the planamendment orcurtailment occurs; and(2)theentity recognises related restructuring costs inaccordance withIAS37. Past service costs resulting from a planamendment orcurtailment shouldberecognised at theearlierof thedate when(1) Service costs comprise current service costs, past-service costs, gains andlosses oncurtailments andnon-routine settlements. similar to that of thebenefits being valued. The discount rate used istheyieldof high-qualitycorporate bonds oralternatively isbased ongovernment bonds witha maturity to anadditionalcredit unitto betaken into account in valuing thebenefits granted andtheobligations pertaining thereto. The calculation of theobligation isdoneusingtheprojected unitcredit method. Eachyear of service confers entitlement valuation. These actuarial gains andlosses are recognised directly intheIncome Statement. in theactuarial assumptions year onyear, and(2)deviations between actual costs andactuarial assumptions used for theIAS19 employee benefit obligations in conformity withIAS19. Actuarial gains andlosses inevitably appear, resulting (1)from changes Actuarial assumptions (concerning thediscount rate, mortality factor, costs of future benefits, inflation, etc.) are used to assess they occur. Re-measurements, comprising of actuarial gains andlosses are recognised immediately through profit orloss intheperiodwhich The provision iscalculated asfollows: method imposed by IAS 19. earned by theemployee onthebasisof thepastservice. Here, aswell, theprovision iscalculated according to anactuarial A provision iscreated for long-term benefits to cover benefits that willonlybepaidina number of yearsbutthat are already a legal, contractual orconstructive obligation (“vested rights” onthebasisof pastpractice). of any planassets) inso far asbpost hasanobligation to incurthecosts inrelation to these benefits. This obligation canbe Long-term employee benefits are valued usinganactuarial valuation method andprovisions are set up for them (under deduction Long-term benefits == –– Actuarial valuation of theobligation underIAS19 Fair value of theplanassets Provision to beconstituted (or asset to berecognised ifthefair value of theplanassets ishigher)
Financial consolidated statements 38 bpost ANNUAL REPORT 2016 type derivatives transactions andenters from timeto timeinto currency swap contracts to cover specific currency transactions. Special rules may applyinthecase of hedgingtransactions by meansof derivatives. bpost hasnot entered into these speculative Derivative financialinstruments are measured at fair value withchanges in fair value recognised intheIncome Statement. Derivative financialinstruments in profit orloss. a foreign operation, thecomponent of other comprehensive income relating to that particular foreign operation isrecognised The exchange differences arisingontranslation for consolidation are recognised in other comprehensive income. Ondisposal of the reporting date and theirincome statements are translated at exchange rates prevailing at thedates of thetransactions. On consolidation, theassets andliabilities of foreign operations are translated into Euro at theexchange rate prevailing at losses onmonetary assets andliabilities onthestatement of financialposition date are recognised intheIncome Statement. rates prevailing onthedates of thetransactions. Realised exchange rate gains andlosses andnon-realised exchange rate gains and Transactions inforeign currencies are initiallyrecorded inthefunctional currency of theentities concerned usingtheexchange Transactions inforeign currencies financial period. Deferred revenue istheportion of income received duringthecurrent orpriorfinancialperiods butwhich relates to a subsequent Deferred revenue be presented ona net basis. Deferred taxes are calculated at thelevel of eachfiscal entity. The deferred taxassets andliabilities of various subsidiaries may not deferred taxassets for unused taxlosses carriedforward. This criterion isreassessed oneachstatement of financialposition date. will beavailable against whichthedeductible temporary difference canbe utilised. The sameprinciples apply to recognition of A deferred taxasset isrecognised for alldeductible temporary differences to the extent that itisprobable that taxableprofit (3) (2) (1) Deferred taxes are not recognised inrespect of: recovered ortheliabilityissettled. Inpractice, therate inforce onthestatement of financialposition date isused. amount of thestatement of financialposition items andtheirtaxbase, usingtherate of tax expected to applywhentheasset is Deferred taxation iscalculated according to theliabilitymethod onthetemporary differences arisingbetween thecarrying It iscalculated usingtherate of taxonthestatement of financialposition date. taxable income for thecurrent year together withany adjustment inthetaxes paid(to berecovered) inrelation to previous years. Income taxincludes current taxation anddeferred taxation. Current taxation istheamount of taxes to bepaid(recovered) onthe Income taxes foreseeable future. investments insubsidiaries, branches, associates andjoint ventures ifitislikely that dividends willnot bedistributed inthe accounting profit nortaxableprofit; and the initialrecognition of anasset orliabilityina transaction that isnot a business combination andthat affects neither goodwill that isnot amortised for taxpurposes;
Financial consolidated statements 39 bpost ANNUAL REPORT 2016 The risksanduncertainties are disclosed inthree categories: the entire business). functions suchasLegal andRegulatory, HealthandSafety, SecurityandIntegrity andtheGroup Executive Management, covering breach of rules andregulations. management orinternal control system canprovide absolute safeguards against failure to achieve corporate objectives, fraudor responses withintheCompany. Inaddition,themitigation efforts described are noguarantee that riskswillnot materialise. Norisk overview of potential andinitiated action points inresponse to therisksandare not beinterpreted asa comprehensive listof risk but whichmay ultimately have a material adverse effect. The riskmitigation asdescribed below ismeant to provide a high-level may beadditionalrisksof whichbpost iscurrently unaware. There may bealso risksthat are currently believed to beimmaterial, Any of thefollowing riskscould have a material adverse effect onbpost’s business, financial position, andoperating results. There Risks are identified at different levels inthe organisation (includinga.o. operational andfinancialmanagement, corporate 2 Committee. key management activities suchastherevision of thestrategy orquarterly reviews of theoperations by theGroup Executive bpost hasdesigned anEntreprise RiskManagement (ERM)framework embeddingcompany-wide riskmanagement processes in Approach andmethodology 6.5 RISKMANAGEMENT Committee, theAudit Committee andtheBoard of Directors. a dedicated mitigation andmonitoring approach isdefined. The application of thisapproach is reviewed by theGroup Executive communication of risksthroughout thecompany (top-down andbottom-up). For themainrisksineachof thecategories, Based onformalised riskevaluation criteria, approved by theBoard of Directors, risksare prioritised inorder to allow appropriate External Business Regulatory/Legal These also includethefinancialrisks. operational risks:Mostly internally oriented risksorunforeseen disasters that may result ina impact onbpost results. external Business risks:External events whichmay affect the validity of thestrategy for thepursuit of growth opportunities; regulatory/Legal risks:These are regulatory orlegal evolutions whichcould impact therealisation of thebpost strategy; Operational Risks Risks Risks
• Definition of PlanB • • • • budget process) with theAuthorities andRegulators Maintaining aconstructive relationship the risks Action plans/Projects to mitigate Networking and influencing the riskassessment Tracking of theevents whichinfluence Mitigation (part of theBUobjectives and (if deemeduseful) (if deemeduseful) • • • • • • Annual status reporting (Corporate Risk) (Legal/regulatory) Annual update ontheriskevolution Review (QR) are reported duringtheQuarterly Brief status &Emerging riskevolutions the strategy evolutions potentially impacting Immediate reporting of important the Annual Report (EOY) Annual status reporting asinputfor strategy evolutions potentially impacting the Immediate reporting of important Monitoring
nd line
Financial consolidated statements 40 bpost ANNUAL REPORT 2016 On June3,2016,theEuropean Commission approved the6 not warrant compensation ormay not entrust these services to bpost. amend thescope andcontent of) certain publicservices, may conclude that suchservices donot constitute SGEIs andhence does European Commission onMay 2,2013.For theperiodcommencing January 1,2021, theBelgianState may cease to provide (or other services). This 6 respect to theother SGEIs (amongstothers themaintenance of a retail network, distributionof pensions, cashat counter and 5 to 2012.OnMay 2,2013,theEuropean Commission approved thecompensation granted to bpost undertheterms of the In itsdecisionof December 25,2012,theEuropean Commission required bpost to repay alleged state aidfor theperiod1992 to predict theexact nature andextent of any impact onbpost of thislegislative initiative. certain amendments, for example abolishtheoperational licensing conditions for postal operators. Itisnot possible at thisstage in thecourse of hislegislature. The new Postal Law willaimto consolidate thecurrent postal legislation andalso to introduce In November 2015,BelgianMinister De Croo, responsible for thepostal sector, announced hisintent to adopt a new Postal Law Related to ourmailandparcel business legal complex to a material adverse effect onbpost’sexposure business, financial condition,operating results and prospects. the limit to laws andregulations orwhether future legislative, regulatory orjudicialchanges orother regulatory developments willhaveorder in whether BelgianorEuropean regulators orthird parties willraise material issues withregard to bpost’s compliance withapplicable implemented are bpost operates inmarkets whichare heavily regulated, includingby national, EUandglobalregulatory bodies. Itisuncertain procedures control internal and processes policies, Appropriate Regulatory/Legal Risks courts to discontinue certain commercial practices or to pay damages to third parties. an abuse of suchdominant position. Failure to observe thisrequirement may result infines. bpost may also beordered by national In addition,inrelation to activities for which bpost isdeemedto have a dominant market position, itspricing mustnot constitute 2017 price increase for these services. formula continue to applyfor now inanticipation of a decisiontaken by theBelgianIBPT/BIPT to approve bpost’s proposed in compliance withtheaforementioned principles orprice capformula. The current tariffs for services subject to theprice cap targets) and priorcontrol by theIBPT/BIPT. The IBPT/BIPT may refuse to approve suchtariffsortariffincreases ifthey are not mail andUSO parcels are subject to a price capformula (which inter aliadepends onbpost reaching defined quality of service affordability, cost orientation, transparency, non-discrimination anduniformity of tariffs. Tariffincreases for certain singlepiece bpost isrequired to demonstrate that itspricingfor theservices falling withintheUSO complies withtheprinciples of proceedings seeking damages innational courts. may also besubject to fines (under the competition law rules andpostal regulation) and/or other postal operators may initiate imposed uponitmay otherwise beunfavorable for bpost. Intheevent bpost were to fail to comply withthisrequirement, it services. Itcannot beexcluded that competent authorities impose access at uneconomic price levels ortheaccess conditions information onrequests for mailre-direction incase of address change), access to itspostal network and/orto certain universal bpost may berequired to provide other postal operators access to specific elements of itspostal infrastructure (suchas stage. clearance decisionbefore theGeneral Court onprocedural grounds. The outcome of this procedure isinherently uncertain at this state aidrules. InOctober 2016,theVlaamse Federatie van Persverkopers sought theannulment of theEuropean Commission’s and regulatory requirements. In addition, bpost strives for a constructive stakeholder management towards a.o. government, government, a.o. towards management stakeholder a constructive for strives bpost addition, In requirements. regulatory and on December 31,2020, andfor a remuneration inlinewiththe principles of the5 decision makers and regulators. and makers decision On December 3,2015, bpost andtheBelgianState have signeda new management contract (“6 another callfor tender willbeissued andwhether theconcession, ifany, willonce more begranted to bpost. from January 1,2016until December 31,2020.Inrespect of theperiodcommencing asof January 1,2021,itisuncertain whether in Belgium,following whichtheservice concession hasbeenawarded to bpost onOctober 16,2015.bpost willprovide theservice transparent andnon-discriminatory tendering procedure withrespect to thedistributionof recognised newspapers andperiodicals In accordance withtheBelgianState’s commitment to theEuropean Commission, theBelgianState hasorganised a competitive, other services itperforms for theBelgianState andvarious publicentities. subject to further state aidallegations andinvestigations inrespect of thisperiodinrelation to SGEIs, other publicservices and economic interest (“SGEIs”) withstate aidrules for theperiodfrom 1992through 2015,itcannot beexcluded that bpost could be bpost with a degree of certainty regarding the compatibility of the compensation it receives for the provision of services of public th management contract covering theperiod2013to 2015.AlthoughtheEuropean Commission’s decisionsonstate aidprovide th management contract provides for a continued provision of these SGEIs for a periodof 5years, ending th management contract andtheconcession agreements underthe th management contract, asapproved by the th management contract”) with
Financial consolidated statements 41 bpost ANNUAL REPORT 2016 as registered mailundercertain conditions, whichapplies since September 2016. adverse impact onbpost’s business. The latter includes EUandBelgianlegislation granting registered e-mailthesamelegal status at the national, regional orEUlevel, would contribute to a significant declineinadvertising mail volumes and could have an the samelegal status asregistered mailundercertain conditions. Ifenacted, opt-in legislation orany similarlegislation, whether telecommunications could also adversely affect bpost’s business. The latter includes Belgianlegislation granting registered e-mail announced inNovember 2015 by BelgianMinister De Croo, responsible –inadditionto postal matters –for digitalgrowth and The enactment of Belgian legislation promoting digitalgrowth, electronic communication ande-government initiatives, as earned from customers that are unableto recover VAT. bpost may also become subject to stricter customs requirements. sector information andtheintroduction of VAT oncertain mailproducts (suchasdirect mail)whichmay reduce turnover Regulation whichisto enter into force asof early2018,the2016Law implementing new EUrules onthere-use of public Such changes includetheintroduction of a stricter data protection framework inBelgiumbased ontheGeneral Data Protection Regulatory changes may impact theattractiveness of mailandparcels asa communication means andhence bpost’s turnover. also be noassurance that bpost willnot face challenges regarding certain employment matters onstate aidgrounds. regulations, includinglegislation andregulations relating to state pensions, could result inadditionalburdens for bpost. There can being deprived of statutory employment protection andbenefits. Amendments to, ortheintroduction of new, legislation and bpost’s contractual employees could also challenge theiremployment status andclaimdamages to compensate themfor possible. In May 2016,theMons LabourCourt of Appeals found infavour of bpost andrejected allclaims. Further appealsare nolonger recruited from January 1,2010 performing certain core functions suchascollection, sorting, transport anddistributionof mail). principles. Inparticular, bpost was involved inlitigation initiated by a numberof auxiliary postmen (which includeall postmen to certain specific risksin relation to employment matters derivingfrom theapplication of certain publiclaw provisions and principles applicableto bpost may present difficulties in interpretation andcause legal uncertainty. Forinstance bpost issubject The interaction between thelaws applicableto allprivate limited liabilitycompanies andthespecific publiclaw provisions and Related to other legal & regulatory requirements to increase itscapital,inparticular asa result of new capitalrequirements. adverse effect onbpost bank’s business, financial condition, results ofoperations and prospects. bpost bank may also be required regulations orwhether future legislative, regulatory orjudicialchanges orother regulatory developments may have a material European regulators orthird parties may raise material issues withregard to bpost bank’s compliance withapplicablelaws and (e.g. quality andlevel of capital,liquidity, corporate governance). Itisuncertain whether andto whichextent Belgianor (e.g., increased focus oncustomer protection, anti-money laundering, …)andprudential supervision hasbeenreinforced bpost bankoperates ina heavily regulated market. The regulatory landscape for financialinstitutionshaschanged considerably Related to bpost bank,bpost’s associate uncertainty regarding theterms andconditions andfinancingmechanismthat would apply to theprovision of theUSO. net cost of theUSO willbecovered. Furthermore, going forward, ifbpost were to bedesignated asa USO provider, there is compensation by theBelgianState intheevent theUSO hascreated anunfair burden, there canbenoassurance that theentire to provide theUSO may represent a financialburden onbpost. Althoughthe1991Law provides that bpost isentitled to bpost was designated by theBelgianState astheUSO provider for aneight-year term commencing in2011.The obligation cross-border parcel delivery operators suchasbpost. Nogeneral agreement onthetext hasso far beenachieved. which, ifadopted by theCouncil andEUParliament, could impose increased pricingtransparency andregulatory oversight for in Europe. InMay 2016,theEuropean Commission prepared a proposal for a regulation oncross-border parcel delivery services, According to theEuropean Commission cross-border parcel delivery isoneof thekey elements impacting e-commerce growth could findthat commercial services have benefited from unlawful state aidand order the recovery ofthisstate aid from bpost. investor would have madethesameinvestment decision.Ifthese principles are not complied with,theEuropean Commission providing suchservi
Financial consolidated statements 42 bpost ANNUAL REPORT 2016 in-sourcing certain new capabilities to execute thestrategy, might bealso a challenge. addition, asany large employer, talent management in view of effective succession planning for criticalfunctions and successfully bpost might face difficulties to attract and retain theoperational workforce toensure day-to-day delivery ofmailandparcels. In Related to theattractiveness of bpost asemployer for the customers ,for example, parcel delivery onSaturday orSunday. need to combine “operational excellence” to keep costs undercontrol withtheincreasing demandtowards more “convenience” There canbenoassurance, however, that bpost willrealise allof thebenefits expected from suchinitiatives. Inaddition,bpost will bpost canreduce itscosts. Accordingly, bpost hasintroduced a series of productivity enhancement initiatives to reduce itscosts. Due to therelatively fixed nature of its cost base, a declineinmail volumes may translate into a significant declinein profit unless Related to theagilityandflexibility of thebpost network financial and reputational impact. sensitivity of information may leadto information beinginappropriately shared. Effective data breaches could have a significant and dependency oninformation processed andstored electronically,plans thelack of consideration andprotection of confidentiality/ action of whichcould result inloss of data orsignificant disruption to bpost’s operations. Also, in today’s world of constant connectivity Mitigating subject to riskssuchaspower outages,attention. disruptions of internet traffic, software bugs, and problems arising from humanerror, any management bpost relies oninformation andcommunication technology (“ICT”) systemsof to provide most of itsservices. These systems are level appropriate Related to Information andCommunication Technologyan require which challenges operational some faces bpost Operational Risks–Business risks risks –Interest rate risk. bpost bank’s business, whichcould impact bpost’s financial results. Seealso for more information below inthe section onFinancial profitability willbeimpacted by the evolution of interest rates. Volatility ininterest rates may have a significant adverse effect on As small savings bankwithrelatively low product diversification beside a recent entry inthemortgage loanactivity, itslong-term of itsinvestment portfolio. Like any bank,bpost bankissubject to theinterest rate risk,whichdirectly influences itsmargin. bpost bankissubject to certain business risksasa result of itsstatus asa financialinstitution.Itmay experience losses in respect Related to bpost bank distress onthelevel of business activity ande-commerce. shift theirspending to mediaother thanpaper. Volumes of parcels may also beadversely affected due to the effect of economic economic distress, volumes of advertising mailmay beadversely affected asbpost’s clients reduce theiradvertising budgets or More ingeneral, adverse economic conditions have a negative impact onmailandparcels volumes. Inparticular, during times of service offering not adopted by clients ina large scale. without beinglimited to, thespeed of disruptive innovations, continuous pressure onprices, ornewly developed product or might bechallenged by external factors triggered by industry, competition andclients. Identified challenges for bpost include, The realisation of growth ambitionsinparcels (both inBelgiumandabroad) andinthedevelopment of new products andservices administrative mail. 2016. in strategy introduced by theBelgianState orother publicauthorities orprivate enterprises that encourage electronic substitution in long-term the of to continue to decline. The rate of declineinmailvolumes may also beaffected by e-government initiatives or other measures review the in The use of mailhasdeclinedinrecent years primarilyasa result of theincreased use of e-mailandtheinternet, andisexpected considered been Related to substitution andcompetition inthemailandparcel markets extend a certain to have paragraph this in mentioned risks The External Business Risks are initiated where needed. The internal control and risk management system is further described in the Corporate Governance Governance Corporate the in described further is system management risk and control internal The needed. where initiated are initiated, are actions mitigating and monitored are trends followed-up, are risks risks, the of each for ownership clear assigning By Statement. Statement. Governance Corporate the in described further is system management risk and control internal The needed. where
Financial consolidated statements 43 bpost ANNUAL REPORT 2016 As at 31December bpost bank. bpost isexposed to credit risksthrough itsoperational activities, intheinvestment of itsliquidities andthrough itsinvestment in Credit risk further detail, see note 6.26. of EUR 21.6million.A decrease by 0.5%of theaverage discount rates, would increase financialcharges by EUR 22.8million.For obligation. At December 31,2016,anincrease by 0.5%of theaverage discount rates, would generate a decrease of financialcharge Financial results of bpost are also influenced by the evolution of thediscount rates, used to calculate theemployee benefits rate minus3.7basispoints). balance of EUR 54.5millionfor whichthecost amortisation isforeseen in2022,carries a floating interest rate (3months Euribor bpost isalso directly exposed to interest rate risks. The loangranted by theEuropean Investment Bank(EIB), withanoutstanding As at 31December change ininterest rates of 1%(from 1%to 1.01%for instance) onbpost bank’s equityand, through theequitypick up, onbpost: change initsequitydirectly influences the consolidated equity of bpost. The following tableillustrates theimpact of a relative are reflected as fair value through Other Comprehensive Income. Since bpost bankisanequity-accounted entity, 50% of the likewise influence valuation of bpost bank’s bondportfolio, whichismeasured asan available for saleasset. Changes in valuation bpost’s associate bpost bankis, like any bank,subject to theinterest rate risk,whichdirectly influences itsmargin. Interest rates Interest rate risk to minimise thisexposure by fundingtheoperations of theentities intheirfunctional currency, wherever feasible. the EUR/USD exchange rate moved from 1.2160at thestart of January to 1.0887at theendof December. However, bpost aims the EUR/USD exchange rate moved from 1.0887at thestart of January to 1.0545at theendof December. Inthecourse of 2015 main other currency being theUSDollar. bpost does not hedge thistranslation exposure butmonitors it.Inthecourse of 2016 bpost consolidated accounts dueto subsidiaries operating incurrency other thantheEuro (bpost’s functional currency), the bpost’s exposure to exchange rate riskislimited andismainlya translation risk.The translation exchange riskistheaffecting Exchange rate risk Operational Risks -Financialrisks be unableto distribute for a periodof timewhichcould negatively impact thecompany’s reputation andfinancialperformance. natural disaster resulting infire orflooding, terrorist attack or otherwise, bpost might beunable to complywithdelivery times or more of these facilities were to beshutdown for a periodof time, whether asa result of a power outage, accident, strike action, centralised, sorted andprepared for distribution.InBelgium,bpost operates sixsorting centers spread over thecountry. Ifoneor Our abilityto serve ourcustomers andthepublicingeneral depends highlyonthesorting centers where themailandparcels are Related to thebusiness continuity CREDIT RISKCLASSES OFFINANCIALASSETS Trade andother receivables Cash andCash equivalents Held to maturity financial assets In million EUR In million EUR Equity bpost Equity bpost bank 1,032.7 481.8 538.9 2016 12.0 (0.2) (0.3) 1% 1,026.9 411.2 615.7 2015 0.0 960.6 398.3 562.3 2014 - 1% 0.0 0.2 0.3
Financial consolidated statements 44 bpost ANNUAL REPORT 2016 per country andper currency have beenestablished andare constantly monitored. and commercial corporations aswell asmortgages. Inaddition,maximum concentration limitsperissuer, per sector, perrating, determines an overall allocation of theinvestments across BelgianState bonds, other sovereign bonds andbonds from financial bpost bankinvests thefunds that have beendeposited by itscustomers. The bank hasadopted a strict investment policy that bank bpost table hereunder: The changes inthefair value of thefinancialliabilities (see note 6.25)are not due to changes incredit risk. This ispresented inthe instruments. to credit riskarises from default of thecounterparty, witha maximumexposure equal to thecarrying amount of these Regarding bpost’s investment of itsliquidities, whichincludes cashandequivalents andinvestment securities, theexposure liquidities of Investment As at 31December is asfollows: Some of thetradereceivables are pastdueasat thereporting date. The ageing analysis of thetradereceivables that are pastdue and themovements canbefound inthetablebelow. Trade andother receivables have beenreviewed for indicators of impairment. Certain tradereceivables were found to beimpaired a credit limit.Both are followed upona dailybasisfor allBelgianandforeign customers. actively manages itsexposure to credit riskby investigating thesolvency of itscustomers. This translates into a credit rating and The credit riskby definition only concerns that portion of bpost’s activities that are not paidupfront incash.bpost SA-NV activities Operational CARRYING AMOUNT AT 31DECEMBER Other changes Reimbursement loan Change attributable to changes incredit risk CARRYING AMOUNT AT 1JANUARY In million EUR TOTAL > 120days 60 -120days < 60days Current In million EUR AT 31 DECEMBER Impairments: Translation differences Impairments: Reversal Impairments: Utilisation Impairments: Additions Impairments: Additions through business combinations AT 1JANUARY In million EUR 443.3 386.5 2016 2016 2016 (9.1) (0.3) (2.6) (1.1) 58.0 65.8 13.4 12.9 45.7 1.3 0.0 5.3 5.8 3.7 0.8 382.6 330.9 2015 2015 2015 (0.7) (9.1) (0.3) (1.4) 65.8 75.6 12.9 38.0 6.9 0.0 6.4 7.3 7.8 369.3 (10.4) 316.1 2014 2014 2014 (0.9) (0.7) (1.3) 75.6 86.9 40.8 6.9 6.1 0.0 5.8 6.7 2.6
Financial consolidated statements 45 bpost ANNUAL REPORT 2016 As at 31December The table below details theelements of themonitoring ratio. and to provide anadequate return to shareholders. (except theEIBloan).The main objectives for thecapitalmanagement are to ensure bpost’s abilityto continue asa going concern Currently, bpost hasnot established a formal set of upperandlower limitsfor thisratio, given theabsence of any significant loans loans less investment securities andcashequivalents. The ratio iscalculated as[Net debt /Capital]. The elements composing theequityfor thisratio are thesameasstated intheequity reconciliation. Net debt iscomposed of bpost monitors capitalonthebasisof theratio of thecarrying amount of equityversus net debt. Capital management policies andprocedures of theliabilities at thestatement of financialposition date. The above contractual maturities are based onthecontractual undiscounted payments, whichmay differ from thecarrying values As at December 31,2016,liabilities have contractual maturities whichare summarised below: The maturity of theliabilities intheprevious reporting periodwere asfollows: revenues ispaidby itscustomers priorto bpost performing theservice. bpost’s current liquidityriskislimited dueto thehighlevel of cashat handanddueto thefact that a significant portion of its Liquidity risk NET DEBT/(NET CASH) TO CAPITAL RATIO TOTAL - Cash andcashequivalents - Investment security Non-interest bearingloansandborrowings Interest bearing loansandborrowings Net Debt /(net cash) TOTAL Non-controlling interests Retained earnings Foreign currency translation Other reserves Issued capital/Authorised capital Capital In million EUR Bank loan Trade andother payables Finance lease obligations 31 DECEMBER2016 In million EUR Bank loan Trade andother payables Finance lease obligations 31 DECEMBER2015 In million EUR less than1year less than1year CURRENT CURRENT 1,035.2 838.3 9.1 1.2 9.1 0.5 not later than5years not later than5years (492.7) within 1 year but within 1year but within 1year but (538.9) (12.0) 779.3 NON-CURRENT NON-CURRENT 135.5 274.2 364.0 2016 (0.6) 58.0 0.1 3.1 2.5 61.7 36.4 40.3 36.4 2.2 1.6 (549.5)
(615.7) 694.8 230.9 364.0 2015 (0.8) (0.0) 66.0 99.3 0.1 0.6 - later than5years later than5years NON-CURRENT NON-CURRENT (486.2) (562.3) 681.4 229.4 364.0 2014 (0.7) 76.0 87.5 18.2 0.0 0.1 0.6 0.0 9.1 0.0 0.0 0.0 -
Financial consolidated statements 46 bpost ANNUAL REPORT 2016 The goodwill derives from expected synergies from combining operations of bpost anditssubsidiaries. Analysis of cash flows onacquisition Carrying amount intheacquired entity The calculated goodwill, after price adjustment, ispresented asfollows: material sensitivity for bpost to variations inthiscontingent consideration. last forecast, thefair value of thecontingent consideration isrecognised for anamount of EUR 6.8millionasa liability. There isno consideration arrangement andforesees anadditionalremuneration based ontheEBITDA achieved in2016and2017.Based onthe the finalclosing accounts, bpost SA-NV paidanamount of EUR 14.8million.Inaddition,theagreement includes a contingent In accordance withthepurchase agreement andincludinga purchase price adjustment of EUR 0.4millioncalculated based on Australia. FDM’s business consists of Third Party Logistics (3PL)warehousing, transport &distribution. These FDM entities are specialised inproviding a personalised customer service for warehousing anddistributingproducts in the P&Ioperating segment usingthefull-integration method asfrom April 2016. FDM Warehousing PtyLtd. (“FDM”), two Sydney-based Australian companies. Consequently these have beenconsolidated within On March 21, 2016bpost SA-NV purchased 100%of theshares both of Freight DistributionManagement Systems PtyLtd. and Acquisitions over thetwelve month periodended December 31,2016 of theshares of CityDepot. EUR 0.2million. InDecember 2016bpost performed a capitalincrease of EUR 5.2millionthroughout whichbpost obtained 99.1% In May 2016bpost SA-NV acquired anadditional10%of CityDepot NV, to reach a total of 58%shares for a price of Additional consideration CityDepot a liability. The payment hadnoimpact ontheoriginalcalculated goodwill. based uponthe2015performance of LandmarkGlobal(PL).The fair value of thecontingent consideration was recognised as In January 2016,bpost SA-NV paidUSD 0.2 million(EURmillion)inexecution of thecontingent consideration agreement and Additional consideration LandmarkGlobal(PL) a total of 75.5%shares for a price of USD 22.5 million(EUR 20.7million). In January 2016bpost SA-NV acquired anadditional24.5%of LandmarkGlobalInc. andLandmarkTrade Services, Ltd., to reach Additional consideration Landmark 6.6 BUSINESS COMBINATIONS NET CASH OUTFLOW Cash paid Net cashacquired withthesubsidiary - Contingent consideration - Cash paid of which: PURCHASE CONSIDERATION TRANSFERRED Goodwill arisingonacquisition Fair value of theassets acquired ie100%Net Assets NET ASSETS Non-Current Liabilities Current Liabilities Non-Currents Assets Current Assets In million EUR In million EUR (12.1) (14.8) 21.6 14.8 16.3 5.4 2.7 6.8 5.4 1.0 1.7 3.8 4.3
Financial consolidated statements 47 bpost ANNUAL REPORT 2016 The resulting goodwill of EUR8.6millionderives from expected synergies from combining operations of bpost anditssubsidiaries. The fair value of the tradereceivables acquired approximates theirgross contractual amounts. the assistance of anexternal independent expert. relationships for atotal of EUR4.1millionand acquired tradenames for atotal of EUR2.5million.Assets were fairly valued with The adjustment to fair value of EUR6.6millionof intangible assets hasresulted intherecognition of acquired customer Analysis of cashflows onacquisition Carrying amount intheacquired entity The following tablesummarises: consideration. for an amount of EUR 7.4 millionasa financialliability. There isnomaterial sensitivity for bpost to variations inthis contingent achieved inJuly2016and2017.Based onthebusiness plan,thefair value of thecontingent consideration was recognised agreement includeda contingent consideration arrangement andforesees anadditionalremuneration based ontheEBITDA the finalclosing accounts, 9517154 Canada Ltd. andbpost USHoldingInc. paidanamount of EUR 12.6 million.Inaddition,the In accordance withthepurchase agreement andincludinga purchase price adjustment of EUR 0.2 million calculated based on transportation andfulfilment services for clients in Canada andtheUS. been consolidated usingthefull-integration method asfrom June2016.These companies primarilyprovide lastmiledelivery, NV, purchased 100%of theshares of Apple Express Courier Inc., a Miami-based Americancompany. Consequently these have and Matt’s Express (1990)Ltd., two Canadian companies andbpost USHoldingInc., another 100%subsidiary of bpost SA- On June1,20169517154Canada Ltd., a 100%subsidiary of bpost SA-NV, purchased theassets of Apple Express Courier Ltd. NET CASH OUTFLOW Cash paid Net cashacquired withthesubsidiary - Contingent consideration - Cash paid of which: PURCHASE CONSIDERATION TRANSFERRED Goodwill arisingonacquisition Fair value of theassets acquired ie100%Net Assets NET ASSETS Non-Current Liabilities Current Liabilities Non-Currents Assets Current Assets at fair value. the goodwill of EUR 8.6 million corresponding to the difference between the consideration and the net assets acquired, measured identifiable assets acquired less liabilities assumed after remeasurement to fair value at acquisition date of EUR 11.4 million;and the consideration for Apple Express EUR 20 million; In million EUR In million EUR (11.4) (12.6) 20.0 11.4 12.6 11.4 1.1 7.4 8.6 0.0 2.5 7.2 6.7
Financial consolidated statements 48 bpost ANNUAL REPORT 2016 (including EUR44.5millioncash). under review andwillbefullydisclosed by theendof 2017.The initial purchase price for 100%of theshares was EUR84.5million determination of thecarrying amount of theacquired entity andthefinalpurchase price allocation of theacquisition are still final purchase price are ongoing the fair value of assets andliabilities at acquisition date cannot beassessed yet. Hence the within theP&Ioperating segment, usingthefull-integration method asfrom December 2016.Asnegotiations concerning the The Ubiway Group was consolidated withintheMRS operating segment, withexception of Kariboowhichisbeingconsolidated of parcels inBelgiumandgives access to onlineservices. AMP to anetwork of around 5,345points of sale. Karibooisanewly builtdistributionnetwork of 735pick-up anddelivery points the company distributes alarge variety of products andservices. These services includealso thedistributionof newspapers with In Belgium,Ubiway isactive inproximity andconvenience retail. With220selling points includingbrands asPress ShopandRelay, Belgian companies performing theBelgianactivities of Lagardère Travel retail. On November 30,2016bpost SA-NV purchased 100%of theshares of AMPandLSDistributionBenelux,renamed Ubiway, two by theendof 2017. amount of theacquired entity andthepurchase price allocation of theacquisition are stillunderreview andwillbefullydisclosed The fair value of assets and liabilities at acquisition date could not beassessed yet, hence thedetermination of thecarrying capital increase inthecompany inDecember 2016. variations inthis contingent consideration. Next to theconsideration paidto thesellers, bpost hascarriedoutaEUR5.5million out amount based onthecompany’s business planhasbeenregistered asaliability. There isnomaterial sensitivity for bpost to sellers willget anadditionalpayment based oneitherthe2020or2021normalised EBITDA performance; anestimated earn- commercial targets (these targets were not yet met at December 31,2016).Anearn-outmechanismisforeseen by whichthe initial consideration consists of apayment of EUR1at closing andapayment of EUR2.0millionconditional to achieving defined The company was consolidated withintheP&I operating segment usingthefull-integration method asfrom October 2016.The allows themto manage and market any spare locker capacityintheirentire network. and operation of packwalls, including modelswithtemperature controlled parcel lockers. deBuren hasdeveloped asoftware that In September 2016,bpost SA-NV acquired 51%of theshares of deBuren Internationaal BV. deBuren specialises intheassembly registered. Asaconsequence, there was asmallbadwill of EUR37,000to beregistered regarding thetransaction. Agreement are capitalincreases inacompany inwhichbpost hasamajorityshareholding, nocontingent considerations are to be which bpost canfurther support Parcify’s growth over thenext 3years. Asallof bpost’s contributions foreseen intheInvestment segment usingthefull-integration method asfrom August 2016.Two potential additionalcapitalincreases are foreseen through bpost acquired 51%of theshares of Parcify viaacapitalincrease, hence thecompany was consolidated withintheP&Ioperating delivery solutions. its (predictive) data analysis tool. Parcify’s crowd-sourced delivery network canbeaddedto orintegrated into thebpost parcel where thereceiver israther thanto his/herpostal address. For that, ituses itsin-house developed iOS andAndroid appand its innovative parcel delivery solution. Parcify uses theomnipresence of smartphones to offer atailored delivery to theplace In August 2016,bpost SA-NV invested inthestart-up company Parcify SA-NV to support andtake part inthedevelopment of was recognised asaliability. The payment hadnoimpact ontheoriginalcalculated goodwill. consideration agreement andrelated to theAugust 2015–July2016performance. The fair value of thecontingent consideration In December 2016,9517154Canada Ltd. paidanamount of CAD 5.1million(EUR3.7million)inexecution of thecontingent
Financial consolidated statements 49 bpost ANNUAL REPORT 2016 As at 31December The tablebelow presents theevolution perbusiness unitfor theyears endedDecember 31,2016,2015and2014: comparable figures. figures are shown undertheheading “comparable”. The variances mentioned hereafter compare the2016figures withthe2015 P&I. Taking into account these changes, the2015figures have beenmade comparable to reflect these changes. The comparable As of January 1,2016theprepaid parcels have beentransferred from MRSto P&I,hence allparcels are beingregistered within under thedefinition of IFRS8.22. The CODM istheBoard of Directors. The operating segments are thelowest level onwhichperformance isassessed by theChief Operating Decision Maker (CODM) from operating activities (EBIT)at thesegment. the operating income of thereconciling category “Corporate”, reconciles to bpost’s operating income. bpost computes itsprofit these two segments captures external sales to third parties. The sumof theoperating income of thetwo segments, together with The two business unitsare also operating segments for financial reporting purposes. Operating income at thelevel of each of under thecategory “Corporate”. employee related liabilities andprovisions. The costs of thecorporate unitsare not recharged to other unitsandare reported bpost’s corporate unitsincludeFinance (excluding GSO), Legal/Regulatory andInternal Audit andsome costs related to the European Mail Center, whichislocated at Brussels Airport andserves asa hubfor international mailandparcels. of collecting, sorting anddistributingmailparcels inBelgium.The IOPSservice unitcomprises theoperations of the GSO (Global Service Organisation) andtheHumanResources &Organisation (HR&O) unit.The MSO service unitisincharge a cost allocation mechanism.The service unitsincludetheMSO unit,IOPStheICT andService Operations units, the bpost hasservice unitsthat support thebusiness whose costs are recharged to thebusiness andcorporate unitsusing business units. lines are includedwithintheP&Ibusiness unit.Otherturnover andvalue-added services are allocated across theMRSandP&I products are includedwithintheMRSbusiness unit.Turnover from theinternational mail,special logistics andparcels product and financialproducts and(x) other. Turnover from thetransactional mail,advertising mail,press andbanking andfinancial (iv) domestic parcels, (v) international parcels, (vi) special logistics, (vii) value-added services, (viii) international mail,(ix)banking bpost provides products andservices based onthefollowing product lines: (i)transactional mail,(ii)advertising mail,(iii)press, handling, delivery andreturn management). The Parcels &International (P&I)business unitspecialises inworldwide mail,parcel ande-commerce logistics solutions (fulfillment, AG Insurance andoffers to itsclients a number of other payment products. other products ontheother hand. Italso sells bankingandinsurance products underanagency agreement withbpost bankand channels suchasthepost offices, the Post Points, point ofsales ofUbiway orthebpost’s eShop topurchase theirmail, press and small andmediumbusinesses ontheonehandandserves theresidential customers aswell asallcustomers usingmass market The Mail&Retail Solutions business unit(MRS)offers solutions to bigcustomers, private andpublic, self-employed workers and through two business units:theMRSbusiness unitandtheP&Ibusiness unit. bpost’s business isorganised based onbusiness units, service unitsandcorporate units. Effective January 1,2013,ithasoperated 6.7 SEGMENT INFORMATION TOTAL OPERATING INCOME Corporate (Reconciling category) TOTAL OPERATING INCOME OFOPERATING SEGMENTS P&I MRS In million EUR 2,425.2 2,393.8 1,844.1 549.8 2016 31.4
comparable 2,433.7 2,393.9 1,870.3 523.6 2015 39.8
2,464.7 2,442.7 1,972.1 470.6 2014 21.9
Financial consolidated statements 50 bpost ANNUAL REPORT 2016 favorable impact of revenue recognition and cost savings inthecentral departments. attributable to theCorporate reconciliation category increased by EUR 24.3million,mainlydueto thesales of buildings, the Not takinginto account thesaleof a sizeable buildingin2015(capital gain of EUR 26.1million), profit from operating activities plan, partially offset by theimpairment of the goodwill of LandmarkGlobalUKandthestart up costs of Parcify. P&I subsidiaries, thesettlement onterminal dues withanother postal operator andtheabsence of theaccrual for theAlphasocial reach EUR 78.0 million. The increase ismainlydueto theincreased revenues driven by Parcels, thebetter performance of some The EBIT attributable to theP&Ioperating segment increased by EUR 9.1millioncompared to 2015,from EUR 68.9millionto decrease could not becompensated by theprice increases, productivity improvements andother cost reductions. social planbooked inthethird quarter of 2015,thelower compensation for SGEI andpress concessions alongwiththevolume The EBIT attributable to theMRSoperating segment increased by EUR 23.2millionin2016.Excluding theaccrual for theAlpha As at 31December 2014: The following tablepresents EBITinformation aboutbpost’s operating segments for theyears endedDecember 31,2016,2015and As at 31December which bpost derives itsrevenues. The allocation of therevenues of theexternal customers isbased ontheirlocation. The following tablepresents therevenues from external customers attributed to Belgiumandto allforeign countries intotal from (see note 6.8),nosingleexternal customer exceeded 10%of bpost’s total operating income (revenues). Excluding theremuneration received to provide theservices asdescribed inthemanagement contract andpress concessions Inter-segment sales are immaterial. There isnointernal operating income. decline inmailvolumes andthewholesale business inorder to safeguard reasonable profit margins. in parcels activities (International Parcels andDomestic Parcels), partially offset by thedecrease of International Maildue to the The increase inP&Ioperating segments revenues in2016,amounting to EUR 26.2millionismainlyattributable to thesolid growth mix improvement inDomestic Mailandtheconsolidation of Ubiway. volume declinein Domestic Mail(-5.0%) combined withthelower compensation for SGEI, partially compensated by theprice and Revenues attributable to theMRSoperating segment decreased by EUR 26.2millionin2016,mainlydriven by theunderlying TOTAL EBIT Corporate (Reconciling category) TOTAL EBITOFOPERATING SEGMENTS P&I MRS In million EUR TOTAL OPERATING INCOME Rest of theWorld Belgium In million EUR 2,425.2 2,073.1 496.5 (41.3) 537.8 459.8 352.1 2016 2016 78.0
comparable 2,433.7 2,102.8 466.1 (39.5) 505.5 436.7 330.9 2015 2015 68.9
2,464.7 2,131.1 480.1 (45.7) 525.8 513.6 333.6 2014 2014 12.2
Financial consolidated statements 51 bpost ANNUAL REPORT 2016 Assets andliabilities are not reported persegment to theBoard. “Corporate”. Financial income, financial costs, share of profit of associates andincome tax expenses are allincludedinthe reconciling category As at 31December follows: Financial details for theyear endedDecember 31,2016,2015and2014 on thecorporate segment (reconciliation post) are as As at 31December 2014: The following tablepresents EAT information aboutbpost’s operating segments for theyears endedDecember 31,2016,2015and EAT CORPORATE (RECONCILING CATEGORY) Income taxexpense Financial results Share of profit of associates EBIT CORPORATE (RECONCILING CATEGORY) OPERATING EXPENSES Other reconciliation items Central departments (Finance GSO Excl., Legal, Internal Audit, CEO, …) OPERATING INCOME In million EUR TOTAL EAT Corporate (Reconciling category) TOTAL EAT OFOPERATING SEGMENTS P&I MRS In million EUR (191.6) (143.2) (191.6) (41.3) (72.6) (17.0) (66.7) 346.2 537.8 459.8 2016 2016 (6.0) 31.4 78.0 9.9
comparable (196.3) (161.4) (196.3) (39.5) (79.3) (72.2) 309.3 505.5 436.7 2015 2015 (5.6) (7.1) 39.8 68.9 10.2
(230.3) (158.6) (230.3) (45.7) (67.6) (67.4) 295.5 525.8 (37.2) 513.6 2014 2014 (0.2) 21.9 12.2 11.2
Financial consolidated statements 52 bpost ANNUAL REPORT 2016 recoverable VAT increased from 13%in2014to 14%in2015and18.79% in2016. Local, real estate andother taxes have decreased mainlydueto thehigherrecoverable VAT (EUR 3.0million):percentage of in note 6.28. the corresponding costs have beenbooked withtransport costs. More details ontheevolution of theprovisions can be found (EUR 16.5million) dueto thereversal of provisions related to a terminal dues settlement withanother postal operator for which Other operating charges decreased by EUR 18.8millionversus lastyear, mainlydriven by lower costs of provisions For theyear ended31December 6.10 OTHER OPERATING EXPENSE its subsidiaries. Other sources of operating income mainlyconsist of reimbursements by third parties of damages suffered by bpost and The third party costs recovery relates to thesales realised by bpost’s restaurants. recurring item, gains onthedisposal of property, plant andequipment increased by EUR 10.2million. EUR 15.8million compared to lastyear dueto thedisposal of onesizeable building at theendof 2015.Excluding thisnon- Gains ondisposal of property, plant andequipment, whichismainlyrelated to thesales of buildings, decreased by For theyear ended31December 6.9 OTHER OPERATING INCOME For theyear ended31December 6.8 TURNOVER TOTAL Other Penalties Impairment ontradereceivables Local, real estate andother taxes Provisions In million EUR TOTAL Other Third party cost recovery Other rental income Rental income of investment property Benefits inkind Gain ondisposal of property, plant andequipment In million EUR TOTAL SGEI remuneration Turnover excluding theSGEI remuneration In million EUR 2,399.4 2,134.5 (15.0) 264.9 2016 2016 2016 25.8 12.4 17.5 1.7 2.7 0.0 1.6 5.2 2.1 0.2 0.6 0.0 2,393.4 2,105.6 287.8 2015 2015 2015 20.5 40.3 13.6 33.4 5.2 0.1 0.1 3.7 1.8 0.5 0.8 0.2 1.4 2,441.7 2,137.4 304.4 2014 2014 2014 21.3 22.9 11.5 15.5 4.7 0.1 2.3 2.0 2.3 1.8 1.0 0.3 2.6
Financial consolidated statements 53 bpost ANNUAL REPORT 2016 For theyear ended31December Financial costs For theyear ended31December Financial income For theyear ended31December The following amounts have beenincludedintheIncome Statement linefor thereporting periods presented: 6.12 FINANCIALINCOME ANDFINANCIALCOST As at December 31,2016,theheadcount of bpost amounted to 26,987(2015:26,381)andwas composed asfollows: For theyear ended31December 6.11 PAYROLL COSTS The average FTEnumberfor 2016is23,708(2015: 23,847). contractual personnel: 15,694(2015:14,079). statutory personnel: 11,293(2015:12,302); FINANCIAL COSTS Other finance costs Impairment current/financial assets Loss from exchange differences Interest from loans Financial costs onbenefit obligations (IAS19) In million EUR FINANCIAL INCOME Other Gain from exchange differences Interest income from current accounts Interest income from short-term bankdeposits Interest income from financialassets held to maturity initial recognition Interest income from financialassets at fair value through P&L,designated assuchupon In million EUR NET FINANCIALRESULT Financial costs Financial income In million EUR TOTAL Other personnel costs Defined benefit and defined contribution plans Social security contribution Social plan-Alphaproject Employee remuneration In million EUR 1,111.1 (17.0) (27.6) 192.3 892.2 2016 2016 2016 2016 27.6 10.7 18.7 10.7 18.8 1.9 0.3 6.6 0.2 0.5 9.8 0.1 0.2 0.0 0.0 7.7 0.0 1,185.8 (10.9) 199.3 900.0 2015 2015 2015 2015 (5.6) (0.6) 10.9 25.2 54.5 5.3 3.2 0.2 7.8 0.2 0.9 3.5 0.2 0.6 0.1 0.0 5.3 6.8 1,199.9 (37.2) (42.7) 207.5 962.6 2014 2014 2014 2014 (0.1) 42.7 17.4 12.4 38.8 5.5 2.0 1.8 0.4 0.7 3.5 0.3 0.7 0.3 0.0 5.5 0.0
Financial consolidated statements 54 bpost ANNUAL REPORT 2016 Deltamedia SA-NV andhasbeenexcluded from the normalised results dueto itsnon-recurring nature. incurred by bpost SA-NV was taxdeductible uponliquidation to theextent itrepresented previously fiscally paid-upcapitalin In 2016Deltamedia SA-NV hasbeenliquidated, triggering a positive impact of EUR 22.2million.The loss ontheparticipation The reconciliation of theeffective taxrate withtheaggregated weighted nominaltaxrate canbesummarised as follows: As at 31December Income taxes recognised intheIncome Statement canbedetailed asfollows: 6.13 INCOME TAX/DEFERRED TAX Effective taxrate Profit before income tax Tax usingeffective rate (current period) TOTAL Other differences Tax effect of Deltamedia liquidation Other: Associates (equity method) Subsidiaries inloss situation Tax effect of taxlosses utilised by subsidiaries Tax effects prior year Notional interests deduction Tax effect of nontaxdeductible expenses Reconciling items between statutory andeffective tax Statutory taxrate Profit before tax TAX EXPENSE USINGSTATUTORY TAX RATE In million EUR TOTAL TAX EXPENSE Deferred taxexpenses Adjustment recognised inthecurrent year inrelation to thecurrent taxof prioryear Current taxexpenses TAX EXPENSEINCLUDED: In million EUR (143.2) 33.99% (143.2) (143.2) 29.3% 143.2 (22.2) 166.4 489.5 489.5 2016 2016 (3.2) (3.4) (4.8) (0.5) (0.1) 2.7 1.7 6.6 0.1 (161.4) 33.99% (161.4) (153.6) 34.3% (10.2) 161.4 160.0 470.6 470.6 2015 2015 (2.7) (3.5) (4.3) (0.9) 3.6 7.0 0.0 2.1 2.5 (158.6) 33.99% (158.6) (158.0) 34.9% 158.6 154.4 2014 454.1 454.1 2014 (2.5) (3.8) (2.9) (1.1) 1.0 6.7 1.7 0.0 2.7 1.8
Financial consolidated statements 55 bpost ANNUAL REPORT 2016 For theyear ended31December number of shares after theshare split: The table below reflects theincome andshare data used inthebasicanddiluted earningspershare computations, based onthe number of ordinary shares. In case of bpost, noeffects of dilution affect the net profit attributable to ordinary equityholdersandthe weighted average dilutive potential ordinary shares into ordinary shares. outstanding duringtheyear plustheweighted average numberof ordinary shares that would beissued onconversion of allthe parent (after adjustingfor theeffects of alldilutive potential ordinary shares) by the weighted average number of ordinary shares Diluted earningspershare amounts have to becalculated by dividingthenet profit attributable to ordinary equityholders of the ordinary equityholdersof theparent by theweighted average numberof ordinary shares outstandingduringtheyear. In accordance withIAS33,thebasicearningspershare amounts are calculated by dividingnet profit for the year attributable to 6.14 EARNINGS PERSHARE reversal of thetemporary difference anditisprobable that they willnot be reversed inthe foreseeable future. No deferred taxisrecognised ontemporary differences arisingfrom investments insubsidiaries, because bpost has control onthe As at 31December asset iscomposed asfollows: As of December 31,2016,bpost recognised a net deferred income taxasset of EUR 48.2million.This net deferred income tax Diluted, profit for the year attributable to ordinary equityholders of theparent Basic, profit for the year attributable to ordinary equity holders of theparent Earnings pershare IN EUR Weighted average numberof ordinary shares adjusted for theeffect of dilution Effect of dilution Weighted average numberof ordinary shares for basicearningspershare IN MILLIONSHARES dillution Net profit attributable to ordinary equityholders of theparent adjusted for the effect of Adjustments for theeffect of dilution Net profit attributable to ordinary equityholders of theparent for basicearnings In million EUR NET DEFERREDTAX ASSET TOTAL DEFERREDTAX LIABILITIES Other Intangible assets Property plant andequipment Deferred taxliabilities TOTAL DEFERREDTAX ASSETS Other Provisions Employee benefits Deferred taxassets In million EUR 343.8 200.0 200.0 343.8 2016 2016 48.2 36.8 85.0 1.72 1.72 29.3 22.6 14.1 48.4 0.3 7.2 – – 307.0 200.0 200.0 307.0 2015 2015 47.2 37.5 84.7 1.54 1.54 30.6 22.0 13.5 49.1 0.2 6.7
– – 293.6 293.6 200.0 200.0 2014 2014 61.0 38.1 99.1 1.47 1.47 32.8 22.7 14.8 61.5 0.1 5.2
– –
Financial consolidated statements 56 bpost ANNUAL REPORT 2016 6.15 PROPERTY, PLANTANDEQUIPMENT ACQUISITION COST In million EUR
Balance at 1January 2014 Acquisitions Acquisitions through business combinations Disposals investment property Assets classified asheld for saleor Exchange rate difference Other movements BALANCE AT 31DECEMBER2014
Balance at 1January 2015 Acquisitions Acquisitions through business combinations Disposals investment property Assets classified asheld for saleor Exchange rate difference Other movements BALANCE AT 31DECEMBER2015 Balance at 1January 2016 Acquisitions Acquisitions through business combinations Disposals investment property Assets classified asheld for saleor Exchange rate difference Other movements BALANCE AT 31DECEMBER2016 REVALUATION Balance at 1January 2014 BALANCE AT 31DECEMBER2014
Balance at 1January 2015 BALANCE AT 31DECEMBER2015
Balance at 1January 2016 BALANCE AT 31DECEMBER2016
buildings Land and Land and (23.2) 861.7 (31.1) 853.8 (25.9) 836.1 864.8 861.7 853.8 19.2 21.1 0.0 0.0 0.0 0.6 0.0 0.0 0.0 2.1 0.0 0.0 0.0 7.5 0.8 0.0 0.0 0.0 0.0 0.0 0.0
equipment Plant and Plant and 293.9 324.7 383.9 282.0 293.9 324.7 (1.2) (0.3) (0.2) (0.0) 25.1 44.0 0.0 0.0 0.0 5.6 0.3 0.0 0.0 7.3 5.9 0.2 0.0 0.0 8.5 0.0 6.9 0.0 0.0 0.0
and vehicles Furniture 223.1 230.3 259.2 219.9 223.1 230.3 (6.1) (0.2) (0.0) (4.7) (0.1) (7.0) (0.0) (0.1) 11.8 17.7 18.3 0.0 0.0 0.0 9.2 0.1 0.0 0.2 0.0 0.2 0.0 0.0 0.0 0.0
and fittings Fixtures Fixtures 109.9 129.5 109.9 (0.9) (6.0) (0.0) (5.2) (1.2) 95.1 (6.8) (0.8) 82.0 16.7 95.1 20.1 20.0 0.0 0.0 0.0 0.0 0.0 3.3 0.1 1.0 6.7 0.0 0.6 0.0 0.0 0.0
Other property, equipment plant and plant and (31.7) (47.2) (0.0) 35.5 (0.0) (0.0) (7.1) 15.4 28.9 20.9 45.4 35.5 27.1 15.4 19.0 7.4 7.4 7.4 0.0 0.8 0.0 0.0 0.0 0.0 0.0 1.6 0.0 7.4 7.4 7.4
1,509.3 1,534.1 1,637.7 1,469.6 1,509.3 1,534.1 (29.2) (10.2) (32.3) (14.0) (26.8) Total (7.4) (2.1) (0.1) (0.1) 77.6 67.0 72.7 71.4 7.4 7.4 7.4 0.4 0.3 0.2 0.3 0.3 7.4 7.4 7.4
Financial consolidated statements 57 bpost ANNUAL REPORT 2016 explained by: Property, plant andequipment have increased by EUR 13.1millionfrom EUR 548.5millionto EUR 561.6million.This increase was business combinations business combinations Acquisition cost -acquisitions through In million EUR DEPRECIATION ANDIMPAIRMENT LOSSES In million EUR Depreciation -acquisitions through Balance at 1January 2014 CARRYING AMOUNT Acquisitions through business combinations Disposals Depreciation Impairment losses investment property Assets classified asheld for saleor Exchange rate difference Other increase (decrease) BALANCE AT 31DECEMBER2014 Balance at 1January 2015 Acquisitions through business combinations Disposals Depreciation Impairment losses investment property Assets classified asheld for saleor Exchange rate difference Other movements BALANCE AT 31DECEMBER2015 Balance at 1January 2016 Acquisitions through business combinations Disposals Depreciation Impairment losses investment property Assets classified asheld for saleor Exchange rate difference Other movements BALANCE AT 31DECEMBER2016 CARRYING AMOUNT
At 31December 2014 At 31December 2015 At 31December 2016 change dueto thepurchase price allocation of some acquisitions; the incorporation of new subsidiaries (EUR 20.1million),thefigures presented inthetablehereunder are provisional andcanstill
buildings buildings Land and Land and Land and (463.1) (469.9) (475.4) (454.3) (463.1) (469.9) (18.7) (20.3) (16.1) 398.6 383.9 360.7 (0.3) (2.6) (4.5) (5.7) (0.3) (7.4) 16.9 16.7 18.3 0.5 0.8 0.0 0.0 0.0 0.0 0.0 2.4 0.0 0.0 0.0 0.0
equipment equipment Plant and Plant and Plant and (231.5) (249.5) (299.4) (215.9) (231.5) (249.5) (30.6) (16.9) (18.3) (30.6) (19.5) (0.2) (0.0) (0.0) 13.4 (0.1) (0.1) (0.1) 44.0 62.4 75.2 84.5 1.2 0.3 0.0 0.3 0.3 0.0 0.2 0.0 0.0 0.0 0.0
and vehicles and vehicles Furniture Furniture (188.8) (199.3) (222.8) (178.4) (188.8) (199.3) (15.6) (16.2) (15.1) (15.6) (15.0) (0.0) (0.1) (0.1) (0.0) (0.0) (0.2) (0.1) 18.3 34.3 31.0 36.3 2.7 6.1 0.0 4.7 0.0 0.0 0.2 7.0 0.0 0.0 0.2
and fittings and fittings Fixtures Fixtures Fixtures Fixtures (63.9) (70.4) (82.1) (54.6) (17.7) (63.9) (19.2) (70.4) (20.4) (4.8) (1.5) (0.0) (0.1) (0.1) (4.8) (0.3) 31.2 39.4 47.5 1.8 6.7 0.0 0.9 4.6 4.4 5.2 0.9 1.2 5.6 6.8 0.1 0.0 7.0
Other property, Other property, equipment equipment plant and plant and plant and plant and (3.7) (3.7) (3.7) (3.7) (0.8) (3.7) (3.7) 39.2 19.1 32.6 1.6 1.6 0.0 0.0 0.0 0.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
(1,083.5) (951,0) (992.9) (906.7) (951.0) (992.9) (51.3) (69.4) (73.0) (51.3) (71.0) 565.7 548.5 561.6 Total Total (0.2) (3.1) (0.2) (0.2) 20.1 (0.2) (0.5) (0.0) (0.4) (0.1) (0.2) 71.4 21.5 10.2 18.0 14.0 18.4 7.4 3.6
Financial consolidated statements 58 bpost ANNUAL REPORT 2016 6.16 INVESTMENT PROPERTY All amortisation anddepreciation charges are includedinthesection “Depreciation, amortisation” of theincome statement. At 31December 2016 At 31December 2015 At 31December 2014 CARRYING AMOUNT BALANCE AT 31DECEMBER2016 Transfer from/to other asset categories Depreciations Balance at 1January 2016 BALANCE AT 31DECEMBER2015 Transfer from/to other asset categories Depreciation Balance at 1January 2015 BALANCE AT 31DECEMBER2014 Transfer from/to other asset categories Depreciations Balance at 1January 2014 DEPRECIATION ANDIMPAIRMENT LOSSES BALANCE AT 31DECEMBER2016 Transfer from/to other asset categories Acquisitions Balance at 1January 2016 BALANCE AT 31DECEMBER2015 Transfer from/to other asset categories Acquisitions Balance at 1January 2015 BALANCE AT 31DECEMBER2014 Transfer from/to other asset categories Acquisitions Balance at 1January 2014 ACQUISITION COST In million EUR transfer to assets heldfor sale(EUR 8.6million)andfrom investment property (EUR 0.2million). depreciation andimpairment amounted to EUR 71.4millionandslightly increased compared to lastyear (2015:EUR 69.4million); (EUR 7.5million), ITandother infrastructure (EUR 15.9million)andland1.5million); network infrastructure (EUR 20.4million),ATM andsecurity infrastructure 4.4million), transportation (EUR related infrastructure acquisitions (EUR 72.7million)related to production facilities for sorting andprinting activities (EUR 23.0million),mailandretail Land andbuildings (12.0) (12.2) (14.9) (12.2) (14.9) (16.0) (0.1) (0.1) (0.1) (0.5) (4.9) (2.7) 18.2 18.7 23.6 18.7 23.6 26.3 6.2 6.5 8.7 0.3 2.9 1.3
0 0 0
Financial consolidated statements 59 bpost ANNUAL REPORT 2016 “Other operating income”. In2016noimpairment charges were recorded inthesection “Depreciation, amortisation”. Profits ondisposal of EUR 17.5million(2015:33.4million)were accounted for intheIncome Statement inthesection network. of 2016.The majorityof these assets are retail outlets whichare vacant asa consequence of theoptimisation of thepost offices The number of buildingsrecognised inassets heldfor saleisquite similarwithlastyear, 8at theendof 2015versus 11at theend deeds signedin2016(EUR 10.2million)partly counterbalanced by thesales agreements signedin2016(EUR 8.6million). In 2016assets heldfor saledecreased from EUR 3.1millionto EUR 1.5million.The decrease by EUR 1.6millioniscaused by the As at 31December 6.17 ASSETS HELD FOR SALE properties rented out. of theinvestment property decreased from EUR 15.1millionto EUR 12.7milliondriven by a reduction inthenumberof The rental income of theinvestment property amounts to EUR 0.6million(2015:0.8million).The estimated fair value a systematic basisover useful life (ingeneral 40years). at acquisition cost less any accumulated depreciation andless any impairment loss. The depreciation amount isallocated on Investment property mainlyrelates to apartments located inbuildingsused aspost offices. Investment properties are carried Property, plant andequipment In million EUR 2016 1.5 1.5 2015 3.1 3.1 2014 2.8 2.8
Financial consolidated statements 60 bpost ANNUAL REPORT 2016 6.18 INTANGIBLE ASSETS At 31December 2016 At 31December 2015 At 31December 2014 CARRYING AMOUNT BALANCE AT 31DECEMBER2016 Other movements Exchange rate difference Impairment losses Depreciation Disposals Acquisitions through business combinations Balance at 1January 2016 BALANCE AT 31DECEMBER2015 Other movements Exchange rate difference Impairment losses Depreciation Disposals Acquisitions through business combinations Balance at 1January 2015 BALANCE AT 31DECEMBER2014 Other movements Exchange rate difference Impairment losses Depreciation Disposals Acquisitions through business combinations Balance at 1January 2014 DEPRECIATION ANDIMPAIRMENT LOSSES BALANCE AT 31DECEMBER2016 Other movements Exchange rate difference Disposals Acquisitions andadditionsthrough business combinations Acquisitions Balance at 1January 2016 BALANCE AT 31DECEMBER2015 Other movements Exchange rate difference Disposals Acquisitions through business combinations Acquisitions Balance at 1January 2015 BALANCE AT 31DECEMBER2014 Other movements Exchange rate difference Disposals Acquisitions through business combinations Acquisitions Balance at 1January 2014 ACQUISITION COST In million EUR Goodwill (24.8) (20.1) (20.1) (20.1) (20.1) (20.1) 199.2 174.4 128.5 (4.7) (0.0) 70.7 66.3 50.5 46.2 70.7 66.3 61.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 4.3 0.0 0.0 0.0 0.0 4.9 Development (79.4) (73.8) (79.3) (13.2) (73.8) (79.3) (76.8) 101.2 (0.0) (5.1) (0.5) (7.7) (0.1) (0.0) (4.5) (4.7) (6.7) 92.2 94.6 13.2 10.8 10.9 21.8 18.3 15.3 92.2 94.6 90.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 6.7 0.0 0.1 0.0 0.0 1.7 0.0 0.0 0.0 0.1 0.0 0.0 7.2 Software (110.8) (100.6) (100.6) (90.2) (10.8) (90.2) (79.5) 129.1 118.6 115.5 118.6 115.5 111.1 (0.0) (8.3) (1.8) (9.6) (0.2) (0.0) (0.1) (0.3) (1.2) (0.1) (0.0) (0.0) (0.9) 18.3 18.0 25.3 0.3 0.0 0.0 0.0 0.0 0.9 0.0 1.4 0.2 6.2 0.1 0.5 0.3 3.0 1.9 0.5 0.0 2.1 2.8 intangible assets (28.8) (10.4) (10.4) Other Other (18.1) (10.4) (10.4) (10.4) (0.1) (0.4) (0.0) (0.0) (0.2) (0.2) (0.0) (0.0) (0.0) (0.1) (1.9) (0.1) (0.0) 38.7 13.2 13.2 25.2 13.2 13.2 12.9 0.1 0.1 0.0 0.0 0.0 0.0 0.0 0.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.4 9.9 2.2 2.8 2.8
(243.8) (205.0) (200.1) (205.0) (200.1) (186.8) (13.8) (20.4) (17.4) (15.6) (14.1) 468.1 294.6 289.7 294.6 289.7 275.8 224.4 140.8 Total (0.2) (4.6) (6.9) (0.1) (4.7) (0.3) (1.2) (0.1) (0.1) (0.3) (0.0) 33.1 14.1 18.2 18.3 89.6 89.5 0.1 0.3 0.0 6.9 0.1 0.3 2.0 0.5 0.1 0.0 0.1 0.4
Financial consolidated statements 61 bpost ANNUAL REPORT 2016 Intangible assets increased by EUR 134.7million,mainlydueto: by about 41%to reduce thenet realisable value below thecarrying value of allcash-generating units. on average, a multipleof 4.5onoperating profit before exceptional items. The earningsmultiples referenced would need to reduce The carrying value of these cash-generating units, excluding interest bearingandtaxrelated assets andliabilities represents, to LandmarkGlobalUK(EUR 4.2million)andCityDepot (EUR 0.4million). of some acquisitions are stillunderreview andontheother handdecreased asa result of theimpairment onthegoodwill related that a majorpart of these goodwill calculations are stillprovisional astheaccounting treatment andthepurchase price allocation 2016. Ontheonehandgoodwill hasincreased dueto acquisition of new subsidiaries andactivities (EUR 128.5million),note The carrying amount of goodwill arisingfrom cash-generated unitshasincreased from EUR 50.5millionto EUR 174.4millionin less costs to sell”), hasbeen assessed withreference to earningsmultiples for recently acquired business combinations. The recoverable amount isbased onthefair value. The net realisable value, for purposes of impairment review (i.e., the“fair value combination, irrespective of whether other assets orliabilities of theacquiree are assigned to those units. testing, goodwill acquired is, from theacquisition date, tested onthelevel withinthecompany that benefits from the After initialrecognition, goodwill ismeasured at cost less any accumulated impairment losses. For thepurpose of impairment assets acquired andliabilities assumed. Goodwill isinitiallymeasured at cost, beingtheexcess of theaggregate of theconsideration transferred over thenet identifiable acquiree. of theconsideration transferred measured at acquisition date fair value andtheamount of any non-controlling interests inthe Business combinations are accounted for usingtheacquisition method. The cost of anacquisition ismeasured astheaggregate All amortisation anddepreciation charges are includedinthesection “Depreciation, amortisation” of theincome statement. CARRYING AMOUNT Depreciation -acquisitions through business combinations Acquisition cost -acquisitions through business combinations In million EUR amortisation andimpairments amounting to EUR 18.5million. assets (EUR 2.2million); investments insoftware andlicences (EUR 2.8million),development costs capitalised (EUR 7.2million)andother intangible allocation of some acquisitions are stillunderreview; increase ingoodwill (EUR 128.5million).A majorpart of these goodwill calculations are stillprovisional because purchase price change dueto thepurchase price allocation of some acquisitions. The incorporation of new subsidiaries EUR 12.7million,thefigures presented inthetablehereunder are provisional andcan still Development (0.5) 1.2 1.7 Software (1.8) 4.4 6.2 intangible assets Other Other (18.1) 25.2 7.1
(20.4) Total 12.7 33.1
Financial consolidated statements 62 bpost ANNUAL REPORT 2016 For theyear ended31December bpost’s future minimumoperating lease income isasfollows andrelates to buildings: transferred to bpost. The operational lease agreements includefixed lease payments. The risksand rewards incidental to the ownership are not newly acquired subsidiaries. The increase of the future minimumoperating lease payments in2016compared to 2015ismainlydueto theconsolidation of For theyear ended31December bpost’s future minimumoperating lease payments are asfollows: Operating Lease The financial lease agreements includefixed lease payments anda purchase option attheend oflease term. As at 31December The future minimumfinance lease payments at theend of each reporting periodunder review were as follows: The net carrying amount anduseful lives of theleased assets are asfollows: The finance lease liabilities as of December 31,2016 relate to leased machinery andequipment. Finance Lease 6.19 LEASE TOTAL More than5years Between 1year and5years Less than1 year In million EUR TOTAL More than 5years Between 1year and5years Less than1year In million EUR TOTAL More than5years 1 to 5years Within 1year Present value of theminimumlease payments FUTURE FINANCECOSTS Less TOTAL More than5years 1 to 5years Within 1year Minimum lease payments In million EUR Vehicles Machinery andequipment In million EUR Useful lives 315.1 159.6 5 years 5 years 2016 2016 2016 81.4 74.1 5.9 3.4 0.1 3.5 2.3 2.7 1.0 0.0 2.2 1.2 0.0 2.2 1.3 237.9 122.1 2015 2015 2015 60.1 55.7 5.4 2.1 0.1 2.2 1.8 2.8 0.8 0.0 1.6 0.5 0.0 1.7 0.5 Carrying amount Dec 31,2016 236.1 117.6 2014 2014 2014 58.8 59.7 9.3 2.8 0.1 2.9 4.0 4.2 1.1 0.0 1.9 0.9 0.0 2.0 0.9 0.3 3.1
Financial consolidated statements 63 bpost ANNUAL REPORT 2016 investments were recognised asfinancialassets held to maturity. equivalent. AsperDecember 31,2016bpost holds EUR 12.0millionincommercial paperwitha maturity of four months, these The investment securities that met thedefinition of cash&equivalents asdefined byIAS7 are reported incash& 6.20 INVESTMENT INSECURITIES of EUR 0.8million in2016. The income that isrelated to operational lease agreements isrecognised inthesection “Other operating income” for anamount newly acquired subsidiaries. The increase of thefuture minimumoperating lease income in2016compared to 2015ismainlydueto theconsolidation of Balance at 1January 2014 ACQUISITION COST In million EUR Acquisitions Disposals BALANCE AT 31DECEMBER2014 Balance at 1January 2015 Acquisitions Disposals BALANCE AT 31DECEMBER2015 Balance at 1January 2016 Acquisitions Disposals BALANCE AT 31DECEMBER2016 Balance at 1January 2014 IMPAIRMENT LOSSES BALANCE AT 31DECEMBER2014 Other movements Balance at 1January 2015 BALANCE AT 31DECEMBER2015 Other movements Balance at 1January 2016 BALANCE AT 31DECEMBER2016 Other movements At 31December 2014 CARRYING AMOUNT At 31December 2015 At 31December 2016 investments non current non current Total 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 - - -
to maturity assets held Financial Financial 12.0 12.0 12.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
investments current current Total 12.0 12.0 12.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 - - -
Total 12.0 12.0 12.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 - - -
Financial consolidated statements 64 bpost ANNUAL REPORT 2016 An overview of theselected financialfigures ofthe associates is presented inthe following tables. The amount represents thedecrease in unrealised gains, net of taxes, onbpost bank’s bondportfolio (EUR 12.0million). Other movements In 2016,nodividendfrom bpost bankhasbeenpaidto bpost. In2014and2015dividends amounted EUR 5.0million. Dividends received bpost bank’s profit amounted to EUR 10.2million. In 2016,bpost’s share intheprofit of bpost bankand of Citieamounted to EUR 9.9million.Lastyear, theshare of profit in Share of profit/loss 6.21 INVESTMENT INASSOCIATES bpost bank 2015 In million EUR BALANCE AT 31DECEMBER Other movements inequityof associates Dividend received Share of profit Addition through business combinations Balance at 1January In million EUR bpost bank 2016 Citie Ownership 50% 50% 33% Total assets 10,314.2 10,704.0 2.3 Total liabilities (excl. Equity) 373.7 (12.0) 9,564.1 9,958.3 375.0 2016 0.0 9.9 0.8 0.2
Revenues 375.0 (46.7) 416.5 2015 282.8 273.5 (5.0) 10.2 0.0 0.0 Profit/(loss) 416.5 341.3 2014 (5.0) (0.2) 11.2 69.1 20.4 19.9 0.0
Financial consolidated statements 65 bpost ANNUAL REPORT 2016 explained by integration of Ubiway asof December 1,2016. inventory (tobacco, beverage, multimedia,…).The increase of thegoods purchased for resale compared to 2015was mainly Goods purchased for resale mainlyincludepostograms, post cards, supplies for resale, press distributioninventory andretail Raw materials includeconsumables, i.e. materials used for printing purposes. Finished products are stamps available for sale. As at 31December 6.23 INVENTORIES fair value. Trade and other receivables are mainlyshort-term. The carrying amounts are considered to bea reasonable approximation of the Tax receivables relate to theoutstandingVAT amounts to bereceived. of Ubiway. driven by a rise intradereceivables of EUR 60.7million.The increase of tradereceivables was mainlyrelated to theconsolidation Current tradeandother receivables increased by EUR 70.6millionfrom EUR 411.2millionin2015to 481.8million, mainly EUR to bepaidwithina short timeframe, makingtheimpact of thetimevalue of money not significant. The non-current receivables are considered asa reasonable approximation of thefair value of thisfinancialasset, asitis expected As at 31December As at 31December As at 31December 6.22 TRADE ANDOTHER RECEIVABLES INVENTORIES Reductions invalue Goods purchased for resale Finished products Raw materials In million EUR CURRENT -OTHER RECEIVABLES Other receivables Deferred charges Accrued income In million EUR CURRENT TRADE ANDOTHER RECEIVABLES Other receivables Tax receivables, other thanincome tax Trade receivables In million EUR NON-CURRENT TRADE ANDOTHER RECEIVABLES Other receivables Trade receivables In million EUR 481.8 443.3 2016 2016 2016 2016 (2.6) 36.7 32.9 33.4 14.6 11.4 32.9 2.8 4.0 1.8 6.8 5.6 2.8 0.0 411.2 382.6 2015 2015 2015 2015 (0.7) 11.1 26.4 10.6 11.2 26.4 2.3 6.0 3.5 2.2 4.6 2.3 2.3 0.0 398.3 369.3 2014 2014 2014 2014 (0.6) 12.5 27.0 12.3 27.0 2.6 9.4 6.5 3.7 2.9 5.3 2.0 2.6 0.0
Financial consolidated statements 66 bpost ANNUAL REPORT 2016 the current financialliabilities. The last repayment willtake place in2022. European Investment Bank.The trancheof theloanrepayable in2017andamounting to EUR 9.1millionwas transferred to The financialliabilities consist mainly of a loan,withanoutstandingbalance of EUR 54.5million,concluded in2007withthe As at 31December As at 31December 6.25 FINANCIALLIABILITIES short-term deposit rates. periods of between oneday andthree months, dependingimmediate cashrequirements, andearninterest at therespective Bank current accounts earninterest at floating rates based ondailybankdeposit rates. Short-term deposits are made for varying As at 31December 6.24 CASH ANDCASH EQUIVALENTS CURRENT LIABILITIES Finance lease liabilities Other loans Bank loans Financial liabilities at amortised cost In million EUR NON CURRENTLIABILITIES Finance lease liabilities Bank loans Financial liabilities at amortised cost In million EUR CASH ANDCASH EQUIVALENTS Short-term deposits Bank current accounts Cash payment transactions underexecution Transit accounts Cash innetwork In million EUR 538.9 (36.5) 285.7 198.6 2016 2016 2016 10.3 47.7 45.5 91.0 1.2 0.0 9.1 2.2 0.0 615.7 (55.8) 481.3 157.3 2015 2015 2015 56.2 54.6 32.9 9.6 0.5 0.0 9.1 1.6 0.0
562.3 (40.7) 418.6 139.7 2014 2014 2014 65.7 10.0 63.7 44.7 0.9 0.0 9.1 2.0 0.0
Financial consolidated statements 67 bpost ANNUAL REPORT 2016 The changes inthepresent value of theobligations are asfollows: As at 31December bpost’s net liabilityfor employee benefits comprises the following: As at 31December Net of thedeferred taxasset related to them,employee benefits amount to EUR 308.3million(2015:297.1million). As at 31December The employee benefits are as follow: agents andnon-baremic contractual employees. the categories of employees of bpost: civilservants (also known asstatutory employees), baremic contractual employees, auxiliary negotiated intheframework of Collective LaborAgreement (‘CLA’). The benefits granted underthese plansdiffer according to termination benefits. These benefit plans have been valuedin conformity withIAS19.Some ofthemoriginate from measures bpost grants itsactive andretired personnel post-employment benefits, long-term benefits, otherlong-term benefits and 6.26 EMPLOYEE BENEFITS - Past service (cost)/gain service Past - - Termination expenses Termination - - Actuarial gains and (losses) DEFINED BENEFIT OBLIGATION AT 31DECEMBER and Statement gains Income Actuarial in - recognised (losses) Re-measurement gains and(losses) inOtherComprehensive Income and gains Actuarial - Re-measurement gains and(losses) Benefits paid Net interest cost service Current - Service cost Present value at 1January In million EUR NET LIABILITY Liabilities Employee benefits amounts inthestatement of financial position NET LIABILITY Present value of net obligations Present value of net obligations for unfunded plan Fair value of planassets Present value of total obligations In million EUR EMPLOYEE BENEFITS NETOFDEFERREDTAX Deferred taxassets impact Employee benefits In million EUR TOTAL Other long-term benefits Termination benefits Long-term employee benefits Post-employment benefits In million EUR (401.2) (356.7) (356.7) (356.7) (308.3) (356.7) (395.6) (356.7) (356.7) (401.2) (356.7) (162.8) (107.7) (31.8) (82.1) (31.8) 2016 2016 2016 2016 40.6 44.5 48.4 (6.3) (1.5) (6.7) (4.1) (6.3) (1.5) 0.0 0.0
(395.6) (346.2) (346.2) (346.2) (297.1) (346.2) (415.2) (346.2) (346.2) (395.6) (346.2) (148.1) (108.9) (25.5) (77.7) (11.6) (20.6) 2015 2015 2015 2015 41.8 49.4 49.1 (6.3) (1.1) (3.8) 5.5 4.2 5.5 4.2
(415.2) (368.6) (368.6) (368.6) (307.1) (368.6) (384.8) (368.6) (368.6) (415.2) (368.6) (151.5) (118.3) (28.0) (85.4) (10.9) (23.2) (13.3) (22.7) (10.9) (23.2) 2014 2014 2014 2014 41.3 46.7 61.5 (9.6) (5.3) 0.0
Financial consolidated statements 68 bpost ANNUAL REPORT 2016 For theyear ended31December The expense recognised inthe“Other Comprehensive Income” caption ispresented hereafter: For theyear ended31December The impact onpayroll costs andfinancial costs intheIncome Statement ispresented hereafter: were includedintheIncome Statement caption “Payroll costs”. Interest costs andfinancialactuarial gains orlosses have been recorded asfinancial costs. All other expenses summarised above as operating expenses. post-employment benefits are recorded inOther Comprehensive Income. Inall other cases, actuarial gains andlosses are recorded Actuarial gains andlosses, caused by changes indiscount rates, are recorded asfinancial costs, whereas actuarial gains/losses for For theyear ended31December The expense recognised intheIncome Statement ispresented hereafter: company, andiscomposed by thereserves accumulated from theemployer andemployee contributions. The planasset relates to thegroup insurance’s benefit inaccordance withIAS19. This planasset isheld by a third party insurance The fair value of theplanassets canbereconciled asfollows: - Past service (cost)/gain service Past - - Actuarial gains and (losses) reported as operating operating as reported (losses) and gains Actuarial - expenses Termination - - Actuarial gains and (losses) (losses) NET EXPENSE and gains Actuarial - Re-measurement gains/(losses) In million EUR NET EXPENSE Financial cost Payroll costs In million EUR financial NET EXPENSE as reported (losses) and gains Actuarial - Re-measurements gains and(losses) Net interest cost service Current - Service cost In million EUR FAIR VALUE OFPLANASSETS AT 31DECEMBER Actuarial loss onassets (OCI item) Interest cost onassets (P&Litem) Benefits paid Contributions by employee Contributions by employer Fair value of planassets at 1January In million EUR (37.7) (37.7) (18.7) (19.1) (30.5) (12.4) (12.9) (30.5) 44.5 2016 2016 2016 2016 (5.8) 49.4 11.4 (5.8) (1.5) (5.7) (5.8) 0.5 1.0 1.2 4.8 0.0 0.0 (25.1) (25.1) (25.7) (24.1) (19.2) 49.4 2015 2015 2015 2015 46.7 (5.2) (6.2) (1.1) (1.6) (3.8) 6.6 1.0 1.1 1.4 5.4 0.6 6.6 4.2 6.6 5.8 (11.2) (56.1) (56.1) (17.4) (24.8) (38.8) (11.2) (23.2) (19.5) (11.2) (30.6) 46.7 2014 2014 2014 2014 39.8 (0.3) (8.1) (3.1) (5.3) 1.4 2.1 6.8 0.0 7.4
Financial consolidated statements 69 bpost ANNUAL REPORT 2016 a result of reasonable changes in key assumptions occurring at theendof thereporting period. This sensitivity analysis hasbeendetermined based ona method that extrapolates theimpact ondefined benefit obligation as A quantitative sensitivity analysis for significant assumptions at December 31,2016is outlined here below: The average duration of thedefined benefit planobligation attheend of2016is11.3 years(2015:10.5 years). rates used in2016range from 0.0%to 1.85%(2015:0.2%to 2.30%): The discount rates have beendetermined by reference to market yields at thestatement of financialposition date. The discount The mainassumptions used incomputing thebenefit obligations at thestatement of financial position date are the following: SENSITIVITY LEVEL In million EUR ASSUMPTIONS Prepension Part-time regime DSPR JOR Jubilee Premiums Pension saving days Medical expenses incase of accidents Workers compensation incase of accidents Accumulated compensated absences Group insurance Gratification Funeral expense Bank Transportation Family allowances BENEFIT Mortality tables Medical cost trend rate Future salary increase Rate of inflation Impact ondefined benefit obligation (increase)/decrease from 14.1to 14.4 increase from 0.7to 1.7 from 2.6to 3.8 0.5% Discount rate
21.6 Duration 18.1 13.3 12.9 15.6 10.7 9.7 7.6 9.6 2.6 9.0 7.4 decrease MR/FR-2 0.5% 2016 5.0% 3.0% 2.0% (22.8)
table MR/FR Mortality Mortality by 1year Decrease Decrease Discount rate 0.00% 0.00% 1.35% 1.10% 1.35% 0.00% 1.30% 1.10% 1.85% 1.60% 1.65% 1.55% 1.70% 1.45% 2016 MR/FR-2 2015 5.0% 3.0% 2.0% (6.4)
from 0.2%to 0.4% trend rate increase Medical Medical 1% 1% MR/FR 0.20% 1.60% 1.80% 0.40% 1.70% 1.50% 2.30% 2.10% 2.15% 1.95% 2.20% 1.95%
2014 2015 5.0% 3.0% 2.0% (2.6) N/A
Financial consolidated statements 70 bpost ANNUAL REPORT 2016 As at 31December bpost’s net liabilityfor employee post-employment benefits comprises the following: Unit Credit) takinginto account future pension accrual pro-rated for pastservice. As a result, bpost could remain consistent withthe2015methodology andappliedtheso-called PUCmethodology (Projected future contributions isa percentage of theaverage past24months return on10years linearbonds witha minimumof 1.75% p.a. Belgium hasbeenremoved withthechange intheWAP/LPC law endof December 2015.Asfrom 2016,theminimumreturn for minimum guaranteed return. The uncertainty withrespect to thefuture evolution of theminimumguaranteed rates of return in Although there isstillnofullclarityontheapproach, new legislation dated December 2015brought more clarification onthe the legal minimumreturn andthereturn guaranteed by theinsurance company. Due to thechange since 2013inthetariffstructure guaranteed by theinsurance company, there ispotentially a gap between and not a year by year return where thelegal minimumontheemployee contributions shouldbegranted ona year by year basis. premiums) and3.75%onemployee contributions. The legal minimumreturn onemployer contributions isa “career average” return WAP/LPC law endof 2015,bpost hadto provide thelegal minimumreturn of 3.25%onemployer contributions (after costs on According to thelegislation, theemployer hasto guarantee a certain return ontheplanassets. Before thechange inthe Belgium these planshave thecharacteristics of a defined benefit planunderIAS19. bpost offers to itsactive contractual employees a group insurance benefit. Since the introduction ofthe WAP/LPClegislation in Group Insurance certificates, investment funds andloans. from a reduction of thefees charged onthecurrent account aswell asfavorable interest rates onsavings accounts, savings All active members, pre-pensioners andpensionersthat have a “Postcheque” account inwhichtheirsalary/pension ispaid, benefit Bank ticket for a tripinBelgiumorfor a price reduction onother transport tickets. Inactive civilservants aswell astheirfamily membersare entitled to personal vouchers that canbeexchanged for a transport Transportation The amount isadapted eachyear proportionally to thenumberof civilservants (full timeequivalents) andissubject to inflation. 19 December 2014).Asa consequence, bpost asa publicinstitutionpays a contribution that isdefined by a programme law. Werknemers (RKW).The financingmethodology of family allowances for civil servants haschanged due to a law change (law of allowance from Office National d’Allocations Familiales pour Travailleurs Salariés (ONAFTS) –Rijksdienst voorKinderbijslag voor The civilservants of bpost (both active andpensioners) withchildren at theircharge (youngsters anddisabled) receive a family Family allowances insurance. Post-employment benefits include family allowances, transport costs, bank costs, funerary costs, retirement giftsandgroup Post-employment benefits NET LIABILITY Liabilities Employee benefits amounts inthestatement of financial position NET LIABILITY Present value of net obligations Present value of net obligations for unfunded plan Fair value of planassets Present value of total obligations In million EUR (126.6) (82.1) (82.1) (82.1) (82.1) (82.1) 2016 44.5 (127.1) (77.7) (77.7) (77.7) (77.7) (77.7) 2015 49.4
(132.1) (85.4) (85.4) (85.4) (85.4) (85.4) 2014 46.7
Financial consolidated statements 71 bpost ANNUAL REPORT 2016 For theyear ended31December The expense recognised inOtherComprehensive Income ispresented hereafter: For theyear ended31December The impact onpayroll costs andfinancial costs ispresented hereafter: For theyear ended31December The expense recognised intheIncome Statement ispresented hereafter: follows: The fair value of theplanassets related to thegroup insurance’s benefit andheld by theinsurance company ispresented as The changes inthepresent value of theobligations are asfollows: - Actuarial gains and (losses) reported as operating operating as reported (losses) and gains Actuarial - - Actuarial gains and (losses) (losses) NET EXPENSE and gains Actuarial - Re-measurement gains/(losses) In million EUR NET EXPENSE Financial cost Payroll costs In million EUR financial NET EXPENSE as reported (losses) and gains Actuarial - Re-measurements gains and(losses) Net interest cost service Current - Service cost In million EUR FAIR VALUE OFPLANASSETS AT 31DECEMBER Actuarial loss onassets (OCI item) Interest cost onassets (P&L item) Benefits paid Contributions by employee Contributions by employer Fair value of planassets at 1January In million EUR (losses) DEFINED BENEFITOBLIGATION AT 31DECEMBER and Statement gains Income Actuarial in - recognised (losses) Re-measurement gains and(losses) inOtherComprehensive Income and gains Actuarial - Re-measurement gains and(losses) Benefits paid Net interest cost service Current - Service cost Present value at 1January In million EUR (126.6) (127.1) (12.4) 44.5 2016 2016 2016 2016 2016 49.4 (5.8) (8.5) (8.5) 17.4 (5.8) (1.3) (7.1) (1.3) (7.1) (6.3) (2.3) (8.4) (5.8) (7.1) (6.3) (8.4) 0.0 0.5 1.0 1.2 4.8 0.0 0.0 0.0 0.0 (127.1) (132.1) 49.4 2015 2015 2015 2015 2015 46.7 (9.8) (9.8) 11.8 (1.2) (8.5) (1.2) (8.5) (6.2) (2.3) (9.9) (8.5) (9.9) 6.6 0.0 1.0 1.1 1.4 5.4 0.0 6.6 5.5 0.0 0.0 5.5 0.0 6.6 (132.1) (118.0) (11.2) (11.2) (10.9) (10.9) (11.2) 46.7 2014 2014 2014 2014 2014 39.8 (8.0) (8.0) (0.3) (2.0) (5.9) (2.0) (5.9) (3.1) (3.5) (9.1) (5.9) (9.1) 9.4 0.0 1.4 2.1 6.8 0.0 0.0 0.0 0.0
Financial consolidated statements 72 bpost ANNUAL REPORT 2016 48 months for theother beneficiaries of theplan. gross annualsalary for a periodof a maximumof 72months for the night workers andthedistributor andcollect agents and 55 years old. For theother employees, theminimumage required is57years old. bpost makes contributions equalto 7.5%of the September 30,2016.For thedistributor andcollect agents andtheemployees working duringnight, theplanisaccessible asfrom of 72months for thecollect agents and48months for theother beneficiaries of theplan. The second agreement was signedon accessible asfrom 57years old. bpost makes contributions equal to 7.5%of thegross annualsalary for a period of a maximum approved in2012 andalready extended in2014isnow also applicablefor collect agents. For theother employees, theplanis In 2016,two new planswere approved. The firstone was signedonJune2,2016andis valid until December 2016. The plan a maximum of 72months for thenight workers and48months for theother beneficiaries of theplan. the planisaccessible asfrom 55years old. bpost makes contributions equalto 7.5%of thegross annual salary for a periodof approved in2012andaccessible to thedistributors isextended to theemployees working during nights. For theother employees, A new planof specific partial (50%)career interruption was approved by the Framework Agreement of May 22,2014. The plan beneficiaries of theplan. to 7.5%of thegross annual salary for a periodof a maximumof 72 months for thedistributor agents and48months for theother the distributors aged asfrom 54years oldandto theother employees aged asfrom 55years old. bpost makes contributions equal The Framework Agreement of December 20,2012approved a new planof specific partial (50%)career interruption accessible to a maximum of 48months. a system of partial (50%)career interruption. bpost makes contributions equalto 7.5%of thegross annualsalary for a periodof Under theCollective LaborAgreement signedin2011,statutory employees, aged between 50and59,are entitled to enter into Part-time regime (50+) have beenappliedtogether withthediscount rate applicableto theduration of thebenefit. charges, holiday pay, endof year premium, management andintegration premium). The relevant withdrawal andmortality rates The annual payment isthenumberof pensionsaving days used multipliedby theprojected dailysalary (increased withsocial of used pensionsaving days. resource department. The individual“pension saving days” accounts are projected perperson anddecreased by theactual number based ona certain “consumption” pattern, derived from thestatistics over the12months of 2016,asprovided by thehuman is based onthefuture “projected payments /cashoutflows”. These are calculated for the totality of thepopulation considered, The methodology of valuation isbased onthesameapproach asthebenefit “Accumulated Compensated Absences“. The valuation The pension saving days are accumulated year over year andcanbeused asfrom theage of 50. of 2pensionsaving days peryear andhave thepossibility to convert eachyear a maximumof 3days of extra-legal holidays. year a maximumof 3days of extra-legal holidays. Contractual employees witha permanent contract are entitled to a maximum “Accumulated Compensated Absences “benefit) inpensionsaving days (7sick days per1pensionsaving day) and to convert each Civil servants have thepossibility to convert theunused sick days above the63days intheir‘notional’ account (see above Pension saving days withdrawal andmortality rates have beenappliedtogether withthe discount rate applicableto theduration of thebenefit. the difference between theprojected salary (increased with social charges) at 100%andthe reduced payments. The relevant The annual payment isthenumberof days used (andlimited by thenumberof days inthesavings account) multipliedby projected for thefuture anddecreased by theactual numberof days of illness. a certain consumption pattern, derived from thestatistics over the12months of 2016.The individualnotional accounts are “projected payments /cashoutflows”. The cashoutflows are calculated forthe totality ofthepopulation considered, based on There have beennomodifications to thecalculation methodology comparatively to 2015. The valuation isbased onthefuture Both thefullsalary paidunderthe“sick days” scheme andthereduced payments beyond that are costs incurred by bpost. up, they receive reduced payments. account. Duringthisperiod, they willreceive theirfullsalary. Once theallotment of theyear andthedays carriedover are used during a year willfirstuse upthe year’s allotment andthenuse thedays carried over from previous years aspertheirindividual sickness days iscarriedover to thefollowing years upto a maximumof 63days. Employees whoare illfor more than21days a doctor, they receive 100%of theirsalary. Ifany given year, a civilservant isabsent less than21days, thebalance of theun-used Civil servants are entitled
Financial consolidated statements 73 bpost ANNUAL REPORT 2016 For theyear ended31December The impact onpayroll costs andfinancial costs ispresented hereafter: For theyear ended31December The expense recognised intheIncome Statement ispresented hereafter: The changes inthepresent value of theobligations are asfollows: As at 31December bpost’s net liabilityfor employee long-term benefits comprises the following: - Past service (cost)/gain service Past - - Actuarial gains and (losses) reported as operating operating as reported (losses) and gains Actuarial - expenses Termination - (cost)/gain service Past - NET EXPENSE Financial cost Payroll costs In million EUR financial NET EXPENSE as reported (losses) and gains Actuarial - Re-measurements gains and(losses) Net interest cost service Current - Service cost In million EUR Statement Income in recognised (losses) DEFINED BENEFITOBLIGATION AT 31DECEMBER and gains Actuarial - Re-measurement gains and(losses) Benefits paid Net interest cost service Current - Service cost Present value at 1January In million EUR NET LIABILITY Liabilities Employee benefits amounts inthestatement of financial position NET LIABILITY Present value of net obligations Present value of net obligations for unfunded plan Fair value of planassets Present value of total obligations In million EUR (107.7) (107.7) (107.7) (107.7) (107.7) (108.9) (107.7) (107.7) (11.4) (11.4) (11.3) (11.3) (11.3) (11.3) 2016 2016 2016 2016 12.6 (5.0) (6.4) (1.4) (1.4) (3.6) 1.3 1.3 0.0 0.0 4.9 0.0 0.0 1.3 (108.9) (108.9) (108.9) (108.9) (108.9) (118.3) (108.9) (108.9) (11.7) (11.7) (10.7) (10.7) 2015 2015 2015 2015 (6.8) (6.8) 16.2 (7.6) (1.2) (1.2) (1.0) (1.0) 6.1 6.1 0.0 0.8 4.1 0.0 2.0 6.1 (118.3) (118.3) (118.3) (118.3) (118.3) (116.1) (118.3) (118.3) (19.1) (19.1) (12.6) (12.6) (10.6) (12.6) (12.6) 2014 2014 2014 2014 17.0 (4.4) (4.4) (8.6) (2.2) (2.2) (8.4) (4.4) 0.0 0.0 4.0 0.0 0.0
Financial consolidated statements 74 bpost ANNUAL REPORT 2016 As at 31December In 2016,thefollowing previous early-retirement plansare includedinthisbenefit: Early Retirement scheme Termination benefits bpost’s net liabilityfor termination benefits comprises the following: in exchange. is terminated before thenormalretirement andthefact that itistheemployee’s decisionto accept theoffer made by bpost The employee benefit related to theearly retirement schemes arises bpost’s liabilitybecause of the fact that theemployment their salary at departure and until they reach retirement age. This planhasanindefinite duration. servants undercertain conditions of age, seniority andservice organisation. bpost continues to pay to thebeneficiaries 75% of departure anduntil they reach retirement age. The second planwas approved onSeptember 30,2016andisaccessible to civil pay to thebeneficiaries a portion (between 60%and75% depending ontheduration of theearly-retirement) of theirsalary at December. Itisaccessible to civilservants undercertain conditions of age, seniority andservice organisation. bpost continues to Two new early-retirement planswere approved in2016.The firstone was signedonJune2,2016andisopenuntil end of until they reach retirement age. Furthermore, theearly-retirement periodistreated asa service period. beneficiaries a portion (between 60%and70%dependingontheduration of theearly-retirement) of theirsalary at departure and function 12months after thepublication of theopenfunctions, hewillbeputinearly-retirement. bpost continues to pay to the In case a civilservant concerned by theAlphaplan,undercertain conditions of age andseniority hasnot beenselected for a new the duration of theearly-retirement. Furthermore, theearly-retirement periodistreated asa service period. departure anduntil they reach retirement age. Besides this, anexceptional yearly allowance ispaid, whereof amount depends of to pay to thebeneficiaries a portion (between 65%and75%depending ontheduration of theearly-retirement) of theirsalary at to civilservants whereof thefunction isimpacted by Alphaandundercertain conditions of age andseniority. bpost continues A new early-retirement planwas approved by theJoint Committee of July23,2015linked to theAlphaplan.This planisaccessible retirement periodistreated asa service period. the duration of theearly-retirement) of theirsalary at departure anduntil they reach retirement age. Furthermore, theearly- In these early-retirement schemes, bpost continues to pay to thebeneficiaries a portion (between 60%and75%dependingon NET LIABILITY Liabilities Employee benefits amounts inthestatement of financial position NET LIABILITY Present value of net obligations Present value of net obligations for unfunded plan Fair value of planassets Present value of total obligations In million EUR measure until thenext Collective LaborAgreement orJune30,2016at thelatest. certain conditions of age, seniority andservice organisation. The Joint Committee of December 17,2015approved to extend this a new early-retirement planapproved by theFramework Agreement of May 22,2014andaccessible to thecivilservants under approved to extend thismeasure until thenext Collective LaborAgreement. and service organisation conditions asat December 31,2013at thelatest. The Joint Committee of December 19,2013has the plancovered by theFramework Agreement of July1,2012andaccessible to thecivilservants meeting certain age, seniority 2016 (4.1) (4.1) (4.1) (4.1) (4.1) (4.1) 0.0 (11.6) (11.6) (11.6) (11.6) (11.6) (11.6) 2015 0.0 (13.3) (13.3) (13.3) (13.3) (13.3) (13.3) 2014 0.0
Financial consolidated statements 75 bpost ANNUAL REPORT 2016 retirement age, witha maximumof 5years. will bereleased from service. bpost continues to pay to thebeneficiaries 70% of theirsalary at departure anduntil they reach aged asfrom 61years oldwhoare attached to theJobMobility Center andwhoare stillattached to itafter a periodof oneyear voorafgaand aandePensionering) for theJobMobility Center. This planforesees for anindefinite duration that civil servants The Framework Agreement of September 30,2016defined a DSPR/ DVVP plan (Dispense Précédant la Retraite/ Dienstvrijstelling DSPR/ DVVP for JobMobility Center Since October 1,2000, bpost hascontracted insurance policies to cover therisk. compensations to workers for accidents whichoccurred before October 1,2000are incurred andfinanced by bpost itself. Until October 1,2000,bpost was self-insured for injuries ontheworkplace andon theway to theworkplace. Asa result, all Workers Compensation Accident Plan Other long-term benefits For theyear ended31December The impact onpayroll costs andfinancial costs ispresented hereafter: For theyear ended31December The expense recognised intheIncome Statement ispresented hereafter: The changes inthepresent value of theobligations are asfollows: - Past service (cost)/gain service Past - - Actuarial gains and (losses) reported as operating operating as reported (losses) and gains Actuarial - expenses Termination - (cost)/gain service Past - NET EXPENSE Financial cost Payroll costs In million EUR financial NET EXPENSE as reported (losses) and gains Actuarial - Re-measurements gains and(losses) Net interest cost service Current - Service cost In million EUR Statement Income in recognised (losses) DEFINED BENEFITOBLIGATION AT 31DECEMBER and gains Actuarial - Re-measurement gains and(losses) Benefits paid Net interest expenses Termination - Service cost Present value at 1January In million EUR (11.6) 2016 2016 2016 (4.1) (0.0) (0.0) (0.0) (0.0) 3.8 3.8 3.9 3.9 0.0 3.9 3.6 0.0 0.0 3.9 0.0 0.0 0.0 3.9 0.0 (11.6) (13.3) 2015 2015 2015 (4.2) (4.2) (4.1) (0.2) (3.9) (0.2) (3.9) (0.0) (0.0) (0.0) (0.1) (0.2) (3.8) (0.1) (0.2) (3.8) 5.9 0.0 0.0 (13.3) (15.4) 2014 2014 2014 (5.5) (5.5) (5.5) (0.2) (5.3) (0.2) (5.3) (0.0) (0.0) (0.0) (0.2) (5.3) (0.0) (0.2) (5.3) 7.6 0.0 0.0 0.0
Financial consolidated statements 76 bpost ANNUAL REPORT 2016 For theyear ended31December The impact onpayroll costs andfinancial costs ispresented hereafter: For theyear ended31December The expense recognised intheIncome Statement ispresented hereafter: The changes inthepresent value of theobligations are asfollows: As at 31December bpost’s net liabilityfor other long-term employee benefits comprises the following: - Actuarial gains and (losses) reported as operating operating as reported (losses) and gains Actuarial - NET EXPENSE Financial cost Payroll costs In million EUR financial NET EXPENSE as reported (losses) and gains Actuarial - Re-measurements gains and(losses) Net interest cost service Current - Service cost In million EUR Statement Income in recognised (losses) DEFINED BENEFITOBLIGATION AT 31DECEMBER and gains Actuarial - Re-measurement gains and(losses) Benefits paid Net interest cost service Current - Service cost Present value at 1January In million EUR NET LIABILITY Liabilities Employee benefits amounts inthestatement of financial position NET LIABILITY Present value of net obligations Present value of net obligations for unfunded plan Fair value of planassets Present value of total obligations In million EUR (162.8) (162.8) (162.8) (162.8) (162.8) (148.1) (162.8) (162.8) (21.7) (21.7) (12.3) (12.1) (12.1) (12.1) (12.1) 2016 2016 2016 2016 (9.5) (6.6) (3.0) (6.6) (3.0) (9.3) (6.6) 7.0 0.0 2.6 (148.1) (148.1) (148.1) (148.1) (148.1) (151.5) (148.1) (148.1) 2015 2015 2015 2015 (4.4) (4.4) (5.4) (1.6) (2.8) (1.6) (2.8) (5.4) (1.6) 7.9 0.0 1.0 0.0 0.0 3.8 0.0 0.0 (151.5) (151.5) (151.5) (151.5) (151.5) (135.4) (151.5) (151.5) (23.5) (23.5) (26.1) (18.6) (18.6) (22.2) (18.6) 2014 2014 2014 2014 (1.0) (1.0) (3.9) (3.9) (1.0) (1.0) 7.3 0.0 2.7 3.7
Financial consolidated statements 77 bpost ANNUAL REPORT 2016 As at 31December trade andother payable includethefollowing items: The carrying amounts are considered to bea reasonable approximation of thefair value. The other payables includedincurrent As at 31December acquisition of deBuren aswell asthecontingent consideration arrangements related to theacquisition of CityDepot. Non-current tradeandother liabilities amount to EUR 40.3millionandcontain mainlythecommitments relating to thefull As at 31December 6.27 TRADE ANDOTHER PAYABLES CURRENT -OTHER PAYABLES Other payables Deposits received from third parties Deferred income Accruals Cash guarantees received Advance postal financial services Advance payments onorders In million EUR CURRENT TRADE ANDOTHER PAYABLES Other payables Tax payable other thanincome tax Payroll andsocial security payables Trade payables In million EUR NON-CURRENT TRADE ANDOTHER PAYABLES Other payables Trade payables In million EUR 332.6 964.8 137.5 332.6 308.1 311.6 2016 2016 2016 40.3 70.6 84.5 10.5 18.8 10.5 12.5 40.3 0.1 0.0 299.6 838.3 106.6 299.6 345.9 185.7 2015 2015 2015 61.7 78.0 79.5 18.8 10.3 61.7 0.1 6.4 7.1 0.0 251.7 782.6 251.7 314.5 208.1 2014 2014 2014 79.8 69.7 79.1 67.3 18.5 10.5 79.8 0.1 6.4 8.3 0.0
Financial consolidated statements 78 bpost ANNUAL REPORT 2016 another postal operator andthedefinitive resolution of payroll-related issues. The use andreverse in2016were mainlydueto thesettlement of a provision whichwas recognised to cover a litigation with proceedings for whichthetimingremains uncertain. The periodanticipated for thecashoutflows pertaining thereto isdependent ondevelopments in thelength of theunderlying (actual orimminent) litigations between bpost andthird parties. The provision for litigation amounted to EUR 38.0million.Itrepresents theexpected financialoutflow relating tomany different 6.28 PROVISIONS Balance at 1January 2014 In million EUR Additional provisions recognised Provisions used Provisions reversed BALANCE AT 31DECEMBER2014 Non current balance at endof year Current balance at endof year Balance at 1January 2015 Additional provisions recognised Provisions used Provisions reversed BALANCE AT 31DECEMBER2015 Non current balance at endof year Current balance at endof year Balance at 1January 2016 Additional provisions recognised Addition through Business Combinations Provisions used Provisions reversed Other movements BALANCE AT 31DECEMBER2016 Non current balance at endof year Current balance at endof year Litigation (17.0) (0.5) (1.7) (0.7) (4.3) 48.7 48.7 (4.5) 49.3 (0.1) 49.3 38.0 38.0 39.5 48.7 49.3 11.4 31.2 17.5 26.2 23.1 10.2 29.0 5.6 0.1 9.1 Environment (0.2) (0.2) (0.1) (0.0) (0.4) 0.5 0.5 0.9 0.9 0.6 0.8 0.6 0.5 0.9 0.1 0.5 0.0 0.5 0.0 0.5 0.4 0.1 0.0 0.0 0.6 0.0 contracts Onerous Onerous (4.9) (2.3) (0.2) (1.9) (1.3) 12.0 4.8 4.8 2.8 2.8 1.6 1.6 4.8 2.8 0.0 4.3 0.5 0.2 1.5 1.3 0.1 0.0 0.0 0.0 1.0 0.7 Restructuring & other (3.6) (0.6) (3.2) (1.2) 10.8 10.8 (2.8) (2.9) 11.2 (0.0) 11.2 18.5 18.5 10.3 10.8 11.2 10.1 17.4 4.7 1.1 9.7 4.8 1.1 5.7 7.4 1.1 (21.6) Total (9.2) (4.8) (4.1) (7.4) 64.8 64.8 (7.3) 64.2 (0.1) 64.2 58.7 58.7 62.6 64.8 64.2 16.1 37.1 27.7 11.0 29.2 35.0 16.1 31.6 27.1 7.5
Financial consolidated statements 79 bpost ANNUAL REPORT 2016 uncertainty of thecollection of thisfine, bpost didnot recognise the repayment of thisfine, nor any interests tobe recuperated. Competition Authority may stillappealthejudgment before theSupreme Court onpoints of law until April 4,2017.Given the decision imposing a fine of EUR 37.4million.bpost may recover suchfine. This constitutes a contingent asset because theBelgian As described undernote 6.28,theBrussels Court of Appeal onNovember 10,2016, annulledtheBelgianCompetition Authority’s 6.29 CONTINGENT LIABILITIESANDCONTINGENT ASSETS bpost iscurrently involved inthefollowing legal proceedings initiated by intermediaries: combinations whichamounted to EUR 7.4millionin2016. Other provisions amounted to EUR 18.5million.The increase compared to lastyear ismainlydueto additionthrough business The provision ononerous contracts concerns thebest estimate of the costs relating to theclosing down of mailandretail offices. The provision related to environment issues covers soil sanitation. The reversal recorded in2016relates to onespecific site. the Supreme Court until April 4,2017butonlyonpoints of law. decision andbpost may recover theEUR 37.4millionfine. The Belgian Competition Authority may stillappealthejudgment before the decisionbefore theBrussels Court of Appeal. OnNovember 102016,theBrussels Court of Appeal annulledtheAuthority’s EUR 37.4million. While bpost paidthefinein 2013, it contested theBelgian Competition Authority’s findingsandappealed over theJanuary 2010-July2011periodinfringed BelgianandEuropean competition law andimposed a fine of approximately Finally, onDecember 10,2012,theBelgianCompetition Authority concluded that certain aspects of bpost’s pricingpolicy on March 10, 2016.bpost recovered theEUR 2.3millionfinein October 2016. IBPT’s findingsandappealedthedecision. The Brussels Court of Appeal found in favour of bpost andannulledBIPT/IBPT’s decision infringed theBelgianPostal Act andimposed a fine of EUR 2.3million.While bpost paidthefinein2012,it contested theBIPT/ Moreover, onJuly20,2011theBelgianpostal regulator (“BIPT/IBPT”) concluded that certain aspects of bpost’s 2010pricingpolicy All claimsandallegations are contested by bpost. of Appeal. (adopted onJune21,2010),whichbpost hasappealedinAugust 2010andwhichiscurrently pendingbefore theBrussels Court Certain aspects of thecontractual relationship between Link2Bizandbpost are also thesubject of a cease anddesist order in thecontext of legal proceedings initiated by Link2BizInternational NVandpendingbefore theBrussels commercial court. a claim for damages inanalleged (provisional) amount of approximately EUR 28.0million(exclusive of late payment interest) of Appeal; May 3, 2016. PublimailappealedthisdecisiononDecember 16,2016.The appealisnow pendingbefore theBrussels Court in thecontext of legal proceedings initiated by PublimailSA-NV. The Brussels commercial court rejected Publimail’s claimon a claim for damages inanalleged (provisional) amount of approximately EUR 19.9million(exclusive of late payment interest)
Financial consolidated statements 80 bpost ANNUAL REPORT 2016 The funds of theState constitute transactions “on behalfof” andare not includedinthestatement of financialposition. bpost settles andliquidates thefinancialtransactions of government institutions (taxes, VAT, etc.) onbehalf of the State. Funds of theState in order to cover thecurrency riskof a specific debt in USD. bpost entered into a foreign exchange forward withINGto exchange USD 30.0 millionagainst EUR 28.6millionon15March 2017 Currency Swap guarantees for bpost uponsimplerequest. bpost hasanagreement withBelfius, INGandKBC, according to whichthey agree to provide for up to EUR 45.3millionin Proximus andElectrabel. bpost acts asguarantor (EUR 1.2millionguarantee) intheframework of theDoMyMove collaboration agreement between bpost, Guarantees given of salethrough thepostal network. At 31December 2016,merchandise representing a sales value of EUR 1.7millionhadbeenconsigned by partners for thepurpose Goods for resale onconsignment They therefore offer bpost financial certainty duringtheperiod of contractual relations withthecustomer. customers (2015:EUR 38.4million).These guarantees canbecalledinandpaidagainst intheevent of non-payment orbankruptcy. At 31December 2016,bpost benefits from bankguarantees ina sum of EUR 16.6million,issued by banksonbehalfof bpost’s Guarantees received 6.30 RIGHTS ANDCOMMITMENTS
Financial consolidated statements 81 bpost ANNUAL REPORT 2016 with theconcession agreements executed between theCompany andtheBelgianState inNovember 2015. 2015. Consequently, since January 1,2016,theservices of distributionof newspapers andperiodicalsare delivered inaccordance respect to these services hasbeen organised, following whichtheprovision of theservices has beenawarded to bpost inOctober commitment to theEuropean Commission a competitive, transparent andnon-discriminatory market consultation procedure with The 5 previous management contracts remain inplace until conclusion of these new implementing agreements. of suchimplementing agreements muststillbeconcluded. However, theimplementing agreements concluded according to the implementing agreements between bpost, theBelgianState and, where relevant, theother parties orinstitutionsconcerned. Some Tariffs and other terms for theprovision of certain of the services provided underthemanagement contract are determined in service points and650 post offices. interest. Inorder to ensure territorial andsocial cohesion, bpost mustmaintain a retail network consisting of at least1,300postal The SGEIs entrusted to bpost underthemanagement contract are aimedat satisfying certain objectives related to thepublic processing of fines, theprinting andsale of fishingpermitsandthesale of post stamps. post items falling withinthefreepost system, thepayment of attendance fees duringelections, thefinancialandadministrative unaddressed election printed items, thedelivery at a special price of postal items sent by associations, thedelivery of letter of information to thepublic, cooperation withregard to thedelivery of voting paperpackages, thedelivery of addressed and of handheldterminals andtheelectronic IDcard by mailcarriers ontheirround), the“Please Postman” service, thedistribution the postman, especially inrelation to persons wholive aloneorare theleastprivileged (this service isrendered through theuse ad hocSGEIs, whichare SGEIs that by theirnature are provided withoutany recurrence. Ad hocSGEIs includethesocial role of day-to-day SGEIs (i.e., “cash at counter” services andhomedelivery of pensionsandsocial allowances) andtheprovision of certain The SGEIs entrusted to bpost underthemanagement contract includethemaintenance of theretail network, theprovision of the financial compensation paid by theBelgian State. for carrying outtheobligations that bpost assumes inexecution of itsuniversal postal services andSGEIs, and, where applicable, services. The Law of March 21,1991,themanagement contract aswell asconcession agreements set outtherules andconditions bpost provides universal postal services andSGEIs entrusted to itby theBelgianState, covering postal, financial,and other public management contract. bpost provides postal delivery services to a numberof ministries, both oncommercial terms andpursuant to theprovisions of the entities. (“SGEIs”), 15.2%of bpost’s total operating income (revenues) in2016was attributable to theBelgianState andState related The Belgian State isoneof bpost’s largest customers. Includingtheremuneration for theServices of General Economic Interest The BelgianState asa customer regulatory authority, isthemainregulator of thepostal sector inBelgium. The BelgianState is, together withtheEuropean Union,themainlegislator inthepostal sector. The IBPT/BIPT, thenational The BelgianState aspublicauthority The rights of theBelgianState asshareholder of bpost are defined inthe corporate governance policies. it hasthepower to control any decisionat theshareholders’ meeting requiring a simplemajorityvote. The BelgianState, directly andthrough theSFPI/FPIM,ismajorityshareholder of bpost andholds 51.04%of bpost. Accordingly, The BelgianState asa shareholder a) Relations withtheshareholders 6.31 RELATED PARTY TRANSACTIONS 6 December 31,2015,these services were provided underthe5 bpost willfurthermore continue to provide theservices of earlydelivery of newspapers anddistribution of periodicals. Until period of 5years, endingon31December 2020. th management contract. This management contract provides for a continued provision of theaforementioned SGEIs for a new th management contract expired onDecember 31,2015.OnDecember 3,2015,bpost andtheBelgian State have signedthe th management contract. Inaccordance withtheBelgianState’s
Financial consolidated statements 82 bpost ANNUAL REPORT 2016 income. Excluding theSGEI remuneration, theservices provided to State related customers donot exceed 5%of bpost’s total operating EUR 5.4million withrespect to theSGEI remuneration to theBelgianState. 31, 2016amounted to EUR 89.8million(EUR79.9onDecember 31,2015).bpost hasalso provided a bankguarantee of Including thedoubtful debtor, theoutstandingamount owned by The BelgianState for theSGEI remuneration onDecember reserved itsrights andbooked anequivalent amount of doubtful debt whichisstilloutstandingperendof December 2016. In 2015theBelgianState unilaterally decidedto reduce thecompensation for 2015by EUR 6.5million.Nevertheless, bpost has distributed volumes. This compensation issubject to further ex-post verifications. The compensation for thedistributionof newspapers andperiodicalsconsists of a flat amount anda variable fee based upon provider of operating withtheSGEI obligation andthenet cost for thesameprovider of operating withoutthat obligation. methodology. This methodology provides that compensation shallbebased onthedifference between thenet cost for the The compensation of SGEIs (except for thedistributionof newspapers andperiodicals) isbased ona net avoided cost (“NAC”) for 2016(EUR 287.8millionin2015). The compensation granted to bpost inrespect of theSGEIs isbeingdisclosed insection 6.8andamounted to EUR 264.9million January 12,1970regulating thepostal service. Decree of April 30, 2007regulating postal financial services andthe Royal Decree of April 14,2013amendingthe Royal Decree of public entities pursuant to theRoyal Decree of January 12,1970regulating thepostal service asamendedpursuant to theRoyal postmen duringtheirrounds). bpost also provides cashaccount management services to theBelgianState andcertain other Certain limited publicservices are provided by bpost onlypursuant to theLaw of March 21,1991(e.g., delivery of stamps by distribution of newspapers andperiodicalsunderthestate aidrules (1) bpost bankdoes not perform any asset management activities norany private bankingorcommercial lending. insurance policies, whichprovide some level of protection for theassets of the policy holder. As aninsurance intermediary, bpost bank also offers annuityandpensionproducts, including “branch 21”and “branch 23”life mortgages credits. Asof December 31,2016,bpost bankhadapproximately EUR 1,020.9million inloansonitsbalance sheet. bpost bank’s customer lendingactivity consists of granting oroffering overdraft facilities to customers, consumer credits and tellers orATMs. bpost also offers theMasterCard bpost bankcredit card. include basicservices suchasdebitcards, access to payment andmoney transfer services andcashwithdrawals at post office bpost bankhadapproximately 764,500 current accounts and 980,100savings accounts asof December 31,2016.Allaccounts health insurances, andbranch2123life insurances provided by AG Insurance. accounts, certificate of deposits andfunds orstructured products provided by BNP Paribas Fortis, respectively accident and/or The mainbankingandinsurance products distributed by bpost bank through bpost are current accounts, saving accounts, term Several agreements andarrangements exist inthisrespect amongthethree companies asdetailed below. bpost, initsqualityof service provider, furthermore provides back office activities and other ancillary services tobpost bank. As a registered banking andinsurance intermediary, bpost distributes bankingandinsurance products onbehalfof bpost bank. BNP Paribas Fortis owning theremaining 50%. bpost bankisanassociate of bpost. bpost bank’s other shareholder isBNPParibas Fortis. bpost owns 50%of bpost bank,with that supports andconnects localmerchants, authorities andcustomers. Citie isanassociate of bpost. Belfius, bpost andProximus eachhold33.3% of theshares of Citie. Citieoperates a digitalplatform c) Relations with associates consolidated financialstatements andare not disclosed inthisnote. Balances andtransactions between bpost anditssubsidiaries, whichare related parties of bpost, have beeneliminated withinthe in note 6.32. A listof allsubsidiaries (andequity-accounted companies), together witha brief description of theirbusiness activities, isprovided b) Consolidated companies On June3,2016,theEuropean Commission approved both the6 procedural grounds. The outcome of thisprocedure isinherently uncertain at this stage. In October 2016,theFlemishFederation of Press Vendors (‘Vlaamse Federatie van Persverkopers’) sought theannulment of theEuropean Commission’s clearance decision before theGeneral Court on th management contract andtheconcession agreements on (1) .
Financial consolidated statements 83 bpost ANNUAL REPORT 2016 (1) Someof the membersof theGroup Executive Management are also memberof theManagement Committee, which onlyacts for thepurposes provided inthe1991Law. Executive Management For bpost, key management personnel iscomposed of allmembersof theBoard of Directors andthemembersof theGroup Key management personnel are those persons with authorityandresponsibility for thestrategic orientation of thecompany. d) Compensation of key management In 2016bpost received nodividendfrom bpost bank(EUR 5.0millionin2015). Dividend intended to constitute theworking capitalenablingbpost to conduct business onbehalfof bpost bank. by bpost. This working capital remains available to bpost throughout theterm of thebankingpartnership agreement. Itis bpost bankhasplaced a working capitalof EUR 12.0millionat thedisposal of bpost withoutguarantee orpayment of interest Working capital EUR 10.2million (2015:million). related to thecommission paidby bpost bank.The amount owned by bpost bankto bpost onDecember 31,2016amounted to banking andfinancialproducts amounted to EUR 192.4millionin2016(2015:205.1million),of whicha significant amount is management andthesales of financial/insurance products realised by the retail network of bpost. Total revenues related to of bankingandinsurance products depends amongothers ontheinterest margin realised by bpost bank,the assets under insurance products andfor theperformance of certain back-office activities. Theamount ofthe commission forthedistribution bpost bankpays bpost a commission determined inaccordance withmarket conditions for thedistributionof bankingand commissions ifcertain sales objectives are achieved. The distributionagreement provides for anaccess fee, commissions onalltheinsurance products sold by bpost andadditional renegotiated andsignedonDecember 17,2014. The cooperation between AG Insurance, bpost bankandbpost isset outinaninsurance distributionagreement whichhasbeen The insurance products of AG Insurance are offered andmarketed viabpost bankusingthedistributionnetwork of bpost. (iii) bpost willcontinue to provide back office activities and otherancillary services tobpost bank. partnership agreement, theexclusive distributor of bpost bank’s products andservices through itsnetwork of post offices; and bank, whichwillcontinue to beanassociate of bpost; (ii)bpost willremain, subject to certain exceptions provided for inthe The framework agreement provides insubstance that (i)bpost andBNPParibas Fortis willcontinue to cooperate through bpost agreement whichhasbeenrenegotiated andsignedonDecember 13,2013. The cooperation between bpost bankandBNPParibas Fortis withrespect to bpost bankisset outina bankingpartnership Banking andinsurance partnership agreement members of theManagement Committee andtheGroup Executive Management andcanbebroken down asfollows: For theyear endedDecember 31,2016,a global remuneration of EUR 3.5million(2015:2.9million)was paidto CEOandthe (2015: EUR 0.38million). In 2016,total remuneration paidto themembersof theBoard of Directors (excluding theCEO) amounted to EUR 0.33million and a company car. contribution andvarious other components suchasdeath inservice, disabilityandmedicalcoverage, representation allowances The remuneration package of theCEOconsists of a base salary, a short-term ontarget variable remuneration, a pension entitled to anattendance fee perattendance to theCommittees established by theBoard of Directors. The members of theBoard of Directors, withexception of theCEO, are entitled to a fixed annual remuneration. They are also The remuneration of themembersof theBoard of Directors was decidedby theShareholders’ Meeting of April 25,2000. remuneration report. A more detailed overview of the compensation of key management of bpost andbpost’s remuneration policy isincludedinthe for exercise in2015or2016. Group Executive Management orexpired in2015or2016andnooptions underprevious stock option planswere stilloutstanding No shares, stock options orother rights to awards shares were granted to orexercised by theCEOorother membersof the post-employments benefits (pension, death in service, disabilityandmedical coverage) EUR 0.2million(2015:million). EUR 3,3million (2015:2.7million) short-term employee benefits (base salary, variable remuneration, leasing costs for company carand representation allowances) (1) .
Financial consolidated statements 84 bpost ANNUAL REPORT 2016 The business activities of themainsubsidiaries canbedescribed asfollows: 6.32 GROUP COMPANIES services for clients inCanada andtheUS. 9517154 Canada Ltd. andApple Express Courier Inc. business consists of thelastmiledelivery, transportation andfulfillment (3PL) warehousing, transport &distribution. customer service for warehousing, fulfillment anddistributingproducts in Australia. Itsbusiness consists of third party logistics Freight DistributionManagement Systems PtyLtd. andFDM Warehousing Pty Ltd. are specialised inproviding a personalised Australia, mainlyfor UScustomers. Landmark Global(Australia) DistributionPtyLtd. offers international parcels delivery services to Australia andfulfillment in for goods entering theUS. Heathrow makes itideallysuited to service USto UKairliftimports. LandmarkTrade Services USA, Inc. provides import services Landmark Trade Services (UK)Ltd. provides import services for goods entering theUK.Itslocation right next to London countries. their products into Europe. This includes both advice oncustoms/VAT set-up andonproduct registration inthevarious European BV This includes customs clearance services, warehousing, pick &pack andlastmiledelivery. LandmarkTrade Services (Netherlands) Landmark Global(Netherlands) BV mainactivities are import services for UScustomers looking to sell theirproducts inEurope. partner for direct selling companies across Western, Central andEastern Europe. Landmark Global(PL)Spzo.o. mainactivities are fulfillment, logistics anddistribution.Itoperates aslogistics anddistribution client base. States for itse-commerce customers. Over thelast years ithasexpanded inoffering various logistics solutions to its existing from U.S.-based e-tailers into Canada, Europa andAustralia. It also offers various fulfillment services inlocations intheUnited parcels consolidators, active intheUnited States and Canada. They are mainlyfocused onthedistributionof e-commerce parcels Landmark GlobalInc. based intheUSA andtheCanada-based LandmarkTrade Services Ltd. company are leadinginternational in Beijing, Shanghai andShenzhen. e-tailers andconsolidators, witha strong focus ondelivery of parcels to European andother globalbuyers. Itisprimarilyactive Kong Ltd. andisestablished inBeijing(China). Itoffers a fullrange of cross-border parcel distribution services to theChinese for delivery inEurope andother regions. bpost International Logistics (Beijing) Co., Ltd. isa company affiliate to bpost Hong sectors. Similarto MSI,they are mainlyfocused ondirectly collecting parcels from overseas e-commerce companies andbusiness and e-commerce fulfillment. Their customers are spread across thebanking, insurance, asset management, publishingandprinting transforming bpost HongKong to provide a fullrange of delivery andlogistics solutions, includingcross-border mailandparcels Hong Kong through bpost HongKong Ltd. These companies originally focused ondelivery of financialdocuments, butbpost is Through LandmarkGlobal(UK)Ltd., bpost isactive inAsia,operating inSingapore through bpost Singapore Pte Ltd. andin entities around theworld. services andx-ray security screening services. LandmarkGlobal(UK)acts asaninboundandoutbound gateway for other bpost in UK.Based nearto Heathrow airport, LandmarkGlobal(UK)hasa customs bondedfacility enablingto offer customs clearance Landmark Global(UK)Ltd. isa UKbased mail,parcel andtransport company providing globallogistics solutions to themarket distribution products. MSIhasitsmainprocessing center located inVirginia (nearWashington DC) anda smallfacility inChicago. Mail Services Incorporated (MSI)based intheUSA, isa cross-border mailconsolidator offering mainlyinternational outbound CityDepot provides citydistributionservices. Certipost provides document security, digitalcertification andBelgiane-IDactivities. (e.g. European License Plate). backup andpeaksolutions for companies having theirown print shop. Furthermore Speos offers dedicated end-to-end solutions (black andwhite orfullcolor) andenclosing, electronic distribution(email, zoomit, webservices) andarchiving. Speos also offers administrative documents, suchasinvoices, bankstatements andsalary slips. Services includedocument generation, printing Speos Belgiummanages outgoing document flows for itscustomers, specializing intheoutsourcing of financialand Euro-Sprinters operates bpost’s special logistics network, mainlyincludingcourier services. isa spin-off company of LandmarkGlobal(Netherlands) BV which focuses onadvising new UScustomers onhow to enter
Financial consolidated statements 85 bpost ANNUAL REPORT 2016 operated underthePress Shop, Relay, Hello!andHubizbrands. Ubiway Retail isa significant player inthenational press, tobacco and convenience retail market witha network of shops mostly services solutions to points of sales whereas Burnonville distributes non-press andnon-food (impulse) products to retailers. under the Kariboo!brand. Convenience distributionrelates primarilyto Alvadis, whichprovides prepaid cards andelectronic such as3PLlogistics (supplychainservices) andanopenaccess network of parcel pick-up anddelivery points inBelgium titles distributed. Ubiway Group also offers non-press logistics services related to parcels and value-added e-commerce solutions, a prominent player intheBelgianpress distributionmarket witha large numberof points of saleserviced anda large numberof The activities of Ubiway Group relate to press logistics, non-press logistics andconvenience &proximity retail.AMP is The “open” network allows any customer to use any free locker capacitythroughout deBuren’s network. (including refrigerated ones), whichare accessible 24/7andcanbemanaged by anappthat allows a multitudeof services. de Buren Group operates an“open” network of parcel lockers walls intheNetherlands. This network consists of secured lockers the receiver’s phonegeo-tracking to deliver parcels at hispreferred location andtime. Parcify isa Belgianstart-up company, aimingto reduce thenumberof missed parcel deliveries viaitssmartphone appwhichuses
Financial consolidated statements 86 bpost ANNUAL REPORT 2016 (***) Merged into Mail Services Inc. (**) Liquidated duringtheyear 2016. (*) Fully consolidated. Deltamedia SA-NV Certipost SA-NV Landmark Global(Belgium)SA-NV Alteris SA-NV NAME TrakPak Ltd. bpost bankNV-bpost banqueSA NAME CityDepot SA-NV eXbo SA-NV Euro-Sprinters SA-NV Landmark Global,Inc. Citie SA-NV bpost International U.S. Inc. bpost U.S. HoldingsInc. bpost International Logistics (Beijing) Co., Ltd. bpost Singapore Pte. Ltd. bpost HongKong Ltd. Landmark Global(UK)Ltd. 2198230 Ontario Inc. Mail Services Inc. Speos BelgiumSA-NV Landmark Global(PL)Sp. zo.o. Parcify NULEVERBAAR.NL BV DRAGSTRA AUTOMATISERING BV DE BURENTECHNIEKBV DE BURENAFHAALCENTRUM BV DE BURENNEDERLANDBV DE BURENINTERNATIONAAL BV KARIBOO! SA-NV UBIWAY RETAIL SA-NV DISTRIDIJLE SA-NV Internationale Boekhandel DistributiedienstSA-NV DISTRILIM-LPA SA-NV UBIWAY SERVICES SA-NV DISTRISUD-BELLENS SA-NV UBIWAY SA-NV ALVADIS SA-NV IMPORT LUX BURNONVILLE BURNONVILLE SA-NV AMP SA-NV FDM Warehousing Pty, Ltd. Freight DistributionManagement Systems Pty, Ltd. 9517154 Canada, Ltd. Apple Express Courier Inc. Landmark Trade Services USA, Inc. Landmark Trade Services (UK)Ltd. Landmark Trade Services (Netherlands) BV Landmark Global(Netherlands) BV Landmark Global(Australia) DistributionPtyLtd. Landmark Trade Services, Ltd. (*) (**) (*) (**) (*) (*) (*) (*) (***) (*) (*) (*) (*) (*) (*) (*) (*) (*) Share of voting rights Share of voting rights 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 33.3% 51.0% 99.1% 51.0% 51.0% 51.0% 51.0% 51.0% 51.0% 75.5% 75.5% 75.5% 75.5% 75.5% 75.5% 75.5% 2016 2016 in% terms in% terms 50% - - - 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 48.0% 51.0% 51.0% 51.0% 51.0% 51.0% 51.0% 51.0% 2015 2015 50% 50% ------incorporation incorporation Netherlands Netherlands Netherlands Netherlands Netherlands Netherlands Netherlands Netherlands Hong Kong Luxemburg Country of Country of Singapore Australia Australia Australia Belgium Belgium Belgium Belgium Belgium Belgium Belgium Belgium Belgium Belgium Belgium Belgium Belgium Belgium Belgium Belgium Belgium Belgium Belgium Belgium Belgium Belgium Canada Canada Canada Poland China USA USA USA USA USA USA UK UK UK BE475.396.406 BE889.142.877 BE474.218.449 BE456.038.471 BE472.598.153 BE447.703.597 BE424.368.565 BE665.683.284 BE427.627.864 BE635.738.988 BE627.630.877 BE502.436.442 BE403.517.327 BE456.569.694 BE407.203.327 BE463.691.276 BE438.281.533 BE404.228.593 BE474.686.326 BE454.455.688 BE440.559.746 BE403.482.188 VAT no. VAT no.
Financial consolidated statements 87 bpost ANNUAL REPORT 2016 bpost group structure asper31December 2016 99.90% 92.60% 75.50% 75.50% 99.99% 99.99% 99.97% 99.07% 33.33% 100% 100% 100% 100% 100% 100% 100% 100% 100% 51% 51% 50% bpost SA-NV (1) Equity method. 7.40% bpost USHoldingsInc. LANDMARK TRADE SERVICES Ltd. LANDMARK GLOBAL Inc. CERTIPOST SA-NV EURO-SPRINTERS SA-NV ALTERIS SA-NV EXBO SA-NV SPEOS BELGIUM SA-NV BPOST SINGAPORE Pte Ltd. BPOST HONGKONG Ltd. LANDMARK GLOBAL UKLtd. LANDMARK GLOBAL (PL)Sp. zo.o. PARCIFY SA-NV CITYDEPOT SA-NV LANDMARK GLOBAL (Belgium)SA-NV CITIE SA-NV (*) BPOST BANK NV-BPOST BANQUE SA (*) DE BURENNEDERLANDBV DE BURENINTERNATIONAAL BV UBIWAY SA-NV AMP SA-NV FDM Warehousing PtyLtd. Freight DistributionManagement Systems PtyLtd. 9517154 Canada Ltd. Mail Services Inc. 100% 0.10% 100% 100% 100%
0.01% 0.03% 0.01% 100% 100% 100% 98.39% 99.98% 99.75% 99.99% 98.98% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 99% BPOST INTERNATIONAL LOGISTICS (Beijing) Co. Ltd. NULEVERBAAR.NL BV DRAGSTRA AUTOMATISERING BV DE BURENTECHNIEKBV DE BURENAFHAALCENTRUM BV KARIBOO! SA-NV UBIWAY RETAIL SA-NV DISTRIDIJLE SA-NV Internationale Boekhandel DistributiedienstSA-NV DISTRILIM-LPA SA-NV UBIWAY SERVICES SA-NV DISTRISUD-BELLENS SA-NV ALVADIS SA-NV IMPORT LUX BURNONVILLE BURNONVILLE SA-NV 2198230 Ontario Inc. Apple Express Courier Inc. LANDMARK TRADE SERVICES (Netherlands) BV LANDMARK GLOBAL (Netherlands) BV LANDMARK TRADE SERVICES USA Inc. LANDMARK TRADE SERVICES UKLtd. LANDMARK GLOBAL (Australia) DistributionPtyLtd. 1.00% 0.02% 0.02% 1.61% 0.25% 0.01%
Financial consolidated statements 88 bpost ANNUAL REPORT 2016 No significant events impacting bpost’s financial position have been observed after thestatement offinancial position date. POSITION DATE 6.33 EVENTS AFTERTHESTATEMENT OFFINANCIAL
Financial consolidated statements 89 bpost ANNUAL REPORT 2016 As at 31December Balance sheet of bpost SA-NV (summary) bpost’s website. The fullversion of theannualaccounts isfiledwiththeNational Bank of Belgiumandare also available free of charge onthe auditor issued anunqualifiedopiniononthestatutory accounts of bpost SA-NV as of and for the year ended December 2016. This section contains a summary version of thestatutory (non-consolidated) annualaccounts of bpost SA-NV. The statutory Summary of thefinancialstatements of bpost SA-NV TOTAL LIABILITIES Accrued charges and deferred income Other debts Income taxpayable Social debts payable Trade andother payables Current liabilities Long-term debts Non-current liabilities Other liabilities andcharges Provision for repairs andmaintenance Pension related provisions Provisions Retained earnings Reserves Reevaluation surpluses Issued capital Equity Equity andliabilities TOTAL ASSETS Deferred charges andaccrued income Cash andcashequivalents Trade andother receivables Inventories Current assets Financial assets Tangible assets Intangible assets Non-current assets Assets In million EUR 1,780.8 1,780.8 558.4 951.2 188.7 896.6 884.2 200.8 148.2 211.7 352.1 162.9 143.5 364.0 446.0 421.8 547.2 330.3 2016 82.5 82.5 38.3 24.4 50.8 19.2 1.4 0.1 9.6 6.7 1,787.8 1,787.8 1,012.6 1,026.3 511.7 196.9 761.5 157.2 216.1 394.7 168.1 364.0 625.4 370.1 413.4 337.4 195.8 2015 66.5 96.8 48.7 27.4 50.8 19.3 11.4 10.7 66.5 1.4 0.1
Financial consolidated statements 90 bpost ANNUAL REPORT 2016 For theyear ended31December Income statement of bpost SA-NV (summary) EARNINGS AFTERTAXES Income taxexpense PROFIT BEFORE TAX Extraordinary gains/losses PROFIT FROM ORDINARY ACTIVITIES Financial gains/losses PROFIT FROM OPERATING ACTIVITIES TOTAL OPERATING EXPENSES Depreciation andamortisation Provisions Other operating expenses Services andother goods Payroll costs Materials cost TOTAL OPERATING INCOME Other operating income Turnover In million EUR 1,710.6 2,151.3 1,068.8 2,115.1 308.7 441.3 449.6 440.7 571.7 132.6 2016 (8.3) (8.2) 15.4 56.9 36.2 8.9 6.1 1,807.3 2,224.3 1,161.0 2.168.7 287.7 431.8 434.0 417.0 562.7 144.1 2015 (2.2) 15.7 17.0 59.5 55.5 0.3 8.2
Financial consolidated statements
ANNUAL REPORT 2016 REPORT ANNUAL Auditor’s report report Auditor’s bpost
Report of the Joint Auditors – Members of the Belgian Institute of Registered Auditors to the General Meeting of bpost SA de droit public / bpost NV van publiek recht on the consolidated financial statements for the year ended 31 December, 2016.
In accordance with the legal requirements, designing, implementing and maintaining the Joint Auditors – Members of the Belgian internal control relevant to the preparation Institute of Registered Auditors (“the Joint of the Consolidated Financial Statements Auditors”) report to you on the performance that give a true and fair view and that are of its mandate. This report includes our free from material misstatement, whether opinion on the consolidated statement of the due to fraud or error; selecting and applying financial position as at 31 December, 2016, appropriate accounting policies; and making the consolidated statement of comprehensive accounting estimates that are reasonable in income, the consolidated statement of the given circumstances. changes in equity and the consolidated statement of cash flows for the year ended Responsibility of the Joint Auditors – 31 December, 2016 and the notes (all Members of the Belgian Institute of elements together “the Consolidated Financial Statements”), and includes as well our report Registered Auditors on other legal and regulatory requirements. Our responsibility is to express an opinion on these Consolidated Financial Statements based on our audit. We conducted our audit Report on the Consolidated in accordance with International Standards Financial Statements - on Auditing (“ISAs”) as they were adopted Unqualified opinion in Belgium. Those standards require that We have audited the Consolidated Financial we comply with the ethical requirements Statements of bpost SA de droit public / and plan and perform the audit to obtain bpost NV van publiek recht (“the Company”) reasonable assurance about whether the and its subsidiaries (together “the Group”) Consolidated Financial Statements are free as of and for the year ended 31 December, from material misstatement. 2016, prepared in accordance with the International Financial Reporting Standards An audit involves performing procedures to as adopted by the European Union, which obtain audit evidence about the amounts show a consolidated balance sheet total and disclosures in the Consolidated Financial of EUR 2,290.3 million and of which the Statements. The procedures selected depend consolidated income statement shows a profit on the judgment of the Joint Auditors, for the year of EUR 346.2 million. including the assessment of the risks of material misstatement of the Consolidated Responsibility of the Board of Directors Financial Statements, whether due to fraud or error. In making those risk assessments, for the preparation of the Consolidated the Joint Auditors considers internal control Financial Statements relevant to the Group’s preparation and The Board of Directors is responsible for the presentation of the Consolidated Financial preparation of the Consolidated Financial Statements that give a true and fair view, Statements that give a true and fair view in in order to design audit procedures that are accordance with the International Financial appropriate in the circumstances, but not for Reporting Standards as adopted by the the purpose of expressing an opinion on the European Union. This responsibility includes: effectiveness of the Group’s internal control.
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ANNUAL REPORT 2016 REPORT ANNUAL Auditor’s report Auditor’s bpost
An audit also includes evaluating the Report on other legal and appropriateness of accounting policies used, the reasonableness of accounting estimates regulatory requirements made by the Board of Directors, as well as The Board of Directors is responsible for the evaluating the overall presentation of the preparation and the content of the Board of Consolidated Financial Statements. Director’s report on the Consolidated Financial Statements, in accordance with article 119 of We have obtained from the Board of Directors the Belgian Company Code. and the Group’s officials the explanations and information necessary for performing our audit In the context of our mandate and in and we believe that the audit evidence we have accordance with the additional Belgian standard obtained is sufficient and appropriate to provide to the ISA’s applicable in Belgium, it is our a basis for our opinion. responsibility to verify, in all material respects, compliance with certain legal and regulatory Unqualified opinion requirements. On this basis, we make the following additional statement, which does In our opinion, the Consolidated Financial not modify the scope of our opinion on the Statements of the Group as at 31 December, Consolidated Financial Statements. 2016 give a true and fair view of the consolidated net equity and financial position, The Board of Director’s report to the as well as its consolidated results and its Consolidated Financial Statements includes, consolidated cash flows for the year then both in form and in substance, the information ended in accordance with the International required by law, is consistent with the Financial Reporting Standards as adopted by Consolidated Financial Statements and does the European Union. not contain any material inconsistencies with the information that we became aware of during the performance of our mandate.
Brussels, 8 March 2017 The Joint Auditors – Members of the Belgian Institute of Registered Auditors
Ernst & Young PVMD Bedrijfsrevisoren BCVBA Bedrijfsrevisoren BCVBA Represented by Represented by
Eric Golenvaux Caroline Baert Partner* Partner*
*Acting on behalf of BVBA.
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Corporate Governance Statement governance Corporate bpost
Reference Code and introduction In this Corporate Governance Statement, bpost outlines the key aspects of its corporate governance framework. This framework is consistent with the rules and principles set out in the Law of March 21, 1991 on the reform of certain economic public companies, as amended from time to time (the “1991 Law”), the Articles of Association and the Corporate Governance Charter. General Belgian company law is applicable to bpost, a limited liability company under public law, unless otherwise stipulated in the 1991 Law or other Belgian laws or regulations. On January 12, 2016, the law of December 16, 2015, amending the 1991 Law (the “December 2015 Law”) entered into force. This law modernises the 1991 Law, in particular by (i) relaxing organisational constraints for certain public companies, including bpost, in order to create a more level playing field with other (private) companies, (ii) aligning corporate governance rules for listed public companies with those for listed (private) companies in Belgium and (iii) defining a framework allowing the Belgian government to decrease its participation below 50% plus one share, and the consequences thereof. Pursuant to the December 2015 Law, bpost will no longer be an autonomous public sector company subject to the 1991 Law if the Belgian State’s participation in bpost’s capital were to drop below 50% plus one share. In this case, bpost would become entirely subject to the general Belgian company law. The latest version of bpost’s Articles of Association was adopted at the Shareholders’ Meeting of May 11, 2016 and has been approved by the Royal Decree of September 1, 2016. This Royal Decree was published in the Belgian State Gazette on September 19, 2016 and has been in effect since September 29, 2016. Any changes to the Articles of Association, approved by the shareholders at bpost’s Shareholders’ Meeting (in accordance with Article 558 of the Belgian Companies Code), must also be approved by a Royal Decree following a debate in the Council of Ministers. The main characteristics of bpost’s governance model are the following: the Board of Directors establishes general policy orientations and the strategy of bpost and supervises operational management; the Board of Directors has established a Strategic Committee, an Audit Committee and a Remuneration and Nomination Committee to assist and make recommendations to the Board of Directors; the ad hoc committee, comprises all independent directors of the Board of Directors and intervenes when the procedure prescribed by Article 524 of the Belgian Companies Code, as incorporated in bpost’s Corporate Governance Charter, is triggered; the CEO is responsible for the operational management. The Board of Directors has delegated to the CEO the powers of day-to-day management; the Group Executive Management assists the CEO with the operational management(*); there is a clear division of responsibilities between the Board of Directors and CEO. The Board of Directors has adopted the Corporate Governance Charter on May 27, 2013. The Charter has been effective since June 25, 2013 and was last amended by a decision of the Board of Directors of May 2, 2016, incorporating the changes brought by the December 2015 Law and the Articles of Association as adopted by the shareholders at the Shareholders’ Meeting of May 11, 2016.
Reference Code bpost is committed to a high standard of corporate governance. It relies on the Belgian Code on Corporate Governance of March 12, 2009 (the “Corporate Governance Code”) as a reference code. The Corporate Governance Code is available on the website of the Corporate Governance Committee (www.corporategovernancecommittee.be). The Corporate Governance Code is based on a “comply or explain” approach. Belgian listed companies should follow the Corporate Governance Code, but may deviate from its provisions provided they disclose the justification for any such deviation. To the extent permitted under the legal framework applicable to bpost, and in particular the 1991 Law, bpost, as an autonomous public sector enterprise, also aims to comply with most of the OECD Guidelines on Corporate Governance of State-owned Enterprises laid down in the OECD Code.
(*) Some of the members of the Group Executive Management are also member of the Management Committee, which only acts for the purposes provided in the 1991 Law.
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Deviations from the Corporate Governance Code The Board of Directors intends to comply with the Corporate Governance Code. However, due to rules imposed on bpost by the 1991 Law (before entry into force of the December 2015 Law), bpost was not able to comply with provisions 4.2, 4.6, 4.7 and 6.3 of the Corporate Governance Code. Under the former Article 18, §2 juncto Article 148bis/3 of the 1991 Law, it was the Belgian State that had to directly appoint a certain number of directors. Under provision 4.2, the Board of Directors needs to propose directors for appointment by the shareholders at the Shareholders’ Meeting. Since the entry into force of the December 2015 Law on January 12, 2016, all directors are appointed by decision of the Shareholders’ Meeting upon proposal by the Board of Directors (Article 54/6, 4° of the 1991 Law). Therefore, some directors appointed before January 12, 2016 have been appointed by the Belgian State, while as from January 12, 2016, all (new) directors will be appointed by decision of the Shareholders’ Meeting. Under the former Article 18, §5 and Article 20, §2 of the 1991 Law, the Chairperson of the Board of Directors and the CEO had to be appointed by the Belgian State. Under provisions 4.7 and 6.3, it is the Board of Directors that should appoint the Chairperson of the Board of Directors and the CEO. Since the entry into force of the December 2015 Law on January 12, 2016, the Board of Directors appoints the Chairperson of the Board of Directors and the CEO (Article 54/6, 4° and 5° of the 1991 Law). Consequently, in the future, and without prejudice to the current mandates of the Chairperson and the CEO, provision 4.7 and 6.3 shall fully apply. Under the former Article 18, §3 and Article 20, §2 (first sentence) of the 1991 Law, bpost directors were appointed for a term of six years. Under provision 4.6, the term cannot exceed four years. Since the entry into force on May 15, 2014 of the Law of April 19, 2014 amending the 1991 Law, directors are appointed for four years (Article 148bis/1, §5 of the 1991 Law). Therefore, the directors appointed before May 15, 2014 were appointed for six years. Directors appointed after May 15, 2014 have been appointed to serve a term of four years.
Board of Directors Composition Until the December 2015 Law entered into force on January 12, 2016, the CEO and up to six directors, including the Chairperson of the Board of Directors, were appointed by Royal Decree debated within the Council of Ministers. The other directors were recommended by the Board of Directors following advice of the Remuneration and Nomination Committee and then elected by an electoral college, which consisted out of all bpost’s shareholders except for Public Institutions (i.e., Belgian public institutions or entities within the meaning of Article 42 of the 1991 Law: the Belgian State and its affiliated entities, including SFPI/FPIM) (the “Electoral College”). The directors appointed by the Belgian State could only be removed by a Royal Decree debated in the Council of Ministers. The other directors could be removed at any time by a majority of the votes cast by the Electoral College. Since the December 2015 Law entered into force on January 12, 2016, the composition of the Board of Directors is now governed as described below. bpost’s Articles of Association provide that the there will be a maximum of 12 directors on the Board of Directors, including the CEO. The Board of Directors shall only comprise non-executive directors, except for the CEO. Each director will be appointed by the shareholders at the Shareholders’ Meeting for a renewable term of four years (without prejudice to the restrictions for independent directors, as defined in Article 526ter, 2° of the Companies Code). The Board of Directors will solely nominate candidates that have been nominated by the Remuneration and Nomination committee. Each shareholder holding at least 15% of bpost’s shares has the right to nominate directors for appointment pro rata its shareholding. Directors nominated by a shareholder can be independent, provided they fulfill the criteria laid down in article 526ter of the Companies Code, but they must not be independent. Except for the CEO and directors nominated by a shareholder, all directors have to be independent directors. In addition, the Board of Directors must at all times count at least three independent directors, fulfilling the criteria laid down in article 526ter of the Belgian Companies Code.
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All directors (including the directors previously appointed by the Belgian State) can be removed by decision of the Shareholders’ Meeting. It was explicitly provided in the December 2015 Law that its entry into force does not terminate the current director mandates. These mandates were continued and will expire as initially provided, notwithstanding the possibility for the shareholders to end these mandates at the Shareholders’ Meeting in accordance with the Belgian Companies Code. Should any of the director mandates become vacant, the remaining directors have the right, in accordance with Article 519 of the Belgian Companies Code, to temporarily fill such vacancy until a final appointment takes place in accordance with the abovementioned rules. In addition, it is provided in the Corporate Governance Charter, as amended by a decision of the Board of Directors of May 2, 2016, that the term of office of a director will end immediately after the annual Shareholders’ Meeting following his/her 70th birthday, unless the Board of Directors approves otherwise in exceptional cases. Directors are expected to resign from office at such annual Shareholders’ Meeting. The composition of the Board of Directors reflects the gender representation requirements set forth in Article 18, §2bis of the 1991 Law. bpost also intends to comply with these gender representation requirements in 2017. bpost further takes into account the gender requirements laid down in Article 518bis of the Belgian Companies Code. The composition of the Board of Directors reflects the language requirements set forth in Article 16 and 148bis/1 of the 1991 Law. The Board of Directors was, per December 31, 2016, composed of the following 12 members:
Presence at Director Mandate Board meetings Name Position since expires in 2016 Françoise Masai(1)(2) Non-Executive Chairperson 2014 2018 (5) 18/18 of the Board of Directors Koen Van Gerven(1)(3) CEO and Director 2014 2020 18/18 Arthur Goethals(1) Non-Executive Director 2006 2018 (5) 13/18 Luc Lallemand(1) Non-Executive Director 2002 2018 13/18 Bernadette Lambrechts(1) Non-Executive Director 2014 2020 16/18 Laurent Levaux(1) Non-Executive Director 2012 2018 11/18 Caroline Ven(1) Non-Executive Director 2012 2018 15/18 Michael Stone(4) Independent Director 2014 2018 15/18 Ray Stewart(4) Independent Director 2014 2018 17/18 François Cornelis Independent Director 2013 2019 16/18 Sophie Dutordoir Independent Director 2013 2019 (5) 16/18 Bruno Holthof Independent Director 2013 2019 (5) 15/18
(1) Appointed by the Belgian State. (2) Françoise Masai was appointed as from June 23, 2014 by Royal Decree dated April 25, 2014. (3) Appointed as CEO by Royal Decree dated February 26, 2014. (4) Appointed by the general meeting of all shareholders of bpost other than Public Institutions held on September 22, 2014. (5) This director has informed bpost that he/she will not complete the full tenure of his/her mandate as described below.
Françoise Masai and Arthur Goethals have reached the age limit of 70 in 2016. Both directors have indicated that they do not wish to complete the full tenure of their mandate and that they will resign from office as from the Shareholders’ Meeting of May 10, 2017, in accordance with Article 3.2.5 of the Corporate Governance Charter. Two independent directors have resigned from the Board of Directors. Sophie Dutordoir resigned on January 15, 2017. Her resignation became effective on February 28, 2017. Bruno Holthof resigned on January 3, 2017. His resignation will become effective as of the Shareholders’ Meeting of May 10, 2017. The Remuneration and Nomination Committee has launched a selection process for the nomination of three independent directors and one Dutch speaking Board member nominated by the majority shareholder. The Board of Directors intends to recommend candidates, nominated by the Remuneration and Nomination Committee, for appointment to the shareholders at the annual Shareholders’ Meeting of May 10, 2017 to replace the directors that have resigned or will resign.
95 statement ANNUAL REPORT 2016 REPORT ANNUAL Corporate governance governance Corporate bpost
Powers and functioning Powers and responsibilities of the Board of Directors The Board of Directors is vested with the power to perform all acts that are necessary or useful for the realisation of bpost’s purpose, except for those actions that are specifically reserved by law or the Articles of Association to the shareholders at the Shareholders’ Meeting or other management bodies. In particular, the Board of Directors is responsible for: defining the general policy orientations of bpost and its subsidiaries; deciding all major strategic, financial and operational matters of bpost; overseeing the management by the CEO and the Group Executive Management; and all other matters reserved to the Board of Directors by the Belgian Companies Code or the 1991 Law. Certain Board of Directors decisions must be adopted by a special majority (see below Deliberation and voting). The Board of Directors is entitled to delegate special and limited powers to the CEO and other members of senior management and can allow the sub-delegation of said powers. Following the resolution adopted at the Shareholders’ Meeting of May 27, 2013, the Board of Directors may, without any prior authorisation of the shareholders at the Shareholders’ Meeting, in accordance with Articles 620 et seq. of the Belgian Companies Code and within the limits set out in these provisions, acquire, on or outside the stock market, its own shares, profit-sharing certificates or associated certificates for a price that will respect the legal requirements, but that will in any case not be more than 10% below the lowest closing price in the last thirty trading days preceding the transaction and not more than 5% above the highest closing price in the last thirty trading days preceding the transaction. This authorisation is valid for five years from May 27, 2013. This authorisation covers the acquisition on or outside the stock market by a direct subsidiary within the meaning and the limits set out by Article 627, indent 1 of the Belgian Companies Code. If the acquisition is made by bpost outside the stock market, even from a subsidiary, bpost shall comply with Article 620, §1, 5° of the Belgian Companies Code. The Board of Director’s specific authorisations to acquire, for bpost’s account, bpost’s own shares, profit-sharing certificates or associated certificates if such acquisition would be necessary to avoid serious and imminent harm, were not extended at the Shareholders’ Meeting held on May 11, 2016. Therefore, the Board of Directors has no longer been authorised to acquire such instruments to avoid serious and imminent harm as of July 8, 2016. The Board of Directors is also authorised to divest itself of part of or all the bpost shares, profit-sharing certificates or associated certificates at a price it determines, on or outside the stock market or in the framework of its remuneration policy to employees, directors or consultants of bpost or to prevent any serious and imminent harm to bpost. This authorisation is valid without any time restriction. The authorisation covers the divestment of the company’s shares, profit-sharing certificates or associated certificates by a direct subsidiary within the meaning of Article 627, indent 1 of the Belgian Companies Code.
Functioning of the Board of Directors In principle, the Board of Directors meets seven times a year and in any event no fewer than five times a year. Additional meetings may be called with appropriate notice at any time to address specific needs of the business. A meeting of the Board of Directors must in any event be convened if so requested by at least two directors. In 2016, the Board of Directors met eighteen times.
Quorum The Board of Directors can only deliberate and make valid decisions if more than half of the directors are present or represented. The quorum requirement does not apply (i) to the vote on any matter at a subsequent meeting of the Board of Directors to which such matter has been deferred for lack of quorum at a prior meeting, if said subsequent meeting is held within 30 days from such prior meeting and the notice of said subsequent meeting sets forth the proposed decision on such matter with reference to this provision, or (ii) when an unforeseen emergency arises that makes it necessary for the Board of Directors to take action that would otherwise become time-barred by law or in order to avoid imminent harm to bpost.
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Deliberation and voting Pursuant to the 1991 Law, decisions on the approval of all renewals or amendments to the management contract and certain decisions on the administrative law status of statutory employees require a two-thirds majority by the Board of Directors. Certain decisions within the competence of the Board of Directors as provided under Article 29, §2 of the Articles of Association also require a majority of two-thirds of the votes cast. In exceptional circumstances, where the urgency of the matter and the interests of bpost so require, the Board resolutions may be approved by unanimous written consent of all directors. This written procedure may not be used for the approval of the annual accounts, the use of the authorised capital or the amendment of the management contract. Without prejudice to the special majority requirements set forth above, all decisions of the Board of Directors are adopted by a majority of the votes cast. In the case of a tie, the Chairperson of the Board of Directors has a casting vote. In addition, the Corporate Governance Charter provides that Board of Directors’ decisions of strategic importance, including the adoption of the business plan and the annual budget and decisions regarding strategic acquisitions, alliances and divestitures must be prepared by a standing or an ad hoc Board committee. For any such decisions, the Board of Directors shall strive to achieve broad support across its various constituencies, it being understood that, following appropriate dialogue and consultations, the Chairperson of the Board of Directors may call for a decision and the proposal shall carry if adopted by a majority of the votes cast.
Evaluation process of the Board of Directors Under the Chairperson’s lead, the Board of Directors conducts regular evaluations of its scope, composition, performance and that of its committees, as well as the interaction with the executive management. If needed, the Chairperson shall propose the necessary measures to remedy any weaknesses of the Board of Directors or of any of its committees. In 2015, the assessment was facilitated by an external consultant. The assessment focused on the role and missions of the Board of Directors and its committees, its composition, its functioning, the information flows within the Board of Directors and with management, and its compliance with governance standards. Following the 2015 external assessment, the Board of Directors decided to monitor and evaluate on a regular basis the main focus areas that came out of the external assessment. In 2016, the Board of Directors continued to follow-up on these focus areas.
Corporate Governance Charter On May 27, 2013, the Board of Directors adopted the Corporate Governance Charter. This Charter entered into effect on June 25, 2013. The Corporate Governance Charter was last amended following the Board of Directors’ decision of May 2, 2016. The Board of Directors will review bpost’s corporate governance at regular intervals and adopt any changes deemed necessary and appropriate. The Corporate Governance Charter contains rules with respect to: the duties of the Board of Directors, Committees, Group Executive Management(*) and CEO; the responsibilities of the Board of Directors’ Chairperson and Corporate Secretary; the requirements that apply to the members of the Board of Directors to ensure that they have adequate experience, expertise and competences to fulfill their duties and responsibilities; a disclosure system on mandates held and rules aimed at avoiding conflicts of interests and providing guidance on how to inform the Board of Directors in a transparent way in case conflicts occur. The Board of Directors may decide to exclude the member who has a conflict of interest from the deliberations and vote on that subject. The Board of Directors continuously evaluates and improves its functioning in order to steer bpost ever better and more efficiently. An induction program is provided to newly appointed directors aimed at acquainting them with bpost’s activities and organisation as well as with the rules laid down in the Corporate Governance Charter. This program is open to every director who wishes to participate. It includes visiting operational and sorting centers.
(*) Some of the members of the Group Executive Management are also member of the Management Committee, which only acts for the purposes provided in the 1991 Law.
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Transactions between bpost, its Board members and executive managers A general policy on conflicts of interest applies within bpost and prohibits any conflict of interests situation of a financial nature that may affect a director’s personal judgment or professional tasks to the detriment of bpost’s group. In accordance with Article 523 of the Belgian Companies Code, Mr. Koen Van Gerven declared to have a personal conflict of interest of patrimonial nature in connection with his annual evaluation as CEO. His annual evaluation was an item on the agenda of the Remuneration and Nomination Committee’s meeting of April 20, 2016, and the Board of Directors’ meeting of May 2, 2016. He informed bpost’s auditors of this conflict of interest and decided not to participate in the deliberation or voting on this item. Below follows the extract of the Board of Directors’ minutes relating to the annual evaluation of the CEO: “Prior to discussing the annual evaluation of the CEO, the CEO declared to have a personal conflict of interest of a patrimonial nature aimed at by Article 523 of the Belgian Companies Code in respect of the agenda item which relates to the evaluation of his annual performance. The CEO left the meeting room and did not participate in the deliberation or the decision regarding his annual evaluation. The CEO will instruct the auditors of his conflict of interest, in accordance with Article 523 of the Belgian Companies Code. The Chairperson of the Remuneration and Nomination Committee reported on the meeting held 20 April 2016: (…) Upon recommendation of the Remuneration and Nomination Committee, the Board of Directors unanimously approved the evaluation of the performance of the CEO and the proposed score”.
Transactions between bpost and its majority shareholders bpost’s Corporate Governance Charter provides that the procedure set forth in Article 524 of the Belgian Companies Code shall be observed for any decisions regarding the management contract or other agreements with the Belgian state or other Public Institutions (other than those within the scope of Article 524, §1, last sub-paragraph of the Belgian Companies Code). In summary, these decisions are subject to a prior non-binding reasoned opinion of an ad hoc Board committee, consisting of at least three independent directors. The committee is assisted by an independent expert, selected by the committee, and bpost’s auditor validates the financial data used. The procedure then requires the Board of Directors to substantiate its decision and the auditor to validate the financial data used by the Board of Directors. The Board of Directors has established an ad hoc committee composed of all independent directors. The Board of Directors did not need to apply the above procedure in 2016. The ad hoc committee did not meet in 2016.
Committees of the Board of Directors Apart from the aforementioned ad hoc committee established pursuant to Article 524 of the Belgian Companies Code and bpost’s Corporate Governance Charter, the Board of Directors has established three Board committees, which are responsible for assisting the Board of Directors and making recommendations in specific fields: the Strategic Committee, Audit Committee (in accordance with Article 526bis of the Belgian Companies Code) and Remuneration and Nomination Committee (in accordance with Article 526quater of the Belgian Companies Code). The terms of reference of these Board committees are set out in the Corporate Governance Charter.
Strategic Committee The Strategic Committee advises the Board of Directors on strategic matters and shall, in particular: review industry developments on a regular basis, review objectives and strategies of bpost and its subsidiaries and recommend corrective actions; review the draft business plan submitted each year by the Group Executive Management; review strategic transactions proposed by the CEO or the Group Executive Management, including strategic acquisitions and divestitures, formation and termination of strategic alliances or longer-term cooperation agreements, launching of new product segments and entry into new products or geographical markets or withdrawal from any such product segments or geographical markets; monitor the implementation of such strategic projects and of the business plan. The Strategic Committee comprises the CEO, who chairs the committee, and four directors, including at least one independent director.
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The Strategic Committee was, per December 31, 2016, composed of the following five members:
Director Mandate Presence at meetings Name Position since expires in 2016 Arthur Goethals Non-Executive Director 2006 2018 (1) 3/5 Luc Lallemand Non-Executive Director 2002 2018 4/5 Laurent Levaux Non-Executive Director 2012 2018 3/5 Michael Stone Independent Director 2014 2018 5/5 Koen Van Gerven (Chairperson) CEO and Director 2014 2020 5/5
(1) Mr. Goethals has reached the age limit of 70 in 2016 and has indicated that he does not wish to complete the full tenure of his mandate. He will resign from office as from the Shareholders’ Meeting of May 10, 2017.
The Strategic Committee met five times in 2016.
Audit Committee The Audit Committee advises the Board of Directors on accounting, audit and internal control matters, and shall, in particular: review accounting policies and conventions; review the draft annual accounts and examine whether the proposed distribution of earnings and profits is consistent with the business plan and the observance of applicable solvency and debt coverage ratios; review the draft annual budget submitted by the CEO or the Group Executive Management and monitor compliance with the budget in the course of the year; review the quality of financial information furnished to the shareholders and the market; monitor and oversee the internal audit process, internal controls and risk management, including for bpost and its subsidiaries as a whole; propose candidates for the two statutory auditors to be appointed by the Shareholders’ Meeting; monitor the statutory audit of the annual and consolidated accounts, including any follow-up on any questions and recommendations made by the external auditors; and review the external audit process and monitor the independence of the statutory auditors, in particular regarding the provision of additional services to bpost. The Audit Committee comprises five non-executive directors, including at least three independent directors. All members of the Audit Committee have sufficient expertise in the field of accounting and audit. The Chairperson of the Audit Committee is competent in accounting and auditing as evidenced by his former executive positions at a.o. the Total group. The other members of the Audit Committee also hold or have held several board or executive mandates in top tier companies or organisations. The Audit Committee was, per December 31, 2016, composed of the following five members:
Director Mandate Presence at meetings Name Position since expires in 2016 François Cornelis (Chairperson) Independent Director 2013 2019 5/5 Sophie Dutordoir Independent Director 2013 2019 (1) 4/5 Bernadette Lambrechts Non-Executive Director 2014 2020 4/5 Ray Stewart Independent Director 2014 2018 4/5 Caroline Ven Non-Executive Director 2012 2018 5/5
(1) Sophie Dutordoir resigned from the Board of Directors on January 15, 2017. Her resignation became effective on February 28, 2017. The Board of Directors has appointed Michael Stone, independent director, as (temporary) member of the Audit Committee in replacement of Sophie Dutordoir.
The Audit Committee met five times in 2016.
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Remuneration and Nomination Committee The Remuneration and Nomination Committee advises the Board of Directors principally on matters regarding the appointment and remuneration of directors, CEO and executive management and shall in particular: identify and nominate Board candidates to fill vacancies as they arise, thereby considering proposals made by relevant parties, including shareholders; nominate for appointment candidates nominated by shareholders (whether or not in application of their nomination right set forth in Article 21, §2 of the Articles of Association); advise the Board on the appointment of the Chairperson of the Board; advise the Board of Directors on the appointment of the CEO and on the CEO’s proposals for the appointment of other members of the Group Executive Management; advise the Board of Directors on the remuneration of the CEO and other members of the Group Executive Management and arrangements on early termination; review any share-based or other incentive scheme for the directors, members of the Group Executive Management and employees; establish performance targets and conduct performance reviews for the CEO and other members of the Group Executive Management; advise the Board of Directors on the remuneration of the directors; and submit a remuneration report to the Board of Directors. The Remuneration and Nomination Committee comprises five non-executive directors, including three independent directors. The CEO participates with an advisory vote in the meetings of the Remuneration and Nomination Committee when the remuneration of the other members of the Group Executive Management is being discussed. The Remuneration and Nomination Committee was, per December 31, 2016, composed of the following five members:
Director Mandate Presence at meetings Name Position since expires in 2016 François Cornelis Independent Director 2013 2019 3/3 Sophie Dutordoir Independent Director 2013 2019 (1) 3/3 Bruno Holthof Independent Director 2013 2019 (2) 3/3 Laurent Levaux Non-Executive Director 2012 2018 3/3 Françoise Masai (Chairperson) Non-Executive Chairperson 2014 2018 3/3 of the Board of Directors
(1) Sophie Dutordoir resigned from the Board of Directors on January 15, 2017. Her resignation became effective on February 28, 2017. The Board of Directors has appointed Michael Stone, independent director, as (temporary) member of the Remuneration and Nomination Committee in replacement of Sophie Dutordoir. (2) Bruno Holthof resigned from the Board on January 3, 2017. His resignation will become effective as of the Shareholders’ Meeting of May 10, 2017.
The Remuneration and Nomination Committee met three times in 2016. In 2016, the Remuneration and Nomination Committee reflected (amongst other things) on changes to the remuneration policy (e.g., long-term incentive schemes) further to a new benchmark exercise with competitive companies.
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Executive Management CEO Until the December 2015 Law entered into force on January 12, 2016, the CEO was appointed by the Belgian State, by Royal Decree, deliberated in the Council of Ministers. Since the December 2015 Law entered into force on January 12, 2016, the CEO is appointed by the Board of Directors, following nomination by the Remuneration and Nomination Committee. It is explicitly provided in the December 2015 Law that its entry into force does not terminate the current mandate of the CEO. The current CEO is appointed for a term of six years by Royal Decree of February 26, 2014, deliberated in the Council of Ministers. The CEO is vested with the day-to-day management of bpost. He is also entrusted with the execution of the Board of Directors’ resolutions and he represents bpost within the framework of its day-to-day management, including exercising the voting rights attached to shares and stakes held by bpost. The CEO can be removed by the Board of Directors.
Group Executive Management bpost’s operational management is ensured by the Group Executive Management and is led by the CEO. The Group Executive Management consists of the members of the Management Committee and maximum four other members, appointed (for the duration the Board determines) and removed by the Board of Directors, following a recommendation by the CEO and advice of the Remuneration and Nomination Committee. The Group Executive Management convenes regularly at the invitation of the CEO. The Group Executive Management is assisted by the Company Secretary. The individual members of the Group Executive Management exercise the special powers delegated to them by the Board of Directors or the CEO, as the case may be. Within the limits of the powers assigned to them, the members of the Group Executive Management may delegate to one or more members of staff of bpost special and limited powers. The members of the Group Executive Management may allow sub-delegation of these powers. The Group Executive Management prepares, under direction of the CEO, a business plan assessing the medium-term purposes and strategy of bpost, which is submitted to the Board of Directors for approval. The Group Executive Management was, per December 31, 2016, composed of the following members:
Name Function Koen Van Gerven Chief Executive Officer Koen Beeckmans Chief Financial Officer, Service Operations & ICT Philippe Dubois Director Mail Service Operations Marc Huybrechts Director Mail & Retail Solutions Mark Michiels Chief Human Resources & Organisation Kurt Pierloot Director Parcels & Logistics
The 1991 Law contains several provisions detailing the composition, appointment and functioning of a Management Committee. Since the December 2015 Law has entered into force on January 12, 2016, these provisions no longer apply to bpost. Hence, the powers to be assigned to the Management Committee on the basis of the 1991 Law are limited to the negotiation of the management contract with the Belgian State (it being understood that the management contract requires the subsequent approval of the Board of Directors). Therefore, the Management Committee will only remain in force for the limited purposes and tasks assigned to it by the amended 1991 Law. The Management Committee is composed of the CEO, who chairs the Management Committee, and the current members of the Group Executive Management with the exception of the CHRO Mark Michiels.
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Company Secretary The Board of Directors and its Chairperson, the committees of the Board of Directors and its Chairpersons and the Group Executive Management are assisted by the Company Secretary, Dirk Tirez, who is also bpost’s Chief Legal Officer. He was appointed in October 2007.
Board of Auditors The Board of Auditors audits bpost’s financial condition and unconsolidated financial statements. The Board of Auditors comprises four members, two of which are appointed by the shareholders at the Shareholders’ Meeting. The other two members are appointed by the Court of Audit, the Belgian institution responsible for the verification of public accounts Cour( des Comptes/ Rekenhof). The Board of Auditors’ members are appointed for renewable terms of three years. The Shareholders’ Meeting determines the remuneration of the Board of Auditors’ members. The Board of Auditors was, at December 31, 2016, composed of: Ernst & Young Bedrijfsrevisoren BV CVBA (“EY”), represented by Mr. Eric Golenvaux (member of the Institut des Réviseurs d’Entreprises/Instituut van de Bedrijfsrevisoren), De Kleetlaan 2, 1831 Diegem, Belgium; PVMD Bedrijfsrevisoren-Reviseurs d’Entreprises SC SCRL (“PVMD”), represented by Mrs. Caroline Baert (member of the Institut des Réviseurs d’Entreprises/Instituut van de Bedrijfsrevisoren), Rue de l’Yser 207, 4430 Ans, Belgium; Mr. Philippe Roland, Member of the Court of Audit (Rekenhof/Cour des Comptes) and First President of the Court of Audit, Rue de la Régence 2, 1000 Brussels, Belgium; and Mr. Jozef Beckers, Member of the Court of Audit (Rekenhof/Cour des Comptes), Rue de la Régence 2, 1000 Brussels, Belgium. The mandates of Mr. Philippe Roland and Mr. Jozef Beckers were renewed for a new term of three years in 2016 and will run up until September 30, 2019. The mandates of EY and PVMD were renewed for a new term of three years by decision of the Shareholders’ Meeting of May 13, 2015 (up until the annual Shareholders’ Meeting of 2018). EY and PVMD are responsible for the audit of bpost’s consolidated financial statements. For the year ended December 31, 2016, EY and PVMD received EUR 333,850.00 (excluding value added tax) in fees for the audit of the financial statements of bpost and its subsidiaries and EUR 268,464.11 (excluding value-added tax) in fees for non-audit services. The other members of the Board of Auditors received EUR 53,723.20 in remuneration for their services in connection with the audit of bpost’s non-consolidated financial statements for the year ended December 31, 2016.
Shareholding structure and shareholders rights bpost’s shares are registered or dematerialised. At December 31, 2016, bpost’s share capital was represented by 200,000,944 shares. The shares are listed on the NYSE Euronext Brussels. With respectively 48,263,200 and 53,812,449 bpost shares in their possession on December 31, 2016, the Belgian State and the SFPI/FPIM together had a participation of 51.04% (respectively of 24.13% and 26.91%) of the shares with voting rights emitted by bpost. The remaining shares are held by individual shareholders and European and international institutional shareholders who hold shares directly in bpost. None of these persons, either individually or in concert with others, have per December 31, 2016, filed a transparency declaration informing that the initial 3% threshold was reached. The shares are freely transferable, provided that, according to Article 147bis of the 1991 Law and Article 16 of the Articles of Association, the direct participation of Public Institutions in the registered capital exceeds at any time 50%. However, since the December 2015 Law entered into force on January 12, 2016, the Belgian Government is empowered until December 31, 2018 to approve, by Royal Decree discussed in the Council of Ministers, transaction(s) that cause the direct participation of Public Institutions to drop below 50% plus one share (Article 54/7 §1 of the 1991 Law). At December 31, 2016, bpost did not hold any own shares. Each share entitles its holder to one vote. Except as required by the Belgian Companies Code, all shareholder resolutions are adopted at the Shareholders’ Meeting by a majority of the votes cast. Apart from the restrictions on voting rights imposed by law, the Articles of Association provide that, in the event shares are held by more than one owner, are pledged, or if the rights attached to the shares are subject to joint ownership, usufruct or any other kind of split of such rights, the Board of Directors may suspend the exercise of the rights attached to such shares until one person has been appointed as the sole representative of the relevant shares vis-à-vis bpost.
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Remuneration report Procedure applied to develop a remuneration policy and fix individual remuneration of management As a limited liability company under public law and in compliance with applicable corporate governance requirements, bpost has developed a specific remuneration policy. This policy was decided by the Board of Directors upon recommendation by the Remuneration and Nomination Committee. The remuneration policy takes into account bpost’s different groups of employees and is regularly assessed and updated if and when appropriate. Any change in this policy is approved by the Board following a recommendation by the Remuneration and Nomination Committee. The remuneration policy aims to offer an equitable reward package to all employees and managers, which is competitive with the Belgian reference market composed of large Belgian companies. The total reward package includes a well-balanced mix of financial and non-financial elements. To that effect, a comparison of the various compensation elements with the median of the Belgian reference market is regularly carried out. Furthermore, to achieve sustainable and profitable growth, performance at both the collective and individual level is rewarded. Such reward system has the ambition to be an affordable and straightforward system that is linked to corporate results, such as EBIT and customer loyalty, and that allows differentiation at individual level in view of performance and talent. At the same time, it aims to create sustainable long-term value. bpost considers that a transparent communication on the principles and implementation of the remuneration policy is essential. bpost distinguishes three different groups, for which the basic remuneration principles will be explained and detailed hereafter: 1. members of the Board of Directors; 2. CEO; 3. members of the Group Executive Management(*). The content of this report does not relate to bpost’s Belgian and foreign subsidiaries. With regard to the foreign subsidiaries, a separate remuneration policy has been established, in line with market standards. This policy is likely to attract and retain qualified and experienced executives.
Remuneration principles Remuneration of the Members of the Board of Directors The remuneration of the members of the Board of Directors was approved by decision of the Shareholders’ Meeting of April 25, 2000. Pursuant to this decision, the members of the Board of Directors (with the exception of the CEO) are entitled to receive the following gross annual remuneration: EUR 39,885.33 for the Board of Directors’ Chairperson, who also chairs the Joint Industrial Committee (Paritair Comité / Commission Paritaire) of bpost, as indexed per March 1, 2016; EUR 19,942.73 for the other directors, with the exception of the CEO, as indexed per March 1, 2016. These amounts are indexed annually. Following the decision of the shareholders at the Shareholders’ Meeting of April 25, 2000, the members of the Board of Directors (with the exception of the CEO) are also entitled to an attendance fee of EUR 1,666.35 per attendance at one of the Committees established by the Board of Directors. No other benefits are paid to the members of the Board of Directors for their director mandate. The CEO is not entitled to any kind of remuneration for attendance to any of the Board of Directors or Board Committee meetings.
(*) Some of the members of the Group Executive Management are also a member of the Management Committee.
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During the financial year 2016, the members of the Board of Directors, with the exception of the CEO, received the following total gross annual remuneration(*):
Remuneration Board Audit Strategic & Nomination Member meetings Committee Committee(**) Committee TOTAL Arthur Goethals EUR 19,942.73 N/A EUR 4,972.32 N/A EUR 24,915.05 Luc Lallemand EUR 19,942.73 N/A EUR 6,611.94 N/A EUR 26,554.67 Laurent Levaux EUR 19,942.73 N/A EUR 4,945.59 EUR 4,999.05 EUR 29,887.37 Caroline Ven EUR 19,942.73 EUR 9,971.37 N/A N/A EUR 29,914.10 François Cornelis EUR 19,942.73 EUR 9,971.37 N/A EUR 4,999.05 EUR 34,913.15 Sophie Dutordoir EUR 19,942.73 EUR 6,665.40 N/A EUR 4,999.05 EUR 31,607.18 Bruno Holthof EUR 19,942.73 N/A N/A EUR 4,999.05 EUR 24,941.78 Françoise Masai EUR 39,885.33 N/A N/A EUR 4,999.05 EUR 44,884.38 Ray Stewart EUR 19,942.73 EUR 6,665.40 N/A N/A EUR 26,608.13 Michael Stone EUR 19,942.73 N/A EUR 8,278.29 N/A EUR 28,221.02 Bernadette Lambrechts EUR 19,942.73 EUR 8,305.02 N/A N/A EUR 28,247.75
(*) These amounts cover all amounts paid out in FY 2016. Please note that attendance fees are only paid out in the month following the attended Board Committee meeting. This means that the amounts paid out in FY 2016 relate to attendance to Board Committee meetings held from December 2015 until November 2016. (**) Please note that erroneously the attendance fee of one Strategic Committee meeting in 2016 was not paid out in FY 2016 and will be paid in FY 2017.
Remuneration of the CEO The remuneration package of the CEO consists of a base salary of EUR 472,195.20 (as indexed per July 1, 2016), a short-term on target variable remuneration of EUR 150,000, a pension contribution of EUR 32,480.04 and various other components such as death in service, disability and medical coverage, representation allowances and a company car. The CEO’s variable remuneration is granted under the terms and conditions defined on an annual basis and approved by bpost’s Board of Directors, following a recommendation of the Remuneration and Nomination Committee. For performance in 2016 (for which payment occurs in 2017), the Board of Directors agreed to apply similar conditions and modalities as applicable to bpost’s management population: the short-term variable remuneration is based on a ‘multiplier system’ whereby the actual variable salary paid out can vary depending on the corporate and individual performance and competences. For the CEO, the corporate objectives are financial (EBIT – weight 70% / Operating Free Cash Flow – weight 30%). The pay-out grid was determined and validated by the Board of Directors following a recommendation of the Remuneration and Nomination Committee. Maximum pay-out per criterion is set at 135%. Individual objectives are mutually agreed between the CEO and Board of Directors. Clear deliverables and KPI’s to be reached in an agreed timeframe are set. The pay-out range for the CEO is in line with the pay-out range principles that apply to the members of the Group Executive Management. The remuneration paid to Koen Van Gerven in 2016 for his performance over the year ending December 31, 2016 amounts to EUR 570,648.12 (compared to EUR 549,429 in 2015) and can be broken down as follows: base salary: EUR 472,195.20 (gross); variable remuneration: to be determined and paid in 2017 after evaluation of performance; pension, death in service, disability and medical coverage: EUR 75,961.80; other compensation components (representation allowances): EUR 3,300; leasing costs for company car: EUR 19,191.12. In addition, the CEO was paid in 2016 a variable remuneration of EUR 258,772 for his performance for the year ending December 31, 2015 (as the 2015 performance evaluation was only determined in 2016). No shares, stock options or other rights to award shares were granted to or exercised by the CEO or expired in 2016. No options under previous stock option plans were still outstanding for exercise in 2016. While there are no future changes as to the remuneration of the CEO at this stage, the Remuneration and Nomination Committee will reflect from time to time on changes to the remuneration policy in light of market practice.
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Remuneration of the Group Executive Management members (*) The remuneration package of the Group Executive Management is reviewed on a regular basis and approved by the Board of Directors following a recommendation by the Nomination and Remuneration Committee. It is based on a benchmark exercise comparing bpost with large Belgian companies. bpost’s objective is to offer a total remuneration package that is in line with the median of the reference market. While there are no future changes as to the remuneration of the Group Executive Management at this stage, the Remuneration and Nomination Committee will reflect from time to time on changes to the remuneration policy in light of market practice. The different elements of the remuneration package are:
Base salary The base salary is benchmarked with other large Belgian companies, in line with the abovementioned principles. The individual base salary is based on: function; relevant experience; performance. The performance of each individual is reviewed annually in a “Performance Management Process” (PMP).
Variable salary A variable salary may be granted, based on the achievement of: corporate objectives; individual objectives. The target variable salary is set as a percentage of the annual base salary. bpost uses a multiplication system whereby the actual variable salary paid out can vary depending on the corporate and individual performance. The corporate objectives are both financial (EBIT – weight 70%) and non-financial (customer loyalty – weight 30%). Per criterion, a pay-out grid is determined and validated each year by the Board of Directors following a recommendation by the Remuneration and Nomination Committee. Maximum pay-out per criterion is set at 135%. Individual objectives are mutually agreed between each member of the Group Executive Management and the CEO at the start of the Performance Management Process (PMP). Clear deliverables and KPI’s to be reached in an agreed timeframe are set. Pay-out range goes from 0% in case of underperformance to 160% in case of over-performance.
Other benefits bpost offers other benefits, such as pension, death in service and disability insurance, medical insurance, company car,etc. These benefits are benchmarked regularly and adapted according to standard practices.
Global remuneration The global remuneration paid in 2016 to the Group Executive Management members, other than the CEO, for performance over the year ending December 31, 2016 amounts to EUR 1,982,514.55 (compared to EUR 1,553,004 in 2015) and can be broken down as follows: base salary: EUR 1,671,984.85 (gross) paid under employment agreements, excluding social security contributions paid by bpost; variable remuneration: to be determined and paid in 2017 after evaluation of performance; pension, death in service, disability and medical coverage: EUR 204,551.04; other compensation components (representation allowances and luncheon vouchers): EUR 20,285.10; leasing costs for company car: EUR 85,693.56.
(*) Some of the members of the Group Executive Management are also a member of the Management Committee.
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In addition, the Group Executive Management members were paid in 2016 a global variable remuneration of EUR 738,918.44 (gross) for their performance for the year ending December 31, 2015 (as the 2015 performance evaluation was only determined in 2016). No shares, stock options or other rights to award shares were granted to or exercised by the Group Executive Management members or expired in 2016. No options under previous stock option plans were still outstanding for exercise in 2016.
Clawback provisions The current remuneration policy does not provide for a specific contractual clawback stipulation in favour of bpost for the variable remuneration granted on the basis of incorrect financial information.
Termination provisions In case of termination by bpost before the end of the current mandate and not for reason of material breach, the CEO is entitled to a termination indemnity of EUR 500,000. Additionally, the CEO is entitled to the use of a vehicle for six months after the date of termination, including all expenses relating to the use of this vehicle, except for the fuel card. No other member of the Group Executive Management is entitled to specific contractual termination arrangements, except for Marc Huybrechts, who is entitled to a minimum severance pay of six months in case of dismissal without cause, and Koen Beeckmans, who is entitled to a minimum notice period or severance pay of twelve months compensation in case of dismissal without cause, it being understood that the latter is decreased to six months if the non-compete clause is applied. In case of automatic termination upon expiry of the six-year term and the appointment by bpost of another CEO, the CEO is subject to a non-compete clause for a period of one year from the date of termination of his mandate. He will receive a non- competition indemnity of EUR 500,000, unless bpost waives the application of such clause. All members of the Group Executive Management, except for Mark Michiels, are subject to non-compete clauses for a period of twelve to twenty-four months from the date of their resignation or termination restricting their ability to work for bpost’s competitors. All such members are entitled to receive compensation in an amount equal to six to twelve months of salary if these non-compete clauses are applied.
Internal control and risk management bpost’s Entreprise Risk Management (“ERM”) framework assists bpost in managing risks effectively and implementing the necessary controls to pursue its objectives. The ERM framework covers: (i) risk management, allowing bpost to take informed decisions on risks it is willing to take to achieve its strategic objectives, thereby taking into account external factors; and (ii) internal control activities, which include all internal policies, procedures and business practices to mitigate risks. Best practices in risk management and internal control activities (e.g., international standard ISO31000) and the Commission on Corporate Governance’s directions have been used as references to define the ERM framework. In general, the objective is to provide a reasonable assurance regarding (i) compliance with applicable laws and regulations, (ii) reliability of financial and non-financial information, and (iii) effectiveness of internal processes. A “reasonable assurance level” is a high, but not an absolute level, given that all internal control systems have limitations linked to, e.g., human error, wrong decisions or choices on cost/benefit of control. The following description of bpost’s internal control and risk management activities is factual and aims at describing the activities’ main characteristics.
Control environment The control environment promotes employee awareness and compliance, defines clear roles and responsibilities, publishes quality guidelines and demonstrates the commitment of bpost’s Group Executive Management and Board of Directors.
Commitment to integrity and ethical values “Earning trust” is one of bpost’s four key values. The Board of Directors and Group Executive Management have approved bpost’s Code of Conduct, which was first issued in 2007. The Code describes the basic principles on how bpost wants to conduct business and the consequences in case of violations. The Code also sets out guidelines to prevent misuse of privacy sensitive and other privileged information and to support sustainable ways of working on environment and society as a whole. The Code of Conduct is provided to all new employees as part of the onboarding process. It is also made available on bpost’s intranet and referred to during trainings. Any violations of the Code of Conduct or fraudulent behaviour can be reported to the Integrity department, triggering an investigation and further follow-up.
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Furthermore, in order to comply with insider trading and market manipulation regulations, bpost has adopted a Dealing and Disclosure Code, which is amended from time to time to be in line with the most recent market abuse laws and regulations. This Code aims at creating awareness around possible improper conduct by employees, senior employees and persons discharging managerial responsibilities (being members of the Board of Directors and of the Group Executive Management) and their associated persons. The Code contains strict rules on confidentiality, non-use of “price sensitive” information and dealing restrictions. The rules of this Code have been widely communicated within the Group and the Code is available to all employees, senior employees and persons discharging managerial responsibilities. In conformity with the Market Abuse Regulation of April 16, 2014, persons discharging managerial responsibilities at bpost have been informed of their obligations in relation to insider trading under the Market Abuse Regulation.
Commitment to corporate governance fostering accountability The Board of Directors supervises the operational management. The Audit Committee advises the Board of Directors on accounting, audit and internal control matters. Without prejudice to the monitoring role of the Board of Directors, the Group Executive Management establishes risk management and internal control guidelines and procedures and monitors their effective roll-out. A “three lines of defense” model has been implemented: the operational management is responsible for the design and maintenance of risk management and internal controls (first line); the second line functions, such as Legal, Health & Safety, Security or Integrity, provide expert support to the first line operational management. The overall roll-out and coordination of the risk management and internal control activities is centralised within the Risk & Control department. All second line functions report at least annually to the Group Executive Management on the risk evolutions in their respective domains; finally, Corporate Audit, responsible for the internal audits of bpost Group, constitutes the third line of defense. The Corporate Audit Director reports to the Audit Committee’s Chairperson and CEO.
Commitment to employee development and competence Good leadership is invaluable and generates better results for bpost. In September 2015, bpost rolled-out the “Leading@bpost” program that identifies accountability and continuous learning as two key values. To develop skills, bpost has established its own training center. Technical courses are held in the business units (e.g., training on the International Financial Reporting Standards (“IFRS”) used to prepare bpost’s consolidated financial statement) and ad hoc courses are developed on a need-to-have basis. Personal development is driven by clear job descriptions and a structured bi-annual evaluation. Ad hoc coaching sessions are promoted.
Risk assessment The purpose of risk management, embedded in the ERM framework, is to deliver a consistent corporate approach and establish a sound risk management culture. Three types of risk management activities are performed. First, a strategic risk assessment takes place as part of the process to define/ revise bpost’s strategy. Each Business Unit further assesses its operational risks on a quarterly basis. Finally, there is risk and internal control management at a process, product or project level. This includes an evaluation of the adequacy of the most important internal controls to mitigate risks at a process, product or project level. The same structured risk management process is applied to the following three types of risk activities: identification of the risks that may have an impact on realising the objectives; assessment of risks in order to prioritise them; decision on risk responses and action plans to address key risks; monitoring action plan implementation and overall risk evolutions and identification of emerging risks. The coherence of the three different types of risk activities is ensured by using a single framework of risk evaluation criteria to assess the risks. This ensures the right risks are circulated, both top-down and bottom-up. More information can be found in the “Risk Management” section of the annual report (note 6.5).
Control activities In general A process management framework is defined based on the Business Process Methodology (“BPM”). As such, policies and procedures are established for the key processes (sales, procurement, investments, treasury, etc.). They are subject to regular controls. Internal control dashboards are monitored where relevant.
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All Group companies use an Enterprise Resource Planning (“ERP”) system or accounting software to support efficient processing of business transactions, to perform accounting and to deliver data for consolidation. These systems provide management with transparent and reliable information in order to monitor, control and direct business operations. A close monitoring of potential conflicts of separation of duties in the ERP system is carried out on a regular basis. bpost has established management processes to ensure the implementation of appropriate measures on a daily basis to sustain the performance, availability and integrity of its IT systems. The adequacy and effectiveness is monitored through internal service level agreements as well as periodic performance and incident reporting to the different Business Units involved.
Specifically related to the financial statements Systematic and structured finance processes ensure a timely and qualitative reporting. These processes include the following main activities or controls: careful and detailed planning of all activities, including owners and timings; communication by the Group Finance Department prior to the closing of guidelines, including on all IFRS accounting principles, to be applied by all legal entities and operating units; separation of duties between the accounting teams in the different legal entities actually performing the accounting activities and the departments responsible to review the financial information. The review is performed more specifically by (i) business controllers responsible inter alia for the review of financial information in their area of responsibility and (ii) the Group Finance Department, which is responsible for the final review of the financial information of the different legal entities and operating units as well as the preparation of the consolidated financial statements; systematic account justification and review after the closing triggering follow-up and feedback of the timelines, quality and lessons learned in order to strive for continuous improvement.
Information and communication Internally, the Internal Communication department uses a wide variety of tools, such as the company’s intranet and employee newsletters, to circulate messages in a structured and systematic way both from top management level as from operational level. Financial and performance information is shared between operational and financial management and the Group Executive Management. Besides the monthly reporting analysis prepared by the Business Controllers, the Group Executive Management conducts a thorough quarterly review of the different Business Units performance. Proper assignment of responsibilities and coordination between the relevant departments ensures an efficient and timely communication process for periodic financial information. The Group Finance Department communicates on a regular basis all IFRS accounting principles, guidelines and interpretations, to be applied by all legal entities and operating units, to the accounting teams of the different legal entities and operating units. Externally, the Press Relations and Public Affairs department manages stakeholders, e.g., press and public authorities. This department centralises and validates external communications with a potential impact at Group level. This includes, but is not restricted to, financial information. Financial information is made available to the market on a quarterly, half-yearly and annual basis. Prior to external publication, financial information is subject to (i) an extensive internal validation process, (ii) review by the Audit Committee, and (iii) approval by bpost’s Board of Directors.
Monitoring Corporate Audit (internal) and Board of Auditors (external) bpost has a professional internal audit department that works in line with the Institute of Internal Auditors’ standards. The department is subject to an external quality review every five years. Corporate Audit conducts an annual risk assessment with a semi-annual revision to determine the audit program. Via its audit assignments, Corporate Audit provides reasonable assurance on internal control effectiveness in the different processes or projects reviewed. bpost’s Board of Auditors provides an independent opinion on the full year statutory and consolidated financial statements. It performs a limited review on the half-year interim condensed financial statements and the statutory BGAAP figures of bpost SA-NV per end of October, which serves for the distribution of an interim dividend. In addition, they review material changes to the IFRS accounting principles. In light of their activities, they also evaluate the different identified key controls on the processes that support the set-up of the financial statements.
108 statement ANNUAL REPORT 2016 REPORT ANNUAL Corporate governance governance Corporate bpost
Audit Committee and Board of Directors The Audit Committee advises the Board of Directors on accounting, audit and internal control matters. To do so, the Audit Committee receives and reviews: all relevant financial information to enable the Audit Committee to analyse the financial statements; the quarterly treasury update; any significant change of the IFRS accounting principles; relevant findings resulting from the activities of the Corporate Audit Department and/or the Board of Auditors; Corporate Audit semi-annual status report on the follow-up of audit recommendations and annual activity report; Group Executive management’s annual conclusion on the effective execution of bpost’s risk management and internal control activities as well as periodic information on the main business and related risk evolutions. The Board of Directors ultimately ensures the establishment of internal control systems and procedures. The Board of Directors monitors the functioning and adequacy of the internal control systems and procedures, taking into account the Audit Committee’s review, and takes the necessary measures to ensure the integrity of the financial statements. A procedure is in place to convene bpost’s appropriate governing body on short notice if and when circumstances so dictate. More detailed information on the composition and functioning of the Audit Committee and the Board of Directors is included in the section of this Corporate Governance Statement on the Board of Directors and the Audit Committee.
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