Consolidated Results – January to September 2021

Consolidated Results

January-September 2021

CTT - Correios de Portugal, S.A. - Public Company

TABLE OF CONTENTS

HIGHLIGHTS ...................................................................................................................................................	3
1.	OPERATIONAL AND FINANCIAL PERFORMANCE......................................................................................	4
2.	OTHER HIGHLIGHTS ............................................................................................................................	13
3.	SUBSEQUENT EVENTS .........................................................................................................................	14
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS .......................................................................	17

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CTT - Correios de Portugal, S.A. - Public Company

CTT - CORREIOS DE PORTUGAL, S.A. - PUBLIC COMPANY

JANUARY TO SEPTEMBER 2021 CONSOLIDATED RESULTS

• Revenues1 grew by 14.7% y.o.y in 9M21 to €612.9m, an increase of €78.6m y.o.y., with the notable performance of the Express & Parcels business unit which grew by €54.8m (+41.7% y.o.y.), followed by Banco CTT with +€12.3m (+20.7% y.o.y.), Mail & other with +€8.2m (+2.6% y.o.y.), and FinancialServices & Retail with +€3.3m (+10.2% y.o.y.).
• Express & Parcels posts revenues of €186.3m in 9M21, driven by the strong performance of the Iberian region, as Spain delivered on the results of the outlined strategy, growing by €36.7m (+76.1% y.o.y.) and Portugal by €17.9m (+22.0% y.o.y.). In 9M21, Spain represented 45.6% of the Express & Parcels segment revenues, with this share growing by 8.9 p.p. y.o.y. in 9M21.

• Recurring EBIT amounted to €39.7m in 9M21, growing by €20.4m versus 9M20, with a margin of 6.5% (3.6% in 9M20). It should be noted that all business units contributed positively to the growth of recurring EBIT, with emphasis on Express & Parcels with +€10.7m (+292.3% y.o.y.) and Banco CTT with €5.3m.
• Operating cash flow stood at €51.4m in 9M21, up €35.3m y.o.y.
• Net profit5 of €26.3m, €22.0m more than in 9M20, driven mainly by the increase in recurring EBIT. The net profit in 9M21 includes non-recurring effects for an amount of €5.8m.

Consolidated Results

								€ million
	9M20	9M21	∆	∆%	3Q20	3Q21	∆	∆%
Revenues 1	534.3	612.9	78.6	14.7%	185.1	200.1	15.0	8.1%
Mail & other	310.8	318.9	8.2	2.6%	106.6	101.3	-5.3	-4.9%
Mail	308.8	316.7	8.0	2.6%	105.9	100.6	-5.3	-5.0%
Central structure	2.0	2.2	0.2	9.5%	0.6	0.7	0.1	12.4%
Express & Parcels	131.5	186.3	54.8	41.7%	46.4	60.5	14.1	30.4%
Banco CTT	59.7	72.1	12.3	20.7%	21.3	26.4	5.1	23.8%
Financial Services & Retail	32.3	35.6	3.3	10.2%	10.8	11.9	1.1	10.1%
Operating costs (EBITDA) 2	468.9	530.0	61.1	13.0%	155.4	174.5	19.1	12.3%
EBITDA 3	65.4	82.9	17.5	26.8%	29.7	25.6	-4.1	-13.8%
Depreciation & amortization 4	46.1	43.2	-2.8	-6.2%	16.0	14.6	-1.4	-8.9%
Recurring EBIT	19.3	39.7	20.4	105.2%	13.7	11.0	-2.7	-19.6%
Specific items	2.1	-5.8	-7.9	-378.7%	1.3	-3.5	-4.8	-369.3%
EBIT	17.3	45.5	28.2	163.4%	12.4	14.5	2.1	16.7%
Financial results (+/-)	-8.4	-8.1	0.3	4.0%	-2.5	-2.7	-0.2	-8.7%
Income tax for the period	4.5	11.0	6.5	145.9%	3.6	2.6	-1.0	-27.5%
Non-controlling interests	0.1	0.1	0.0	49.7%	0.0	0.1	0.0	100.7%
Net profit for the period 5	4.3	26.3	22.0	507.7%	6.3	9.1	2.8	44.5%

• Excluding specific items.

• In 2021 and in the same period of the previous year (proforma), operating costs (EBITDA) include impairments and provisions and the impact of the leases covered by IFRS 16 being presented pursuant to this standard.

• Excluding depreciation & amortization and specific items.

• Depreciation & amortization were positively impacted in 9M21 by the revision of the useful life of some assets.
  5 Attributable to equity holders.

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CTT - Correios de Portugal, S.A. - Public Company

1. OPERATIONAL AND FINANCIAL PERFORMANCE

The economic activity recovered in 9M21, although restrictions continued to be imposed on the population and the economic activities in the scope of the COVID-19 pandemic. In this context, CTT continued to present a resilient revenue growth as a result of continued investment in the transformation of its business: digitalization and e-commerce, express & parcels and business solutions.

Mail

Revenues of the Mail business unit in 3Q21 decreased by €5.3m (-5.0% y.o.y.), driven by the performance of international inbound mail, strongly influenced by the removal of the Value Added Tax (VAT) exemption on extra-EU purchases (de minimis) as of 1 July 2021.

In 9M21, Mail revenues amounted to €316.7m, corresponding to a growth of €8.0m (+2.6% y.o.y.). This resulted mostly from higher transactional mail revenues (+€5.0m; +1.9% y.o.y.), which benefited from the contribution of higher value-added mail items, leading to a lower dependence on ordinary mail - whose weight in revenues decreased from 35% in 9M20 to 33% in 9M21 - and a greater importance of registered mail and international inbound mail, whose weight in revenues grew from 35% in 9M20 to 37% in 9M21. Simultaneously, there was a positive influence of advertising mail (+€0.2m; +1.9% y.o.y.), editorial mail (+€0.1m; +0.7% y.o.y.), universal service parcels (+€1.0m; +22.1% y.o.y.), philately and other mail products and services (+€1.3m; +22.9% y.o.y.) and business solutions (+€0.3m; +2.7% y.o.y.), whose revenues include one month of activity of the new company Newspring Services.

The average variation in prices of the universal postal service6 in 9M21 was 2.0% y.o.y.

Mail volumes

								Million items
	9M20	9M21	∆	∆%	3Q20	3Q21	∆	∆%
Transactional mail	336.7	313.5	-23.3	-6.9%	108.5	97.5	-11.0	-10.1%
Advertising mail	28.5	26.9	-1.6	-5.7%	8.9	7.8	-1.1	-12.1%
Editorial mail	22.1	21.4	-0.7	-3.1%	7.0	6.7	-0.3	-4.7%
Addressed mail	387.3	361.7	-25.6	-6.6%	124.3	111.9	-12.4	-10.0%
Unaddressed mail	305.3	333.1	27.8	9.1%	122.2	111.0	-11.1	-9.1%

In 9M21, transactional mail volumes declined by 6.9%, mainly due to the declines in domestic ordinary mail (-7.9%), with contractual clients of the banking and insurance segments continuing to make the biggest contribution to this decline, and in international inbound mail (-21.5%). Noteworthy is the continued growth of registered mail (+10.8%) and green mail (+1.0%).

The worsening of the decline in international inbound mail in 3Q21 was greatly impacted by the entry into force as of 1 July 2021 of the regulation abolishing the exemption of VAT on mail items below €22 ("de minimis"), which means that every item originating in extra-EU countries is subject to customs clearance. This has affected all European countries, as a drop of about 30% in international inbound mail volumes has been observed across Europe. This change had a significant operational impact insofar as, by the end of 1H21,

more than 95% of CTT's mail volumes of extra-EU origin were exempt from VAT and customs declaration. The customs clearance process has been automated so as to respond to the new reality, and the presentation-to-customs fees were reformulated accordingly. The trend to transfer the business associated with tracked mail items to the express segment continues, mostly for items originating in China, a source that since 2019 has seen declines of around 75% for all of Europe. International outbound mail volumes increased by 2.6%.

In advertising mail, as some advertisers have resumed campaigns as of 2Q21, mainly in the retail and consumer goods areas, the activity showed some degree of recovery, especially in unaddressed advertising mail. In 9M21, unaddressed advertising mail volumes recorded a 9.1% y.o.y. increase while addressed advertising mail volumes

• Including letter mail, editorial mail and parcels of the universal postal service, excluding international inbound mail.

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CTT - Correios de Portugal, S.A. - Public Company

decreased by 5.7% y.o.y. In 3Q21, a new Marketing Database offer was launched to strengthen the Advertising Solutions segment.

Although restrictions in the access of customers to the CTT Retail Network were maintained in the period under analysis, philately revenues in 9M21 amounted to €4.0m, corresponding to a 3.5% y.o.y. growth. To be highlighted is the issue of 27 stamps of the Republic, 17 postal stationery and 3 thematic books.

Business solutions

In 9M21, business solutions recorded revenues of €12.8m, corresponding to an increase of 2.7% y.o.y. (+€0.3m), as a result of the integration in September 2021 of Newspring Services in CTT's Business Solutions base offer. This acquisition is part of CTT's portfolio diversification strategy and the acceleration of growth in business solutions, by combining NewSpring's expertise in Business Process Outsourcing (BPO) and Contact Center solutions with CTT's commercial network, thus creating upsell opportunities with the B2B sales channel already in place.

CTT continued to focus on expanding and optimizing its current portfolio, having launched a new version of the CTT Local Trade app, with new features for consumers and traders, as well as a Confidential Document Destruction Solution for small businesses and remote workers.

Express & Parcels

Express & Parcels revenues totaled €186.3m in 9M21, an increase of €54.8m (+41.7% y.o.y.).

Inthe Iberian market, revenues stood at €184.0m, up €54.5m (+42.1% y.o.y.). CEP (Courier, Express and Parcels) represented €170.1m (+51.0% y.o.y.), and volumes totaled

53.1 million items, representing a 54.2% growth over 9M20. CEP growth in the Iberian market was boosted by the good performance of the CEP operation in Spain, which continues to gain share in a growing market.

In Portugal in 9M21, Express & Parcels revenues recorded €99.1m, growing €17.9m (+22.0%y.o.y.), and volumes totaled 23.9 million items, representing a growth of 21.2% y.o.y.

The Express & Parcels business performance in Portugal in 9M21 was based on the CEP business growth, whose revenues amounted to €86.6m (+32.8% y.o.y.). The cargo business revenues totaled €6.3m (-27.0% y.o.y.), those of the banking documents delivery business €3.4m (-32.4% y.o.y.) and those of the logistics business amounted to €2.3m (+35.2% y.o.y.).

The performance of the CEP business was mainly related to e-commerce (B2C), with particular focus on large global

marketplaces, due to organic growth and the capture in 2Q21 of a major worldwide e-commerce platform. The "back-to- school" campaign gave a relevant contribution to this performance, not only in the CEP product line but also in logistics, as a result of the capture by CTT of the schoolbook logistics and distribution operation of one of the largest sales channels for this product.

In the cargo product line, the strong reduction in revenues is related to the outsourcing of this business segment to a partner and the renegotiation of some customers' agreements, given the impossibility of agreeing on commercial conditions that would allow for adequate profitability. This meant, for example, the full abandonment of the tire delivery service. As a result, an improvement is intended in the product margin, which in 2020 stood at -5.8% and is expected to reach a positive operating margin in 2022.

The banking documents delivery product line continued under pressure due to the closure of bank branches as well as, and foremost, to the reduction of collection/delivery frequency in context of continued reduction of the capillarity of banking networks and increasingly lower utilization thereof.

The growth of CEP underpinned by e-commerce, the outsourcing of the cargo operation, and the decline in the banking documents delivery product have led the Group to redesign the operational express network in order to optimize the cost structure, adapt it to the new needs of the network and capture efficiency gains.

CTT continued to invest in the development of new platforms, systems and applications aimed at promoting the adoption of e-commerce by e-sellers and e-buyers. In this context, several initiatives were launched, with emphasis on: (1) the expansion, after its launch in the United States of America and in the United Kingdom, of the CTT service International Virtual Address to online shops in Spain and other European countries that do not ship to Portugal; (2) the shipping plug-in platform that allows its customers to automate their shipments through CTT by integrating online shops created in Prestashop, Shopify, MagentoandWoocommerce;(3) the partnershipwith Habitat Invest that led to the installation in July 2021 of the first 24-hour Locker in Portugal, in a residential building, with the ambition of transforming the market and ensuring the convenience of homeowners when receiving parcels; and

1. the partnership with Zomato offering a new home meal delivery service with more than 300 food places in Lisbon and Oporto.

Furthermore, CTT continued to roll out its 24-hour Lockers strategy to both the general public and companies. These allow the clients to pick up their parcels with maximum convenience,24 hoursa day, everyday of theweek (24/7). As of this date, CTT's parcel locker network offers 147 24-hour Lockers, in various locations around the country, namely in intermodal transport platforms, shopping centers, university campuses, physical retail networks or, in the case of corporate lockers, in companies. The locker network, in

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