CTT Correios de Portugal S A : Consolidated results - 1st quarter 2024

1st Quarter 2024 Consolidated Results

Table of Contents
1stQuarter 2024 Consolidated Results	3
1.	Operational performance	4
2.	Financial performance	9
3.	Other highlights	15
4.	Interim condensed consolidated financial statements	19

CTT - Correios de Portugal, S.A. - Share capital EUR 71,957,500.00 - Lisbon commercial registry and fiscal no. 500 077 568

2

Avenida dos Combatentes, 43 - 14th Floor - 1643-001 LISBOA - PORTUGAL ctt.pt

1st Quarter 2024 Consolidated Results

CTT - Correios de Portugal, S.A.

1st Quarter 2024 Consolidated Results

Revenues1 amounted to €263.5m in 1Q24 (+€21.7m; +9.0% y.o.y2), underpinned by Express & Parcels, Banco CTT and Mail & Other. Financial Services & Retail recorded a negative variation, given the extraordinarily high level of public debt placement in 1Q23.

• Express & Parcels achieved €101.4m in revenues in 1Q24 (+€36.7m; +56.8% y.o.y), reflecting strong volume growth both in Spain (+120.9% y.o.y) and in Portugal (+12.4% y.o.y). This segment continues to benefit from increased e-commerce adoption and market share gains.
• Mail & Other revenues reached €120.3m in 1Q24 (+€6.0m; +5.2% y.o.y), mainly due to the price increase, the mix evolution and the volumes from the legislative elections.
• Financial Services & Retail registered a decline in revenues (-€23.2m;-80.8% y.o.y) due to the exceptional placement of public debt in the same period of the previous year.
• Banco CTT revenues totalled €36.2m in 1Q24 (+€2.2m; +6.3% y.o.y), due to the expansion of the customer base, which hit 658k accounts (+11k compared to December 2023), and business resources (+€396m in 1Q24). Increase in net interest income anchored in the growth of its auto and mortgage loan portfolios.

Recurring EBIT stood at €16.9m in 1Q24 (-€8.8m;-34.2% y.o.y) with a margin of 6.4% (10.6% in 1Q23). To be noted is the growth registered in Express & Parcels (+€5.0m; +745.7% y.o.y) as well as in Banco CTT (+€2.1m; +48.6% y.o.y), in both cases thanks to operating leverage supported by the expansion of revenues and the investments made in previous years. Financial Services & Retail registered a decline of €15.2m (-83.9% y.o.y).

Operating cash flow stood at €8.5m in 1Q24 (-€35.6m;-80.7% y.o.y). Net profit3 reached €7.4m in 1Q24 (-€8.7m compared to 1Q23).

Net Debt to EBITDA ratio, with Banco CTT under equity method, is 1.34x, underlining the solid and prudent balance sheet which offers strategic flexibility.

Highlights

							€ million
				1Q23	1Q24	Δ	Δ%
		Revenues1	241.8	263.5	21.7	9.0%
		Express & Parcels	64.7	101.4	36.7	56.8%
		Mail & Other	114.4	120.3	6.0	5.2%
		Financial Services & Retail	28.7	5.5	(23.2)	(80.8%)
		Banco CTT	34.1	36.2	2.2	6.3%
		Operating costs	201.0	229.4	28.5	14.2%
		EBITDA1	40.8	34.0	(6.8)	(16.6%)
		Depreciation & amortisation	15.1	17.1	2.0	13.1%
		Recurring EBIT	25.7	16.9	(8.8)	(34.2%)
		EBIT	25.0	14.9	(10.0)	(40.1%)
		Net profit for the period3	16.1	7.4	(8.7)	(53.9%)
				31.12.2023	31.03.2024	∆	∆%
		Equity	253.3	286.4	33.1	13.1%
		Net Debt	(39.0)	(63.9)	(24.9)	(63.9%)
		Net debt with Banco CTT under equity method	177.3	153.0	(24.4)	(13.7%)
		Net debt/EBITDA (LTM) with Banco CTT under equity	1.44	1.34	(0.1)	(7.0%)
		method
1	Excluding specific items.
2	y.o.y - year on year.
3	Attributable to equity holders.

3

4

1st Quarter 2024 Consolidated Results

1. Operational performance

Performance analysis by Business Unit

Express & Parcels

Express & Parcels revenues amounted to €101.4m in 1Q24 (+€36.7m; +56.8% y.o.y). The growth achieved was driven by increased volumes (+68.5% y.o.y) both in Portugal and Spain.

Spain already accounts for 61.7% of revenues in the Express & Parcels segment, as a result of the growth in the e-commerce market and the gain in market share, which reflects the investments made in the expansion and capacity of the network, in the extension and differentiation of the portfolio of services offered and in the quality of delivery. Growth in Spain has been boosted by all customer segments. In terms of the strategic customer segment (international e- sellers, with daily volumes above 20,000 items), there continues to be strong growth, as a result of the incorporation of new customers, reflecting commercial proactivity, the wide range and quality of the services offered, and the increase in average volumes, with CTT intensifying its relationship with these customers. The other customer segments also registered strong growth, as a result of a commercial strategy that prioritises customer diversification and the expansion and granularity of the geographical presence in Spain.

The strong growth of E&P activity in Spain is boosted by a strong commercial proactivity, a distinctive service offer and high quality in delivery.

The new unit in San Fernando de Henares is already operating at full capacity, adding to the capacity of the sorting network and providing the customs clearance service integrated in last-mile delivery, thus making a significant contribution to reducing delivery times for extra-EU volumes and increasing CTT's differentiation from its competitors.

In addition, more than 14,000 convenience points in Spain have been incorporated into the network, which, when added to CTT's network in Portugal, constitutes

the largest convenience point network in the entire Iberian Peninsula.

In this context, revenues in Spain have benefited from the aforementioned growth trajectory, totalling €62.6m in 1Q24 (+110.5% y.o.y), with 20.5 million items (+120.9% y.o.y).

Revenues in Portugal recorded €37.4m in 1Q24 (+€3.5m; +10.4% y.o.y) and volumes totalled 9.7 million items (+12.4% y.o.y).

CEP revenues amounted to €34.6m in 1Q24 (+€3.9m; +12.8% y.o.y), with a 16.6% y.o.y increase in volumes per working day. This growth was underpinned essentially by e-commerce (B2C) customers, particularly large global marketplaces and international e-sellers. The risk of business concentration is significantly low, given the high sectoral diversification of CEP customers.

The growth registered in e-commerce activity is a reflection of the significant increase in e-commerce, driven by the ubiquitous access to the internet, convenience in transactions and the continuous development of payment systems, promoting a safer experience for consumers.

The logistics product line recorded revenues of €1.0m in 1Q24 (+13.0% y.o.y). This evolution was underpinned by business growth from current customers.

At the end of 1Q24, CTT's Locky network comprised 858 lockers installed in Portugal and maintained an upward trend in the number of lockers installed. Locky lockers are part of the CTT delivery points network, the largest and most capillary national network with more than 3,300 points where customers can pick up, send and return their parcels with maximum convenience, 24 hours a day in most lockers, every day of the week. The locker network, Locky, is an agnostic network and, since 4Q23, another carrier, in addition to CTT, has been using it. CTT continues to invest in expanding the Locky locker network both in Portugal and in Spain, where this offer is already present.

5

1st Quarter 2024 Consolidated Results

The E&P operation in Portugal shows consistent growth, anchored in market expansion and high diversification.

This growth demonstrates the trust placed in CTT by existing and new customers, who rely on the quality of the service offered by CTT.

Revenues in Mozambique in 1Q24 amounted to €1.4m (+35.4% y.o.y). This growth was partly driven by additional services, such as the risk and safety fee for pick up and delivery in the province of Cabo Delgado.

Recurring EBIT generated by the E&P business increased from €0.7m in 1Q23 to €5.6m in 1Q24. As a result, the margin increased from 1.0% in the same quarter last year to 5.6%. Recurring EBIT performance benefited from increased business activity in Spain and Portugal. Strong volume growth in Spain is fuelling rapid margin expansion due to operational leverage. In Portugal synergies have been leveraged with the basic mail network to channel more and more parcels to be delivered by postmen.

Mail & Other

Mail & Other revenues amounted to €120.3m in 1Q24 (+€6.0m; +5.2% y.o.y). This growth was essentially due to the performance of revenues from addressed mail (€100.7m; +€5.6m; +5.9% y.o.y) and business solutions (+€0.6m; +5.1% y.o.y). Excluding additional revenues from international outbound mail associated with the legislative elections of 10 March (+€7.8m), addressed mail revenues were slightly down compared to the same period of the previous year (-€2.2m;-2.3% y.o.y).

It should be noted, however, that the mail business was penalised by the fact that 1Q24 had two fewer working days (i.e. -3.1%) than 1Q23, because this year Easter fell in the first quarter.

In 1Q24, the mail business benefited from the volumes generated by the legislative elections, but was penalised by the lower number of working days.

In 1Q24, revenues from addressed mail were leveraged by the positive performance of international outbound mail (+€7.7m; +73.5% y.o.y), as a result of the additional revenue generated by the volumes from the legislative elections, as mentioned above. On the other hand, there were decreases in ordinary mail (-€1.4m;-3.9% y.o.y), registered mail (-€0.3m;-0.7% y.o.y) and international inbound mail (-€0.3m;-5.3% y.o.y). These revenue lines were affected by the lower number of working days.

The overall average price change of the universal postal service4 in 1Q24 was +9.92% y.o.y.

In 1Q24, business solutions recorded revenues of €11.9m (+€0.6m; +5.1% y.o.y). Growth continued in the Business Process Outsourcing (BPO) and Contact Centre areas as new businesses in different sectors were won and implemented. Noteworthy are also

1. the increase in revenues associated with the solution for managing administrative offences and administrative instructions, and (ii) the higher volume of hybrid mail produced by the new version of the "e-Carta" platform, a tool for customers to optimise their internal mailing processes.

Recurring EBIT declined by 24.7% to €2.0m, due in part to the lower number of working days. The cost efficiency programme is progressing and results are expected this year. Price increases will help stabilise margins.

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

6

1st Quarter 2024 Consolidated Results

Mail volumes

				Million items
	1Q23	1Q24	Δ	Δ%
Transactional mail	100.9	91.3	(9.6)	(9.5%)
Advertising mail	6.0	4.3	(1.7)	(28.4%)
Editorial mail	6.7	6.1	(0.6)	(9.3%)
Addressed mail	113.6	101.7	(11.9)	(10.5%)
Unaddressed advertising mail	76.4	69.5	(6.9)	(9.1%)

Financial Services & Retail

Financial Services & Retail revenues amounted to €5.5m in 1Q24 (-€23.2m;-80.8% y.o.y). This unfavourable performance, when compared to the same period last year, comes mostly from the performance of public debt certificates.

In the first quarter of 2023, placements of public debt certificates reached all-time highs, driven by the greater attractiveness of the product compared to bank deposits. The change in marketing conditions in June 2023 reduced the attractiveness of this product for savers due to the lower interest rates, and limited marketing capacity due to the drastic reduction in placement caps per subscriber. It is expected that a possible future change in marketing conditions will once again increase the attractiveness of this product.

Public debt certificates (Savings Certificates and Treasury Certificates Savings Growth) posted revenues of €2.1m in 1Q24 (-€21.2m;-91.1% y.o.y).

Subscriptions of these certificates amounted to €294.8m in 1Q24, which contrasts with €7.5bn in 1Q23. The performance of 1Q23 was driven by the extraordinarily positive context previously referred. However, it should be mentioned that the 1Q24 performance is being affected by the limitations imposed on the sale of this product introduced in June 2023. Between 2019 and 2021, before the change in interest rates environment that started in 2022, the average of placements per quarter was around €1bn.

In addition to debt placements, CTT has been repositioning its retail network for distribution of services (retail as a service). This strategy includes:

1. public debt; (ii) insurance products; (iii) mail and express & parcels services, mostly in self-service; and

1. convenience services for citizens.

In this context, CTT reinforced the commercial drive in the area of non-life insurance, including auto, health, personal accidents, multi-risk, among others, by entering into a distribution agreement with Generali, but also benefiting from other distribution arrangements, namely on healthcare plans. It is worth mentioning the partnership with Prosegur for the sale of alarms, launched at the end of September 2023.

The strategy defined for the retail network includes repositioning it as a service platform.

Given the abnormally weak quarter in terms of public debt placements, recurring EBIT totalled only €2.9m.

Banco CTT

Banco CTT revenues reached €36.2m in 1Q24 (+ €2.2m; +6.3% y.o.y). Revenue growth was due to the positive performance of net interest income, which totalled €24.1m in 1Q24 (+€2.1m; +9.3% y.o.y). Interest received increased by €14.8m compared to 1Q23, benefiting from higher interest rates and volume growth. Interest paid increased by €12.8m vis-à-vis the same period last year due to the increase in interest rates on customer deposits and securitisations of auto loans.

The number of accounts was 658k (11k more than in December 2023), at end of 1Q24.

Customer deposits (Banco CTT consolidation) stood at €3,470.4m in 1Q24 (+11.7% vs. December 2023). There was a 25.1% increase in term deposits and a 5.5% reduction in sight deposits compared to December 2023.

7

1st Quarter 2024 Consolidated Results

Banco CTT is focused on continuing to grow its client base while improving client engagement, in order to grow business volumes, specially savings and deposits.

Interest from auto loans amounted to €14.6m in 1Q24 (+€4.0m; +38.1% y.o.y) and reached a loan portfolio net of impairments of €877.0m (+1.9% vs. December 2023). Auto loans production stood at €63.9m in 1Q24 (-4.4% y.o.y).

Interest from mortgage loans stood at €7.8m in 1Q24 (+€4.0m; +103.4% y.o.y), which is in line with the positive evolution of Euribor since 1H23. The mortgage loan portfolio net of impairments totalled €736.8m in 1Q24 (+1.3% vs. December 2023). Mortgage loan production amounted to €44.3m in 1Q24 (-€4.9m;-9.9% y.o.y).

Also worthy of note is other interest received, which increased by €8.1m in 1Q24 compared to 1Q23, to which contributed the liquidity surplus at Banco de Portugal.

Commissions received in this business unit reached €11.6m in 1Q24, (+€0.4m; +3.3% y.o.y). The following positive contributions in this quarter stand out: (i) from commissions received from accounts and cards, which amounted to €3.1m (+€0.1m; +3.4% y.o.y), (ii) from payments, which totalled €5.0m (+€0.4m; +8.9% y.o.y); and (iii) from mortgage loans amounting to €0.2m (+€0.1m; +255.3% y.o.y).

The loan-to-deposit ratio reached 46.8% in 1Q24.

The cost of risk (consolidated and accumulated) in the quarter stood at 1.0%, down by 0.3 p.p. compared to December 2023, influenced by lower levels of risk in the consumer credit portfolios.

Recurring EBIT rose to €6.3m (+48.6% y.o.y) due to operational leverage supported by the strong growth in business volumes, namely deposits, mortgages and auto loans.

Banco CTT is therefore well positioned to achieve the

2025 objectives announced in September 2023:

• Reach 700k to 750k accounts (compared to 658k in 1Q24);
• Grow in customer resources and loans to customers to business volumes of over €7bn (compared to €6.2bn at the end of 1Q24);
• Deliver on profitability, with pre-tax profits between €25m and €30m (compared to €21.0m in 2023 and €5.1m in 1Q24).

8

9

1st Quarter 2024 Consolidated Results

2.	Financial performance
Income statement
					€ million
		1Q23	1Q24	∆	∆%
	Revenues	241.8	263.5	21.7	9.0%
	Express & Parcels	64.7	101.4	36.7	56.8%
	Mail & Other	114.4	120.3	6.0	5.2%
	Financial Services & Retail	28.7	5.5	(23.2)	(80.8%)
	Banco CTT	34.1	36.2	2.2	6.3%
	Operating costs	201.0	229.4	28.5	14.2%
	Staff costs	97.7	102.2	4.5	4.6%
	ES&S	84.8	114.8	29.9	35.3%
	Impairments and provisions	8.0	5.8	(2.2)	(27.5%)
	Other costs	10.4	6.6	(3.8)	(36.3%)
	EBITDA	40.8	34.0	(6.8)	(16.6%)
	Depreciation and amortisation	15.1	17.1	2.0	13.1%
	Recurring EBIT	25.7	16.9	(8.8)	(34.2%)
	Express & Parcels	0.7	5.6	5.0	»
	Mail & Other	2.7	2.0	(0.7)	(24.7%)
	Financial Services & Retail	18.1	2.9	(15.2)	(83.9%)
	Banco CTT	4.3	6.3	2.1	48.6%
	Specific items	0.7	2.0	1.2	»
	Business restructuring and strategic projects	1.0	0.4	(0.6)	(61.1%)
	Other non-recurring income and expenses	(0.3)	1.6	1.9	«
	EBIT	25.0	14.9	(10.0)	(40.1%)
	Financial results (+/-)	(3.1)	(4.1)	(0.9)	(30.3%)
	Financial income, net	(3.1)	(4.1)	(1.0)	(30.6%)
	Financial costs and losses	(3.5)	(4.1)	(0.6)	(16.8%)
	Financial income	0.4	0.0	(0.4)	(97.7%)
	Gains/losses in subsidiaries, associated companies and	0.0	0.0	0.0	»
	joint ventures
	Income tax	5.7	3.4	(2.3)	(40.5%)
	Non-controlling interest	0.0	0.0	0.1	«
	Net profit for the period	16.1	7.4	(8.7)	(53.9%)

Revenues

Revenues totalled €263.5m in 1Q24 (+€21.7m; +9.0% y.o.y), underpinned by Express & Parcels (+€36.7m; +56.8% y.o.y), Banco CTT (+€2.2m; +6.3% y.o.y) and Mail & Other (+€6.0m; +5.2% y.o.y). Financial Services

• Retail (-€23.2m;-80.8% y.o.y) recorded a negative variation, given the extraordinarily high level of public debt placement in 1Q23.

Operating Costs

In 1Q24, operating costs totalled €248.5m (+€31.7m; +14.6% y.o.y).

Staff costs increased by €4.5m (+4.6% y.o.y) in the period, mostly due to the salary increase (+€3.3m), including the increase in the national minimum wage. Additionally, the growth in the Express & Parcels activity also contributed to this evolution in costs, as did the contact centre and document management in the corporate solutions business line of Mail & Other.

10