Year 2017

1. Operating segments

 

Posti's reportable segments consist of four operating segments: Postal Services, Parcel and Logistics Services, Itella Russia and OpusCapita. The Group's operating segments are based on the various services and products they offer and on the respective markets. The operating segments are managed as separate businesses. The President and CEO is the chief operating decision maker, being responsible for allocating resources to operating segments and the evaluation of the segments' results.

               

The Postal Services operating segment and the Parcel and Logistics Services operating segments have been aggregated into a single reportable segment called Mail, Parcel and Logistics Services. Posti reports its result of operations according to the following reportable segments: Mail, Parcel and Logistics Services; Itella Russia and OpusCapita. The aggregated reportable segment for the most part shares common operative functions, such as production, retail network and customer service. These functions represent the majority of the combined segment's expenses, so the financial performance of the segments is dependent on the allocation principles of the shared cost base. In addition to similar financial characteristics and common production processes , the aggregated operating segments are similar in terms of their services, customers and distribution channels.

               

OpusCapita carried out significant restructuring measures during the financial year. OpusCapita sold its Finance and Accounting Outsourcing business in September. In addition, the digitizing production in Sweden, Norway and Poland was outsourced to the US-based BancTec in October. OpusCapita’s sending of documents and invoices as well as the digitizing operations in Finland were transferred to Posti’s Postal Services business group effective from October 1, 2017. The Buyer-Supplier Ecosystem business continues as a unit of its own within OpusCapita segment. Segment reporting has been changed to reflect the new operative structure. The changes in reporting are presented retrospectively starting from 1 January, 2015 to increase longer term comparability.

               

The chief operating decision maker primarily uses measures of adjusted EBITDA and adjusted operating result to assess the performance of the operating segments. He also receives information about the segments' net sales and assets on a monthly basis. Balance sheet items allocated to the segments include non-current and current operating assets and liabilities, including non-interest bearing liabilities and provisions. Operating assets and liabilities are items the segment uses in its operations or that may be reasonably allocated to the segments. Capital expenditure consists of additions of tangible and intangible assets including additions of financial leases and business acquisitions.

               

The measurement and recognition pinciples used in the internal management reporting comply with Posti's accounting principles. Transactions between the segments are carried out at market prices.  

               

Mail, Parcel and Logistics Services

             

Postal Services (PS)

Postal Services is in charge of mail, press and marketing services as well as document sending and digitizing services. Mail Services is in charge of stamps, mail redirection services, Netposti, international postal cooperation and mail services offered to companies and consumers. Press Services provides newspaper, magazine and free distribution paper delivery services for business customers. Marketing Services provides addressed and unaddressed direct marketing services for companies as well as value-added services, such as register services, target groups, the Contact service, and printed products that can be ordered online. Posti Messaging provides digitizing services, electronic archiving and multi-channel solutions for sending documents and invoices.

               

Parcel and Logistics Services (PLS)

PLS is in charge of comprehensive supply chain solutions, parcel and eCommerce services, transport services for companies, as well as warehousing and supplementary services. PLS is the market leader in the B2C and B2B parcel business and in warehousing services in Finland. In transport services PLS is among the three largest operators in Finland.

               

Itella Russia

             

Itella Russia offers comprehensive logistics services to both Russian and international companies. Itella is the market leader in warehousing in Russia. In addition, Itella offers road, air, sea and rail freight services, customs clearance services and logistics services for online retailers. The activities also include Itella Connexions, which is one of the largest direct marketing specialists in Russia and MaxiPost which offers last-mile delivery services for eCommerce customers. MaxiPost was acquired in March 2016.

               

OpusCapita

             

OpusCapita focuses on global procurement, payments and cash management solutions with target to become a leading operator in global B2B procurement and payment ecosystem. OpusCapita operates in Finland, Scandinavia, Latvia, Poland, Germany, Switzerland and USA and its solutions are used globally.

               

Other and unallocated

             

In addition to operating segments, Posti has group headquarters, centralized support functions as well as real-estate company Posti Kiinteistöt which owns the facilities in Finland and offers facility management services to the businesses. These centralized Group functions and related corporate level costs including financing are reported under "Other and unallocated". Also the divested financial accounting outsourcing business for the period prior the divestment is included in this.

               

Adjusted EBITDA and adjusted operating result

             

In order to enhance the comparability between periods, Posti reports adjusted EBITDA and adjusted operating result, which exclude effects of significant items of income and expenses which are considered to incur outside of the ordinary course of business. These adjusting items are referred as special items. The chief operating decision maker assesses the performance of the segments primarly based on these performance measures. Special items include restructuring costs, significant impairment losses on assets, significant gains or losses on sale of shares, real-estates or business operations, changes in contingent purchase considerations originated from business combinations, and other material items outside of the ordinary course of business.

               

2017

             

EUR million

Mail, Parcel and Logistics Services

Itella

Russia

Opus-

Capita

Seg-

ments

total

Other

and un-

allocated

Elimi-

nations

Group

total

External sales

1,447.5

119.1

62.5

1,629.0

18.0

 

1,647.0

Inter-segment sales

1.2

0.1

2.2

3.5

5.5

-9.0

 

Net sales

1,448.7

119.1

64.7

1,632.5

23.5

-9.0

1,647.0

               

EBITDA

102.2

-14.4

-3.6

84.2

-0.6

 

83.7

Special items included in EBITDA:

             

Personnel restructuring costs

3.8

0.3

0.7

4.9

0.1

 

5.0

Disposals of subsidiaries, real-estates and businesses, net gain (-) /loss (+)

     

0.0

8.1

 

8.1

Onerous contracts

 

17.7

 

17.7

-1.1

 

16.6

Changes in contingent purchase considerations

     

0.0

2.5

 

2.5

Other

0.2

 

0.3

0.5

2.2

 

2.7

Special items included in EBITDA total

4.1

18.0

1.0

23.1

11.8

 

35.0

Adjusted EBITDA

106.3

3.7

-2.6

107.4

11.2

 

118.6

               

Operating result

49.3

-21.5

-35.9

-8.1

-19.4

 

-27.5

Special items included in operating result:

             

Special items included in EBITDA

4.1

18.0

1.0

23.1

11.8

 

34.9

Impairment losses

7.0

0.0

26.9

33.9

1.1

 

35.0

Special items total

11.1

18.0

27.9

57.0

12.9

 

69.9

Adjusted operating result

60.4

-3.5

-7.9

48.9

-6.5

 

42.4

               

Financial income and expense

           

-9.4

Profit/loss for the period before taxes

           

-36.9

               

Assets

616.6

138.6

101.4

856.7

239.1

-2.9

1,092.9

Liabilities

383.7

29.4

12.9

426.0

177.2

-2.9

600.3

               

Capital expenditure

28.3

2.3

4.3

34.9

38.4

 

73.3

Depreciation and amortization

45.5

7.0

5.3

57.8

18.0

 

75.8

Impairment losses

7.5

0.2

26.9

34.6

0.8

 

35.4

Personnel at period-end

16,615

2,329

404

19,348

666

 

20,014

Personnel at period-end, FTE

13,605

2,281

392

16,278

655

 

16,932

               

2016, restated

             

EUR million

Mail, Parcel and Logistics Services

Itella

Russia

Opus-

Capita

Seg-

ments

total

Other

and un-

allocated

Elimi-

nations

Group

total

External sales

1,414.2

104.6

60.4

1,579.2

28.4

 

1,607.6

Inter-segment sales

1.8

0.0

1.6

3.4

8.5

-11.9

 

Net sales

1,416.0

104.6

62.0

1,582.7

36.8

-11.9

1,607.6

               

EBITDA

93.4

3.9

2.1

99.4

16.7

 

116.0

Special items included in EBITDA:

             

Personnel restructuring costs

16.2

0.4

1.0

17.6

1.3

 

18.9

Disposals of subsidiaries, real-estates and businesses, net gain (-) /loss (+)

-2.8

   

-2.8

-10.6

 

-13.4

Onerous contracts

 

-1.7

 

-1.7

1.6

 

0.0

Changes in contingent purchase considerations

2.7

   

2.7

1.4

 

4.1

Other

-0.6

   

-0.6

1.6

 

1.1

Special items included in EBITDA total

15.6

-1.3

1.0

15.3

-4.6

 

10.7

Adjusted EBITDA

109.0

2.6

3.1

114.7

12.0

 

126.7

               

Operating result

42.5

-2.7

-2.5

37.3

-6.6

 

30.7

Special items included in operating result:

             

Special items included in EBITDA

15.6

-1.3

1.0

15.3

-4.6

 

10.7

Impairment losses

3.8

 

0.3

4.1

1.6

 

5.7

Special items total

19.4

-1.3

1.3

19.4

-3.0

 

16.4

Adjusted operating result

61.9

-4.0

-1.2

56.8

-9.7

 

47.1

               

Financial income and expense

           

-1.2

Profit/loss for the period before taxes

           

29.5

               

Assets

597.7

153.5

130.0

881.1

306.9

-2.4

1,185.6

Liabilities

356.3

23.0

8.6

387.9

191.7

-2.4

577.2

               

Capital expenditure

35.9

4.7

33.9

74.4

26.0

 

100.4

Depreciation and amortization

46.5

6.5

4.6

57.6

21.6

 

79.2

Impairment losses

4.4

0.0

0.0

4.4

1.7

 

6.1

Personnel at period-end

16,423

2,389

351

19,163

1,334

 

20,497

Personnel at period-end, FTE

14,508

2,377

343

17,228

1,291

 

18,519

               

2015, restated

             

EUR million

Mail, Parcel and Logistics Services

Itella

Russia

Opus-

Capita

Seg-

ments

total

Other

and un-

allocated

Elimi-

nations

Group

total

External sales

1,437.7

118.8

56.2

1,612.7

36.4

 

1,649.1

Inter-segment sales

10.3

0.0

0.0

10.3

9.3

-19.7

 

Net sales

1,448.0

118.9

56.2

1,623.0

45.8

-19.7

1,649.1

               

EBITDA

100.3

-8.3

5.8

97.8

49.5

 

147.2

Special items included in EBITDA:

             

Personnel restructuring costs

7.1

0.6

 

7.7

0.7

 

8.4

Disposals of subsidiaries, real-estates and businesses, net gain (-) /loss (+)

1.2

   

1.2

-40.8

 

-39.6

Onerous contracts

0.7

11.7

 

12.4

   

12.4

Changes in contingent purchase considerations

             

Other

0.9

0.1

0.1

1.1

-1.4

 

-0.3

Special items included in EBITDA total

10.0

12.4

0.1

22.5

-41.6

 

-19.1

Adjusted EBITDA

110.3

4.1

5.9

120.3

7.9

 

128.2

               

Operating result

52.7

-25.0

3.7

31.5

23.3

 

54.8

Special items included in operating result:

             

Special items included in EBITDA

10.0

12.4

0.1

22.5

-41.6

 

-19.1

Impairment losses

2.1

7.5

 

9.6

2.3

 

11.9

Special items total

12.1

19.9

0.1

32.1

-39.3

 

-7.2

Adjusted operating result

64.9

-5.1

3.8

63.6

-16.0

 

47.6

               

Financial income and expense

           

-12.5

Profit/loss for the period before taxes

           

42.3

               

Assets

617.8

126.1

99.9

843.7

467.6

-3.0

1,308.3

Non-current assets classified as held for sale

       

3.6

 

3.6

Liabilities

336.9

27.0

3.9

367.7

363.0

-3.0

727.7

Liabilities associated with non-current assets classified as held for sale

       

1.0

 

1.0

               

Capital expenditure

42.8

2.9

1.7

47.4

19.4

 

66.8

Depreciation and amortization

45.3

9.2

2.1

56.6

23.9

 

80.5

Impairment losses

2.2

7.5

0.0

9.6

2.3

 

11.9

Personnel at period-end

17,278

2,646

302

20,226

1,372

 

21,598

Personnel at period-end, FTE

15,212

2,629

293

18,134

1,349

 

19,483

               

Net sales distribution of Mail, Parcel and Logistics Services     

Net Sales, EUR million

       

2017

2016, restated

2015, restated

Mail & Marketing Services

       

630.2

651.9

683.8

Press Services

       

166.9

171.4

169.6

Parcel Services

       

287.5

276.7

274.9

Logistics Services

       

373.4

322.6

328.7

Other and eliminations

       

-9.3

-6.7

-9.1

Total

       

1,448.7

1,416.0

1,448.0

               

Geographical areas

             

The group operates in four geographical areas: Finland, Scandinavia, Russia and Other countries. The net sales of the geographical areas are determined by the geographical location of the Group's customer. Assets are presented according to their geographical location, and they include non-current assets except Group goodwill, deferred tax assets and financial instruments. Finland is the only individual country that generates a material part of the Group's net sales. The Group’s customer base consists of a large number of customers over several market areas, and net sales to any single customer does not represent a significant part of the Group’s net sales.

               

2017

             

EUR million

   

Finland

Other Nordic countries

Russia

Other

count-

ries

Total

Net sales

   

1,289.2

124.9

118.8

114.2

1,647.0

Non-current assets

   

290.7

3.1

98.0

24.0

415.8

               

2016

             

EUR million

   

Finland

Other Nordic countries

Russia

Other

count-

ries

Total

Net sales

   

1,261.9

133.2

104.6

107.7

1,607.6

Non-current assets

   

294.2

5.0

110.5

27.3

437.0

               

2015, restated

             

EUR million

   

Finland

Other Nordic countries

Russia

Other

count-

ries

Total

Net sales

   

1,264.1

140.4

118.5

126.1

1,649.1

Non-current assets

   

362.4

5.3

90.8

15.0

473.5

               

Revenue streams

             

EUR million

       

2017

2016

2015, restated

Sales of services

       

1,627.2

1,583.4

1,625.4

Sales of goods

       

9.7

14.6

13.5

Sales of licenses

       

10.1

9.7

10.2

Total

       

1,647.0

1,607.6

1,649.1