CTT - Correios De Portugal, S.A. (CTT) Earnings Call Transcript & Summary

Good morning. Welcome to the CTT Capital Markets Day. Firstly, I would like to thank you for your presence. And I really mean this within the context of the pandemic and within the context of the effort that we are doing in coming back on the road and coming back in contact with the markets in person. Thank you, we appreciate the effort that you made. We will have a full morning, so let's get started straight away. We have -- just to outline the agenda for the morning, we will have a welcome session where we will do basically the strategic review of the industry and of CTT. We will also have the morning organized in the logistics part or the B2B part as we call it, where we will have the Mail and the Parcels, and we will -- where we will go through the operations and the profitability initiatives that we are doing. Then we will have a Q&A. I would say a short Q&A, focusing on the 3 prior sessions, and we will have a coffee break. Then in the second part of the morning, we will basically have our B2C arms, our Retail arms, Financial Services and Retail and Banco CTT. We will outline our ESG strategy, particularly our net-zero goals, which we have just announced. And we will highlight the financial ambition and take you through the guidance that we just published. Then finally, we will have a wrap-up and the Q&A. Regarding the Q&A, a few words: basically to say that in each of the Q&A moments, we will start with questions from the room. But this is also a virtual event, and we have investors participating from home or from work. And so we will also take questions from them. And we will take batteries of questions here initially in the room and then we will take questions from investors that are participating virtually. For these online participants, we have a moderator. You can either ask written questions in the chat, or you can ask questions in real time. But please coordinate with the online moderator that we have in place. Finally, just before asking João to join us, I'll spend a few seconds basically displaying and reminding of our disclaimer -- of our disclaimer and safe harbor disclosures, which apply throughout the presentation. Once again, thank you very much, and I hope we have a good event. João, please, the floor is yours.

It's my privilege to launch the works today and I was just thinking this morning coming here that it's almost exactly 3 years since I joined as CEO of CTT and gathered an impressive leadership team with my executive teams, colleagues, a high number of top managers and not much longer after a Board, a great Board, by the way. And if I had to like to comment sense or attribute for all these people. That will be probably one of commitment. Commitment towards a project, and that is, in fact, turning an old company, a 500 years old company, with the main declining business into a growth case. And for that purpose, I think that -- for that reason, I think that committed to deliver, which has been our motto in recent years is quite appropriate. Committed to deliver in the sense that we are committed to deliver, of course, Parcels and letters timely and with quality, but also to deliver what's expected from us from all stakeholders. And for today, as a different way of framing what we are going to discuss and the way forward, we have added to this that we are committed to deliver e-Commerce in Iberia, because this is a way of synthesizing all we do in logistics and in B2B. And the Iberia nature of our presence as you're going to see, and it's measurable, it's extremely important these days, even more when we go forward. But also committed to deliver growth in our Retail services platform in Portugal because this is -- this platform connected with our digital channels is where we serve B2C, as we already mentioned. This is the platform that serves the bank, that serves public debt, that serves insurance partners, that serves social security and the number of partners enlarging and expanding going forward. So it's with this vision and this model in mind that we decided to proceed, but in a better, faster and greener way. And these are concerns that are present throughout the whole of the deployment of our strategy. Under this vision, I think that we can declare appropriately that we've gone through a truly transformation journey. Why is this? When we came, the company was mostly a Mail company, with 2/3 of its revenues generated on Mail. And my was and still is a declining issue more globally, not because of anything particular of Portugal. And it was only 1/3 of our revenues that were associated with diversification, and hopefully, growth. But that was not even profitable in those days. And when we closed the account last year, 3 years afterwards, for the first time in our history, Mail not only declined absolutely, but for the first time, came to be just below half of our revenues. So a Mail company that was losing its main business, but that was able to grow and to grow through these new growth areas. And if this reasonably impressive in terms of revenues, it's even more so in terms of profitability because we came from a negative contribution of the diversification areas to a very significant contribution to what we call now growth areas. To the point of those growth areas today represent almost 3/4 of our recurring EBIT. So I think it's fair to say that we've been through a really transformational journey. And we did so because the sector is also transforming itself, and we had to comply with that and take that as an opportunity. And why is the sector changing? Well, in many ways, it's changing on the course of digitalization of the economy and in a particular case, the impact it has in e-commerce, but also on the change in consumer habits and expectations for obvious reasons. So digitalization and e-commerce growth, it's one of the main factors for transformation, new supply chains and the way they organize another one for sure, the way consumers demand more convenience, more speed, it's of course, an important lever. The technological change, it applies to all sectors of the economy and certainly very much so to logistics and e-commerce. Then a particular one for the post, which is the fact that -- sorry, one which is, in fact, quite general, which is the fact that this complexity and this new digitalization journey applies for a number of partners. And so the idea of someone, 1 single business partner being able to help in the transformation journey, and now yes, a particular one for post, which is the fact that generally across the world, brick-and-mortar branches are closing, posts and those with USO concession contracts do have to maintain a relevant press in the territory and then it's our obligation to leverage on this fact. And finally, more than ever, all stakeholders requiring sustainable and social responsible business, and that's why we've given so much importance today to the deployment of a new strategy also with new and very demanding ESG commitments. So if you follow me through any of these starting -- every of this, starting with digitalization, we came from an impressive 15 letters to 1 parcel in the beginning of the century to almost parity in global terms. This is obviously because Mail has been steadily declining, but parcels has also been increasing on a monotonic way. And the situation is not that different for Portugal. In fact, we came from even more impressive 30 letters to 1 parcel, not yet to parity, but in only 20 years, we have declined this much and the mix has changed this much. This is why it's so important for us to follow this trend also for Mail. That's why our E-carta or e-letter, as Joao Sousa will explain later or our certified email via CTD is now -- is now reaching almost 2 million users because, in fact, some of these usage of Mail remains usage of Mail in a different way. Moving to the decentralization of supply chains, well, we're all aware that most of international e-commerce is sourced in South Pacific, in the South Pacific area, and particularly in China. And so the supply chain needs to comply with this peculiarity. And global suppliers have organized themselves by deploying more and more, larger and larger, more and more efficient fulfillment centers in a global way. But this brings a new role for regional players because it's for regional players to complement this on last mile. And that's how -- why it is so important for us to present ourselves and to behave ourselves as a truly regional player for Iberia. Moving to the third one -- and sorry, it's also because of that, that we have been increasing our fulfillment capacity. And just to illustrate that, from the last 9 sorting centers that we've opened, on 6 of them, we have reserved and designed for fulfillment space. Moving to consumers demanding, consumers are, in fact, demanding more flexibility, more sustainability, more convenience in the points of presence. This is why everyone is deploying lockers. More than half of the European sellers already offer to do alternative for delivering their parcels. But they also expect their parcels to arrive no later than next day. And so it's convenience and speed. And this goes to a point in which a significant number of customers is willing to pay more to receive on same day. In China, this goes to up to 1/3 and some of them declared that we pay as much as EUR 1 or $1 to have extra fast delivery. Then there is the issue of technology. Technology, well, moves everything across the industry. Of course, it enhances the power of users, but it also enables other types of delivery more sophisticated and faster. In what concerns the use of data and big data and analytics, it's the main promoter. Well, probably Amazon, Spain knows more about my personal taste than my children or even my wife, I don't know. So the use of big data. And of course, more than in anything else, the impact it has on operations with well sensoring, robots, unmanned stuff. So technology is, of course, a lever and a driver for change also in our sector. And it creates new markets. Just to give you 1 example, EUR 10 billion is the expected market size for same-day delivery in only 3 years' time. Moving to the issue of digitalization and the search for partners that would fulfill these needs in a one-stop-shop approach, this is the value chain of logistics and this image, if anything, it shows that it is a bit complex, and it is extremely populated. From advertising to management of returns, value-added services, payments in between fulfillment, well, delivery. That's our -- well, early presence here. And CTT is covering part of this value chain and then in to over even more. And as we're going to see also across the morning, we have a number of services either through partnerships or internally developed or internalized. And our aim is to serve the full value chain for e-commerce, both in Portugal and in Spain, so in Iberia. And then this peculiarity of miles. This is an impressive chart that shows how branches in general, banks, utilities, you name it, are closing down. And the fact that we need to comply with a significant level of density, compels us to leverage on this obligation. This density is funded by the economics of the concession contract. And so we need to leverage on this and do more with these impressive assets, which is the way of combining for B2C the physical world with the digital world, which we believe are developing better than anyone. And finally, the issue of ESG and all stakeholders requiring more and more responsible business. In our particular case, with an emphasis on the environment because post our industry is, by nature, very brown, we performed hundreds of millions of kilometers per year. And therefore, we need to do something, we need to act. And we need to act because we believe so. But also because there is a mesh of constraints that come on one side from the regulatory side, which is especially relevant in Europe, as you all know; on the other side, by customers because customers are expecting us to behave more responsibly and to be greener, but also in the way we need to engage employees in our value proposition. And of course, last but not the least, investors because we know that there is a premium for companies that do perform and commit to proper ESG targets. And we do all this within the framework of the UN SDGs we've chosen those that are more relevant for our industry. So we need to set a strategy and to find in a strategy that conforms with all these requirements, different stakeholders, but we need to turn this into achievable and the understandable commitments, and we are going to disclose that more. We've done that early and Miguel da Silva will also guide us through our agenda on ESG. So the sector is changing. It's changing a lot. I believe, we believe CTT sees this transformation as an opportunity, and we have delivered. We have delivered, this is the same chart now unfolding business-by-business nature, both in revenues and recurring EBIT. We have symmetrical contributions. Our main business back in 2018 Mail contributing negatively in both revenues and margin and then all the others with positive contributions. So I think you may state that we have converted decline Mail revenues in higher diversified growth business revenues. So we have transformed the company, and we became a growth history with positive contributions from all the diversification areas, Express & Parcels, the highest contributor in terms of revenues and the bank, the highest contributor in terms of increased profitability. But all of them, Financial Services and Retail also contributing to a more positive story. In this period, we have done a lot, and we like to -- we want to stress 3 what we call key achievements in this period. The first one being the turnaround in Spain; the second one being the bank, the breakthrough; and the third one being the awarding of a new concession contract for Mail. Coming to the first one, Spanish turnaround. The Spanish turnaround is based on 3 levers, quite simple to describe. We have a CapEx and investment plan. We had very strict KPIs. We've announced that we will follow this and if diverging, we would probably go elsewhere, but we did it. The first one was to switch to our own operations model. B2C is the growing thing. Franchisees are not efficient in delivering to B2B. We were basically to run and Express was basically a franchisee-based operation, and we turned that into an operation. And we're going to see that we have operated a huge number of operating centers in Spain because in Portugal, we were already properly recovered. Then a significant market share gain and with scale significantly high efficiency. And again Joao da Silva will guide us through what's been done in greater detail. And with that, we've been able to anticipate our declared target of positive EBITDA during this year, anticipated that to a full year positive EBITDA last year. So quite ahead of time. We had the first period where we had to handle legacy, and then we started a period that we believe and we are very confident it's going to be a growth period and the contribution of Spain to our Iberian approach will be more and more important. Landmark achievement number two, the bank breakthrough. This is the case as Luis will then explain in further detail of great success in the launching of our bank network and the acquisition of customers. We have a very rich customer base now, young with significant affluency. We have now more than EUR 1 billion of consumer finance in our book, both through partnerships and using our own internal assets and expertise. And we have already EUR 700 million of balance sheet, just to mention 3 of the main areas where the bank was successful. So after 5 years, only the bank in a very, well not so favorable environment for the banking industry, we managed to have a bank with a proven business model, a clear strategy and that achieved profitability in these adverse conditions which is good. It sounds like -- it looks like a startup growing, but with the exception that it also is profitable. And we brought the bank to a position in which we start generating and seeing interest for equity margins, potentially at no discount which is good because in the long run, we don't see ourselves as having to be the majority or the only owner of this bank or even the majority owner of this bank. Moving to key landmark number 3, the concession contract. Well, there are 3 main levers on a concession contract for USO, price, quality and density. This is what matters. And in the framework of a new postal law that somehow was approved late last year. We have negotiated a new concession agreement in much better terms, both regarding price, because the criteria are now to be based on historical data and not predictions. And they will be established by agreement. We are, as we speak, in fact, even yesterday, you had a meeting. We are negotiating with the regulator and the general directors for consumers. The criteria that should set the prices that then we will propose and will be approved by the guarantor, that is government. And this is for 2, 3-year terms because for this year, things have been arranged in a similar way. That's why you have this 6.8% price raise for this year. And the new quality criteria that should follow for those 2 times 3 years period on quality are, to again, to be approved by the government, proposed by the regulator, but following European best practices. And this is granted in the new law and in the new contracts. And it even states that it needs to comply with the average of comparable countries in Europe. So a great process. And on progress and on density, things are pretty the same. We were comfortable with what we have, and there is not much to add. So going forward, I believe that we -- I can say we envisage a better, faster and greener CTT, which is a well-diversified company with these 5 business areas. I know that we only report 4 because business & commerce services is still small and young, and we are reporting this as others together with Mail 1 day, hopefully, we shall render this independent and sizable. And also with the proper separation between B2B and B2C, so a quite ample offer and always in a better, faster and greener way. Moving to Mail. We have a simple strategy based on 3 levers again. It sounds like we are consultants. The first one, it's price. Why? In price -- well in price, of course, we have the increase itself, and we have much higher flexibility than we used to have. We have more flexibility to compete to manage churn, and again Joao will enlight us more about this in a moment. Then digital services, because in digital services, this is where we are going to grab part of the last mile and the offer is becoming richer and richer. And also, we can combine this with our physical presence in the territory. And finally Business Solutions because we are inside the customer's house and then it's our obligation to increase share of wallet with customers. We are doing now things with companies, BPO stuff in companies that are very, very remotely with Mail. But we can try to continuum because we were there and we started doing other things, and this is going to be very significant. Moving to Parcels. The most important note I'd like to drop here is that we are an Iberian partner. We have an Iberian approach. And this is very important for a number of reasons. This is a table very hard to read on purpose because we just want to call your attention to this. Iberia is the fourth largest e-commerce market in Europe, only behind U.K., Germany and France. And it's not only the fourth largest, but it's also the one that is growing faster. And this is because Spain is moving towards the average of European in terms of e-commerce adoption, Portugal is still lagging behind. But even in Portugal, these 4 reasons that it's our obligation to resolve because Portugal has been typically an early adopter of technology. This was the case for cell phones, ATMs, electronic tolls and why not e-commerce? Well, we are also adopting e-commerce at a faster way, but out of Portugal. In fact, we ranked fourth in the country with the highest level of international e-commerce. Meaning that we via in Spain, via in China, in U.K., in France, Germany because we have a scarcity of e-sellers being a periphery country well, the large e-tailers was -- didn't come yet. Amazon is still not here. Zalando is not here, but you just came a couple of months ago. Also because the Portuguese large e-tailers, they were a bit lazy, if I'm allowed to say so. And it was the pandemic that actually woke them up. And then the small companies because of lack of sophistication, and we are doing a lot. We have created more with our tools, more than 3,000 online shops for small companies in the recent past. So this is also why it is so important for us to present ourselves as an Iberian operator. And we are now even using this CTT Iberia brand. We plan and operate at an Iberian level more and more with integration across Iberia in Parcels and with a unique integration between Mail and Parcels as the others around, Joao Sousa will also let us know when he talks about operations. And this is extremely important because most of our customers. Well, Portugal and Spain are the largest trade partner of each other. And because of that, most companies, they hire Parcel operators at an Iberian level. So this is absolutely fundamental for us. And the importance of Spain can be seen here for this Iberian approach because Spain has a contribution to our revenues growing going forward and even more so on contribution to growth. Moving to Financial Services and Retail. Well, we have this unique capillarity. We excel in public debt, and now we hope to do the same in non-life insurance. We can leverage on thousands of people that come to our stores every day and even more so hopefully soon through our digital channels. And we can -- we are already doing so and can leverage on being a platform for services. We serve the bank, we serve CTT. We serve the social security. We serve utilities. We serve the tax authority. And this idea of being a platform for services is, in fact, quite convincing, and we are emerging as the convenience platform for services. And in some places, it's quite easy to sell because we are the only ones there. And finally, moving to the bank. The bank is a case of -- from now on, fast forward growth based on 3 axis. It's going to be explained in values, of course. First one, monetize the customer base, as I said, it's a very rich customer base; excel in life savings and here, capturing the tradition and trust that the CTT brand has. CTT has been placing Portuguese Republic's debt in the retail for ages. It's in fact the only channel to do so. And the third [ ax ] regarding consumer lending, which is a growth business, and we have quite significant aspirations in this area. And the final word on ESG. Just to stress that, well, we know the world needs to decarbonize. We are, in fact, an unfortunate contributor to carbonizing it, and we need to act. And we will do so by adopting 100% EVs in our own fleet, 50% already in 2025. 2025 is tomorrow, you know. We want to achieve gender parity in mid and top management in 2025 tomorrow. We need to have, we want to have, we will have half of our mid-managers with incentives, variable remuneration associated with ESG matters. And we want to have 3/4 of our procurement purchases to be done locally. That is in Portugal and Spain again in 2025. And with this, we are committed to deliver e-commerce in Iberia, deliver growth in our Retail platform in Portugal in a better, faster and greener way. And I believe we are ready. Thank you.

Good morning, and welcome. This morning, I'm going to present to you the strategy for Mail, Parcels and e-commerce solutions. Beginning with Mail, we can see that business is under transformation from the last years. We see a decreasing of the 8 of Mail decreasing from 2018 to 2021. Minus 18 percentile points. So when you look for 2021, we see that the height of the Mail business now is less than 50%, but however, when we look for the total revenues of CTT, we see an increasing and the revenues are increasing 6% [ op ] points per year. This means that the business is in transformation in Mail, and Mail business EBIT is still a strong contributor for the EBIT of CTT and compare much better than our peers. And we think that's going to happen and going to continue in the future through a more and efficient, modern operational structure and also, like João Bento already talked about, because of the new concession contract. This gives us flexibility to increase pricing and also to managing the churn of our customers. For us, Mail is an asset and still an opportunity. Why it is an asset? It creates the opportunity to contact with all the companies in Portugal because of Mail and we have Mail on CTT, we have relationship with large corporate customers, the SMEs, the public entities. And also give us a lot of assets like a strong brand, I can say that it's the best recognized brand in Portugal. The relationship with the customers like I told you, a very huge capillary presence with account managers and more than 500 stores in Portugal and most of all, a very good knowledge about the process and the flows of the digitalizations of the large companies. And because of all of these assets allow us to have a very good relationship with our customers. We know all the process. That's why we can develop now connected with Mail tailored-made solutions from doc of managing to BPO and contact centers and standardized solutions for SMEs, mainly digital and self services. I'm going to talk a lot about the SMEs. And why? Because in Iberia, more than 98% of the company's are SMEs. And if you want to be the #1, we need to take care about this sector and these segments that typical large companies don't take care about. We're going to realize our strategic for Mail in 3 pillars. The first one, price strategy. Like I told before, the new USO contracts allow us to increase pricing and most of all, managing the churn of our customer base. And this is a very, very good opportunity for us. The second one, digital services. We know that the companies are using digital services, and they're going to use, and we don't have anything against that. We just want to be part of that process, and we can help the customers to do this process. And the last one is Business Solutions, where we are developing a lot of the new solutions and the new revenue streams to our companies. And I'm going to show you right now what we are doing in digital services. I'm going to present to you 2 solutions which we have part of our portfolio, the first one via CTT. We can say that is a unique solution that allow us -- business to connect with the consumers and promote security, where we already have more than 1.8 million users, all the companies over there. And we're aiming to achieve more than 50% of the Portuguese households. The other solution we have on digital is E-carta or for the English e-letter that allow us mainly the SMEs to send Mail without printing or manually packing and that we take all the friction of sending a letter for the companies because in the SME is typical, the problem is not the pricing. It's the friction and the work they need to send a letter. So this solution can be part of the digitalization of the SMEs. Coming for Business Solutions, where we are complementing the Mail value offering, where we are developing all our offers related with Mail, like from my room, some printing and finishing and try physical and digital, where we have integrated the solutions with the knowledge I talked before, we have from the customers developing tailor-made BPOs and self-service solutions for SMEs and very, very important, helping the government to achieve process and greatest process and efficiency. We are aiming to increased the revenues 3.5x when you compare with 2019. And inside of this, we acquired recently newsprint to reinforce our business solutions offer, and we are very happy, I can say, with these assets and also with the first results from the fundaments. And what we want to do with NewSpring is expand the market share of this company already has in Banking Insurance. Helping to bring NewSpring to penetrations in other sectors like Utilities and Retail where CTT have a very good relationship and one more time moving for the SMEs doing standardized solutions. And with that, we need -- we want to promote the heat of the revenues of business solutions from 7% to 22% on the total of revenues of Mail and Business Solutions until 2025. With all of these assets and all of this knowledge, we can say that we have an extended offer, you can say that's unique in Portugal. The companies from the corporate and public entities, we can help them to support the business or empower the business. And I want to highlight this marketing and advertising. This is very important for us. We are reinventing this business because also CTT is an advertising company. And with the information we have from the customer joining the physical and the digital, we can also helping our customers to promote an empowerment the business. We have a full range of solutions for our customers. And 1 more time, more digital and self-service solutions for SMEs. But to do this, we need to deliver, and we are a delivery company. So that's why channels is so important. We come from a single channel face-to-face to a multichannel company with more than 300 key account managers around Iberia, inside sales inbound and outbound agents and more than 500 stores around the country. And we know what we want to do with them. So the key account managers are going to take care about the large and medium companies, try to managing the share of wallet. Inside sales and outbound going to take care about the small companies, try to promote new services, acquire new customers and digital channels and direct channel stores going to work with micro companies, consumers, try to leverage the incoming traffic. We take care and we look very important for our go-to-market, so the way we are doing this. So we can say that in the Mail highlights, the USO contract provides us stability and sustainability to the post business. Mail is the hook to bring extended offer, like I told you for large corporate and SMEs. We have in our portfolio a wide range of tailor-made solutions and standard services for SMEs and CTT is a multichannel presence. And before I enter to Parcels, I'd like to say that in a 500 years old business, we are still young. Coming for Parcels. We realize our strategy for Parcels in 3 major points. A unique Iberian setup like João Bento already told you, it's very important. We don't care if it's Portugal or Spain for us. The market is Iberia. B, the real one-stop shop supplier for companies. And last but not the least, because quality and relationship with the customer is very important at a superior multichannel customer experience. Enter on the unique Iberian setup, we can say that we have a unique Iberian operation we have launched several initiatives to deployment this unique operation. We have right now more than 17 depots serving both countries. We have now sorting capacity more than 940k per hour. We cover D+1 all Iberia, you don't care if we need to live in Barcelona or in Lisbon or Porto or Madrid and we have more than 300 key account managers serving all this country. And this is unique. That's why we create this CTT Iberia, and I think we are the first logistics company to have these brands. So even this is already an asset. So nobody can say that Iberian [indiscernible] name. We see that Iberian flows like João also talked about the potential of these Iberia markets, it's an opportunity for us in volumes and EBIT. So that's why we are creating a strong Iberian footprint with a different offer. We think this is really unique. No other company works and looks like an Iberian, if you look for our competitors. We are looking for the early days of fulfillment for e-commerce, and also one more time, taking care about the SMEs. We have a package of e-commerce suites for SMEs very, very important. From the advertising solutions, online stores, payments and so on and I'm going to spend a little more in France. But to take care about this Iberian market, we begin to put both teams, Portugal and Spain working together, and these Iberian coordination begins with operations because quality of services is critical in our business, and the customer pays in these quality of services. Then we're beginning to share the commercial knowhow, information about customers. That's why you're going to see most of the big customers work with us in Portugal and Spain, sharing practices about products and sharing know-how about both markets. So that's really Iberian company. And what we are working right now is on product catalog, value-added services, expression, the last mile offering we have in Portugal. Through Spain, expanding the PUDOs offer we have in both markets, and that's why we can say that the customer, we don't care if it's in Portugal and Spain, the experience we need to have with CTT, with CTT Iberia need to be the same. Coming for Portugal. Now I'm going to explain a little bit part of Portugal and Spain. We came from increasing of revenues of 40% per year, as you can see, sites 2018 to 2021 in Portugal and our aiming for the future is to maintain the market position and reinforcing one more time the best-in-class. Again, quality is very, very important in our business. And now you're going to do this like a consultant like João say with 3 different steps. The first 1 have the highest offer in the market. Nobody has an offer like us. So the customers don't need to take -- going to another operator. We have offers like Next Day delivery, 2-men delivery, cargo, same-day delivery, green deliver. It is today, everybody -- anybody is getting a new offer, we're going to have next tomorrow. So the companies can work with us. The second one was benefit from the growth of e-commerce in Portugal. We can say that today, we have more than 50% of market share of the global marketplaces like Amazon and Alibaba. And when you look for the 15 out of the largest 20 sellers in Portugal, works also closely with CTT. And the last one, it was the new offers we created for 2 different reasons. The first one for the company who wants to go for the first time online, so we have online stores, that's where we put more than 3,000 new SMEs working online for the first time. We create fares for the agriculture to sell their products in the pandemic. And also, we have solutions for companies that already are in retail in brick-and-mortar but they need to develop in their online business. We also have solutions for them. So that way it helps the market to grow and because we are leaders, we're going to grow with the market. When you look for Spain, you see that we're coming for 28% of increasing revenues since 2018 until 2021, here also very ambitious. We have a lot of ambitions also for these markets like everybody can understand. And we want to outgrow in the market, gaining market share and to reach the high single-digit market share by 2025. Again, now we're going to do these 3 different steps. First one was implementing a new operation model. Like João talked about, we changed it for a franchising model to our own operations. That was the best way to guarantee better quality of services and also reverse the benefit costs. The second one was gaining the largest e-commerce players so that we can guarantee volumes and scale and because of these 2 ones are already on green, it's not because of ESG's because already done. We have positive EBITDA in 2021 earlier than we expect. And now to grab the market share we want, we are implementing a new commercial model, and also extending the service offer for the future. So that's -- this is going to allow us to continue to grow in Spain and capture the results we want. Saying these, CTT expires a significant market in Spain, and we think we are well positioned to maintain the leadership positioning in Portugal. The second step is be the real one-stop shop player or supplier for e-commerce companies. I can say, and we use these words a lot, but I think it's real. We have a unique position. Nobody in the market has these kind of offers. So an SME or a corporate company can talk with us. If they are in the presales phase, sales or post sales, we have offer for everyone. If you want to create a brand, if you want to create an online store, if you need payments, if you want logistics, returns or customer support, we can do everything on a bundle or for different phases for our companies. And one more time, tailor-made for corporates our standardized solutions for SMEs. I'm going to highlight 2 of them. So with the payments and the logistics, and the other ones you already know what we have. On logistics, we want to grab the early stage of the fulfillment for e-commerce because we have a lot of few fulfillment companies around the world, but fulfillment for e-commerce that grabs value-added services for the e-commerce is totally new and more new even in Portugal and Spain. That's why we are looking for this fits a lot with CTT, increased stickiness in the e-commerce customers and we expect that this market is going to grow 15% per year. So we are a growth company. We need to grab services that help us to grow, and we can look for inorganic growth to accelerate this strategy. In payments. I think everybody know -- in the room knows we have Payshop a very important brand with services, but we want to come from build payments and cash in person to digital payments and with that achieved 9% of market share in 2025. This help us the e-commerce suite because we have payments one more time is something unique we have inside of our portfolio. So we can say, and everybody have a company inside of the room can talk with us. We can help them to support the business with our solutions, we can empower the business with our solutions and because it's our core, we can deliver the business to our consumers. So we are the real partners for the companies in Portugal, and we want to take this also to Spain and the real partners to the companies in Spain. And last, because we are here, we really like our employees, we like our shareholders, but what is more important, customer. And we want to give to our customers a very good customer experience. And I'm going to show 2 different things we are doing. The first 1 is the convenience of delivering. We have a produce network with more than 2,400 PUDOs in Portugal. We count up to 350 lockers, our CTT stores, our partners in CTT and Payshop. We want to achieve 5,000 to 6,000 PUDOs network, and we want to take also this strategic again to Spain because we are an Iberian company. And I would like also to highlight the -- we are building the largest local network in Portugal already with a very good brand we call Locky. Locky, you can wait for you for your package. With more than 350 lockers. Very happy to say that these lockers are 100% local made in Portugal, and we want to achieve 1,000 lockers until the end of 2022. And we already have these 350 lockers in the real places that are important for customers, shopping miles, retail networks, gas stations and so on. And one more time, we want to take these to Spain. At last, but not the least, we can with all this evolution on CTT from a product-centric focus, more than 3 different digital touch points with the customers and we want to go for a B2B, B2C company, understand all the company needs and have a portal experience for B2B, just 1 portal where we have all the services. They can -- we have the same relationship and the same experience we can have in the company in this portal. And for B2C, we are creating and contracting right now an app that we put all the service over there. So the customer on the phone can have all the services about CTT and maybe from some partners. So that's why you can say that we, CTT have a unique position to capture the growth of e-commerce in Iberia, grab share in Spain and supported the market growth in Portugal; b, the real one-stop shop in e-commerce, including fulfillment across Iberia and giving for our customers the best customer experience. And with that, you can say we are committed to deliver. Back to Joao Miguel da Silva. Thank you very much.

Good morning, everyone. These have been very eventful times at our operations. This has been very busy times, and these have been transformation times as we adjust our operational blueprint to the business priorities that Joao just shared with us. Over the next 20 minutes, I will cover our operations contributed to the turnaround of our CEP business. We are handling declining Mail volumes in Portugal and now we are addressing this challenge of sustaining the productivity levels in this context of declining Mail and also the portfolio of initiatives we have in place to keep driving down unit costs to consolidate the turnaround of our CEP business, and to provide a better customer experience. Now before we move into the details, I would like to start by giving you some context on our starting point. When we set out on this transformation path, our operations in Spain and in Portugal faced very specific challenges. In Spain, we have a loss-making business. We have a subscale operation, most of which was outsourced to the franchisees. And we have a legacy IT systems that the business felt didn't respond to changing consumer needs, it didn't respond to what the market was calling from us. In Portugal, the situation was different. We had similar constraints with our IT system. We already have some integration of Parcels into our Mail network, but these 2 networks were still managed independently. And finally, we -- during the peak periods, we ran into capacity constraints that impacted our ability to deliver quality during these peak periods. Above all, these were to independently planned independently managed networks that post significant opportunities to capture synergies. So network integration in Iberia has been a very important element of the turnaround process. So how do we go about doing this? Our vision for our Iberian network is to give our clients what they want. Most of our clients see the Portuguese and the Spanish market as a single Iberian market. So they want to have consistent processes, and they want to provide their clients with a seamless experience across both markets. So in order to do that, we want to have consistent and completely aligned processes in our operations in Iberia. In order to do so, we need to have a common IT platform, and we have a road map in place to get there and an important enabler for us to be able to align our IT platform is having a consistent degree of control over our operations, both in Spain and in Portugal. Finally, we want to deploy a unique network capable of delivering D+1 in the entire Peninsula. Now as we started moving and implementing this vision, we have been able to improve the quality of service in very challenging times, it means the pandemic, several confinements. And what we have seen is a significant improvement in quality scores in both countries, but mostly in the cross-border flows. We still have room to improve, and by 2025, we expect to improve on top of what we have already achieved. I will now detail a couple of these points, starting with our technical architecture. So in the long run, we want to have a common IT system. But the challenge here is how to do that while keeping the operations running. So we have set a migration plan in place by which we'll be deploying new software pieces, deploying new features and disconnecting different components of our legacy system. There are 3, what we call foundation elements for us to be able to do this. The microservice approach. This is what will allow us to implement new pieces to deploy new features without having to shut down, to disconnect entire model of our legacy system. The event BUS that is a core component that allows for the different pieces to communicate to publish events into the BUS without having to deal with the complexity of the entire ecosystem and the API management platform that will facilitate collaboration across the different developing teams having clear standards in place with also significant security gates. And it's these elements that have been allowing us to deploy new features, but different features aligned with the business priorities in each country. So in Spain, we have already implemented a new app, a new Drivers' Mobility apps that we are now rolling out in Portugal. The same solution we implemented in Spain is now being rolled out in Portugal. The same for the Iberian Suppliers Portugal -- Portal where we manage the interactions with our suppliers, namely with our last mile suppliers. We have implemented 100% traceability solution across both markets. The technical part is in place, and we are now rolling it out, adjusting the procedures. And finally, the Decision Server. It's an important part of our parcel integration strategy into the Mail network, which I will address shortly. A second important element has been creating a network, a unique network from these 2 networks that grew independently over time. We have consolidated the line all design of both networks. Last year, for the first time, we started a joint network planning exercise for our sortation centers. And we have also adjusted our last mile operations, the departure times of our last mile event to be able to guarantee 100% coverage in the Iberian territory. Another important element of the turnaround was capacity expansion. Over the last 3 years, we have more than tripled our sorting capacity in Iberia. We now have about 2/3 of the capacity expansion plans executed. We intend to keep adding capacity until 2025. And towards the end of this year, we hope to bring live a new sortation center that will support our customs clearing process in Spain in the center of the Iberian Peninsula entirely dedicated to the customs clearance of e-commerce flows of international e-commerce flows. But we didn't just add the capacity on the sortation piece. Adding fulfillment capacity is a very important element of our value proposition to e-sellers. We believe that by having fulfillment capacity adjacent to our sortation nodes we are able to provide more competitive set of times. So we have already expanded our fulfillment capacity to more than 30,000 square meters. And in 9 of the new sortation -- out of 9, the last 9 sortation centers, we have fulfillment capacity in 6 of these. And finally, on last mile, where we have opened 27 new distribution centers in Spain as we took over the operations management from the franchisees. And in Portugal, upgrading facilities and also tweaking the distribution model to guarantee more last mile distribution capacity. We believe the infrastructure we now have in place is becoming a competitive advantage, besides allowing us to deliver in 24 hours in Iberia, it also allows us to provide value to our customers' operations, being by offering later cut off times by providing more flexibility, first, we are able to cope with peaks in our client demand. And once we have the new customs clearing center up and running in Madrid, we'll be able to merge the customs clearance and the sortation operations, thus reducing the lead time for international e-commerce. But this infrastructure is also becoming a stepping stone for cost reduction initiatives for efficiency improvement initiatives. And this has also been one of the central pieces of the business turnaround. We have a large array of initiatives in place I will just comment a few. We have deployed business intelligence apps for our operational managers across the logistics chain. We have these in place in sortation centers for our transportation operations and for last mile. This is very important for us to be able to monitor how we are executing and to quickly adjust and adapt react to deviations. We have revised the contract structure with our last mile providers both in Portugal and in Spain. For the first time, we have centrally defined last mile rates that allows us to have consistent rates in regions with comparable delivery densities. This new contract structure also has in place the mechanisms that will allow us to capture a portion of the savings from additional efficiency gains. Technology deployment, obviously is also playing an important role. We have been deploying new route optimization systems the Driver's Mobility app that I have already mentioned. We have also been deploying some solutions to streamline the delivery process itself. And the important thing with this is that even marginal gains in millions of deliveries results in substantial cost savings, and obviously, the deployment of the Parcel network, which is level to [indiscernible], and what we call the pit-stop model. The idea is that via -- the idea is to slash the time our driver spend in the distribution centers, loading the vans, that they get to the pit stop. They can scan 1, 2, 3, 4 backpacks with Parcels and off they go to distribute. These initiatives have been allowing us to reduce unit costs. This is an example from our last mile costs that account for roughly 2/3 of our direct cost structure. We have been able to reduce costs even in the first quarter of '22 in a very high inflation environment, we have been able to reduce unit costs. Obviously, there is an external variable, which is energy inflation, but we believe that under reasonable scenarios for energy inflation, we will be able to continue delivering unit cost reductions. Now moving on to our strategy to help with declining Mail volumes. Network integration, again, is also a cornerstone of our strategy to deal with declining Mail volumes and to manage productivity and drive productivity gains in such an environment. This is not new to CTT. We have started pushing Parcels through the Mail network back in 2015. Over the last years, we have been able to increase the number of Parcels delivered by mailmen by 60%. But what we need to accelerate the integration of the Express & Parcels and the Mail network was to, one, integrate the management. So as of last quarter of '21, we have common management for the regional networks of Mail and Parcels. And we have also put in place what we believe is the best-in-class integration strategy of Parcels into the Mail network, using what we call the Decision Server. So what is the Decision Server. For us, with 3/4 of our Parcels, we need to decide which network will deliver that Parcel, the Mail network or the Express network. What the Decision Server does is to optimize the way we make this decision. So it pushes into the Mail network, the Parcels that are more suitable to be delivered by fixed routes. The smaller Parcels, the lighter Parcels, typically the e-commerce Parcels and the ones that have no time window commitment. What we gain by doing this? Well we get quality because we are pushing to that network, the parcels that the network is more capable of delivering. We get cost efficiency and carbon efficiency because we get to deliver more parcels with just a marginal effort. And this is also proving to be an important capacity management or I should say, demand management tool because by daily adjusting the parcel capacity that each is able to receive, we are managing the demand and thus ensuring better quality in the delivery of these parcels. Besides pushing more parcels into the mail network, another important element for us to manage productivity in last mile is to revise the way we plan and we deploy our resources and the way we are set up to distribute on the last mile of miles. An important contribution for this has been the rollout in 2021 of the Shamrock model. This is a model that we first piloted in the end of 2020 and that we rolled out last year. It is now implemented in 40% of the hubs that accounts for 60% of the route. I will not go through the details of this model. But for those of you who are interested, we would invite you to join us during the break at the stand, where my colleagues will be more than happy to take you through it. There is an important idea, however, I would like to point out this model has clearly been outperforming our traditional XY model. It has been allowing us to reduce costs to increase productivity and to increase the number of parcels delivered by each mailman. But we know this is not enough. We know that mail will continue to decline. So we have a pipeline of distribution improvement initiatives of new distribution models that we plan to test this year, on the third quarter of this year to then roll out in 2023. Again, I will not take you through the details. Just a quick comment on this last one. The Elementary segment distribution model is what will help us break away from the rigidity of fixed distribution routes. The idea is that we optimize the route composition on a daily basis based on incoming volumes and available resources. Now as you may imagine, with all this going on, this has been very demanding for our teams. So we need a governing idea that helps our people realize what is going on and engages our front-line staff to bring them along in this journey. We are doing this by rolling out a lean operating model. And besides the typical components of such projects of shop floor optimization, visual management, structured daily briefings. For us at CTT, this is really a vehicle for cultural transformation. We want our people to think of their responsibility as mailmen as frontline employees, not just being responsible for execute, but to execute and help us think how we should get things done and how to improve our operations. I would highlight that based on this, we intend to by the end of this year, establish a short-term variable compensation program for our mailmen based on performance, both in terms of quality and productivity. Now I've been sharing with you what we have been doing internally in our operations. But we have also been working on upgrading the way we interact with our customers. So over the last year, we have broadened the reach of our customer care channels. We are now on Facebook, on Instagram and on Whatsapp. Next month, we will be also present in LinkedIn, on Twitter. So we'll have customer care channels supported by LinkedIn and Twitter. Second important component, we have been placing a significant bet in self-care and automation. This is important to keep the unit cost of interaction under control. And even if these applications are relatively recent, we have already achieved very interesting deflection rates, reducing the workload on our customer care agents. Finally, we are planning to deploy, towards the end of this year -- in time for this year, speak some functionalities to improve the delivery experience of our clients. One hour delivery window prediction based on the execution of the route by the Mailmen and the distributors, live delivery tracking and onetime password as proof of delivery. As of now, we already have an NPS score north of 50 points, both in Portugal and in Spain. And we believe by -- as we deploy more features to improve the delivery experience of our clients, this score will also improve. So in short, we believe we have taken the steps to establish the best integrated set network in Iberia. This has been paramount to the turnaround of our sub operation. We have the capacity in place to not just support, but to drive e-commerce growth and attain economies of scale and capture efficiency gains. And we have what we believe is a state-of-the-art parcel integration strategy that will be key to help us continue driving productivity in the postal network despite declining mail volumes. So three priorities going forward. One, proceed with the integration of the Iberia network, supporting Spanish network. We have done a lot, but we still have a lot to do. Second, efficiency. We need to be relentlessly focused on reducing unit costs. This will be critical to consolidate the turnaround of our sub operation. This will be critical to cope with declining mail volumes. And finally, customer experience. customer experience is an overused buzzword. So let me emphasize the importance of this for us. When I first got to CTT 4 years ago, we were a very different company. I can testify that we are now in our frontline people are now much more customer-oriented than they were back then. That being said, we still have a long, long way to go. And we believe that our people need to become truly obsessed with customer experience, especially our frontline staff, our operational staff as they play a critical role in -- not only on the quality, but also on our clients perceive quality. So we are truly committed to making this idea of improved customer experience, the governing idea that helps us engage our people, transform our operations and we believe this will be critical for CTT's growth and for our future success. Thank you very much.

It's now time for Q&A. I'll probably ask you to reserve financial targets kind of questions to the second Q&A after we go through Guy's presentation. So starting with the people in the room, then following with online questions live. And finally, as Nuno mentioned, possible written questions. Up to you. myself, Guy and our colleagues, all the presenters will be obviously available and please to answer to your questions. I know the presentations were great, but you might have [indiscernible] our curiosity. Yes, please.

My first question is to understand this e-commerce growth that you have 20% in Portugal, and 15% in Spain to understand how this already accounts with the actual situation when we see the [indiscernible] that you mentioned and has us with a constant profit to earnings with the e-commerce declining could be only 1 year. But we -- in an actual situation, we don't know. To understand what -- how sustainable this growth could be for next year? How do you see that?

Thank you. A few more questions?

I was just curious how you come to the 9% market share in payments in Iberia number? Where are you starting? Can you just have some of the calculations behind that?

How much in your operational efficiencies plan do you target to improve the joint letter parcel delivery? Is that like a strong pillar of cost savings? Or how do you target the operating efficiencies in the last mile deliveries?

Basically, you are targeting a high single-digit market share by 2025. But recently, we have new large e-commerce investing heavily in its own distribution network. So do you see it as the risk or how you see it?

A follow-up on a point already raised. Are you able, for example, to adjust your network if e-commerce for some reason growth less than expected. This is a trend, as mentioned here in Europe and even in U.S., the retailers that are doing better like Costco on e-commerce revenue is growing less than on the physical side. So are you -- is your expansion plan in terms of capacity rigid? Or are you able to adjust it, given the evolution of e-commerce demand?

Okay. I think we have a pretty interesting set of questions to start with. First one about e-commerce growth and how we cope with the present decline in e-commerce. I will probably deliver a general comment, and we can reverse that regarding the assumptions that we have in the plan, and Guy will be explicit on that in his presentation. So we still have all the reputable sources advocating growth for Portugal and Spain. And the decline in commerce is within that framework. If things go differently than we have other ideas and I will reserve that for Guy's presentation and eventually comments. But yes, the assumptions that you have is taking into account the present situation regarding the dynamics of e-commerce in both markets. Joao Sousa would you like to add something on this question?

I can -- I don't know if my -- I can elaborate a little bit more. So we have this base case of growth still, how we put all the sources we have point to that central scenario. We think we continue to have a catch-up effect in all the regions we operate. So there is convergence still in any scenario to the European average that will continue to drive growth and we have market share lever for us to continue to grow as well. And as such, we think we can attain -- we have seen growth resuming after -- in Portugal after a difficult first quarter. And we are seeing things still very, very resilient on Portugal. And in Spain, we have the market share and the underlying dynamics to capture.

Well, about the doubt on the how we compute 9% payments in Iberia, it was not in Iberia. It was not payments at large, but maybe Joao can be expressed on that.

Yes. So we had [ contingent ] for Portugal is where we are right now with payments, and we are just looking for the payments we are doing inside of CTT. So it's not comparable, but you can give you more details.

Okay. Then third question, how much of our cost savings come from joint delivery? We have mentioned -- and Joao Gaspar da Silva, this is a session full of [indiscernible], as you've noticed. But then we're going to diversify for the second part. Joao has mentioned the trend and the evolution you have from back 2018 on the amount of parcels delivered by mail -- sorry, the amount of parcels delivered by mail person -- people, but that is only one aspect of efficiency that we are grabbing and I would probably ask Joao to expand on this.

So I would just highlight two additional elements. First, the appetite of the distribution model does intend just to increase our parcel distribution capacity. We are updating and increasing the frequency by which we update what we call the distribution studies that basically define the setup in each distribution hub. And by doing that more frequently, we will be able to adjust our infrastructure to the declining mail volumes. And we are also starting to deploy different distribution models in different regions, depending on the specific distribution density to optimize the operations at a local level. Second point I would highlight is capacity management. The mail network, the mail distribution network by nature, tends to be very rigid. So it relies on a fixed route structure. And what we are doing is moving to more variable capacity models. This implies having more reliable demand forecast, and it implies giving our managers the tools to be able to react to deviations between the forecast and the reality. I'm sorry, I don't know what's the question, but an important element of the last distribution model -- the third distribution model that we will be piloting towards the end of this year aims at having -- breaking away from the fixed route structure and start having a more variable structure. In order to do that, you need to optimize on a daily basis based on the amount of volumes that got to the distribution hub and also based on available resources. The concept of the idea behind this model is that the head manager will be able to input the available resources and the system knowing the incoming volumes will establish the number of routes and the sequence for those routes. I'll be more than happy to share more details in this time.

Joao was going through the second version of the presentation. Thank you.

Then on the question of big e-tail or big marketplaces entering the last mile, we have -- in the past few years, we witnessed these big e-tailers and marketplaces driving more and more share of the market. And that scale enables some of them to go to last mile. Although not at a nationwide level, only in very high density areas where the economics work for them. Since the pandemic began this concentration stopped worldwide. We have not seen these big concentration to continue. We are seeing actually the reversing of this concentration, so the market is becoming more fragmented. And as such, we don't see in the future, this scale continue to be present in a larger number of marketplaces being Amazon probably in Iberia, the only big one doing last mile. We have not -- we are not seeing that scale effect, enabling more competitors or marketplaces to compete with us on last mile. Nevertheless, we see this always concentrated to higher density areas. And the pure last miles continue to have the opportunity to operate in the internationally wide, be it in Portugal, be it in Spain. And we are also adjusting our way we price to our customers to hedge against that, because we are aligning prices with density that, in a way, also reduces the space to arbitrage between difference of unit costs that higher-density brings and it's less profitable for them to enter the space. And until now, we see that evolving well. On the question on capacity and how flexible were our investments. Joao shared with you, I don't know if you remember, Joao Gaspar, a chart with Iberia with our sortation centers. We have been deploying this strategy of having a lot of operational notes that then we are increasing the sortation capacity. So we start with -- that has no sortation so no automation. So no big CapEx when we start. And as volumes evolved, we increased tactically the capacity of those nodes. And that is enabling us to have some linearity to our CapEx, of course. It's still step changes, but not very big and bulk investments. We are talking about sorters that are below EUR 1 million of investments. Of course, sometimes we need to deploy more than one. And that enables us to have linearity on the investment, and we have been heavily successful until this point to slowly increase CapEx and capacity as we have the volumes to be there. Of course, capacity needs to move ahead of the volumes. But there is linearity, and we -- of course, if the scenario changes, we see a lot of flexibility on CapEx.

Coming to the final question in the room about the ability to adjust if e-commerce goes down. It was partly answered in the sense that, for example, for peak seasons, we have, I would say, sudden gains of capacity by opening centers or increasing our capacity. So the same way it can go downwards. But the most important thing is that in Spain, delivery is fully outsourced. In Portugal, the amount of outsource is still very, very important. And we have this flexibility that has been explained of deploying -- of balancing between the outsourced network and the internal network. So we have a number of tools that we can use if we need to somehow manage for a decline in e-commerce demand. We have -- it seems two questions from the -- out of world. The first one, if we believe it is possible to continue to reduce last mile cost on a scenario of high inflation, especially on fuel and energy costs. I will start and then maybe Guy and Joao Sousa can expand on this. But with a significant part of our customers we have an hedge relation with them regarding full costs because we don't even discuss. It's embedded in the contractual relation and therefore, it's going to be more expensive than a neutral for the operating between ourselves. Then we have -- and we are now closing that round -- this was about 1/3 of our customer base. then for another 1/3, we are now closing the round of embedding within the negotiations -- annual negotiations or regular negotiations on price increase, the issue of additional petrol costs. And we have then a final 1/3 in which things are a bit harder, which are the very big sharks because they have bargaining power that is very strong. And while it's up to a negotiation that it's not always resolved towards our interest because it's more difficult to very large customers, which are also not only big customers, big companies, but they have a very big component of our volumes with us that, of course, it's a bit more difficult. So all in all, we are managing the best part of the hedging of the fuel costs but still, it's going -- there's going to be some erosion, which means that we need to work hard in all the other efficiency levers. I don't know if Guy or Joao if you want to add anything?

Just to refer that on last mile costs 20% to 25% of the last mile is actually fuel costs. Of course, it depends on the long-term view on full inflation. There are scenarios where we can decrease. We are also moving to have a more electric fleet. Until now, we see it's more possible to hedge the inflation cost on energy, more than fuel. Why? Because we are increasing our own energy production on solar. We aim to have between 15% and 20% of the energy we'll produce on top of our buildings. We are hedging more than the end of this year because we have the energy hedge until the end of this year with a long-term contract to try to tear down the energy, and we see ability to model more the energy prices than on fuel and the transition of the fleet to the electric fleet will help as well as we go. And as I mentioned, fuel, it's the relevant part of the last mile, but not the biggest part.

We have a second question from remote participants. How do we plan to grow market share in Spain? Are we planning any inorganic play? Actually, when talking about capital allocation, Guy will be explicit on that, but we've been stating that both for fulfillment and last mile, we are looking at opportunities to speed up our growth if opportunities do exist, if they do exist at interesting multiples. And so it could happen, although we have a significant ambition to grow also organically. Anything additionally here Guy?

Let's say, we -- Joao Sousa covered a little bit of this on your presentation. I lost my sound.

Try again.

Hello? Yes. We are transitioning this growth strategy from big e-tailers. So first, we ground the big marketplace as an e-tailers to help us grow fast. We are now entering a second tier of local big players e-tailers, and we are changing our strategy to address more and more SMEs with deploying commercial sales force and commercial -- and tools to help the sales force would rest that market. We have extensive experience in the management channels to address B2B in Portugal but we are converging to Spain as well, to continue penetrating these other tiers of the market, and we continue to see opportunity to grow market share, especially on what we also covered extensively on the cross-border market, where we continue to have competitive advantage leveraging on the Portuguese operation. And with the markets as they are very integrated and we start from a low market share positioning on that market. We continue to see the ability to grow share.

There's Antonio raising his hand.

There are some stores are delivering -- well, our offerings to the customers to pick the package in the store instead of doing last mile. How do you see this? And if this is something that could threat your strategy?

Well, it's interesting new trend. We are active on that. We are part of that for very renowned e-tailers in Portugal. The very lockers that they use for click and collect are ours. So that there is -- but there is also an opportunity, but I would ask Joao Sousa to expand on this.

Thank you. So the way we see it -- and this is comparable also for the question about how we see large retailers using their own fleet. In the way that the market it is, is still an opportunity for us because when the retailers are doing that, they are pushing for the e-commerce site. So they're going to put the market to grow. And you see for the market grow in Portugal, we need to put more people buying online and more companies selling online. For now, we are looking for that. Of course, we prefer to deliver at home of our customers, but it's good because that means that the retailers are pushing for the e-commerce site. So for us, in this area is still an opportunity. In the same way, like I just want to highlight the last question about the large retailers using their own fleet. It's also an opportunity because the same way that we see that in Amazon, the other ones want to compete to Amazon don't have the same muscle. They are asking to CTT to be the right partner in a like a white label to compete against the Amazon. So this -- we can take this threat and put like an opportunity for us.

Just complementing on this narrative, we know from market studies, it's known that online buyers prefer convenience. So going to the store is always a second option for them. So as Joao said, we are, in fact -- they are in fact, contributing to increase in e-commerce. And eventually, these will be people that prefer -- customers that prefer to have received their parcels at home, at their jobs or in a locker, hopefully.

Thank you very much. We will now allow ourselves some time for a break. As you know, we have kind of expo with various stance on the areas that we are covering throughout the presentation. So if you want to also take the opportunity not only to grab a bite, but to go through the various stands where we have people welcoming you there and explaining any question that you may have. [Break]

On the next few minutes, we will talk about financial services and retail. Financial service and retail, it's an important EBIT contributor for CTT, but we want to keep growing, capitalizing on a strong track record and a clear identity in financial service. Last year, we placed more than EUR 4 billion in public debt. But also, we want to play an important role on nonlife insurance products. On the service and retail products, leveraging our capability in traffic we want to bring new services and products for our customers. In financial service, the ambition is to keep our capacity of public web sales and become a leading distribution network of non-life insurance. How we will do it? Increasing penetration in customer base adapting our portfolio, creating offers for small and micro business, all of this with a multichannel strategy: Managing our customer data with some tools as CRM, but other tools to understand our buyers' behaviors and understand their expectations, to have a tailoring customer proposal, of course, leveraging and taking advantage of our cross-selling potential. We know we need to improve our sales, HR skills and improve our capacity to advertising our stores. With what I mentioned in the last slide, and with new tools, better training and the loyalty program. We want to increase our conversion of financial products in customer set, reaching 50% coming in 2025, coming to 8% in 2021. Of course, public debt is a very important revenue stream for CTT, 8% of our individual clients came to our stores to buy public debt, but we know that more or less 20% of our frequent clients. They are aware of our public debt offer, but they don't use it. So we see a huge potential in our customer base, but also bringing new customers for this kind of products. We're remaining committed as the main retail provider of public debt with a clear saving product strategy between CTT and Banco CTT. Working with our partners, we want to increase our offer mainly on non-life insurance, bringing new products at health and appliance protection, but also motorcycle, also sports. Of course, on money transfer services, trying to explore new international corridors and on payment and -- in payment service tax payments, air transport subsidies into payments and everything that makes sense for our customers to bring to our offer. Financial solutions for small and micro business. We have launched this with money transfer services, with health and for companies and municipalities and all the mandatory insurance for the companies. Of course, leveraging in our customer base, all of this with a complementary way with Banco CTT strategy. In retail, our ambition is to become a one-stop shop for our customer service needs. Of course, leveraging in our traffic, but also increasingly digital and self-service functionalities. We want to be the place to solve for our customers in a convenient way, the daily service requirements. We are the unique network with this capability with more or less 2,400 points of presence. We are in all municipalities. As you can see on this map, we are the unique network with this proximity with the citizens, and this is a very important asset for CTT. We have more than 60,000 -- 65,000 of unique visits per day. More than less 7% of our active clients visit our network at least once a month. Our parcels are gaining relevance. The reasons why customers come to our stores, and we have a new store concept with very good results and with a new offer of digital and self-service functionalities, results that we will see on the next slide. Increasing 7% of total revenues, but also on public debt and also on the other products of retail and services. In our Net Promoter Scores, with very good results when compared with other retail stores. In self-service, 24/7, very interesting numbers, 30% of the package are picking up when the store is closed and 29% of our customers that use our vending machine use it when the store is closed. So we want to be the place to solve for our customers with all the convenience, the daily service requirements, now focus on subsidies, payments, documentation, renewal, but also we see a huge potential in other servicing -- services, energy and telco contracts and everything that we can bring to this network to make sense for our customers. We have a well-established financial service franchise. Operating other contracts, banks, insurance, government, and we want to be a leading distribution on nonlife insurance. We have huge traffic in our stores, and we aim to be an important platform for individual, small and medium companies. We are the unique network with this capability. We are the unique network with this proximity, and we believe we are the unique network with the sale of services for the citizens in this country. Thank you very much.

Hello, good morning. Thank you for your presence. Team from communication also thank you for my photo. It was at least 10 years ago. And this, by the way, reminds me this day into 2016 when we opened the bank. We launched the bank with a simultaneous opening of 50 branches. I think this never happened before in Portugal. And together with physical branches. From day 1, we have available for clients, digital channels. And there's two things together. I'm sure never happened before, and I guess will never happen in the future because 50 branches and digital channels together in the same day, it's not repeatable. So we like to see ourselves as one of a kind in the sense that we bridge the world of fintechs that are associated with digital with affordability with convenience with very strong assets, legacy assets that come from our shareholder and partner CTT. And those are associated with a very well-recognized and trusted brand, nationwide distribution channel. By the way, with a human touch and a model where we share resources: Physical resources, technical resources, human resources, which really is a different model. And we like also to make sure the bank offers to the clients simple products, not many products, but simple and low cost. In fact, products that are though typical products that 99% of the population needs. We are talking retail. And to make sure that we have a good offer, we have also an ecosystem of partnerships to offer third-party best-in-class products. And so it's this value proposition that gave us the confidence that we would be able to attract clients to the bank in a market that is a mature market where there are lots of banks. It's new kid on the block that comes, how can we be successful? How can we attract clients? And this was the concept, unique and difficult to replicate value proposition, simple, affordable designs for retail customers. And in fact, what happens is that in a few years, we came from absolute 0 clients to more than 570,000 clients. And who are these people? These people, they came from other banks, from incumbents and they came because they like the offer of Banco CTT. And surprisingly -- I think surprisingly for all of us, these people they are young. The core age of our clients is between 30 and 40 years old. They are urban. They are professionally active. They are active digital users. This is a profile of a customer base that is surprisingly rich and with a very high potential. Therefore, we had to do business with this client base. That was obvious. And in fact, we reached so far, I think, levels, volumes of business that are very considerable. On the resources side, we have right now almost EUR 3 billion in resources, over EUR 2 billion are deposits. Probably a few months ago, you will tell me, why do you have so many deposits? Interest rates are negative. This is a loss-making business. It is not today, and it will not be in the future. It has not been in the past. And these deposits, they are quite fragmented. There are small deposits from many people, which give us a base of deposits that is very stable and low cost. By the way, 70% come from current accounts and on average, we have around EUR 50,000 per customer. But on top of that, we have more than EUR 700 million on off-balance savings products. And this is quite important because here, we have longer-term savings. So we get loyalty from clients good margins and diversification of risk adapting the products to the risk profile and the duration of the investments that the clients want. Then we have -- on the asset side, we already have a quite sizable consumer credit book with high margins, over EUR 1 billion by end of last year coming from 0 in 2018. And the mortgage book of around EUR 600 million, which has been a product that I mean was launched immediately, I think, 1 year after we launched the bank. So we have clients. We have a rich customer base, and we have business with those clients. Therefore, we need -- if you have clients, you have business, you need to reach profitability. And I think this slide, in a way, is a good reading of the story of the bank. 2018 and '19, they represent the years of investment, building a customer base, building this infrastructure, building this franchise requires an investment. But then we had to reach, and we have an objective to reach breakeven by 2020. In beginning of 2019, everybody in the bank knew that our target was to get -- to achieve breakeven by 2020. This was something that everybody knew in the bank. We have this everywhere in all our communication -- internal communication. And really we have breakeven in 2020, despite the fact that 2020 was very difficult. I mean, it went well, the first quarter, the second quarter, we had a pandemic. Moratorium, as you know. So by summer, we were afraid that we could not reach breakeven. We did it. We did it, was an important milestone. And so 2021, already [ EUR 60 million ] of net profit, still with a big contribution from specific items, which is basically the sale of sovereign bonds, taking advantage of a period of very low interest rates in the market. But above all, organic growth, with revenues growing over 27% per year and costs only 9%. So improving our cost to income ratio to 79%. And with the cost of risk very well-controlled at 1%. We should also mention the acquisition of 321 Credit, which was, I believe, exceptional investments. And it brought profits immediately since they won, but since the acquisition, it has been also a catalyst for profitable growth of the bank as a whole, as it brings risk management experience in consumer and was an exceptional opportunity for the bank to deploy the excess of deposits that you saw in the beginning in the context of negative interest rates. So we could get profitability from those deposits. So this is where we are today, franchise, business, profitability. So going forward, we have really to focus and accelerate value creation. The strategy for the future is clear, and it's based on three levers. The first lever is , in a way, a tailwind that we got from the work that we've been doing in the past years. Then the two other levers are business lines with a high level of profitability where we are doing pretty well, and we want to focus the bank going forward. All this with a target of achieving a return on tangible equity between 11% and 13% by 2025. Lever by lever. First one to monetize the customer base. We have 3 axes here. The first one is that we still have room to be a price attacker. We got a lot of clients since the beginning as we saw. But people ask us, well, is this sustainable? Can you continue to grow clients if you change your position of 0 commissions or asking it in another way, is it possible? Is it sustainable bank with 0 commissions with this level of interest rates? And the proof is, yes, yes, because we've been starting to charge commissions to the accounts. By 2021, we had already EUR 12.5 per current account and the current accounts continue to grow. Our target going forward is to continue to grow the customer base. And still, we believe we have room to increase the level of commissions per account. Second block is to increase the banking relationships. I think for a new bank, it's quite impressive, the fact that already 40% of our clients say that their primary banking relationship is with Banco CTT. But the average tenure of those clients with us is still low with only 3 years. And we see room to move to over 60% of primary relations with the bank, which means this movement will be done through increasing cross-selling. So this is the way we will increase the loyalty and deepen the relationships between clients and the bank. The third is more an [ exhaustionous ] context that comes from the monetary situation. Interest rates are going up, and this is obviously favorable for the bank. We have a balance sheet that benefits from that. Because we have -- as we saw before, deposit base that is very stable, low cost, very fragmented. And so less propense to have increased in this cost base of deposits. Secondly, we have a mortgage portfolio that is more than 90% variable interest rates. And so as this mortgage portfolio reprices, we get obviously better interest revenues. And on top of that, we have a significant amount of excess liquidity from the deposits that are today kept at ECB and that we've been now investing as interest rates go up. Second lever. Second lever is bancassurance. I think we've been doing very, very well on bancassurance. Bancassurance as you can see, has been growing over 40% per year in the last 3 years. We launched this end of 2018. This is, again, an excellent product, is very profitable to the bank, does not consume capital. We have partners. We have a good commissioning on these products. We have a large customer base with high potential for cross-selling. We are, as we speak, digitalizing the sales process, tailoring some products to asset like products. And so here again, we have also targets and we expect to have a portfolio of EUR 1.5 billion by 2025. So another business line with high levels of profitability, no capital consumption and with all the conditions to penetrate our customer base. Third lever, the consumer lending. And here, we believe we are very well-positioned to be a reference player on consumer lending. We expect to go up in the ranking of players until 2025, we have now a book of around EUR 1.1 billion. We should have a book of around EUR 1.7 billion by 2025. And for that, we have 3 engines that combine well between themselves. And by the way, reduce the risk of execution, having the three engines. The first one is the auto loans, where we expect to reach EUR 1 billion by 2025, total book by expanding the footprint and the share of wallet of 321 Credit. Then we have the credit cards where most important driver is the partnership that we have with Sonae. The organic growth is there. And on top of that, we are about to launch a co-branded Banco CTT Universal credit card that will be sold in our network very, very soon. Third, the personal loans. Where, again, taking advantage of our customer base with proper risk models and propensity models and complemented by CRM and complemented also with digital sales that are already working. This will increase significantly in the years to come. So monetizing the customer base on top of that, focus on two high profitability business lines. So this what -- is to achieve profitability because in the end, what we are looking for is for profitability. How this profitability will come? We can -- we start with still at excluding -- I mean, excluding the specific items, the sales of bonds in 2021, we come from a 2% return on tangible equity level. And the main contributor for this growth in profitability will be revenue growth. And this revenue will come from what I've just explained before, monetization and focus on those two business lines in particular. Then you have efficiency gains, efficiency gains that come from scale and from the fact that we have this model with CTT sharing resources, a unique situation that allows us for synergic efficiencies. And of course, then you have on the other side, more consumer lending, a tougher context with higher interest rates and inflation. And so we will be prudent on the impairment side. So in the end, by 2025, we should have a return on tangible equity between 11% and 13%. This plan is self-funded, meaning that will be funded through the balance sheet, both capital-wise and obviously liquidity-wise and is seeking to maintain capital ratios at a level of 15%. So all in all, Banco CTT has already a proven track record. It's a new bank with a unique value proposition, well-designed for retail in Portugal has a sizable and profitable franchise. 570,000 clients with a young urban digital profile and has a clear growth strategy, continue to grow the customer base while strengthening relationships with those customers and focusing in high profitability business lines, the consumer lending and the off-balance sheet savings. All this to be a big contributor for CTT Group. I would say it's a strong plan with strong aspirations, self-funded -- based on high-quality franchise that has been built together until now. And based also on a great team that we have in the bank and a great cooperation that we have with CTT, in particular, with CTT network. Thank you very much.

Hello, everyone. [Foreign Language] I'm very pleased to be here today, and I will be presenting CTT Sustainability Vision for the upcoming years. So we have set a plan across the environmental, the social and the governance dimensions. Our aim is to have a positive footprint in terms of the impact that we have on people and also on the planet. First, I will start to say -- with a brief overview of where we stand and then we will go to the goals and detail one and others. So all of us already heard that climate emergency is one of the biggest challenges of our times. At CTT, we were made aware of this very soon, and we start working to reduce our carbon footprint. So in this sense, we already reduced our overall carbon emissions by 20% since 2013. And we will continue to develop this plan with energy efficiency measures, producing renewable energy, as already was mentioned and doing other initiatives that I will detail afterwards. We are very happy to be distinguished with leadership positions in the main environmental ratings. And also climate change is not the only front that we are working on, and we will continue to address other environmental issues to improve our environmental [ preficiency ]. Of course, people engagement, and their well-being is very, very relevant. As you already know, CTT is the oldest company in Portugal. So this means that besides being innovative and resilient, we also take people engagement, safety and their well-being very -- as key for our business. So we have been developing a strong plan of action across several levers, such as employee experience, health and safety, road safety. This is also an important matter. As you also may know, we have thousands of drivers that travel every day the streets in Portugal and Spain. So road safety is also very important issues for us. We have set a CTT Road Safety Program since 2015. That has also been distinguished with several positive awards, and we will continue to develop these programs. As already said, presence and proximity are key values of CTT business. Also, we have -- we now cover 100% of the municipalities in Portugal, and we have a growing presence in Iberia -- in Spain and in Iberia. So we have last -- during last year, during the pandemic, we also launched several digital solutions that helped local commerce and small producers to face the constraints of this pandemic. So we have also always meant to have a positive social footprint on the communities where we are present in Portugal and in Spain. Last but not the least, in terms of governance, of course, we promote regular engagement with our stakeholders. We annual report our ESG initiatives and our performance against targets in a regular basis through several channels, and we will keep doing that. And I will just add that we are also updating some governance principles that we will soon launch to our employees. So this was a brief overview. And now I ask your attention, please, to our future strategy for the upcoming years. So we are aiming to reach net-zero by 2030. Of course, this will require an acceleration of the electrification of our fleet, especially in the last mile. And we will continue to -- we will continue with our energy efficiency plan and our carbon management plan, where CTT is placed as a leader among others in the sector. This is our environmental goal. It's a strong goal to tackle climate change. Also regarding people's well-being and development, we are thinking to achieve, as already mentioned, a goal of gender parity on top and mid- management by 2025. Also, we will continue our employee development plan for -- to retain and attract people and to promote their succession and well-being. In terms of our presence in Iberia, we have a volunteering program, and we have put some social impact initiatives in profit of the communities. We have several partnerships with nonprofitable organizations, and we intend to reinforce this work for the benefit of the community in Portugal and in Spain. And last but not least, again, in terms of governance, we intend to launch ESG incentives to top and mid- management in order to boost employee engagement in sustainability initiatives. So this is our vision for the upcoming years. We think we will create a positive footprint -- social environmental footprint in people and in the planet by doing so. And we are committed to achieve these goals. Our vision is also supporting in several initiatives, and we will highlight some next 10 initiatives, one more than the others. So in terms of -- in order to become net-zero by 2030, I will be telling you this initiative, in particular in next. But we intend to reach 100% of Last-Mile vehicles by 2030 and 50% by '25. This is one main lever. And also, we will engage and promote a stronger engagement with our supply chain in order to help them to also accelerate the decarbonization of their fleets. On environmental subjects. And our -- we know that our customers have changed their profile, and they are very aware of the environmental and social impacts or becoming more aware of the social and environmental impacts of the services and the products that they buy. So at CTT, we already started to use [indiscernible] in order to have a greener and more positive offer with green mail, for example, that we launched 10 years ago. And we expanded some of the green mail features to other portfolios. But today, I would like to highlight a new product that we launched very recently. I brought a unit of this. This is the reusable package, CTT reusable package. We launched this for e-commerce. It's designed to live up to 50 cycles. So if you compare this package with the alternatives, this results in a bigger reduction in terms of raw material and also waste -- the amount of waste that is produced with the packages for e-commerce. So we think this is one way to do it. And it's a very positive package. And if you want to see it better, it's here available for you. And we will also -- of course, green procurement is key for all the 3 initiatives and the key areas that we are working on. And the aim is to keep improving our environmental proficiency. Now related to our net-zero goal. So of course, we want to go further and faster in terms of electrification. We already mentioned that with our -- in particular, in the last mile. We know that the business case during last years for electrification wasn't positive, but now it is in particular to this segment. So it's where we will concentrate our efforts. And the reason is because 70% of our overall emissions are related to road transportation. So this means that we have to manage these large part of emissions. Also CTT is already procuring green electricity for 100% of our buildings. We are also starting, as already mentioned, to produce renewable energies with solar panels in some of our biggest operational centers. So our major footprint regards to road transportation, owned and subcontracted, and it's where we will concentrate our efforts. The technology exists. The investments that we need to apply according to our business scale is feasible. So we are committed to this in order to achieve net-zero. And after doing all the efforts to reduce our carbon footprint with electrification, energy efficiency measures, training, we're creating awareness, we will then offset the remaining carbon emissions. This is our path to reach this target. In terms of employee engagement, we will continue to develop our plan, and I will just mention some of the initiatives that we are putting in already in place. So in terms -- under diversity and inclusion, in order to reach our goal of gender parity, we will -- we intend to launch a recruitment and training approach dedicated to this goal. We are also implementing several other initiatives. For example, as we all know, in times such as the present, where people are thinking in new ways of working, we are also tackling that in order to improve employee satisfaction and their needs. And we intend to redesign working areas and launch innovative tools to -- that will help us achieve that. Also in terms of health and safety, we performed very, very, very well in this matter, as we saw before. We will maintain our high standard measures in terms of health and safety. And I would just like to highlight our CTT road safety program that we will develop according to the United Nations commitments in terms of accidents in totality by 2030, which will be -- we intend to be 0. So in order to produce -- or in order to reach a positive impact in Portugal and Spain in our communities, we will reinforce our volunteering program and implement social impact actions, and we will continue and reinforce our investment in these initiatives. We already have some -- in this picture, we can see an image, a positive image of our -- A Tree for the Forest campaign, for example, which is a reforestation campaign that we launched several years ago with Quercus, which is one of the most influential ENGOs in Portugal. And we invite people, our employees and their families to participate. And we also engage with the public at large. We already reached with this campaign 100,000 trees -- native trees planted in Portugal with participation of hundreds of volunteers that trying cause. So our aim is this. We will put our CTT network and our communication channels for the benefit of these causes, the causes of our partners. And we take these causes as our own for the benefit of all. As I said, we are preparing to launch several governance principles. But here, I'd just like to highlight that we will be launching ESG incentives linked to the goals that we are presenting today in order to improve and to reinforce and boost employee engagement in these initiatives. Our vision calls every employee, all employees to take part and participate in this program. And of course, we will have our governance bodies that will ensure the applicability of the road map to 2025 and 2030, our longer-term goals. And now I would just like to end with a final note stating that sustainability is in CTT's DNA. We have ambition to be on the forefront on environmental commitments to keep leading in the sector and in Iberia. We aim to be a top employer in Portugal and to have a positive footprint -- social footprint in Portugal and in Spain. So this is it. Thank you for listening, and I hope that with this plan, we can contribute to a better and sustainable future for us in the planet.

So good morning, everyone. We are coming to an end of this intense morning. But first, we still have to go through the financial ambitions and guidance. CTT, as Joao shared with you thoroughly on his presentation, has been on this deep transformation journey, where we are being diversifying away from mail to growth business that now account for more than 50% of our top line and even more of our EBIT generation, more than 70%. We have been doing this with growth, strong growth in every division except Mail, Parcels and the Bank of course, contributing the most; parcels benefiting from these strong trends on e-commerce; the bank being -- continued to grow its credit book and monetizing its already extensive customer base. And it's because of that, that we think we have now conditions to be a company exposed to sustained growth, not only because we have a mix of business that is geared towards the growth business, but also because during this time in the last 3 years, we solved 2 fundamental issues. We were able to deliver the turnaround of Spain. The bank since 2020 became profitable. So now our -- all of our gross business are delivering profitable growth. We'll be growing on the back of the Iberian commerce. That is one of our strongest levers of growth going forward. We'll be accelerating consumer credit, savings and insurance to both our arms, Banco CTT and the retail network. And we'll strive to achieve a more sustainable mail business with 2 new -- with a new lever that comes from the new concession contract that we were able to renew in the beginning of this year with more pricing power, with all the efficiency measures that we continue to push in our operations to combine to deliver sustainability to Mail. At the same time, we are also elevating our ESG commitments, as Maria shared with you, being the highlight, the net zero in 2030. So with all of this, we have ambitious targets to grow our revenues between 7% and 10% until 2025 to achieve a recurring EBIT between EUR 100 million and EUR 120 million, doubling in the top guidance range. During this morning, my colleagues, I hope was very detailed view on the strategies, how to achieve this. But 2 growth drivers, Express & Parcels where we'll be benefiting from the market dynamics, we'll be gaining share because our competitive positioning still allows for that market share gains and we'll be improving margins. The bank will be a top player on consumer finance. We'll also accelerate the off-balance sheet savings, and also we'll include efficiency gains to achieve double-digit return on tangible equity until 2025. Financial Services is also contributing positively. And Business Solutions, it will be an additional lever to bring sustainability to the Mail as we aim to gain share of wallet of our corporate customers, and with that, being more optionality to the sustainable Mail business. Operations, we covered thoroughly and also a key driver for Mail. Of course, we -- to support this growth, we need to invest. We'll continue to invest in our business. We aim to invest EUR 40 million to EUR 45 million per annum until 2025, primarily directed to automation, automation in parcels, sorting capacity and lockers deployment, higher efficiency and digital experience across all our business and reinforce quality. Of course, we know that the macro context has been very volatile in the beginning of this year. We have seen all the central banks revising slightly downwards their projections and all other financial institutions. But still, the base case is a scenario of growth. And as such, that is our central scenario. We know the scenario for recession is increasing. We think we have a resilient portfolio of businesses. Mail is contracyclical. It's been reinforced, that contracyclicality with the new concession contract. We have the financial services arm that also can overperform during tougher times. And we have levers of adjustment. We have CapEx to -- as we already answered that question, to react if the growth is not there. I'm presenting an example of things that we can do because we have still a relevant part of outsourcing costs in last mile that we can redirect to the mail network if we come to an aggressive scenario. And we still have a robust balance sheet to weather us through those tough times. Nevertheless, we are already working on additional efficiency measures. We aim to save between EUR 15 million and EUR 20 million per annum with a very broad range of initiatives that goes from the solar panels that we thoroughly mentioned, the electrification of the fleet, exiting part of our headquarters because the pandemic brought us that flexibility, and even the reductions of headcount that we have on the last years can help us do that. So a very broad set of initiatives. We are already seeing those benefits flow through during the second half of this year, EUR 5 million to EUR 6 million, accelerating during 2023, to stabilize in 2024 to full impact on that year. And a word on guidance on this year. We know that we had a very tough first quarter, as you know. We have been seeing improving trends. We aim to have a second quarter between flat year-on-year with a small decline. As we shared with you in our last call, we see our EBIT generation gear to the second quarter. We have been seeing mail pricing, in fact, coming to a full effect. That will flow through entirely or in full in the second half of the year. The meaning is it will be annualizing after July. We have been seeing parcels improving, and we see reinforced growth on the second half. And Banco CTT will also contribute further for the growth. And with the efficiency measures that I just shared, we remain committed to deliver a guidance above the EUR 65 million on this year. We are also announcing a new financial framework. On shareholder remuneration, we want to ensure that we can continue to invest in our business, on growth and reinforcing our business model. And we want to keep an attractive shareholder policy with this intent to have a payout ratio between 35% and 50% and announcing also a leverage ratio to maintain a very prudent approach to our financial position of below 20.5 -- 2.5x net debt to EBITDA, excluding the Banco including it in the equity method. We see our cash flow benefit from growth and operating leverage. As Luis shared with you, the bank has a self-funded plan. Organically, it does leave us to fund the existing plan. We'll be allocating capital primarily to the growth and transformation of the business and to the recurrent shareholder remuneration that I already mentioned. And we see excess cash to be further enhanced with opportunities that we want to materialize still this year. The Banco's strategic partnership and real estate optimization, that further financial flexibility to be used in potential M&A or to reinforce shareholder remuneration to opportunistic share buybacks programs to enhance our shareholder remuneration. I'll now detail these 2 additional sources of cash. Banco CTT, for some time, it seemed not possible to bring a strategic partner to the bank. Now we have received several offers of interest to be a strategic partner of the bank. We are seeing this strategic partnership to materialize through a share capital increase reserved for a minority stake, hopefully, with no or little discount. And at the same time, we are looking for an insurance distribution agreement and exclusive -- of exclusive nature between life and non-life products to reinforce and broaden our product offering in both our networks. I have a disclaimer that I'm not going through, but I'll invite you to read it. And also, we are pursuing optimization of our real estate dual strategy. We have a portfolio optimization on our yielding generating assets and asset by asset optimization for our development assets. We have a small number of assets but very valuable located in city centers, where we see opportunities to have mixed-use development. And with the kind of returns that development brings, that will time in order to crystallize the most value to CTT. And that's why we will be following an asset by asset optimization. On the remainder of the assets, we'll be announcing -- or we already started exclusive negotiations to create a vehicle to be invested by institutional investors, aiming to have a minority stake around 25% of that vehicle that will incorporate the 400 assets that we'll be also trying to optimize further the value of those assets as we still have a big portion of those assets that are not occupied or fully used that we can further enhance. And also, it will be a vehicle where we can grow our operations footprint. We have build-to-suit opportunities as our operations continue to grow in Iberia, and then there will be the optionality to do that through this vehicle. Then we chose to share with you how we see the value chain for e-commerce logistics in Iberia. CTT has been or has more than 95% of its business between last mile and returns. We have been trying to explore organically entering in the fulfillment area. We see opportunities between -- on the B2C e-commerce fulfillment of growth. We see it as increasing loyalty of our customers, so it will increase the stickiness of the last mile and also can shift the market shares of the last mile. So we'll be looking to reinforce our capabilities on fulfillment to grow faster, always with an Iberian approach. And then we will be also active to see if there are opportunities on the last mile. So 3 key message for you today. We have the ambition to -- for strong growth. We are crystalizing asset -- our asset pool with additional financial flexibility to deploy it and growing and reinforcing further our footprint in Iberia and to increase our shareholder remuneration. Thank you.

So we're coming to an end of a very intense and hopefully informative session. It's now time for wrapping up before the final row of Q&A. I believe it's fair to say that CTT is ready and geared for growth. This is the modem for the closure. And going on a fast forward way to -- through what we've seen, the sector is changing. We are grabbing those changes as opportunities on top of digitalization of the economy, changing consumer expectations and behavior. We seize that. We transformed ourselves. Along this way, we have several achievements, 3 of them we have detailed given the importance they have towards our present and future. And going forward we have, well, truly diversified company with a strong content of what we are now calling growth businesses. We do this by capturing our Iberian nature and presenting ourselves as a one-stop shop for e-commerce, extremely relevant already in Portugal and now unfolding to the remainder part of Iberia, that is Spain, leveraging on proximity and trust and this idea of our unique network as being the platform for provision of convenient services and with an increased focus on efficiency which is, in fact, the second lever, that's taking into account the concession contract, has turned Mail into a different story going forward. And all of this at the forefront of environmental, social and governance practices. We are leveraging on a number of strategic assets. We presume that on -- in 3, again. The first one, the unique Iberian sales force, underpinned by the access we have to B2B clients we have there. So everyone is a customer, every company, of CTT because of mail. And therefore, there is a unique opportunity, and the same applying to B2C because of the retail network; then a strong and very trusted brand for people and businesses alike; and thirdly, because we have an unmatched last mile Iberian integrated network for deliveries. And beyond this, we also have what we believe to be a wide and rich product and services offer, well balanced, enhancing the best of our assets and, of course, capitalizing on a very experienced leadership team. With that, our commitments: 7% to 10% growth in revenues; 14% to 19% growth on EBIT, meaning EUR 1.1 billion to EUR 1.25 billion of revenues and between EUR 100 million and EUR 120 million of recurring EBIT by 2025; being the fastest-growing e-commerce logistics player in Iberia; maximize share of wallet on top of the relation we have through mail on business and commerce services with our B2B customers; to bring the bank to an increased level of profitability with a return on tangible equity between 11% and 13%; having our retail arm emerging as the proximity platform for convenience services; remaining being a top employer in terms of employee experience, diversity, inclusion, health and safety, CTT is already -- was already considered this year the best employer for the transportation sector; achieving net-zero in 2030 with this intermediate target of 100% of EV for last mile, but 50% of that already in 2025; and combined in an optimal way, shareholder remuneration and the ability to invest in our own business. And of course, all of this in a better, faster and greener way. Thank you.

So with this, we would open for our last Q&A round, now with no restrictions on the financial targets.

So I would start with something that maybe I missed in the presentation, and if you could elaborate on that, in terms of dividend policy and dividend commitment. If you could be more specific on this. So that would be my first question. And I have 3 questions. Then the second question has to do with the partnership in the bank. I mean, here, what I wanted to understand the -- you mentioned capital increase in the bank with the new partner coming in, which obviously should drive further growth in the bank. The question here is that if that's included in your strategic plan, so the revenue growth, EBIT growth that we saw there in the presentation, if it contemplates this partnership? And then lastly on the real estate initiative, here, just to clarify if there is any capital commitment from you to -- I mean, you mentioned there will be a development in these assets. So just to understand what's your commitment there.

First question, on your guidance. So I'd like to understand basically what will be the drivers for this improvement on H2, especially given that during last year, you netted in recurrent EBIT around EUR 30 million or EUR 31 million. You are guiding to EUR 44 million to EUR 48 million. If I look to the current quarter, I see EUR 10 million to EUR 14 million, which should have already in place the new mailing concession or contract, let's say it like this. On the bank, I would like to have, if possible, a sense on NII. To arrive, for example, for plus 100 bps in NII, what would be the improvement in your revenues? I'd like also to understand in terms of cost of risk volatility that you mentioned here in the presentation, if you see any increasing cost of risk. I see that during last year, your credit portfolio ended at EUR 1.5 billion or EUR 1.6 billion. I see around the presentation, EUR 1.1 billion, EUR 1.3 billion. Basically, do you foresee an increase in cost of risk? And if yes, would this increase be -- will be offset by the increase in [ arrival ]?

Yes, I think so. Do you start with dividend policy and commitments?

Let's see. We won't guide a specific dividend per share. Our commitment is to that payout ratio between the 65 and the 50. With the targets we have, we aim to have an increasing remuneration in line with the profile -- with the profitability of the company, and that we foresee within [indiscernible]. In terms of the bank partnership, you are right. I add that reference to the slide, but I forget to specifically mention. The plan doesn't include additional uses from the proceeds of the capital increase. We have other areas to work on using those proceeds, ROE accretive, namely if the environment allows to reinforce more consumption credit and mortgage because we have been prioritizing consumer credit versus mortgage because of the returns and the scarcity of capital. We have a natural share that we are not fully using right now in mortgage, and even DBA requirements seem to be evolving in the right way. So it will be a more profitable business, even with the interest rates increasing. And we have the ability even to our natural share, or if we want to grow share, to increase the placements there. So we have initiatives to deploy that extra capital if and when it appears.

Just let me just reinforce a bit of context for the dividend issue with a pretty obvious statement. We have been moving from being a traditional post to being closer to logistic operator. And so we received -- well, great consensus in the Board was generated towards the dividend policy also should be geared towards something in between post and logistics and, hence, the range that we have now set for the payout. And then there was the question on capital commitment for development, Guy can complement on this. But well, there are other tools to reinforce needs for development. But in any case, guy will give you the right answer.

We are seeing this vehicle to start fully unlevered. So that -- the contribution of the institution will be fully on equity. So the vehicle will have leverage capacity to do the development for the portfolio assets that we'll be incorporating in that vehicle. For the asset-by-asset development, we see every asset as a project. And then we can also leverage those individual projects if needed be, depending on the timing that we chose to monetize those assets. As you know, as the opportunities evolve, the kind of IRR that investors comment by the stage that the development is changing a lot. And because we don't have a specific need of capital from those assets, we can afford to optimize when we exit those assets and then reinforcing the value capture by CTT. For the second half, you're right. It's -- there is ambition on our guidance. We see the second half benefiting not only from the price that we already see this quarter, and part of the improving trends come from that. There is another effect that is still at play this quarter, and it was on the first quarter, that is de minimis. De minimis reached the top in between April and May last year, then started to decrease in June and then washing through. So that will help as well. Parcels have been on a recovery profile. So we saw Spain performing, Portugal not performing on the first quarter, both with the deceleration. We are seeing this converging to growth again. And the bank continues to have a strong positive contribution that will come in the second half. On top of that, we have the cost initiatives that I shared.

We have in this round the final question on the bank and cost of risk volatility. We usually like to stand out for that one. And how -- if cost of risk volatility increase, it could be offset by Euribor. Yes. Can we have sound for Luis, please?

Okay. It's okay now. Okay. Thank you. So the 2 questions. What can I say, is that first of all, yes, the balance sheet of the bank is positively exposed to increases in interest rates, and that obviously depending on the actual increase on interest rates, we may expect an increase in net interest margin in the next years by 0.2 to -- 0.1 to 0.2 percentage points. Exactly what is the impact on revenues of an increase of 100 basis points in market rates? I mean, this is the information that I cannot share with you. Of course, we have our interest rate model, and we manage the interest rate risk, and we measure within certain boundaries the impacts on changes in interest rates on our economic value of the bank. But this is too much detail to share. Regarding cost of risk offsetting -- being offset by increases in Euribor, with the macroeconomic scenario that we are using and that was exposed here, yes, I can say that the increase in interest rates will offset the increase in cost of risk. Thank you.

I just have one final question from my side. Looking here at the group recurring EBIT, your ambition of reaching EUR 100 million to EUR 120 million by 2025. I see that the new growth business contribution should be 80% to 90%. If you can give us a little breakdown between this new growth business or by saying by 2025, which business will have the highest contribution for EBIT, namely between Express & Parcels and Banco CTT, if possible.

I have one question regarding the concession agreement. So as far as I understood, it was 1 year plus 3 plus 3. So the first year was already -- well, it's now in the process. So should we start to -- what can we expect for the coming 3 years? Is the same driver that we saw last year or not? So I don't know if you can share with us your sense about this.

Thank you, Antonio. Another question -- 2 questions there, please.

Can you please clarify what's the balance sheet policy? I mean, you are mentioning a 2.5 -- below 2.5x net debt EBITDA, which is way higher than where you are at the moment. So I'm just trying to understand if that's a cap that you want to keep? Or if that's a level you want to be, which implies a very efficient use of the capital, and therefore, we should expect follow-up M&A or buybacks? And secondly, in your guidance. If you can clarify what's your assumption for parcel volume growth from 2020 to 2025 both in Portugal and Spain? And what's your assumption for mail volume decline?

So the first question is on the EUR 8.5 million investment for your efficiency plan that you have in 3 years, around EUR 8 million of investment necessary. Is this amount included in your CapEx guidance? This is the first one. Then I think the question about the cost of risk volatility. It was -- in the presentation, it is in the second part. I wanted to understand well what is behind this volatility in the cost of risk, if you can explain that? And what is the lever that you are assuming in your plan to achieve a ROTE of between 11% and 13%? What is the real projections that you are assuming on that? And if possible, if you can give the implicit contribution of the EBITDA of the bank, implicit in this return on tangible equity.

Can you repeat the last part? Sorry. The implicit...

The implicit contribution for the EBIT of your plan, implicit in this return on tangible equity of 11%.

Okay. Thank you. A lot of questions. Thank you so much. But the answer is obviously that we are not disclosing the business by business contribution. Otherwise, we would have made it here, and we reserve that freedom for the times ahead. Then Antonio's question on -- regarding the concession contract. It is indeed 1 plus 3 plus 3. And what we expect is, in fact, a confirmation of your conjecture. What we are now discussing with ANACOM and the direct to channel for consumers is a set of criteria and the fundamental aspects that we want to preserve, and we cannot disclose what's going on there, but it's our assumption. And so we are targeting to somehow be successful in that is that, first, we need to hedge, as always -- as it happened in the past for inflation, hedge for volume decline but in a proper way. That is using historical data, as I've mentioned in the presentation, rather than predictions that then can, well, go wrong and also to have some consideration for efficiency and all weighted in a proper way. So that's our expectation. That is how things are being discussed. That's what happened, in fact, as you said, for 2022. So hopefully, this will be the criteria. Then the mechanics is that we proposed -- with those criteria established, we propose concrete set of price increases, and that would be hopefully approved by government. On balance sheet policy, I would resort to Guy, if the 2.5x is the target or...

The 2.5, firstly to clarify, that excludes the bank both in net debt and EBIT. It includes the lease liabilities. And of course, it allows us room to have more levers if it's needed according to the situation that I have outlined to M&A -- potential M&A or to additional remuneration that we'll be assessing every year. On the mail volumes and parcels, we won't disclose more data points. We said we think we provide you with a very detailed set of data points in parcels. Mail volumes, I can comment that we see the same trends over the last year, so mid-single-digit volume declines. And that's what is on our estimates. The implicit contribution of the bank, I think Joao already replied. Of course, parcels and the bank will be the most contributors. We won't rank it. but I think you can understand that from everything we shared. And on...

Yes, we have this question on the EUR 8 million of costs associated with the savings measures.

That is included on the guidance.

And then this set of 3 questions regarding the bank, volatility on cost of risk, please expand a little bit more on that. The assumption for the Euribor that will lead us to this 11% to 13% of return on tangible equity and how much at least conceptually EBIT is being considered for this -- for achieving that target. And because we are not disclosing EBIT business by business that one, it's obviously answered in advance. So there is an EBIT contribution for that. So let's stick with the Euribor assumption and the volatility of cost of risk.

If I understood well, the question is on whether the adjustments of the models will bring or not volatility. Our current vision on that is that we have cost of risk below -- before adjustments, below trend on the first quarter and will be above trend on the second quarter after adjustments. And then we expect stability from then on again on the current macroeconomic scenario. Regarding interest rates that are embedded in the plan, what we are expecting is a progressive evolution to interest -- market interest rates of around 1.6%, which is compatible with the GDP growth that we also presented in the macroeconomic scenario.

And that I think it's aligned with the projections of Banco Portugal as well.

Yes. Yes. Although the Bank of Portugal has a bit higher GDP growth.

Yes. 2.6% GDP in the Bank of Portugal with the exact 1.6% of rates, correct. Any more questions from the room? Yes, please.

Just on the bank, to clarify one thing. Regarding your presentation, you focused on extracting more value from customers. I would like to understand if this customer segment will remain as individuals of private consumer-led lending or if we could see Banco CTT engaging in SMEs, given you're actually developing your one-stop shop for services, and we could see SMEs actually being a new segment in the bank. And on e-commerce data gathering, on the parcels that you manage in the infrastructure, do you collect any trends on the types of sectors that show more dynamic? And do you think that could be a lead for you to focus, for example, and develop your fulfillment targets, for example?

Thank you. Any more questions from the room? There's one over there.

Just one more question for me. On the real estate spin-off that you are doing, can you please clarify how much of the book value or how much of the asset base is actually not utilized and up for sale?

Sorry, just a final question. Regarding the bank...

We need a microphone, please.

Regarding the bank, your targets -- your current targets are very, very ambitious in [ 2022 ]. I think that will be -- we have to give you congratulations. So why do you -- are thinking now to sell minorities or to create a minority stake at this point in stage and not expect 3 or 4 years to create the minorities?

A final one on the bank. What is the invested equity that you expect in 2025 to achieve this return on tangible equity level?

Okay. Thank you again. I will invite Luis to expand on the opportunity for SMEs and who -- which customer base are reconsidering for this. And then Joao could expand -- Joao Sousa, please, on the trends -- sectoral trends with higher dynamics that Sophia alluded to. Luis, up to you, please, SMEs.

SMEs. Well...

In the framework of '22, '25.

Yes, yes. So I mean, being very direct, we are not expecting within this time frame to launch a specific business line for SMEs. It's not something that is far away from our thoughts as we have been building capacities that we believe would fit well with the type of business model that are needed for SMEs in Portugal that we still believe are not well covered. Having said that, we have so much work still to -- work to be done on private individual clients and to execute well this plan, not losing focus, not putting more investment on the bank reaching the profitability that is required. For now at least, we do not envisage the -- I mean, the launch of an SME business.

On the parcel side, if I understand well the sectors you are asking, we have 2 main sectors we see growing on the parcel side. It is fashion and electronic. And then inside of what we call marketplaces is a mouth of a lot of things. But I think for fulfillment strategy, more than just the sectors is the way we develop value-added services for the customer, so the late [ towers ]. So the customers -- our customers are trying to understand how can bring more quality in the way they deliver the package, in hours, speed and so on. This is even more important than the sectors, okay?

Actually, building on this one, we were discussing this at dinner with the example of a large retailer, brick-and-mortar retailer that is now going online. The facilities, the tools, the infrastructure for e-commerce logistics is quite different because it's just picking a very low number of very diverse pieces. So a huge range of categories and then minor portions of each. And that is, in itself, implies a different set of tools and the infrastructure, robotics and so on. So it's more covering something that is now emerging, which is fulfillment for e-commerce that provides an opportunity. Moving to the real estate, how much of the book value is included. Guy, please?

It's not...

It's not utilized. I believe that was the question.

So the book value, I cannot say. But right here, I can -- we can follow up off-line. I can share that we have 25% of the square meters vacant. That is not to be extrapolated to 25% of the buildings vacant because some of them have -- we have reduced the footprint of CTT. For instance, a building that included a storefront, we continue to occupy the storefront and we render vacant the floors above the store. So 35% of the square meters, not to say that it's fully vacant to be disposed and also to say that those square meters that we published in the beginning of the week already includes rentals from some parties. So there is already rental income on that portfolio.

Then we have this much anticipated question by Antonio Seladas, which is intellectually challenging. But in fact, what we believe is that bringing a partner to the bank at this stage, we'll conform with the previous commitments that we have of not bringing additional capital to the bank. It's very important to stress that the bank is able to generate through its balance sheet and business, the capital it needs to fulfill the targets that have been shared with you today. But there are opportunities, and Guy mentioned that conceptually, that we see accretive to do more with more capital. And so it's, in that sense, speed -- fastens the development of the bank and its growth. But it's also bringing if that would be the case additional business lines, additional expertise that will, in itself, will be also accretive. So that's the reason why we will eventually go along those lines. And well, nevertheless, the good news is that not so long ago, if we did partner, for some reason, we'll have to offer the bank or to sell it to a very high discount. And things seem to be changing dramatically. I will ask Luis to complement on the capital that will be there in 2025, but with the obvious statement that the capital on top of the existing one will be generated internally by the bank.

Yes. I think this is the point. I mean, as Guy mentioned, the plan is self-funded. So the equity will be generated by the bank itself, either through results or utilizing the balance sheet. And so for this plan, no further equity from shareholders will be required.

Well, with no further questions in the room, we might move to the remote questions. We are seeing one. Now the sun is making it more difficult. So the first one is about saving solutions for the bank. This is a question for the bank. Like investment funds as an alternative to traditional deposits is increasing demand for that. So -- I'm sorry.

My question?

My question is how to see your offer for the next 3 years. More specifically, are you thinking to extend your offering investment funds and PPRs. PPRs are already a huge part of what we do. Luis, please?

Yes, I mean, we've been diversifying our savings products, all of them wrapped in insurance products, due to the fact that we are not a financial intermediary. So we, now, as we speak, can only sell insurance products. Why? Because it's another regulator. It's more regulatory costs. It does not mean that we cannot go through this route in the forthcoming future. But for now, we believe that we are able to diversify the offer using insurance products, and namely, unit links that could very well fit to the needs of our clients. On top of that, there are also fiscal considerations on insurance products. So diversification, yes, the portfolio is already pretty well diversified. But we are continuing to work with our partners in the sense -- in order to continue to adapt the offer to the risk profile and the needs of our clients. And I mean, this is an area of focus of the management of the bank, as I said. And we will keep growing fast on this front.

We have another question, a remote one. I will dare to start answering to this one, Luis, again for the bank. How confident are you in the growth of the bank's customer base, in particular, if you plan to align commissions with those of peers? We do plan, as was shown, to increase commissioning and the revenue stream from that but always in a clearly competitive manner. But if you want to add anything else?

There's no -- it's exactly that. We still have room to improve the commissions per account but still being well below the market. So we will not lose the price [ taker ] stance that we have so far and so we can combine this growth of customers with still an increase in those commissions. By the way, we -- despite the fact that we have been increasing the commissions in [ BASF ] we are still the preferred bank for people that want to open a new account in the new bank. So we are still the primary bank according to BASF.

Okay. It seems that questions are, for the moment, done. We'll remain, of course, available all of us, the executive team, the speakers, the Investor Relations team. Allow me a more intimate note to thank Nuno and his team and Miguel and his communication team and also, of course, my dear colleagues here in the stage. And thank you a lot for, well, willing to come to CTT's Capital Markets Day. It's been a pleasure. We are not leaving. We are staying with you. But before you start managing your orders and buying shares, please join us for a quick lunch, and we remain with the stance open and, of course, available for interacting with you as always. Thank you very much again.