Poste Italiane S.p.A. (PST) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to Poste Italiane Capital Markets Day. I'm Giuseppe Esposito, Head of Investor Relations. And on behalf of the entire management team, thank you for joining us. Today, we'll present our 2024-2028 Strategic Plan, The Connecting Platform. On the screen, you can see the agenda for the day. In a few moments, our CEO, Matteo Del Fante will provide an overview of the group strategy for the next 5 years. Afterwards, we will have a presentation by each of our 4 business units, starting with Massimo Rosini for Mail, Parcel & Distribution; then Guido Nola for Financial Services; Andrea Novelli for Insurance Services; and Laura Furlan for Payments and Mobile, which starting from today and in light of business evolution, we will name Postepay Services. Finally, our CFO, Camillo Greco, will deep dive into the financials. After the closing remarks from our CEO, we will start the Q&A session. And for any topic, we won't be able to cover today, please do reach out to me and my team and will provide any clarification you might require. Now before we start, I must ask you to read the legal disclaimer on the screen, which a copy is also included in the presentation pack. And now I think we are ready to kick off. Matteo, over to you.

Thank you, Giuseppe. Good morning, ladies and gentlemen, and a very warm welcome to Poste Italiane Capital Markets Day. Our first in-person presentation since 2019. I'm very pleased to see so many familiar places here today. In today's event, we will provide insight into our business unit and our strategic priorities. At the end of the presentation, you will have the opportunity to meet management and ask us questions. Let's get started with the video, highlighting our achievement since the start of our journey. We have tried to summarize in this video, our past achievements and future goals. So please bear with us, please. [Presentation]

Thank you. So we started our transformation journey back in 2017 with a simple ambition to maximize value for our clients and be the most effective and trusted distribution network in Italy. We've gone beyond that and establish ourselves as the largest digital platform in Italy, driving on the integration of multiple touch points and creating an omnichannel ecosystem where each portion of the platform complements the others. 13,000 post offices in every corner of the country, often where there is no other trusted institution to be found. 51,000 third-party network touch points, all leading to 23 million daily interactions with our 45 million clients, where our clients started journey online and then visit postal office or vice versa, the transition is seamless. Italy can count on Poste Italiane as a solid, trusted, and effective strategic pillar for the country. And finally, rather than make you wait for the numbers and to avoid you flicking through the deck, you can see our key financial targets, which we will be diving into later. So let's move to Slide #8, please. As you can see, we have constantly over delivered on our key targets, every single year over the course of the last 7 years. We have demonstrated our nature of being an anti-fragile company. We have always adapted to a rapidly evolving operating costs, transforming challenges into opportunities as we did during the pandemic. I'm proud to say that this year, we posted a record EBIT of EUR 2.62 billion, twice 2017 number with a similar trend for our compelling dividend distribution, which grew at a slightly lower pace. Moving to Slide 9 on shareholder remuneration. We have ensured a reliable dividend stream under any circumstances with dividend distributed even on 2020 results, which were impacted by the pandemic. In total, since listing, we have distributed around EUR 6 billion in dividends to our shareholders. At the same time, our group shareholders' equity has constant increase from EUR 6.6 billion in 2016 to EUR 11 billion in 2023. Our dividend per share has grown at a remarkable 11% annualized rate since 2016 with targets upgraded every single year since 2021. Looking at total shareholder return, our performance has been well above the one of the Italian stock index market. Our dividend distribution has been enabled by a strong and sustainable financial performance supported by our diversified business model. Let's move to Slide #10, please. Since 2017, we have worked on transforming Poste from a traditional mail focus operator into an omnichannel platform company, positioning the business for sustainable growth and profitability. If you look at the KPI column on the right-hand side, there are some remarkable results we achieved. In Mail & Parcel, we anticipated the growth of the Italian e-commerce market and became a leading B2C parcel operator, focusing on e-shopper needs also by building an extensive pickup and drop off network and by investing to build a state-of-the-art logistic infrastructure. Entering the contract logistics market is a natural evolution of our business, enabling us to provide end-to-end solution to our clients. In 2023, this division was finally at breakeven 1 year ahead of guidance. In Financial Services, we have created a unique omnichannel business, redefining our commercial offer to meet all our client needs from lending, savings, investments, and insurance. Our TFAs, total financial assets, including retail bank deposits have constantly grown in all market environments, demonstrating the loyalty of our client base. In Insurance Services, we have built a fully fledged and resilient insurance company, able to deliver positive net flows in Life in the face of significant market headwinds and grow the protection business also through the acquisition of Net Insurance. Our Solvency II capital position is extremely solid, and we have successfully addressed the volatility of this capital ratio. The Postepay Services business unit, which, as you heard, we have recently renamed, has became the largest ecosystem in Italy for everyday needs with payments at its core. Transaction values has almost increased fourfold since 2017 to over EUR 80 billion. We completed the integration of LIS and successfully launched the Energy business, now standing at over 0.5 million contract signed in just over a year. As I will show you later, we continue our focus on digitalization, customer experience and workforce transformation as cornerstone of our strategy. Let's move to Slide #12, please. This is simply a snapshot of our platform and truly omnichannel service model. We connect citizens and businesses and to the public administration through daily physical and digital interaction. Our clients simply want to have access to our services through whatever channel is most convenient to them, be it the post office, the PuntoPoste network or the digital devices. We handle more than 23 million daily client interaction across our platform, extending the scope of the engagement with our 45 million clients. Data, technology, Generative AI allow us a seamless customer experience, engaging our clients across all distribution channels. Moving to Slide 13, please. Since 2017, we spent almost EUR 5 billion in cutting-edge technologies, deeply transforming our IT infrastructure, which is based on 4 key pillars. First, a strong boost in cloud adoption with more than EUR 100 million spent in 2023 and about 90% of new projects implemented as cloud native. Second, investment in AI, now ready to scale up and process a vast amount of interactions and transactions. Third, a new generation, distributed platform based on an innovative data measure system for analytics and real-time streaming for each business domain. And finally, tech-focused acquisition of specialized companies such as Agile Lab, Sourcesense and N&TS, and a multiyear talent in sourcing program upskilling and reskilling of our IT people. We have also changed the way we work by adopting lean and agile methodologies and empowering our technology workforce by using GenAI, such as co-pilot. This transformation extend to the entire network of more than 700,000 devices, taking full advantage of all the new explanation technologies, in particularly, Generative AI. These investments have already generated return with ICT cost to serve per transaction more than halving since 2017. And let's move to Slide 14. We have also enabled the digitalization of our client base to increase satisfaction, loyalty, and as a result, cross-selling. As you can see, our digital clients grew by around 50% from 11.6 million in 2020 to 17.2 million in 2023. We have 12 million payment wallets, and we are a speed digital identity provider to over 27 million Italians. Our customer experience has grown exponentially since 2017, especially on our apps, resulting in increased use and loyalty of our clients. 1 out of 4 clients uses our apps every day. Digitalization is also a key driver of value creation for the group. In fact, as you can see, hybrid clients using both physical and digital clients grew by 64% in the last 3 years. Such clients have a higher cross-selling rate than the average of the client base to the benefit of our bottom line. Moving to Slide 15, please. Starting from the left side of the page, omnichannel interaction now total 6.9 billion per year, of which 3.3 billion on our digital channels, over 4x the 2017 level and a remarkable 48% of the total. Moving to the central graph, you can see how these interactions are converted to transactions. Out of 2.8 billion annual transactions and sales almost 1 billion or 27% are completed through our digital channels. Overall, nearly EUR 0.5 billion in revenues are generated through our digital channels, almost 4x 2017 levels. Let me be clear about this. This is not a different way of doing the same business. As an integrated platform company, we coordinate the work of our networks in order to maximize our omnichannel potential. Our purpose remain to reach everyone in an inclusive way to -- through their preferred channels, digital, physical, bridge by remote assistance if need be. And let's move to the key pillars of our new plan on Slide #16, please. We will roll out a new commercial service model, aiming to maximize the value of our platform. Our client coverage will be optimized and supported by digital enablers. We will continue to evolve our post offices from transactional touch points to relational ones, focus on building and maintaining strong customer relationships. We'd also renew our focus on micro small businesses as Guido and Laura will deep dive into later on. On the logistics front, faced with a secular decline of mail volumes and in order to preserve financial sustainability, we will transform our network to a parcel dedicated one, developing our real estate infrastructure and leveraging technology to improve operational efficiency and customer experience. These initiatives, coupled with our strong capital position, cash flow visibility, and sustainable growth are the key ingredients to increasing shareholder remuneration going forward. And let's look now at the new commercial service model on Slide 17. The group platform has reached 45 million clients through the addition of digital identity and utility services, and through the digitalization of traditional services such as invoicing and registered mail among others. To serve our clients on the connecting platform, we differentiate business models according to 2 types of needs complementary to each other. Everyday needs met by subscription-based services such as mail, payments, telco, energy, parcels; and long-term needs, such as savings, investment and insurance protection. The 2 models have their distinct in features in terms of aeration, technology and objective but they're interconnected on our platform, allowing us to identify everyday clients with high potential in order to also address their long-term needs. The data-driven approach is particularly relevant in serving everyday clients, mainly through digital channels and the post office, where we continue the evolution from a transactional to a relational approach increasing the number of Home & Family corners by over 2,000 in the post office through the plan. For long-term services, advisory activity is essential. We are reconfirming our widespread presence in the country, making a conscious countertrend decision to size untapped potential. We will enhance everywhere the coverage of our Affluent+ clients base to increase productivity, also benefiting from the reorganization of our network in a hub-and-spoke fashion, as Guido will discuss later. To attract and retain talent, we also redefined adviser, career paths, and their incentive schemes. AI used by both business models will help us reduce administrative burden and set customer engagement priorities. With Generative AI, we will increase personalization of financial advisory content and improve significantly productivity. To facilitate the integration of the offering, as you will see in the SuperApp video, we are building integrated sales funnel. Let's look at our new SuperApp on Slide #18 on this. The new SuperApp is the tip of our tech evolution iceberg, enabling business integration and confirming the role of Poste Italiane as a real platform company. Our SuperApp is being smoothly deployed and will become the new single access point to Poste Italiane digital ecosystem, enabling a seamless experience and maximizing cross- and up-selling potential. Let me show you a short video on our tech journey and the new SuperApp to give you a feel of what we are already doing today. [Presentation]

Moving to Slide 19. I would like to share with you how our business model leverages on technology applied at scale. We're using traditional AI models and the new generative ones in a highly ethical way in order to customize our omnichannel engagement and maximize customer experience. We'll achieve these targets, thanks to our unmatched data analytics capabilities. In 2023, through AI, we analyzed around 3.3 billion transaction, equivalent to more than 23 petabytes of data, best like, to give you an idea, the memory storage of a normal PC for every single Poste Italiane client. In particular, through a one-to-one omnichannel customer engagement, we will be able to identify the most suitable service or product satisfying the specific client needs and offering it at the right time through the right channel. Customer experience must be our best product. This is why we actively collect feedback from our client base that we use every day to continuously improve the experience of our clients. In short, we believe that this approach will enable a way to cycle increasing at the same time, cross-selling and customer loyalty. Moving to Slide 20 on Logistics transformation. With Mail volume, secular decline, we need to transform our logistics network into a parcel-centric and future-proof one. The Parcel business is more seasonal than the Mail business with afternoon and weekend deliveries on the top. Therefore, today's joint delivery model needs to be further evolving introducing additional levels of flexibility, enabling our Postine and Postini to deliver a higher number of parcels. In today's fast-paced world, the key goal is flexibility. Providing flexible delivery options and customer shipping solutions puts control into the hands of our clients. As an example, and as Massimo will show you shortly, we will develop micro fulfillment areas into our logistics sites to enable deliveries of high consumption products within 4 hours from ordering. We will enter into a joint venture with a best-in-class logistics operator to accelerate and co-finance the required evolution of our physical logistics infrastructure. The transformation of our logistics business will also be supported by significant investment in technology, data analytics, machine learning and cutting-edge technologies that will enable us to increase operational efficiencies as well as customer experience. Finally, we will continue to have a strong focus on reducing our CO2 footprint, as sustainability is also a key competitive advantage. Let's move to Slide 21 on operating costs, please. As Camillo will discuss more in detail later, cost discipline remains a pillar of our strategy. We aim to constantly support business growth, balancing efficiencies and increasing productivity. On HR costs, the negotiation with unions on the new collective agreement are progressing based on a consolidated relationship. Our plan enable projections in the best interest of both parties. This is in line with our profitability ambitions while meeting the legitimate claims of our people. We will continue to actively address our FTE evolution, managing retirement and hirings. FTE increase will be focused on subsidiaries where we expect higher revenue growth. Insourcing, re-skilling and upskilling of employees will also support our human capital strategy. We're also optimizing non-HR cost, in particular, we expect up to 8,000 FTEs to be redeployed to support parcel growth, enabling lower variable cost. We'll also increase efficiencies with lower unit cost on parcel and payment businesses. To optimize Energy cost, we will leverage on the expertise of Postepay, and we will keep implementing initiatives to reduce consumption. Finally, we are working to streamline our procurement processes to mitigate inflationary pressures. And let's move please to Slide 22 and our ESG focus. We are confirming sustainability to be an integral part of our group strategy. Our ESG strategic plan continues to be granted on the 8 key pillars we identified in 2021. For the 2024-'28 period, we have added another 53 new KPIs which include an enhanced focus on accessibility and inclusivity for our clients and employees. We will closely monitor our progress towards these targets and provide regular updates to the market. Our enduring commitment to advancing along our sustainability journey has earn us the inclusion in the most prestigious global indices and ratings, strengthening our market reputation. Let's move to Slide 23. We have successfully already reduced the group's CO2 emissions in line with our midterm target of minus 30% by 2025 and are on the right path towards carbon neutrality by 2030. To enhance long-term visibility, we have set an additional reduction target of minus 42% for Scope 1 and Scope 2 emissions. To this end, we're introducing several new initiatives such as the incorporation of Poste Mobility, a Benefit Corporation, whose purpose will be to manage the decarbonization of our fleet as well to promote our Green Logistics. As we say, what gets major gets managed. We are then introducing the Green Index, a carbon footprint calculator for every stage of our Logistics supply chain. The real estate management program focused on energy optimization will continue as planned, increasing the number of carbon-neutral buildings from 1 to 10 by 2028. Our Polis Project and the Logistics Real Estate joint venture will further contribute to Energy optimization of our sites. The upgrade of around 7,000 post offices and selected logistics sites will comply with the highest environmental standards. Finally, to further reinforce group commitment to green transition in line with the Paris Agreement, I'm proud to announce that we have set the ambitious net zero target by 2050 for our investment portfolio as Andrea will describe later. Moving to Slide 24 and our people strategy. Obviously, our people are the real engine driving our transformation. Over the past 6 years, we have witnessed a profound generational shift in the company, involving as much as 80,000 AFTs through hirings and exits, allowing for the average age of our employees to fall from almost 50 to under 48, and this is 6 years later. Women make up 54% of our workforce and occupy 46% of middle and senior managerial roles. Through consistent investment in training and development programs, we foster innovation and grow talent. The core of our success lies the contribution of every single individual in the company. We support an inclusive culture that encourages commitment and unleashes potential. As an example, since its launch in 2021 with the Insieme 24SI people engagement initiative, we have gathered over 41,000 contribution to our ESG group strategy. Let's have a quick look at the Polis project on Slide 25 for an update. As you have seen in the video, as part of the national recovery and resilience plan of the government, we have already launched the Polis project for small municipalities with the aim of supporting social and economic cohesion and inclusion, reducing the digital divide. At the end of February, we have completed the renovation of close to 1,200 post offices. And by 2026, all post offices in 7,000 small municipalities nationwide that will be completely transformed with a new look, offering digital administration services, making life easier for citizens. As a result, footfall in our Polis post offices will significantly increase. Polis is also the largest co-working network in Italy with 250 sites, spatial Italia, covering 80,000 square meters or close to 900,000 square feet will be made available with workstation, meeting spaces, shared services, edge computing and training areas open to the public. Our post offices, thanks to the Polis project will become smarter, equipped with 1,000 solar panel, 5,000 charging stations, and 500 lockers to meet evolving client needs on one side and reducing our CO2 footprint on the other. Uniqueness of this project is such that it has become, as you heard in the video, a case study and a benchmark for other European postal operator. Finally today, I'm very proud to say that last week, we issued and delivered the first passports out of a post office, a landmark achievement for profile and, I must say, company capabilities. Let's look at our key financial targets on Page 27, please. We foresee an EBIT growth at around 4% on average over the plan, lending at EUR 3.2 billion in 2028. Organic revenues will continue to grow steadily, reaching EUR 13.5 billion in 2028, with a positive contribution from all segments and increasing exposure to growing businesses, as you will see in Camillo's presentation. As a result, we intend to grow our dividend per share at a 7% annualized rate on the basis of a payout ratio of at least 65% over the planned period. Moving to Slide 18 (sic) [ 28, ] more specifically on our shareholder remuneration. We are upgrading, but more importantly, changing approach in our dividend policy today. Replacing a fixed DPS growth policy, going forward, we are committing to a payout of at least 65% over the plan, targeting at least EUR 1 dividend per share in 2026. Delivering the targets will result in a distribution of over EUR 6.5 billion cumulated dividend between 2024 and 2028, representing over 40% of current market cap. The switch to a payout ratio will result in higher distribution when over delivering on our targets. Our compelling dividend policy is backed by a strong visibility on future cash flow and capital generation. Thanks to increased and diversified dividend upstreaming from all our subsidiaries. We're also leveraging on a strong capital position with strong Solvency II ratio, well above our managerial ambition and with a lower expected correlation of capital position with BTP spread, leading to a more stable value generation proposition for the whole company. This has also enabled a Poste Vita remittance ratio in the plan of up to 100% from 2024 onwards in line with our centralized group capital management strategy. Thank you, everybody. And now over to Massimo for a deep dive into our Logistics strategy.

Thank you, Matteo. Good morning, everyone. Let me start with a video that shows the transformation journey undertaken in Mail, Parcel & Distribution since 2017. [Presentation]

The industrial journey over the recent years has transformed us from a Mail focused operator into a leader in the Italian Mail & Parcel sector. The driver of change has been the growing parcel business built on strategic partnerships with key merchants and market leadership in the inbound B2C flows from China. We have leveraged on our unique assets such as the leading PUDO network and then implemented a focused M&A strategy. After decades of losses in 2023, we reached the promised breakeven ahead of our guidance. We are now ready to complete our transformation into an end-to-end sustainable logistics operator. In line with client needs, the 4 key priorities of our plans are: first, consolidation of our parcel leadership, also growing the international business; second, the development of contract logistics to provide our customers with turnkey end-to-end solutions; third, business expansion in the growing health care logistics market; fourth and most important, we will build a sustainable and future-proof Postini network. All these strategic ambitions will step up our market positioning with 50% of revenues deriving from the growing and profitable Parcel and Logistics markets by the end of 2026, a huge difference compared to 20% in 2017. Let's move to Slide 33. Let's start with the market trends. We actually find ourselves in a better position than our European peers for 2 reasons. First, we have already experienced a sharper Mail volume decline than our peers. And second, we are lagging behind the rest of Europe in terms of B2C parcel per capita, but we are catching up. In Mail, although demand shocks are becoming less likely, we are being conservative in forecasting a 6% annual market revenue decline over the plan. The Domestic Parcel market growth continues to be steady even after the pandemic phase. B2C market will continue to grow at high single-digit rate outpacing B2B in terms of sites by 2024. In Italy, B2C parcels per capita are still lower than the European average by over 30%. Moving to the markets where we target to grow our share. International market is growing with high margins and can be accelerated through strategic partnerships. Contract Logistics market is also trending upwards, mainly fueled by Parcels. As a very fragmented market, we believe there are tangible growth and consolidation opportunities around solid operators. Moving to Slide 34. Over the plan period, our target is to deliver EUR 700 million of new business between Parcels and Contract Logistics. Before deep diving into the growth plan, we need to focus on what we believe are the 4 key enablers, in particular, technology, sustainability, real estate strategy and the implementation of a future-proof Postini network will be enhancing productivity and efficiency. We will now focus on these enablers on the next slides. Technology has always been a key element of our evolution, enabling both improved customer experience and network efficiencies. Our data-driven journey starts from a purely descriptive approach moving to a predictive one and finally, lending on a proactive evolution stage. Starting from the descriptive approach, IoT and Edge Computing enhanced our network control, improving our end-to-end visibility and our assets productivity. We are now working on a predictive approach based on that analytics and machine learning, improving our customer experience and optimize a parcel allocation within our networks. At the same time, we are moving ahead to a proactive approach, leveraging on Generative AI using our clients' preferences to improve their customized experience. Moving to Slide 36 on Green Logistics. Our sustainability strategy includes: first, the completion of our Green Fleet, enabling a 40% CO2 reduction in 2024 versus 2019, in line with our Scope 1 target. As to Scope 3 target concerning the emissions of our third-party suppliers, our target is a 15% reduction by 2025. Second, we will focus our offer on solutions with a lower environmental impact. PUDO Network, Boxless and Paperless return solutions will be reducing the CO2 emission. Third, process innovations will allow reduction of paper usage and waste materials. Overall, these actions improve Poste Green Index, which is a distinctive features calculating carbon emissions per single parcels providing our clients with a new tool to assess their sustainability path. Moving to Slide 37. As we continue our transformation journey, we will need more spaces as a result of parcel growth, the conversion of Mail sites into multifunctional sites and the development of new warehouses for Contract Logistics. To accelerate this process, we will enter in a joint venture with a specialized Logistics real estate partner. We will leverage on the partners' know-how and expertise to achieve faster execution, building state-of-the-art facilities according to the highest quality and ESG standards. Finally, by selling a minority stake to the future partner, we will also reduce our CapEx while continuing to consolidate our assets. Let's move to Slide 38. Focusing on the next phase of our network transformation, we will evolve our consolidated joint delivery model into a new future-proof network now enabled by the growth of parcel volumes. Our joint delivery model is based on the combined delivery of Mail & Parcels and designed to provide a long-lasting competitive advantage, thanks to which we became a leading B2C parcel operator in Italy. Today's joint delivery model needs to evolve in order to support growing parcel volumes, introducing additional flexibility, thanks to Parcel focused rules such as parcel weight increase and working hours flexibility, but also a leaner footprint, allowing efficiencies. This update joint delivery model is a key to preserve the financial sustainability of our business while continuing to use Mail volumes as network cost optimizers. In our future-proof model, we will also add the Parcel dedicated network to capture new market opportunities, such as for our Parcel deliveries enabled by micro fulfillment areas in our Logistics sites and specialized logistics activities like pharma and refrigerated products. This new network is key to enable an even higher growth of parcels delivered by our Postine and Postini. Finally, this new model is designed to allow the 2 network to be self-adapting in terms of workforce allocation. Whatever the trend of our business is in the future, this organization is ready. Moving to Slide 39. Let me show you a concrete example of our network transformation. Let me remind you that our delivery station is where Postini start their daily journeys. In the future, these centers will be used also as a micro fulfillment sites, enabling us to provide new cutting-edge services such as 4-hour delivery. These proximity areas will store e-commerce high consumption products for marketplaces allowing shoppers to order online till lunch time and receive the parcels by dinner. These features is enabled by our much real estate footprint, perfectly located in all main city centers and by our large electric fleet. The result will be to offer our clients super fast and green deliveries. But actually, for us, the future is just now. [Presentation]

Moving to the next slide. Let's look at the key strategic actions of our plan, expected to deliver EUR 700 million additional revenues in Parcel & Logistics. Let's move to Slide 41. All market leaders in the B2C segment have built their success using Poste Italiane as a trusted delivery partner and they need us to keep on growing. This stems from some unique features of our service model. First, a winning factor is the Postini network, which will be more Parcel oriented. Second, our resilient performance, even at peak times is crucial to satisfy the needs of our customers, and is a key competitive advantage. Third, our flexible solutions for customers' returns are best-in-class in the market. In addition, all second end customers are making large use of our delivery options and PUDO network. Finally, with micro-fulfillment, we will be offering our key clients a new 4-hour delivery service. All of this contributes to the success and growth of our partnerships with key merchants, providing higher revenue visibility. Moving to Slide 42. Let's look at another key priority of our Parcel strategy. In the e-commerce market, out-of-home deliveries are the fastest-growing segment also driven by second end products. This segment is expected to grow about 11% per year, almost 3x the overall Parcel market. Our PuntoPoste Network is already unmatched, also thanks to the acquisition of LIS with 28,000 points offering a high-quality experience and a complete range of services. Yet our delivery options will grow further. First, we will expand our network, targeting 40,000 points by 2028, with almost 100% of the population within a 5 minutes distance. This will allow us to deliver 80 million parcels via PUDOs by 2028, gaining efficiencies and margins by one-stop multiple deliveries. In addition, we will reach our solutions through a new Locker network developed in partnership with DHL. LockerItalia is a dedicated joint venture targeting 1,500 new points by 2025. This is one of the building blocks of our wider partnership with DHL as we will see in the following Slide #43. Since 2018, we have become a leader in B2C inbound parcels from China with over 60% market share leveraging on Sengi acquisition to offer end-to-end solutions to Chinese merchants. As shown in the slide, our strategy will be delivering almost EUR 200 million growth and is based on 2 pillars. Outbound business development will be leveraging on our partnership with DHL, providing us with a competitive commercial proposition for our domestic customer base. As a second pillar, inbound flows will be growing over 3x by 2028, supported by 3 initiatives: first, additional volumes channeled to our network, thanks to DHL partnership; second, a new network of international promoters based outside Italy; finally, further consolidation of Chinese inbound leadership. Let's move to the next slide, 44. Contract Logistics is another key pillar of our strategic plan with EUR 300 million revenues targeted by 2028. Our strategy is focused on clear competitive advantages. First, we will leverage on synergies between warehousing and distribution. Second, our logistic network development will be accelerated through the real estate joint venture, enabling us to provide a wide range of solutions in all geographies with a fast time to market. Lastly, our investment capacity, proven execution track record and brand reputation make us an appealing counterpart for large and institutional clients. To reinforce our commitment in this space, we have set up a dedicated company Postelogistics, offering tailor-made end-to-end solutions to our clients with the highest compliance and operational standards. Finally, through the acquisition of Plurima, we became leaders in the fast-growing Italian healthcare logistics market. Italian regions are increasingly outsourcing the hospital logistics operation to obtain cost savings. This business model is already delivering results with 3 regional projects in the execution phase and 2 more in the approval phase. Overall, Contract Logistics business is a driver to develop long-lasting corporate client relationships, providing us long-term revenue stability and visibility. Let's move to Slide 45. In line with the ambition to enhance our brand reputation in high-visibility events, Poste is closely working with the Milan Cortina Foundation to lead the logistics for the 2026 winter Olympic, Paralympic games with the objective to become the logistic partner of this event. Activities are expected to start by October 2024. This event will have a worldwide audience of over 2 billion people and close to 100 participating countries. Before moving to the financial targets on Page 46, let's summarize our strategy in a short video. [Presentation]

Let me translate our strategy into financial targets. Segment revenues will grow 1% on average with Parcel & Logistics growing at 7% per year, compensating the expected Mail revenue decline. In fact, Mail revenues are expected to decrease by 5% per year with our repricing strategy partially offsetting volume decline where in our numbers, we took a cautious approach. Our EBITDA is projected to reach EUR 1.4 billion by 2028, an increase of EUR 600 million versus 2023. Our EBIT, we reached breakeven in 2023, will remain steady across the plan, reaching EUR 100 million by 2028, including EUR 300 million non-recurring transformation costs. Let's move to the last slide of my presentation. The highest priority for me and my team in the last years was the turnaround of a loss-making business unit. With the 24SI plan, we promised to reach breakeven by 2024. This target was achieved 1 year ahead of our guidance. With the new plan, our transformation will be completed. Our aim is to guarantee a bright future to our Postine and Postini who will play a key role in the implementation of our strategy to become an end-to-end fully sustainable logistics operator. That's all from me. Over to you, Guido.

Good morning, everyone. Good morning, everyone. It is a real pleasure for me to be here with you today in our headquarters in Rome. I will be going through the main topics of the Financial Services industrial plan and the main targets for 2028. But first of all, let me quickly go through the major achievements of the segment in the last 6 years to set the scene, starting from Slide 51. Since 2017, we have methodically focused on our unique service model and on a more comprehensive product range. As you can see in the lower left part of the slide, in 2017, we launched the first advisory service assigning clients to generalist advisers. Through post office centric model, the progression in coverage has continued by assigning over time, different client segments to specific advisers, affluent, itinerant, mass and premium. By 2026, most of the evolution from a post office centric to a real client-centric model will be completed. I will go through the strategy behind this later in my presentation. On product offering, we completed the range of financial needs covered with the platform, an improvement that was very well received by new and existing clients and resulting in additional 80 billion TFAs by 2023. Just to give you a sense and highlights, we introduced the multi-class products to provide a better risk-reward financial solution to client investments. On the protection side, we introduced a coordinated view of clients' financial and protection needs supported by a P&C modular offer. Together with CDP and thanks to the recent rate move, we significantly widened the range of postal bond products available to clients. On the lending side, we evolved and improved the salary-backed products, thanks to a very successful joint venture with BNL-BNP Paribas. Let's move to Slide 52. Not only have we focused on products and client coverage, but we also accelerated our digital transformation program with the aim of enhancing the overall customer journey within our omnichannel group strategy. The digital experience now covers all main products ranging from lending to postal savings. The strategy here is not designed to have an exclusively digital offer, but to allow clients to access our products in a way that best suits their needs, be it in the post office or through any channel they prefer, web, app or call centers. The take-up on digital sales is impressive with a 71% annual compounded growth. We will keep investing in consolidating our omnichannel model to be able to serve our clients whenever and wherever they want on all our products. Let's look at macro and market trends on Slide 54. Macroeconomic evolution with a mix of mild inflation, stable and slightly lower rates is creating a benign environment for growing savings and investment fees and improving visibility on our investment portfolio revenue stream. Our physical presence remains untouched, confirming the opportunity offered by the banking desertification in local communities, where post offices remain the key institution covering financial needs of both retail and micro and small clients -- business clients. As our clients are changing habits, when dealing with financial transactions and management of the wealth, we will evolve our omnichannel service model to cater to these changes. For instance, as Matteo mentioned, our SuperApp will help clients to have seamless experiences with Poste Italiane and ensure we have everything they want in one place. Let's move to Slide 55. Here, we'll be highlighting our business priorities. As you know, Financial Services has 2 main sources of revenues: firstly, fees and commission from distributing our own as well as third-party products; secondly, net interest and trading income deriving from our government bond portfolio. On fees and commissions, the plan will focus on the commercial service model evolution. We will evolve client segmentation and their allocation to specialized financial advisers. We will also optimize the span of control of the post office network applying our own version of the Hub & Spoke model. This major activity will also allow us to reinforce our savings and investment revenue stream by better serving clients' financial needs, as you can see in the TFA increase. On consumer loans, we will aim to maximize the effectiveness of this new commercial setup by increasing the approval rate of our partners, thanks to significant IT investments, resulting in additional volumes and fees. The new service model will allow us also to refocus on micro and small business clients with emerging synergies with the retail network and the wide range of products we offer at group level. As far as the investment portfolio is concerned, we will continue to stabilize net interest income by reducing the floating rate exposure and lock the current high rates for the medium, long term. As our track record shows, we are able to extract value from the portfolio even in unfavorable rate scenarios, by moving from interest income to trading gain and vice versa. I will better explain each of these business priorities in the next couple of slides. Let's move to Slide 56, please. Here, you can see our new client segmentation and its translation into the commercial service model. We designed a new model embedding a comprehensive transformation of our network, most of which will be deployed by 2026. The objective is to better cover clients based on the real needs by adapting the network to clients rather than asking them to adapt to us. Starting from the left-hand on the segmentation side, the main innovation is the introduction of the upper mass cluster, which includes clients with financial assets less than EUR 100,000 and generating yearly revenues higher than EUR 100. 80% of private and affluent clients will be covered by specialized financial advisers compared to circa 30% today with a small client portfolio, which allows them to meet with each client regularly during the year to discuss asset mix, and rebalance their allocation when appropriate. These teams of advisers will be supported by centralized dedicated desks that will guide them in more complex situations. We will increase the number of Affluent+ consultants by upskilling the top performance among the other existing consultants and dedicating significant resources in training and supporting the professional growth of these colleagues. Upper mass clients will be covered by generalist advisers able to manage all the financial needs, including lending products. Focusing advisers on clients with coherent needs will also allow us to train them much more deeply and efficiently, recalibrate their incentive schemes and to retain the best performance in client-facing roles instead of promoting them to non-client-facing roles as we do today. All other mass clients will be covered reactively by tellers and by over 4,000 Home & Family corners operators. They can cover directly simple financial needs, for example, opening a bank account, selling a postal bond and may and basic insurance products or alternatively, arrange physical or digital meetings with advisers for more complex transactions. As newly created team of remote advisers will also be used in these kinds of situations. Let's look at postal savings on Slide 57. First of all, let me say that similarly to what we've done in 2023, we agreed with CDP to adapt the existing multiyear contract to current market conditions. Our overall joint ambition is to guarantee a stable stock over the plan horizon, mitigating record high maturities expected over the next few years and much higher than the last 3 years. We are envisaging 4 elements. One, a revised commercial model with an important role carved out for digital channels. Postal saving is among the most omnichannel product we have. And in 2023, our approach has proven very successful. Over the plan, we will keep investing significantly to keep up the good progress made so far; two, strong reliance on special products offering with appealing returns to attract new money and to reinvest maturities. Together with CDP, we will tactically activate different features and appealing rates to navigate in different competitive scenarios; three, the adoption of a further revised product range. Thanks to the new rates environment, a number of new products have been added. We currently offer more than 10 different postal bonds. We will keep working with CDP to make sure we will maintain a comprehensive product range serving many different saving needs; and four, and lastly, a streamlined end-to-end process to optimize the time to serve in the post office and online, aligning them with the best-in-class UX on similar products. We believe that by combining customer journey, simplification and digitalization with a focused communication, we could widen our client base and, in particular, become more known and appealing to young adults. Let's move to Slide 58 on investment, please. In this area, the new commercial service model is by far the most important enabler for sustainable revenue generation. Client centricity is our main priority. We need to foster a stronger relationship with our affluent and private clients maximizing the fit of their asset to their target portfolio. How will we do this? It's common practice in the industry, but the first in Poste Italiane, a proactive approach to existing assets in order to optimize clients risk reward dynamics by rebalancing their investments when appropriate. We will start from outlier client portfolio. Hence, we will only activate around 3% of the stock of TFAs by 2028. By that date, clients average mix will still be composed of 58% of TFAs invested in capital guaranteed products, a sizable 24% in liquidity and only 18% invested in market-exposed product. Let's move to Slide 59 on consumer loans distribution. We target an ambition growth of around 30% in volumes for both personal loans and salary-backed loans. In consumer loans, we will continue to work and improving our banking partners approval rate. At the beginning of 2022, we were slightly below competitors. Whereas in 2023, we were able to increase the rate overperforming the market by almost 10 percentage points, proving once again that our multi-partner model works. Therefore, we focus our 2028 objective in maximizing the efficiency and the effectiveness of our advisers by achieving a 60% approval rate, thanks to: one, data enrichment; two, focus on higher-rated clients; and three, most importantly, automatic routing to the most suitable partner and rerouting in case of rejection. We invested and keep investing in digitalizing the customer journey to attract Poste clients leveraging on our unique trusted brand. On salary backlogs, we will focus on our very successful JV Financit by extending the offer to private sector employees, and we will contribute to increase the credit protection insurance volumes of Net Insurance recently acquired by PosteVita. Let's move to Slide 60. Our group strategy of micro and small business is based on our unique product offer, ranging from logistics to acquiring from telco and fiber to financial and insurance services. With our 3% market share and the banking sector retrenching, room for growth is impressive. We will create PuntoPoste business corner, which will be set up in major post offices throughout the country. The PuntoPoste business corners will offer the full set of group services representing a one-stop shop with a client-centric approach, enabling product bundling and next best product proposition. Another key pillar of the new service model, especially for [ prosumer ] i.e., professional consumers will be the leverage we have with our retail tellers and advisers and our digital platform. Laura will give you more color in a presentation later. By 2028, from a financial services perspective, we are projecting 400,000 current accounts with an EUR 11,000 average balance, supporting the growth in net interest income and in transaction fees. Moving to Slide 61. Now let's turn our focus to the investment portfolio. Over the ECB, once the ECB has started to raise financial official rates, we were able to reap the benefit of the structure we raised for our investment portfolio, generating greater value from the variable component. As the market stabilized, reaching interest rate levels we deemed appropriate, we started managing the portfolio to cover for an expected decrease in interest rates, crystallizing higher fixed rates on both newly purchased bonds and part of the existing stock unwinding hedging derivatives. Overall, volumes are expected to decline driven by our decision to reduce low-margin funding from corporate and public administrations. On the other hand, a moderate growth in retail deposit is expected, mirroring the commercial focus already outlined before. The portfolio's net yield is expected to grow, thanks to the active management of the assets and the positive effect of rolling over maturities. The target indeed is to grow further revenues from the investment portfolio through the reduction of the variable rates exposure and the tactical use of capital gains. Let's move to Slide 62, please. On the left-hand side of the slide, we show the solid results of our massive change in strategy over the last 2 years. Early in 2022, our portfolio was structured to reach 50% variable rate exposure by 2028 via forward starting swaps. Following the increase in rates and anticipating the downwards rates movement, we structurally change our portfolio, increasing the fixed rate component, locking in higher yields. Our plan now envisages a 70% exposure to fixed rate by 2028, broadly in line with today's level, which offers a large buffer also in unfavorable market condition, as you can see from the sensitivity analysis. This sensitivity is the same analysis we have consistently shown since 2018, and as a proven track record shows, we are creating a gross unrealized capital gain buffer, providing further flexibility to meet and potentially exceed our targets. Let's go to our financial targets on Slide 63. We expect a 3% annualized revenue growth, mostly driven by savings and investment fees and supported by revenues from investment portfolio, consumer credit and transaction banking fees. As I mentioned before, TFAs will increase moderately overall, but with an improved quality mix. How will we do this? Thanks to the new service model, which will allow us to increase coverage and strengthening relationship with our clients, as shown by the 2 KPIs at the bottom of the slide. Camillo will go in more details on EBIT. Next slide for some closing remarks, please. Let me close my section by summing up the key messages. We are launching a new commercial service model which better suits retail and micro small business clients needs. The plan focuses on creating value from savings and investment fees by revamping the postal savings offered coupled with a proactive portfolio rebalancing of our Affluent clients. Our group omnichannel strategy will improve customer journey with the new SuperApp, a tangible sign of this transformation. The investment portfolio revenue stream will grow in a descending interest rate scenario. With an increased share of fixed rate bonds, we are gaining greater visibility under unfavorable market scenarios while the generation of gross unrealized capital gains will provide us with additional flexibility to meet and potentially exceed our targets. All this transformation will not change our priorities and values. We want to keep aiming at being the most transparent, most locally present, best priced, and client-oriented asset manager of all Italians. Over to you, Andrea.

Thank you, Guido, and good morning, everyone. Let me start with Page 68, showing our key achievements since 2017. Starting from the left hand side, you can appreciate PosteVita solid track record of steady financial growth since 2017 and our performance on our targets. We also stabilized the Solvency II ratio reaching a level of 307% at the end of 2023, which already factors in an increased remittance ratio to the parent company of 75%. We achieved these results, mainly thanks to the resilience of our life investments and pension business which continues to deliver steady growth and profitability through the cycle, significantly outperforming the market. At the same time, we've also built a fully fledged protection business with an accelerated growth over recent years, also thanks to the acquisition of Net Insurance. So our insurance business starts the journey of the connecting platform plan from the strongest position ever. Let's move to Page 70. We believe that some long-term trends will continue to provide tailwinds to our business. First of all, the moderate expected increase of Italian GDP coupled with the ongoing normalization of inflation will contribute to the increase of financial wealth and disposable income of Italian families. Also, the end of zero interest rate policies by central banks is creating a much more favorable environment for our life investments and passion business, as we will see later on. On the market side, we start to see first signals of stabilization in Life Insurance with gross written premiums rising year-on-year in the first weeks of this year. I will come back later on this to show you how we have been, in any case, performing much better than the market, even in a challenging year as 2023. Looking at the Protection Insurance market, we continue to see very high demand for personal insurance since the end of the pandemic, and we have no reason to expect the trend reversal, as this is also the result of secular trends, such as progressive aging and changing lifestyles coupled with the structural under penetration of the Italian market compared to other European countries. Moving to Page 71. We will show you now the main KPIs of our insurance business divided into 2 segments: Life Investments & Pension and Protection. The Life Investments & Pension business includes all insurance-based investment and pension products that we distributed to retail clients through our captive network. It is our largest business and we firmly believe that it will continue its path of steady growth. Our protection business comprises all non-life and life protection products offered by PosteVita and PosteAssicura, again, mainly to retail clients through our captive network. With the acquisition of Net Insurance, we've also gained its credit protection business on salary-backed loans and third-party distribution channels. We are indeed very committed to further develop this business as it is capital light and fast growing. Moving to Page 72. So our strategic ambition for the insurance business is to provide a stay haven for all investment and protection needs of fellow Italians. We want to achieve this by continuing to grow in the Investment & Pension segment, thanks to our unique business model and supported by normalizing inflation and interest rates. In the Protection segment, we expect to grow very fast. Thanks to increasing demand and low customer penetration while keeping a good profitability level. Thanks to a mix that remains focused on the retail part of the business, which is less volatile and more profitable for us. As we have done for other businesses in our group, for Net Insurance, we will continue to develop complementary products and third-party distribution channels. Finally, we aim at maintaining our very solid capital position, keeping volatility under control and increasing the remittance ratio to the parent company. Let's move to Page 73, where I will do now a quick deep dive into each of our businesses, starting with Life Investments & Pension. As anticipated, we have been performing very well during the past year, which has been one of the worst ever recorded for the Italian insurance market. Indeed, we achieved positive net inflows in each quarter of 2023 and experienced only a moderate increase in lapse rate from 3% to around 4%, which is less than half market average. Going to Page 74. We believe that the resilience of our results is mainly due to our business model, which is truly unique. First of all, we have a very diversified portfolio of 7 million policies with an average ticket of less than EUR 30,000. This is because we serve all client segments and have a lower concentration on the higher end of the market, where clients tend to be more opportunistic in their investment behavior. On the other hand, in this business, we rely only on our captive distribution network, so retaining full control on distribution, selling the right product to the right client without any influence from third parties. And by the way, among the reasons behind the collapse of the former Eurovita, they were indeed, it's a reliance on our network clients and distribution agreements with a large number of counterparts, resulting in a weaker control on distribution. On the product side, we've always been very conservative. We kept selling capital guaranteed products also when interest rates were negative, and everybody else has stopped distributing them. By doing so, we shielded our clients from the significant market volatility of recent years, and thanks to this approach, pretty much all of them are currently sitting on positive returns. In turn, we are rewarded with their continued loyalty as you can see, looking at our low lapse rate and positive net flows. We also aim at keeping our product offering as competitive as possible over time. For example, after becoming leaders since 2019 also in multi-class products, we took advantage of the new interest rates environment to revamp our traditional capital guaranteed products by launching a new general account, which gathered more than EUR 3.5 billion in less than 1 year. Let's move to Page 75. So with the overall market starting to stabilize and our rates environment generally more favorable, we are very confident that this business model will continue to be successful. Going ahead, we will also continue to benefit from higher margins, which are expected to increase by at least 5 basis points over time and exceed 110 basis points as the profitability embedded in the new business is higher than our stock's average. At the same time, we remain very competitive compared to market benchmarks, so providing good value for money for our clients. We expect an annual level of net inflows, which is broadly in line with 2023, and so the resulting annual average growth of technical provisions is expected at 4%, with CSM normalized growth rate at 5%. As a result of higher margins, and volumes, we envisage a steady growth in revenues and EBIT. Each region of 3% per year already taking into account a higher proportion of rebates to the Financial Services segment, which remain fully in line with market practice and are linked to the further development of our commercial service model, as you have seen in Guido's presentation. Moving to Page 76. Here, you can appreciate how the new scenario will help us to achieve our results with an even more conservative risk profile. For the first time in years, in 2023, the rate at which we invested new money was higher compared to the average portfolio rate, and we expect this to remain the case in current market conditions. This implies that the returns of our capital guaranteed products will increase over time and catch up with the yield of other fixed income competing instruments. We will achieve this, at the same time, further reducing the overall risk embedded in our investment portfolio as a combination of higher exposure to European government bonds, an improvement of the average rating of corporate bonds with a reduction in the overall volume and an opportunistic increase of alternative investments such as private debt and infrastructure equity that will provide yield enhancement to our portfolio. Let's move to Page 77, where you can see our journey so far in the progressive integration of ESG principles in our business. After the setup of an internal governance and framework in 2019, we started to integrate ESG of sustainable finance disclosure regulation, meaning that they promote environmental or social characteristics. Looking ahead, we will continue this journey by reducing the carbon footprint of our portfolio, as mentioned by our CEO, committing to reach net zero by 2050, and launching investment products with a specific sustainable investment objective, so complying with Article 9 of SFDR. Let's go now to Page 78 and move to the Protection business. Here, while most of our products are targeted to retail clients, in recent years, we have also built a sizable corporate business, providing health insurance policies to corporate as a French benefit for their employees. We grew very fast and became one of the leaders in this segment, which has lower margins, but it's strategic as it allowed us to gain valuable underwriting experience and to build up scale of our internal TPA, which manages health insurance claims. Going forward, our priority will be to further grow in the retail business, which is less volatile and more profitable and where we have no exposure at all to motor insurance and limited and diversified exposure to NatCat risk. As I've mentioned earlier, demand for personal insurance products has been high in recent years, and we have been successful in the integrated advisory and sale of investment and protection products, which we'll continue to develop as showed by Guido. Nevertheless, the penetration of Protection within our client base remains relatively low. So with a significant room to grow, we, therefore, expect Protection gross written premiums to roughly double over the plan from EUR 0.8 billion in 2023 to at least EUR 1.5 billion in 2028, while maintaining good profitability levels as we aim to keep our combined ratio below 85%. The result of all this will be continued double-digit growth in revenues and EBIT coming from the protection business. Moving to Page 79. The targets just seen included a positive contribution of all our group's entities, including Net Insurance through which we acquired complementary businesses and distribution channels. First of all, Net Insurance is the leading player in credit protection insurance for salary-backed loans and increasingly popular consumer lending product, for which insurance coverage is acquired by law. We expect this business to continue to grow steadily. Thanks also to the strategic partnership we signed with IBL Bank, the #1 player in this business in Italy on the lending side with also the minority shareholder of Net Insurance and also thanks to the organic growth of our captive lending business mentioned by Guido. More recently, Net Insurance has been developing also a Protection Bancassurance business through a network of small regional banks with a strong local footprint and several relationships with Insurtech and other non-financial players willing to enter the insurance distribution market. We expect this new business to grow rapidly as most distribution agreements are recent and so still have to display their full potential. Let's move now to Slide 80. As you have seen earlier, we closed 2023 with a very solid capital position and a group solvency ratio of 307%, which is much higher than our managerial ambition of 200%. This allowed us to increase the remittance to the parent company to 75% to be paid in 2024 on 2023 net profit. Going ahead, in current market conditions, our expected organic capital generation is higher than the capital required by the new business, so allowing for a higher remittance. We have also a significant buffer of more than 100 percentage points to absorb any higher-than-expected volatility, and we have showed over time, our productivity using such volatility through management actions, like Europe's largest ever mass lapse risk coverage that we completed last year. We are, therefore, very confident in increasing the remittance ratio to the parent company above 75% and up to 100% over the plan. Let's move to Page 81, where finally, you can find the summary of the financial targets for the Insurance division, which underline a steady growth expected through the planned interest both of revenues and EBIT, which Camillo will comment in a moment. And now turning to Page 83 for some closing remarks on my side. So you have seen that we undertake the journey of this new plan from a stronger-than-ever position as we continue to see long-term macro and market trends supporting our path. Thanks to our unique business model, we are indeed confident to continue to outperform the markets in the Life Investments & Pension business, whereas our Protection business is poised for fast and profitable growth. We closed 2023 with a very solid solvency capital position and we retain a significant buffer over our managerial ambition to manage future market volatility, counting on an organic capital generation, which allows a remittance ratio to the parent company of up to 100%. Thank you very much for your attention. And now over to you, Laura.

Thank you, Andrea, and good morning, everyone. It is my pleasure today to present to you Postepay, a unique payments and services ecosystem and to walk you through our evolution journey and contribution to Poste Italiane 2024-2028 Strategic Plan, The Connecting Platform. Let me start with a snapshot of the impressive achievements, KPIs and value already created by our ecosystem. Since 2018, when Postepay was incorporated as a spinoff of financial services, we have recorded double-digit growth across all financial metrics with a 20% average annual revenue growth rate and then more than doubled EBIT. Supported by the secular cash to digital payments shift, we now reached an issuing transaction value of EUR 80 billion, processing 2.7 billion transactions last year and paving the way for future growth in the coming years. More importantly, we have pursued our goal of building an ecosystem of products and services for everyday life, extending our consolidated payments products range to the home services offer with the launch of Fiber in 2021 and the entry into the Energy market in 2023, successfully reaching over 500,000 subscriptions since launch. We achieved these results, thanks to the unmatched network of post offices and digital properties, enhanced by the acquisition of LIS in 2022. With its technology, LIS enabled 45,000 proximity locations to become points for recurring transactions, further strengthening the group omnichannel platform. Through our ecosystem, we are deeply connected with our clients' everyday needs. Let me launch a short video to show you how a day with Postepay services looks like today. [Presentation]

Let me summarize the impressive results, we just watched the video as a base for our plan. 30 million payment cards, 12 billion digital payment wallets, 4.7 million SIM and landlines and more than 0.5 million power and gas contracts. Now moving to Slide 88. On this page, we show the pillars of our omnichannel strategy. Our goal is to connect services for everyday needs and to further develop our open payment ecosystem. We have built a unique selling proposition based on synergies between everyday services. We target over 15 million new contracts for cards, mobile, landlines, and energy over the planned period. We will unlock cross-selling opportunities using the power of data and the Framework Connect, is scheme specifically designed to reward customer loyalty. We also want to fully develop our open payment ecosystem, starting from our current base of 12 million digital payment wallets. We will extend the services and connect payments cards and accounts of third-party institutions to keep them engaged and to become the preferred checkout for 16 million customers in 2028, steering the cash to digital payments transition. Key assets to reach these results are the valuable relationships with our clients, further strengthen with the new Home & Family corners dedicated to everyday needs, and the capabilities in data analytics and AI to personalize experiences and to maximize sales and loyalty. Let's move to Slide 89. I will now come back to Matteo's comments about the tech transformation, and I will show you how our ecosystem is a key component of the Poste Italiane platform, and how payments and utility services will be further powered by technology. First of all, 2.7 billion payment transactions constantly feeding the data platform are analyzing process to gain greater knowledge of clients' behaviors. Our primary goal is to assist them in their daily journeys, managing frictions, fraud, and security. The introduction of the SuperApp with the digital payment wallet at its core and the constant evolution of the digital properties will create more value for customers, allowing them to choose the preferred omnichannel experience and increase our profitability, data-driven, and GenAI capabilities will scale up in the next years, and we are ready to benefit from these evolutions. Our focus will be keeping our clients engaged improving targeting capabilities and granting security and assistance across different touch points. Moving to Slide 90. Let's look at our payment strategy, starting from market data and our unique positioning. Even after the great acceleration in digital payments during the pandemic, their share at 40% of total spending is still relatively low compared to European standards, showing significant growth potential with an expected annualized growth rate of about 7% over the planned period. Our expected growth is even higher as we are a key player in the e-commerce space. This market represents a fast lane avenue given the low e-commerce penetration compared to other countries. The unique positioning of Postepay will give us a further advantage over our competitors to see additional opportunities overperforming the market. We can rely on a very large direct client base that ensures us recurring fees. In particular, we have a unique base of 10 million IBAN-backed Postepay Evolution cards ready to intercept emerging fast-growing trends such as subscriptions and peer-to-peer payments. Our ecosystem is natively instant and future proof for new payment methods that will emerge in the European landscape. Our 2028 target is to overcome EUR 130 billion of transaction value, managing 4.6 billion transactions with a double-digit annualized growth. Moving to Slide 91. As Matteo mentioned, the SuperApp will be one of the most relevant access point to the platform. The SuperApp digital payment wallet will be the engine and the checkout, naturally becoming the wallet of choice of Italians. Over the years, we have created a solid card-based offer to satisfy increasing digital payment needs, and we have developed innovative acquiring solutions for merchants. Now the next challenge is to become users preferred wallet solution. We believe that Postepay is well positioned to maintain the leadership in the new payments age. We will integrate new functionalities such as loyalty and identity services connecting people with the largest Italian payment community open to third-party accounts and cards and seizing the opportunities offered by the new PSD3 framework. In line with what you've seen in Guido's presentation we will develop acquiring solutions for micro and small businesses extending lease service model, generating recurring fees and connecting merchants to our unmatched retail client base. Our acquiring capabilities will be enriched by tech competencies from the recent acquisition of a minority stake in N&TS Group, a tech boutique operating in this space accelerating our time to market. Let's move to Slide 92 on Telco. We aim to enable new simplified experiences and to evolve our network with ultra broadband solutions. We will have an opportunity to capture a share of the over 4 million additional clients needing high-performance connectivity in Italy. Market users are expected to reach 8.8 million Fiber To The Home lines and 5.4 million Fixed Wireless Access by 2028. In the mobile market, we will extend our winning Postepay Connect model to all Postepay cards to maintain a loyal customer base in a competitive market and to create greater value, thanks to the integration of payment and telco products. In the fixed line business, we will expand our addressable market, offering connectivity and premium services to micro and small businesses. This strategy will allow us to increase our telco customer base by 800,000, reaching a total of 5.5 million in 2028. Let's move to Slide 93. Let's complete the overview of our home services with a focus on the recently and successfully launched energy business. Since the start of 2023, we reached over 500,000 contracts. The market is very dynamic with many Italians changing energy supplier, resulting in over 8.8 million contracts signage here and the remarkable switch rate of both power 19.4% and gas 14.4%. We will continue our growth in this market. Thanks to a 100% Green offer and the relevant high successful rate of conversion from courts. Our expectation is to increase energy customer base by 2 million contracts, reaching a total of 2.5 million in 2028. Market share will reach 4% to 5% at the end of the plan. We believe these are achievable targets as implied annual sales represent 7% of the addressable market. Now move to Slide 94. The energy offer with its innovative approach to sustainability fits perfectly within Poste Italiane ESG strategy. The aim is to responsibly achieve business targets, creating share value for the communities in which we operate. We propose a full suite of natively green products and services such as sustainable payment cards made over cycle plastic, 100% energy from renewable sources, gas with 100% CO2 offsetting, and eco-friendly SIM. In addition to a Green by design approach, we will support a structural program of customer engagement to promote eco-sustainable habits. Now let's look at our KPIs. On this page, we summarize all the KPIs that you have seen through the presentation and will allow you to monitor our segment growth. And finally, let's look at the financial targets for the Postepay Services segment on Slide 96. Segment revenues, net of commodity price and pass-through charges of the Energy business, we reached EUR 2.2 billion in 2028 from EUR 1.45 billion in 2023, with an annualized growth rate of 9%, driven by payments business that will remain at the heart of the Postepay's ecosystem. Operating profit and net profit will follow a robust high single-digit growth trajectory over the plan with a positive and balanced contribution of all product lines. EBIT is estimated to steadily grow to EUR 0.7 billion and net profit to reach EUR 0.5 billion in 2028. Let's now move to the last slide. Postepay is the everyday services ecosystem with a track record of over-delivering. We are focused on connecting payments and home services, leveraging on Poste Italiane's omnichannel platform. We will set our strategy on SuperApp digital payment wallet solutions to connect retail as small business ecosystems. We expect a robust revenue and EBIT growth supported by all Postepay products. Now thank you, and over to you, Camillo.

Thank you, Laura, and hello to everyone. Now we'll get to the best part of the day and we'll talk about the financials. Before we get going, let me also remind you that we have overachieved quarter-after-quarter on all our key targets meeting guidance every year since 2018, obviously not counting the 2020 pandemic when even there, we delivered the promised dividend. Let's move to Slide 101. As discussed by Matteo earlier, revenues will grow steadily over the next 5 years with an annual growth of over 3%. EBIT will grow to EUR 3.2 billion in 2028 from our record operating profit of EUR 2.62 billion in 2023. Net profit reached EUR 2.3 billion in 2028 from EUR 1.93 billion in 2023. Our enhanced dividend policy will allows us to distribute over EUR 6.5 billion to our shareholders over the plan, ensuring competitive remuneration as well as strong financial flexibility. Starting from 2024, we'll be looking at over 65% payout ratio with the plan, with a planned dividend of not less than EUR 1 per share by 2026 and an average annual growth of circa 7% over the plan. Let's move to Slide 102. Revenues will grow to reach EUR 13.5 billion in 2028, with a positive contribution from all business segments. The revenue composition that we are targeting envisages a change mix with a well-diversified business, increasing exposure to growing markets and new businesses. In particular, the share of revenues related to growing markets will increase to 55% by 2028, whilst we'll be reducing our exposure to declining markets. By 2028, we expect over EUR 2 billion additional revenues from higher growth businesses. Moving to Slide 103. On this slide, we can see the evolution of our operating profit over the next 5 years. We envisage EBIT growing by EUR 0.6 billion with all business segments delivering positive contributions. All our divisions will contribute to revenue growth over the plan with higher growth from financial, insurance and Postepay services, while in Mail, Parcel & Distribution, we expect Parcel & Logistics revenues growth to -- to more than compensate Mail revenue decline. Cost increase is driven by HR costs, variable costs related to business growth and higher D&A due to investments in business transformation. Overall, EBIT will grow annualized rate of 4% through the plan. Let's look at each business, starting with Mail & Parcel on Slide 104. We expect our revenues to increase annually by 1% toward the plan. Let me like, the relevance of this growth trajectory with a significantly improved mix in Mail, Parcel & Distribution become financially sustainable positively contributing to the overall growth of group revenues and EBIT. Looking at the underlying drivers in more detail. Parcel & Logistics revenues will grow 7% annually on the back of e-commerce leadership, International and Contract Logistics. By 2026, Parcel & Logistics revenues represent approximately 50% of the overall Mail & Parcel revenues. Distribution revenues will also increase supported by the rollout of the new service model. Finally, cost discipline to mitigate inflationary headwinds will contribute to financial sustainability of this division through the plan. Now let's look at the EBIT evolution of this segment on Slide 105. In this slide, we show the building blocks of Mail, Parcel & Distribution EBIT evolution through the plan. Revenue growth from Distribution and Parcel & Logistics will amount to circa EUR 1.5 billion over the plan, while operating costs will benefit from Logistic network transformation and continued cost discipline. Overall, these actions will more than compensate the 2 main headwinds coming from expected Mail revenue decline and HR cost increase from new labor agreement. Business transformation actions will generate extra cost during the planned period, which can be considered non-recurring. Let's move on Financial Services on Slide 106. We see a 3% annualized revenue growth through the planned period, mostly driven by savings and investment fees deriving from resilient insurance flows and renewed commercial focus on postal savings, all supported by rollout of new commercial service model. Growing investment portfolio revenue benefits on proactive management actions to stabilize yield in the medium term with a negligible contribution from capital gains and flexibility to adapt to market scenarios. Operating profitability will remain broadly stable as the increase in revenues would be narrowed by higher remuneration to the network due to higher productivity. Let's now look at Insurance Service on Slide 107. Insurance segment revenues, we see an annual average increase of 4% to just under EUR 2 billion in 2028, with positive and stable net inflows in the Life Investment and Pension segment, supporting steady CSM normalized growth. Protection business, we delivered double-digit revenue growth driven by increasing demand and a low customer penetration with improving profitability due to mix shifting towards retail business. Overall, EBIT evolution in revenues landing EUR 1.6 billion in 2028. Moving on to CSM on the next slide. Normalized CSM growth will be around 5% with positive contribution from new business and expected return more than compensating the yearly release. Sensitivity to key market parameters is limited, stability of group CSM provides strong visibility on the division's sustainable profitability going forward. Let's move to Postepay service on Slide 109. We envisage high single-digit organic growth at 9%, supported by all product lines. Payments are at the core of the business and growth over the plan will continue to be supported by cash to card shift on our -- and our e-commerce leadership. In telco revenues will continue to grow, supported by the large loyal customer base and the new fiber opportunity. The Energy business will contribute positively to the division's profitability from 2025. EBIT is expected to grow by a remarkable annualized 9%, in line with revenue growth. Let's now look at FTEs on Slide 110. The number of FTEs will decrease by about 6,000 people, driven by natural turnaround and continued transformation of our workforce with 25,000 expected exits compensated by 19,000 new hirings. Let me highlight that by 2028, we expect up to 8,000 FTEs to be dedicated to additional parcel volumes, hence, reducing our reliance to external delivery suppliers. FTE growth during the plan will be concentrated in the growing companies we have recently acquired. Value-added per FTE will materially increase from EUR 81,000 in 2023 to EUR 102,000 in 2028 as a result of continuous productivity enhancement. Moving to Slide 111. Let's see how the FTEs evolution I just described translating to our P&L. First of all, let me start by saying that these numbers include our best estimate as to the remuneration increase resulting from the upcoming new labor agreement. Overall, HR costs will increase from EUR 5.6 billion in 2023 to EUR 6 billion in 2028. Let me remind you that 2023 HR costs include the one-off impact from the extraordinary employee bonus of EUR 133 million as well as EUR 171 million of early retirement incentives. HR costs will benefit from efficiency gains stemming from our logistics network transformation which will boost productivity. As you can see from the ordinary share cost to revenues KPI decreasing from 41 in 2023 to 38 in 2028. Moving to Slide 112. Let's look at non-HR costs. Non-HR costs are expected to increase from EUR 4.1 billion in 2023 to EUR 5.1 billion in 2028. But let's look at each component to better understand the individual trends. Variable COGS are driven by higher volumes, especially in our Parcel & Payments businesses. Fixed COGS increase is due to inflation impact as well as higher technology cost, in line with our strong strategic focus on digitalization. Finally, as mentioned earlier, D&A are impacted by higher investments in Logistics transformation. Overall, our efficiency will improve as variable COGS related to business volumes as percentage of relevant variable revenues will steadily decrease from 62% in 2023 to 51% in 2028. Moving to Slide 113. We continue to make capital expenditure to support transformation. Cumulated CapEx over the plan period comes at circa EUR 5 billion, including only the self-funded Polis CapEx. As for the majority of those, we benefit from government grants. Let me like, we continue to have diverse investment mix across all segments, with most of our investments continue to be concentrated on technology, digitalization to improve customer experience and real estate investments related to our logistics transformation, including renovation of post office network with Polis. 70% of the initiatives and investments are ESG-related. Let's move to Slide 114. The group will grow shareholders' equity over the plan. Each business segment is adequately capitalized and will contribute to our dividend policy, achieving an even stronger balance sheet in 2028. Moving to Slide 115. As Matteo mentioned, our new dividend policy is fully backed up by strong visibility on cash and capital generation. Dividend upstream from our subsidiary is diversified and will increase materially providing us with additional financial flexibility. Dividends to shareholders are covered by at least 1.5x by dividends from subsidiaries to group holding company. To reiterate, we are committing to a payout ratio of at least 65% through the plan with a dividend per share of at least EUR 1 for 2026 and over EUR 6.5 billion to be distributed to our shareholders. Moving to Slide 116. Let's take a look at the net financial position of Mail, Parcel & Distribution, which we consider as the holding company from a cash standpoint. Overall, we expect an improvement of EUR 1.7 billion due to strong cash flow generation, notwithstanding increased distributions to shareholders. Moving to Slide 117. We continue to invest in 4G relationships with several partners to support continued growth across all our segments. In this slide, you can find an overview of our group strategic shareholdings that will support us in pursuing and delivering our business targets. At the same time, they represent the financial lever that strengthens our flexibility and optionality through the plan. Let's go to the last slide. Finally, a quick snapshot on how we are performing in the first months of 2024. As you can see, the year started on a very positive note for us. Across all our businesses, main KPIs are better than budgeted and better than the start of 2023. Thank you for your time this morning. I'll pass it over to Matteo for some closing remarks.

Thank you, Camillo. We're halfway through the presentation today. Thank you. We're -- we come to the end of our presentation, where I hope you really gain a full picture of the direction we will be taking in the next few years. We're the largest digital platform in the country. And we are the strategic pillar for Italy, supporting its development, leveraging on our track record to over deliver on the past 2 strategic plan, we're paving the way for the next step of our transformational journey. Confident on our ability to adapt to potential changes in our operating context. The new commercial service model will allow us to maximize the value of our platform and the transformation of the Logistic business will ensure its long-term sustainability. We're focused on delivering a sustainable strategy as a data-driven and tech-enabled company, which will allow us to improve customer experience and enable cross- and up-selling. We are well aware that shareholders remuneration is the cornerstone of our investment case. Our commitment to move to a dividend policy based on a payout of at least 65% over the plan will result in a distribution of over EUR 6.5 billion leaving room for upside in case of performance. Our plan is well grounded and credible. And our year-to-date results confirm that we are pointing in the right direction. Under promise and over deliver is still and is always our motto. Thank you.

Also on behalf of Silvia Rovere, our Chair, together with our Director General, Giuseppe Lasco, I would like to thank all those who contributed there to the successful implementation of our plans, and we have worked in different capacities on the plan that we've just presented. I'm confident that we shall all work together with a passion that characterizes us so that we can do better than we promised for a bright future of Poste Italiane. And I would like to give special thanks to the institutions for their renewed confidence to the Board of Directors, to the trade unions. Obviously, our investors especially the 150,000 more savers, and especially, please allow me, all colleagues at Poste who every day contributed with great commitment and dedication to the results of our company.

Okay. Thank you, Matteo. And in some time, we can start our Q&A session. We will take questions from people present here in the room. And then after that, from people connected remotely. Will have to submit questions -- written questions either through the webcast platform or by e-mail to the Investor Relations' email address. Please ask you to speak clearly in the microphone, limit yourself to 2 questions and state clearly your name and company before asking the question. Alberto.

Alberto Villa from Intermonte. Thanks for the presentation. I have more than 2 questions, but a limit as much as I can. In any case, I would here start from the dividend policy, asking why you decided to move from a DPS to payout? What's the logic? And how we should see the floor for the future, you over delivered as you mentioned at the end of the presentation. So eventually, we can expect something even more than what you already said during the presentation. And then linked to this point, you never mentioned about M&A or anything inorganic. I was wondering if you can tell us if there is anything in any of the segments that you would like to look at as an inorganic opportunity for the group going forward? You made acquisitions in the past, bolt-on quite successfully. So wondering what's your eventually firepower for acquisitions out of the dividend payout you outlined during the presentation? The second question is related to the HR costs from what I've seen, it seems that there is no cost inflation in 2024. So I was wondering this meaning that the effects of the new contract eventually will kick in later in 2025, if that's correct. And I wanted to ask about the planned cost for, let's say, plans to reduce the workforce, what is in the plan? And finally, you mentioned during the presentation that the start is -- that the year has started on a positive note. Maybe you can be a little more specific on what -- which areas are performing better than your expectations?

Thank you, Alberto. I think that the first question is probably the most important one today because we started in 2017 with a dividend per share fixed and growing per year. And today, we're making a step and a different policy decision going back to payout. Why are we doing that? Most of you will remember that back in 2016, '17, the company was already at a payout policy. And the reason why in 2017, we moved to fixed rate is because there was an overweight in our operating margin of capital gains. So just to give you a feel, back in the last 7 to 8 years, 2016-2023, we had an average of EUR 370 million capital gains per annum. And if I look at 2016, we were above EUR 500 million with the net interest margin below 1.5, okay? In 2023, we're presenting a company where net interest margin, including capital gain is in the EUR 2.3 billion and capital gains, specifically at EUR 150 million. And over the course of the plan, we're not disclosing the capital gains because they are -- if we had to put a number with the rounding, it would have been at 0, okay? So it's below EUR 50 million on average over the plan. So if you move into a organic environment, we believe that the payout is a better metric and a better policy, rewarding investors for over performance, because we are committing to a minimum payout and any over performance translates into automatically higher dividends. M&A, we call our growth to EUR 13.5 billion end of the plan top line organic. So you correctly pointed out that there is no M&A. Our net financial position as the CFO has highlighted, improves. So we have ample room even without touching the payout to look at opportunities. We will be looking at market opportunities. So then, I think, 15 acquisitions over the last 7 years. But I think that the bulk of what we had to do, it has already been done. So we don't anticipate any major M&A transaction. The question on HR costs and early retirements, please Camillo.

Yes. So , I do understand why you're asking the question. I would like HR cost in 2024 are going down. But first of all, this is obviously is an aggregate number. And within the number, there are a number of components, which are ordinary HR cost, early retirements compensation to the network. So there are a number of things that in aggregate add to EUR 5.6 billion. But as far as ordinary costs are concerned, we are indeed assuming that we are going to pay more also in 2024. So the salary -- the expected salary increase will not kick in, in 2025, but already in 2024, and we are accruing the numbers as if it's already happening. So that's the first -- the first point. The second point with respect to early retirement is indeed is EUR 5.6 billion. We do expect to have early retirement charges throughout the plan. And it's safe to say that we have an increasing proportion of early retirement charges going towards the end of the plan as then is when some of the sort of restructuring that we have talked about will be completed.

We start the early retirement journey with 31st of December 2023 of EUR 250 million fund which is way above what we have ever spent over the last 7 years.

I had only 1 question, and it's actually I'm borrowing the question from my former colleague and much better, and is Ashik. I'm from Berenberg, Michael Huttner. And the question is, can you make us dream a little bit in terms of the operating leverage. So if I look at the individual divisions, there is no operating leverage in insurance, it's negative because revenues are up 4% EBIT free, there's an operating leverage in Postepay, both revenues and EBIT growing 9%. And in the group as a whole, the operating leverage is minimal with revenues up 3% and EBIT up 4%. Now, my guess is this hides a huge amount of conservatism, and I could begin to kind of maybe look at the numbers. But I think since you are here, maybe you can kind of give a feel for where it is. That's my only question.

I think that's a good question. Historically, we have over delivered on the cost side, for sure, and that creates operating leverage. And by history, we have also been relatively conservative on our top line guidance. So I think the best answer we can give you is liaising back with the previous question of Alberto saying Camillo even beginning of this year, where we're seeing better business flows than what we are projecting. And we specifically put a page on the presentation to give you a feel, even though, obviously, we are not in the position of disclosing any specific figure.

Yes. So I think that we have done a very detailed bottom up analysis on get to the costs. And at the beginning of the year, our new business plan, there is an element of consensus building to ensure that every division is comfortable with the costs associated to the business to generate growth. And we think at this point, we are there. We obviously update you quarter-by-quarter on how things are developing. I'd also say that there is another point which has to do also with the commissions that the 3 companies -- product companies paid to the network to the D, because part of the extra profit of financial services, insurance and Postepay goes to D, which is our sales force. And we have a sales force of 50,000 people, which will have, as we just discussed, is a increase. Cost of energy is higher. So the charges that the D invoices, the 3 product companies is going up and that also may be blunders a bit the picture.

Yes, probably considering that there is a very direct impact of our Mail revenues on EBIT because there are no variable costs correlated to Mail revenues. If you look at 2023, Mail revenues versus 2022, and then you look at the plan where we assume EUR 100 million reduction per year, there is certainly leverage upside over the course of the plan if we manage to control. Which is the first line of page 118.

We're indicating in the first 2 months of the year, correspondences above budget. We are indicating on Page 118 that the correspondence for Mail is above budget in the first 2 months of the year. And that goes directly to the EBIT.

First of all, congratulations for putting out this very comprehensive plan. Looks very good. And thanks for higher dividend payout ratio. I was greedy at full year results. I'm still greedy. So my question is, you have EUR 3.8 billion potential distributable reserve by the end of the plan. That's a lot versus what you have right now? I mean max EUR 1 billion, looking at the chart and the sizes, et cetera. So what needs to happen for you to consider using that EUR 2.8 billion extra versus right now, I mean, either through a special dividend or through M&A. So what needs to happen? That's my first question. Secondly, I guess, we definitely got a bit of color that there is a bit of conservatism on the cost side, but it looks like on the revenue side as well, you are pretty conservative at the moment. If I look at your Parcels ambition, you're trying to grow by 7%. But if I look at the charts, I mean the market size is growing, your market share is growing and you're investing more CapEx and more technology. You're changing your distribution model. So does 7%, it doesn't look conservative on the Parcels growth, just given where the Italian economy is growing in the e-commerce space. So these 2 questions would be very helpful.

Yes. I think first question is you're right. I mean, if one wants to say that we are under lever and overcapitalized, there's nothing I can say about it. Because even the ratio we move of the -- of our solvency is, as you are well aware, way above our managerial ambition and that in all market scenarios creates a very robust burden that this company really never had for the last 7 years. So one has another pocket of extra capital, and that's why we decided to upgrade the dividend policy from PosteVita to the holding company up to 100%. What does need to happen? I really don't foresee large acquisition, the size, EUR 3.8 billion, EUR 4 billion extra capital on PosteVita, these are 2 large numbers for any acquisition. So we will play it by the day. We were at -- let's not forget that in February, we were at 48%, 49% payout, okay? On the 28th of February, we went at 58%. And today, we're telling you is minimum 65%. So one has to do things progressively. In terms of conservative on cost and the revenues growth specifically on parts, you take it and if Matteo wants to chip in.

Well, look, I think, on the Parcel, we are coming from a few years when the growth in the market was a bit subdued or we see a pickup, and we expect the market to grow at -- we expect to grow at 7% in Parcel. I think, it's also fair to say that, that also is a growth that comes with some marginal price erosion because some of you guys know on some of the large clients, we have contracts that are backed to volume. So the more you sell, the better is the price for the client. So there is an element also of that, that probably is around -- between 100 and 200 basis points across the life of the plan. But there are 2 -- I hate to say it again, but we have also, on that front, started a bit better. I would ask you to wait early May when we have our first quarter and maybe we can revisit this question. This is on the revenue side. On the cost, I go back to what I said to your colleague, we have a lot of flexibility to use if we see that the market does not grow at the speed that we expect, we will start to cut down cost as we did incidentally during the pandemic. We are not in that scenario. But we have the means to reduce costs if needed, and we are, again, early in the year, let's not forget that EUR 2.62 billion is the highest operating profit that were done by Poste Italiane. We intend to do even more. So we want to be fully equipped to get to that level. And if during the course of the year, we can start to squeeze more cost, I'm going to be the first one to do it.

Okay. So the first question is on the Mail. Do you think you are a conservative enough on your estimates of decline of volumes? And then you mentioned the upcoming agreement with the Union, any update on the discussion?

I'll start with the update on the labor agreement. We started, as you know, the contract was covering the labor contract up to the 31st of December 2023. On average, it takes 12 to 18 months, we will be faster to negotiate the new contract, work is underway, and we don't anticipate any obstacle. The question on Mail revenues conservatism, please, Massimo.

As I said in the presentation, we took a cautious approach in the Mail revenues. In the last 2 years, we registered a flat revenues in comparison with the previous years. We have to consider that for us, it's very difficult to control the substitution. This substitution is the real reason of our trend on Mail. So we consider a cautious approach, and we are forecasting in our plan the same trend before the pandemic phase.

Iain Pearce from Exane BNP Paribas. I just had a couple of questions on the Insurance business, mainly around the remittance numbers. Could you just talk a little bit about how you're expecting the solvency capital requirement to trend? So with the 100% remittance guidance on net profit, are you expecting that solvency capital requirement grows and that's what brings you down back towards your target level of solvency? Are you expecting to more remain around the sort of 300% and then potential for excess remittance if you want to bring that solvency number down? Second one is just on the combined ratio guidance. Obviously, it's very, very strong in retail at the moment. I think 75% you're talking about on the retail combined ratio. Why is that so strong compared to the market? Do you view that level as sustainable? And with the business mix trends sort of focusing on retail growth over commercial, why are you not guiding to sort of a better combined ratio at a group level? Those are my 2 questions.

Thank you, Iain. And I ask Andrea to answer the questions.

Thank you. So considering the first question on solvency ratio, I will go back to Page 80 of the presentation. As you can see on the bottom left part of the page, we are mentioning that we expect positive organic capital generation in current market condition, even embedding a 100% remittance ratio. So this means that we do not expect solvency ratio to go down even embedding a 100% remittance ratio because the capital generation we are getting from both our in-force portfolio and the new business is clearly positive. So we will use this buffer we have of more than 100 percentage point compared to our managerial ambition to face any higher-than-expected volatility in the ratio, which we don't expect, by the way, in current market conditions. Second question is on combined ratio. As you have seen, for sure, we are reporting a combined ratio that -- you see on Page 78 of our presentation, which is, as I've mentioned, lower compared to other peers in the Protection business. I think there are 2 components helping this that are mentioned again in the slide. First of all, we have very marginal exposure to NatCat risks in our business compared to other European insurers that you have seen, they've mentioned a significant impact from NatCat this year in their combined ratio. And we have no technical exposure or not soever, to motor insurance, which is another area that in Italy is currently working at a relatively high combined ratio. So by sticking to the retail part of the business, as I mentioned in my presentation, we are very confident to keep our combined ratio at the same level where we stand today.

Equita. The first question is on, if you can elaborate a bit more on how do you plan to reduce further the correlation of capital to the BTP spread? And the second question, if you can provide us an update on your hedging strategy. You said your investment, your NII from the investment portfolio is expected to grow also through the rolling of the portfolio, but also through hedging. And so if you can provide us an update on hedging?

Okay. Guido, you ready for the second question. I think on the first question is, we have run also some back testing analysis. But basically, the very simple answer is having significantly reduced the correlation of solvency to BTP spread, we have implicitly reduced the overall correlation of the group to the BTP spread, not in more, not in less, and the numbers are showing it. Guido, on the second one.

Sure. So let me try to explain what we have done and what we're still doing. We've done mainly 2 things on our asset swap portfolio. We -- on an overall size of about EUR 16 billion in the last 1.5 years, we have done two things. One is we sold the asset swap. So the bond plus the derivative, that is a cash item and goes from a floating straight into reinvesting in a fixed interest bond. The second one is we unwound the derivative, and we kept the bond. When you do that, 2 things happen. First of all, the positive mark-to-market goes to increase the rate of the bond you keep until maturity by reducing the book value. The second thing that happens is you release the collateral. So you have a cash item, you can invest, again, you can invest that 10-year maturity roughly. So overall, this EUR 16 billion now have yielded about 3.4% -- 3.35%, which increases the overall yield of our fixed rate component of the portfolio.

Again, I think it's very important to emphasize the change role on one hand of managing this portfolio, okay? The change role -- sorry, the change of the weight of this portfolio in the company bottom line, okay? Just to again go back to the past. I mentioned before 2016-2023, EUR 370 million. But if we go back to 2016, which is the first balance sheet and income statement after privatization, the company produced EUR 1.1 billion operating margin, of which more than EUR 500 million was coming from capital gains. Last year, we did EUR 2.62 billion, of which EUR 2.5 billion are without capital gains. Okay. And remember, when we took office in the handover, the previous management told me, look, you have another 3 years of gasoline because you have EUR 1.5 billion of positive mark-to-market, and you need EUR 500 million per year, okay? So you have 3 years but you better think about something else because in 3 years, there is no more capital gains, okay? We are a completely different story today. But it doesn't mean that we don't know how to do it any longer. We still have the same team. We have the best -- we're the largest by far owner of Italian Govies in the world, and we have the best expertise, and we are the most active player in this space. So -- and when we say that over the course of the plan, we're basically putting 0 capital gains, it doesn't mean that we have today capital gains already in the balance sheet that we could have put in the plan. As of last night, there was at least EUR 750 million, but that's not the gain where we want to be in. But that's something that is there for any situation where we might need some extra room or extra support to meet or hopefully exceed our guidance.

So if there are no more questions from the room, we go to the questions from the webcast platform. Starting from Farooq Hanif, JPMorgan. The first question is about your thoughts on how much the Italian government might be willing to sell in the rumor privatization, if you can say anything? And the second question is, what is your confidence that you can get the level of flexibility you need from employees in Logistics, given your discussion with the unions? Last question from Farooq, is about the sensitivity of NII to interest rates. What's your base case in your net interest income assumption?

Okay. First one, I mean, there is a law getting pass that allows for up to 30%, and it's really up to the government to decide what to do. So there is no comment I can add. On the second one, I can just repeat that we're highly confident it's in the interest of the future and the stability of the company, which means also the stability of our employees. So we are heading in the direction where any employee, any union representative could only dream to see the company going. So our goals are totally aligned. On the sensitivity, please, Guido?

Yes. So if you can go back to my Page 62, I believe, so the question is about what assumptions we have in the plan. The assumptions is as the same as usual. We always use the forward rates. So in what you see here as baseline, we used the forward rate. So just to give you a sense, we have a short-term swap rate at about 2% and the BTP -- the 10-year BTP around 4%. So these are the 2 main -- as you know, 2 main drivers. And there, for us, given our portfolio. And you can see what Matteo was saying about if this was not the realized scenarios or if rates move, you can see that, in any case, the revenue stream can be stabilized by using capital gains, which obviously have increased given what I said before, we have 14 -- sorry, EUR 16 billion will have, at the end, EUR 16 billion of additional fixed rate bonds. Obviously, that has increased the overall amount from which we create capital gains if rates move down.

Yes. I mean most of you will remember that this page as Guido said in his presentation, it's basically the same page we presented back in March 2018 in our first plan, where we're basically saying, "Don't worry about the investment portfolio because we are structurally hedged." So if rates happen to go lower, we will have lower interest margin, but we'll have more capital gains and vice versa. And this hasn't really changed, and we moved the needle because of higher interest rate environment and because of higher volumes than expected back in 2018 from 1.5 net interest margin, excluding capital gain to basically 2.3.

Okay. So we have a number of questions from Giovanni Razzoli at Deutsche Bank. The first question is what remuneration we are assuming on Postal savings through the plan if we have already agreed with CDP in the terms of the new distribution agreement. And if so, what are the key changes to the old one? Then we have a question on Mail, Parcel & Distribution regarding our assumption on extraordinary cost for early retirement in the 2024-2028 period. The other 2 questions have already been answered.

I mean, a factor on the CDP front, we have basically secure this year and basically next year in terms of the agreement. And on product, we're counting under renew commitment to competitive products. You have seen the amazing performance that thanks to the support of CDP in terms of product, we deliver in 2023. 2024 is starting relatively solid. And I have no reason to think that their support will not be there because at the end of the day, we're doing our job. We're doing it well, and there is no reason why we should not receive their full support. On early retirement, I'm not sure we're disclosing a lot, but Camillo.

Yes. Well, on early retirements, I mean, the first -- the starting point, we are starting with the opening position of the fund of EUR 280 million at the -- as of at the end of 2023. We have a curve of charges that increases over the 5 years with a lower amount in the first year, which goes up to closer to EUR 200 million towards the end of the plan.

We have now a question from Mediobanca, Gian Luca Ferrari. It's a little bit articulated, but I'll try to read it slowly. If I understood correctly, the Financial Services segment is making EUR 1 billion of additional revenues over the planned period, but EBIT will remain unchanged vis-a-vis 2023. As you mentioned, early debates to the network for the increase in productivity. This means roughly EUR 1 billion of intersegment revenues for Mail & Parcel, yet the segment will generate EUR 100 million operating profit from the current breakeven. Can you comment on such trend in operating leverage combining both segments?

Yes. The first point is that, yes, it would look optically if that's -- there is an increase of EUR 100 million. But in fact, we have lost EUR 40 million in 2023 in Mail, Parcel & Distribution, we're saying 0.1 in 2028. So there could be a delta of EUR 200 million there. So those are EUR 200 million. Then we have EUR 0.5 billion of cumulated loss in Mail, which goes directly to the bottom line and that makes up for another chunk of that amount. And then the third drag has to do with increased depreciation and amortization as we are passing to the P&L of Mail, Parcel & Distribution, the CapEx on Polis not only our portion of EUR 400 million, but also the EUR 800 million for which we get a grant, that translates into in EUR 200 million more of D&A, and that makes up for the EUR 1 billion difference.

Okay. It's 1 O'clock. We have no more questions. So we can go for quick lunch.