In 2008, we achieved an operating profit equal to 3.7% of turnover, in the main through focused and successful cost control in every aspect of the business. Turnover from continuing operations, at €850m, was down €26m on 2007. This decline arose mainly from the downward pressure on mail volumes and the contribution from mail associated with the General Election of that year.

2008 was one of two distinct halves for An Post. Mail volumes and revenue showed good growth in the first half but this trend was reversed in the second six months as the economic climate deteriorated.

The experience in our retail business was quite different. While the first half performance was in line with budget, second half revenue and transaction volumes rose significantly. This was due to increased numbers of Social Welfare recipients collecting benefits at post offices and the increased attractiveness of savings products and schemes operated by An Post on behalf of the National Treasury Management Agency. In addition, Postbank enjoyed further positive development during the year. The growing strength of the brand and an increase in the range of products on offer resulted in many more people seeking to do business with An Post.

Preparation for a new reality

Customer Service Improvements

Our customers are at the heart of this Transformation Programme. Reflecting this, the priority of management in 2008 was to achieve sustainable improvement in the quality of mail delivery. The medium term focus is on achieving our target of 94% nextday domestic delivery, agreed with the postal service Regulator, ComReg. Sustainable improvements were achieved during 2008 and the initiatives undertaken last year are expected to result in further improvement in 2009.

Delivering Through People

Building organisational capability and employee commitment are key pre-requisites to achieving the planned transformation of An Post.

In preparing for market liberalisation, we depend on the active support and participation of all staff. Many of our successes in 2008 are directly connected to programmes focussed on changing work practices, work flows and logistics planning.

During 2008, we invested considerably in initiatives to provide continuing professional development for management at all levels and to improve methods of communicating with a geographically dispersed workforce. As well as demonstrating to staff that they are valued and respected, this ongoing investment is being made on the sound business criteria that staff who understand the challenges facing this business will support the adjustments necessary to compete in a fully liberalised marketplace.

Securing An Post’s Future

Worldwide, the postal sector faces an extremely challenging future. The growing substitution of mail by electronic means of communication comes on top of EU market liberalisation and the global economic downturn. At An Post, we have developed a number of strategies to cope with these challenges.

The launch of Postbank in 2007 is an example of this approach. Last year saw considerable expansion in both the geographical reach of Postbank and in its portfolio of services. While we cannot be oblivious to the difficulties currently facing the worldwide banking industry, An Post remains confident that Postbank can and will make a positive contribution to its business, to society and to the economy in general.

During 2008, the Board approved a new strategic direction for An Post's Retail network.

This strategy is focused on a sustainable future for our network and includes key elements such as infrastructural investment and the broadening of the range of products and services on offer, all of which will improve the service experience of post office customers across the country.

In recent years, An Post has become increasingly aware of the underlying value of its brand and we have continued our investment in it through operational improvement, fleet procurement, the development of relevant products and services, as well as through advertising and sponsorship.

Immediate Prospects

On behalf of the Board, I would like to thank the management, staff and our postmasters for their loyalty and hard work during 2008. I would also like to thank my colleagues on the Board for their continued commitment. It is extremely satisfying to see their efforts over a number of years beginning to bear fruit and also to acknowledge the roles they have played in preparing the Company for these difficult times.

Everyone throughout the organisation has played an important role in improving the Group’s performance and the contribution of the Directors, in helping to set the course, has been particularly valuable. I want to thank especially Mr Thomas Devlin and Mr Terry Kelleher, who retired as directors during 2008, each having served for four years. Their contributions are greatly appreciated. I welcome two new Board members, Mr Paddy Costello and Mr Gerry O’Toole. I would like to say a special word of thanks to the Minister for Communications, Energy and Natural Resources, Mr Eamon Ryan, TD, and his officials for their assistance and support throughout the year.

Overall, 2008 is a year on which everyone can reflect with pride.

Our customers and our shareholder should be assured that the year’s many achievements will not lull us into complacency. Far from it, we recognise that we are on the brink of full, open competition in our core letter delivery market.

The bright future we seek can only become a reality if the success of 2008 is consistently repeated and exceeded in the years to come. In preparing the revenue and expenditure budgets for 2009, we have taken account of these difficult and uncertain economic times and recognise that increased monitoring of financial performance will be essential. However, for An Post there is one certainty – that is the requirement to continue to transform the business into an entity that can remain viable in a competitive market. That task must remain our central focus.

John Fitzgerald
Chairman
19 March, 2009