Notes to the Financial Statements

Main Text Placeholder

1. Status Of Company

The Company is a limited liability company, incorporated under the Companies Acts, 1963 to 2006. Under the Postal and Telecommunications Services Act, 1983, the Company is entitled to omit the word 'Limited' from its name.

2. Turnover

	2008 €'000	2007 €'000
The analysis of turnover is as follows:
Republic of Ireland
Postage: Letters and parcels Postage: Elections and referendum Post offices: Agency, remittance and related services Other services Interest income	624,820 4,708 156,407 18,547 21,622	631,578 14,686 154,321 29,042 18,192
	826,104	847,819
United Kingdom and Other European Countries
Other services	23,939	28,164
	850,043	875,983

Turnover above excludes the Group’s share of Joint Venture’s turnover of €14,126,000 (2007: €8,390,000). In the opinion of the directors, fuller compliance with the disclosure requirements of SSAP 25 ‘Segmental Reporting’ would be seriously prejudicial to the Group’s interests.

3. Operating Costs

	2008 €'000	2007 €'000
Staff and postmasters' costs	599,010	600,913
Other costs:
Distribution	66,521	69,655
Accommodation	26,561	42,035
Operational	62,644	72,966
Administration	44,681	41,247
Depreciation and amortisation of goodwill	19,391	20,041
	818,808	846,857

4. Exceptional Items

	2008 €'000	2007 €'000
Profit on sale of subsidiaries	-	248
Profit on sale of land and buildings	-	1,268
Profit on sale of assets	-	1,516

5. Profit on ordinary activities before taxation

	2008 €'000	2007 €'000
The profit on ordinary activities before taxation is stated after charging:
Directors' emoluments Fees Other emoluments Pension contributions	287 400 75	290 435 70
Auditors' remuneration - audit	270	270
Depreciation	18,573	18,757
Amortisation of goodwill	818	1,284
Operating lease rentals: Rental of buildings Other - equipment and motor vehicles	6,707 11,674	6,381 8,209
Interest payable on bank facilities repayable within one year and similar charges	-	5
and after crediting: Capital grants amortised Profit on sale of fixed assets	102 310	102 1,466

The amounts shown above as directors emoluments include only the amounts paid to the directors in the execution of their duties as directors and the salary of the Chief Executive who is also a director. Other than this, they do not include the salaries of the employee and postmaster directors.

In accordance with the Government Guidelines on Remuneration and Other Conditions of Chief Executives, the Company operates a performance related pay scheme for the Chief Executive which provides for a maximum possible annual award of 35% of basic pay. Under this scheme, up to 25% is applied to annual objectives (the 25% short term scheme) and up to 10% is applied to multi-annual (three year) objectives (the 10% long term scheme). The Chief Executive has voluntarily waived his entitlement under the 25% short term scheme in the current year. Amounts earned under the 10% long term scheme are not finalised and do not become payable until the end of the three year term. However, it is estimated that an amount of €66,000 has been earned by the Chief Executive under the 10% long term scheme since the date of his appointment, 14 August, 2006, up to 31 December, 2008.

The remuneration package of Mr Donal Connell, Chief Executive Officer, which is included in the amounts shown above as directors’ emoluments, was as follows:

	2008 €'000	2007 €'000
Basic pay Non-pensionable performance related pay	379 -	353 61
Total Pay	379	414

Taxable benefits, including use of a company car Director's fee Pension contributions	21 18 75	21 18 70
	493	523

6. Tax on Profit on Ordinary Activities

	2008 €'000	2007 €'000
Current tax
Ireland - Capital gains tax	31	248
Ireland - Corporation tax	5,925	5,230
Ireland - adjustment with respect of prior years	(69)	(269)
UK - Corporation tax	788	873
Share of joint venture tax	-	-
	6,675	6,082

The current tax charge is lower than the standard rate of corporation tax in Ireland.

The differences are explained below:

	2008 €'000	2007 €'000
Profit on ordinary activities before tax	39,890	49,417
Current tax of 12.5% (2007: 12.5%)	4,986	6,177
Effects of:
Expenses not deductible	1,068	326
Depreciation in excess of capital allowances	988	1,618
Share of joint venture losses not deductible	1,211	1,559
Income taxed at higher rates	3,214	3,135
Utilisation of tax losses	(1,750)	(3,854)
Short term timing differences	(2,973)	(2,221)
Other	-	(362)
Prior year overprovision	(69)	(296)
Current tax charge	6,675	6,082

Given the uncertainty over the existence of future taxable profits, a potential deferred tax asset of €76,372,500 (2007: €19,004,000) has not been recognised in the consolidated balance sheet at 31 December, 2008. This deferred tax asset not recognised comprises a deferred tax asset in relation to the net pension deficit recognised of €72,937,500 (2007: €14,287,000), timing differences on business restructuring, €2,381,000 (2007: €2,381,000), tax losses forward not utilised, €5,529,000 (2007: €7,279,000), offset by other timing differences of €4,475,000 (2007: €4,943,000).

7. Profit for the Financial Year

	2008 €'000	2007 €'000
Profit after tax in the holding company	40,023	46,367
Profit after tax in subsidiary undertakings	2,877	9,443
Share of result of joint venture	(9,685)	(12,475)
	33,215	43,335

A separate profit and loss account for An Post has not been prepared because the conditions laid down in Section 148(8) of the Companies Act, 1963 have been satisfied.

8. Staff Numbers and Costs

	2008 €'000	2007 €'000
The average Full Time Equivalent (FTE) number of employees working in the Group during the year was:
Operations (mails and retail)	9,960	10,027
Corporate	711	700
Subsidiaries	299	327
Total employees (FTE)	10,970	11,054
The average number of employees working in the Group during the year was:
Operations (mails and retail)	8,961	8,888
Corporate	717	691
Subsidiaries	310	326
Total employees (FTE)	9,988	9,905

Postmasters: Engaged as agents	1,185	1,256

	2008 €'000	2007 €'000
The aggregate payroll costs were as follows:
Wages, salaries and postmasters' costs	511,679	500,743
Social welfare costs	35,314	34,384
Other pension costs (note 18)	52,017	65,786
	599,010	600,913

9. Intangible Fixed Assets - Goodwill

	€'000
Group
Cost
At 31 December, 2007 and 2008	13,628
Amortisation
At 31 December, 2007	9,946
Charge for year	818
At 31 December, 2008	10,764
Net Book Value
At 31 December, 2008	2,864
At 31 December, 2007	3,682

The directors have considered the carrying value of goodwill at 31 December, 2008 and have concluded that no impairment arises.

10. Tangible Fixed Assets

	Freehold & long leasehold land & buildings €'000	Interest in GPO €'000	Motor Vehicles €'000	Computer & Other Equipment €'000	Total €'000
Group
Cost
At 31 December, 2007	170,950	26,429	25,880	222,862	446,121
Additions	14,737	-	5,974	18,220	38,931
Disposals	(58)	-	(3,876)	(718)	(4,652)
Exchange differences	-	-	-	(260)	(260)
At 31 December, 2008	185,629	26,429	27,978	240,104	480,140
Accumulated Depreciation
At 31 December, 2007	38,916	9,499	24,551	195,535	268,501
Charged during year	4,212	651	936	12,774	18,573
Eliminated on disposals	(21)	-	(3,800)	(709)	(4,530)
Exchange differences	-	-	-	(165)	(165)
At 31 December, 2008	43,107	10,150	21,687	207,435	282,379
Net Book Value
At 31 December, 2008	142,522	16,279	6,291	32,669	197,761
At 31 December, 2007	132,034	16,930	1,329	27,327	177,620
Company
Cost
At 31 December, 2007	151,264	26,429	25,816	217,009	420,518
Additions	36,786	-	5,974	17,339	60,099
Disposals	(58)	-	(3,875)	(491)	(4,424)
At 31 December, 2008	187,992	26,429	27,915	233,857	476,193
Accumulated Depreciation
At 31 December, 2007	33,396	9,499	24,532	190,941	258,368
Charged during year	4,239	651	929	12,171	17,990
Eliminated on disposals	(21)	-	(3,800)	(491)	(4,312)
At 31 December, 2008	37,614	10,150	21,661	202,621	272,046
Net Book Value
At 31 December, 2008	150,378	16,279	6,254	31,236	204,147
At 31 December, 2007	117,868	16,930	1,284	26,068	162,150

Group and Company
The depreciable element of freehold & long leasehold land & buildings (namely buildings) amounts to: Group €154,971,000 (2007: €146,186,000), Company €161,921,000 (2007: €129,854,000).

11. Financial Fixed Assets

	Group 2008 €	Group 2007	Company 2008	Company 2007 €
Shares in subsidiary undertakings, at cost	102	102	10,650,643	10,650,643
Interest in joint venture and associated undertakings	10,840,163	25,380,220	33,109,871	19,108,628
	10,840,265	25,380,322	43,760,514	29,759,271
The movements during the year were as follows :
Shares in subsidiary undertakings
At beginning of year	102	102	10,650,643	11,430,777
Additions	-	-	-	8,534,837
Disposals	-	-	-	(9,314,971)
At end of year	102	102	10,650,643	10,650,643
Interest in joint venture and associated undertakings
At beginning of year	25,380,220	163	19,108,628	163
Additions	-	33,000,000	18,856,300	14,253,408
Costs capitalised in relation to acquisitions	-	4,855,057	-	4,855,057
Capitalised costs expensed	(4,855,057)	-	(4,855,057)	-
Share of result of joint venture	(9,685,000)	(12,475,000)	-	-
At end of year	10,840,163	25,380,220	33,109,871	19,108,628

On 16 April, 2007, the Group established a joint venture company, Postbank Ireland Limited, with Fortis to provide banking services to the Irish market. Under the terms of the joint venture agreement, An Post contributed its Postpoint and An Post Direct Limited businesses which had a carrying value of €10,000,000. Fortis contributed €56,000,000 in cash. An Post also incurred costs of €4,855,057 in establishing the joint venture which have been expensed in 2008. The assets transferred consisted of:

	€'000
Fixed assets	1,416
Debtors	4,904
Creditors	(9,457)
Cash at bank	13,137
Net assets	10,000

In 2007, the Group recognised a gain of €23,000,000 in the Statement of Recognised Gains and Losses on the transfer of the businesses to the joint venture as follows:

	€'000
Share of Joint Venture assets received on set up	33,000
Carrying value of assets transferred	(10,000)
Gain recognised	23,000

Additional disclosures in respect of Postbank Ireland Limited, which exceed certain thresholds under Financial Reporting Standard 9 Associates and Joint Ventures, are as follows:Additional disclosures in respect of Postbank Ireland Limited, which exceed certain thresholds under Financial Reporting Standard 9 Associates and Joint Ventures, are as follows:

	2008 €'000	2007 €'000
Fixed Assets	8,629	6,493
Current Assets	183,328	65,667
Share of gross assets (excluding goodwill)	191,957	72,160

Liabilities due within one year	(181,117)	(51,635)
Share of gross liabilities	(181,117)	(51,635)

Share of net assets (excluding goodwill)	10,840	20,525
Costs capitalised	-	4,855
Investment in joint venture	10,840	25,380

Goodwill was created in Postbank Ireland Limited upon receipt of the businesses and assets transferred to it from An Post in 2007. In accordance with accounting principles, An Post has not recognised its share of the goodwill and intangible assets created in Postbank Ireland Limited. This amounts to €20,000,000 at 31 December, 2008 (2007: €23,000,000). The directors have considered the carrying value of financial fixed assets at 31 December, 2008 and have concluded that no impairment arises.

In the opinion of the directors, the value of the financial fixed assets, none of which are listed, is not less than their carrying amount.

12. Debtors

	Group 2008 €'000	Group 2007 '000	Company 2008 '000	Company 2007 €'000
Amounts falling due within one year
Trade debtors	41,926	48,101	36,543	41,949
Amounts owed by subsidiary undertaking not consolidated (note 27)	979	1,167	785	1,167
Amounts owed by other subsidiary undertakings	-	-	588	1,753
Amounts owed by associated undertaking (note 27)	895	370	895	370
Amounts owed by joint venture (note 27)	403	2,496	-	2,220
Other debtors	304	705	295	695
Prepayments and accrued income	6,220	3,437	5,391	2,563
	50,727	56,276	44,497	50,717
Amounts falling due after more than one year
Amounts owed by subsidiary undertakings	-	-	5,465	14,752
	50,727	56,276	49,962	65,469

13. Cash at Bank and In Hand

	Group 2008 €'000	Group 2007 '000	Company 2008 '000	Company 2007 €'000
Cash at bank	14,157	52,983	5,727	35,060
Cash in hand	254,753	222,660	254,753	222,660
	268,910	275,643	260,480	257,720
Term deposits	392,139	402,036	392,139	402,036
Less: Amounts held in trust	(310,586)	(324,472)	(310,586)	(324,472)
	350,463	353,207	342,033	335,284

14. Creditors: Amounts falling due within one year

	Group 2008 €'000	Group 2007 '000	Company 2008 '000	Company 2007 €'000
Trade creditors	18,853	18,367	15,418	14,625
Amounts owed to subsidiary undertakings	-	-	48,138	7,123
Amounts owed to joint venture (note 27)	1,754	-	1,754	-
Other creditors	4,045	6,477	3,402	5,788
Taxation and social welfare (note 15)	15,208	12,965	14,202	11,327
Accruals	105,130	113,826	102,883	110,695
Deferred income - capital grants (note 16)	102	102	102	73
Deferred postage income	20,100	22,190	20,100	22,190
	165,192	173,927	205,999	171,821

15. Taxation and Social Welfare

	Group 2008 €'000	Group 2007 '000	Company 2008 '000	Company 2007 €'000
Corporation tax	1,160	1,330	508	417
Income tax deducted under PAYE	7,353	5,676	7,210	6,800
Pay related social insurance	5,205	4,241	5,146	2,914
Value added tax	780	1,208	554	692
Professional services withholding tax	710	510	784	504
	15,208	12,965	14,202	11,327

16. Creditors: Amounts falling due after more than one year

	Group 2008 €'000	Group 2007 '000	Company 2008 '000	Company 2007 €'000
Deferred income - capital grants	3,767	3,869	3,767	2,839
The movements on grants were as follows:
At beginning of year	3,971	4,073	2,912	2,985
Transferred from subsidiary	-	-	1,048	-
Amortised to profit and loss account	(102)	(102)	(91)	(73)
At end of year	3,869	3,971	3,869	2,912
Transferred to creditors: amounts falling due within one year	(102)	(102)	(102)	(73)
	3,767	3,869	3,767	2,839

17. Provisions for Liabilities

	2008 €'000	2007 '000
Group and Company
Business restructuring	59,938	69,261
The movements during the year were as follows:
At beginning of year	69,261	78,702
Utilised during the year	(9,323)	(9,441)
At end of year	59,938	69,261

The provision for business restructuring at 31 December, 2008 includes €40,892,000 (2007: €50,215,000) in relation to business restructuring redundancy costs, and €19,046,000 (2007: €19,046,000) in relation to the introduction of an Employee Share Ownership Plan (ESOP). Business restructuring is now anticipated to be completed by 31 December, 2010.

18. Pensions and Similar Obligations

The pension entitlements of employees arise under a number of defined benefit and defined contribution pension schemes, the assets of which are vested in independent trustees appointed by the Company for the sole benefit of employees and their dependents. Annual contributions are based on the advice of a professionally qualified actuary.

The amounts charged during the year to operating costs were as follows:

	2008 €'000	2007 €'000
Defined benefit schemes - current service cost	50,400	63,976
Exgratia schemes - current service cost	1,000	1,150
Defined contribution scheme	617	660
Recognised in the profit and loss account	52,017	65,786

Past service costs of €3,638,000 (2007: €2,109,000) arose during the year. These were discharged through the utilisation of the restructuring provision (note 17) and had no impact on the profit and loss account for the year ended 31 December, 2008 or 2007. Contributions payable to pension schemes and included in creditors at 31 December, 2008 amounted to €43,000 (2007: €38,000)

The pension costs of the defined benefit schemes are assessed in accordance with the advice of an independent professionally qualified actuary. The most recent actuarial valuations were carried out at 1 January, 2008 using the attained age method and are sufficient to cover 100% of the accrued liabilities. The principal actuarial assumption was that, over the long term, the annual rate of return on investments would be 2.0% higher than the annual increase in pensionable remuneration. The actuarial valuation of 1 January, 2008 recommended a contribution rate of 14.4% of pensionable remuneration. The actuarial valuations are not available for public inspection but the results of the valuations have been advised to the members of the schemes.

The valuations of the pension schemes used for the purpose of FRS 17 disclosures have been based on the most recent actuarial valuations as identified above and updated by the independent actuaries to 31 December, 2008. Scheme assets are stated at their market value at the balance sheet date.

The financial assumptions used to calculate the retirement benefit liabilities under FRS 17 were as follows:

Valuation method	2008 Projected Unit	2007 Projected Unit	2006 Projected Unit
Discount rate	5.75%	5.50%	4.70%
Inflation rate	2.00%	2.00%	2.00%
Increase to pensions in payment	3.25%	3.75%	3.75%
Pensionable salary increases	3.25%	3.75%	3.75%

The long term expected rates of return on the assets of the pension scheme were:	2008	2007	2006
Equities	9.00%	7.75%	7.60%
Bonds	3.80%	4.50%	4.20%
Other	6.85%	5.15%	5.10%

The assumptions relating to longevity underlying the pension liabilities at the balance sheet date are based on standard actuarial mortality tables and include an allowance for future improvements in longevity. The assumptions are equivalent to expecting a 65-year old to live for a number of years as follows:

Life expectancy at 65	Male	Female
Current Pensioners - aged 65	84.0	87.0
Future Pensioners - aged 40	85.5	88.5

The market value of the assets of the defined benefit schemes at 31 December, 2008, 2007 and 2006 were:

	2008 €'000	2007 €'000	2006 €'000
Equities	723,800	1,362,000	1,477,000
Bonds	612,400	529,000	510,000
Other	111,500	200,000	166,000
Fair value of pension schemes' assets	1,447,700	2,091,000	2,153,000
Present value of funded defined benefit obligations	(2,017,900)	(2,193,100)	(2,333,000)
Present value of unfunded defined benefit obligations	(12,100)	(12,200)	(13,226)
Present value of defined benefit obligations	(2,030,000)	(2,205,300)	(2,346,226)
Pension liability	(582,300)	(114,300)	(193,226)
Movement in fair value of pension schemes' assets
Fair value of pension schemes' assets at beginning of year	2,091,000	2,153,000
Expected return on plan assets	139,200	141,500
Actuarial loss	(768,161)	(188,294)
Employer contributions	55,263	51,770
Members contributions	3,900	3,600
Benefits paid	(73,502)	(70,576)
Fair value of pension schemes' assets at end of year	1,447,700	2,091,000
Movement in present value of defined benefit obligations
Defined benefit obligations at beginning of year	(2,205,300)	(2,346,226)
Current service cost	(51,400)	(65,126)
Past service cost	(3,638)	(2,109)
Interest cost	(120,860)	(110,250)
Members contributions	(3,900)	(3,600)
Benefits paid	73,502	70,576
Actuarial gain	281,596	251,435
Deficit benefit obligations at end of year	(2,030,000)	(2,205,300)

Other Finance Income

	2008 €'000	2007 €'000
Interest on schemes' liabilities	(120,860)	(110,250)
Expected return on schemes' assets	139,200	141,500
	18,340	31,250
Amounts recognised in statement of total recognised gains and losses
The actuarial gains and losses are analysed as follows:
Difference between expected and actual return on assets	(768,161)	(188,294)
Experience gains and losses on schemes' liabilities	(8,400)	-
Changes in assumptions underlying the present value of schemes' liabilities	289,996	251,435
Actuarial (loss)/gain recognised	(486,565)	63,141

The actual return on the schemes’ assets in 2008 was a loss of €629m (2007:€46m). The cumulative actuarial gains and losses recognised in the statement of total recognised gains and losses at 31 December, 2008 is a loss of €417m.

Employer contributions in 2009 are expected to be €53m.

History of actuarial gains and losses

	2008	2007	2006	2005	2004
Difference between expected and actual return on assets	(768,161)	(188,294)	66,000	257,000	85,000
Expressed as a percentage of schemes' assets	(53%)	(9%)	3%	13%	5%
Experience gains and losses on schemes' liabilities	(8,400)	-	(43,000)	(2,000)	(65,000)
Expressed as a percentage of schemes' liabilities	-	-	(2%)	-	(3%)
Total actual gains and losses	(486,565)	63,141	118,179	(1,786)	(110,000)
Expressed as a percentage of schemes' liabilities	(24%)	3%	5%	-	(6%)

19. Share Capital - Group and Company

	2008 €'000	2007 €'000
Authorised:
80,000,000 Ordinary Shares of €1.25 each	100,000	100,000
Allotted, called up and fully paid:
54,590,946 Ordinary Shares of €1.25 each	68,239	68,239

On 14 January, 2003, pursuant to Section 26 of the Economic and Monetary Union Act, 1998, the Company’s shares were renomalised from €1.269738 to €1.25 per share and an amount of €877,000 was transferred to a capital conversion reserve fund.

20. Profit And Loss Account

	Group 2008 €'000	Group 2007 €'000	Company 2008 €'000	Company 2007 €'000
At beginning of year	185,692	56,216	165,325	(22,513)
Profit for the financial year	33,215	43,335	40,023	46,367
Dividends/distributions	-	-	-	64,502
Other recognised (losses)/gains	(486,565)	86,141	(486,565)	76,969
At end of year	(267,658)	185,692	(281,217)	165,325

21. Reconciliation of Shareholders' (Deficit)/Funds

	Group 2008 €'000	Group 2007 €'000	Company 2008 €'000	Company 2007 €'000
At beginning of year	254,808	125,332	234,441	46,603
Profit for the financial year	33,215	43,335	40,023	46,367
Dividends/distributions	-	-	-	64,502
Other recognised (losses)/gains	(486,565)	86,141	(486,565)	76,969
At end of year	(198,542)	254,808	(212,101)	234,441

22. Gross Cash Flows

	2008 €'000	2007 €'000
Reconciliation of operating profit to net cash inflow from operating activities
Operating profit	31,235	29,126
Depreciation, amortisation and impairment of financial asset	24,246	20,041
Profit on sale of tangible fixed assets	(310)	(198)
Payments in relation to provision for business restructuring	(9,323)	(9,441)
Non cash pension cost	(225)	15,465
Capital grants amortised	(102)	(102)
Interest payable	-	5
Decrease in operating debtors	5,549	18,688
(Decrease)/increase in operating creditors	(6,628)	10,863
Net cash inflow from operating activities	44,442	84,447
Returns on investments and servicing of finance
Interest paid	-	(5)
Taxation
Tax Paid	(6,845)	(8,852)
Capital expenditure and financial investment
Purchase of tangible fixed assets	(40,773)	(11,081)
Disposal of tangible fixed assets	432	1,525
	(40,341)	(9,556)
Acquisitions and disposals
Disposal of subsidiary undertakings	-	5,775
Financial services joint venture set up costs capitalised	-	(305)
	-	5,470
Management of liquid resources (note a)
Decrease/(increase) in term deposits	9,897	(117,709)

Note a: Liquid resources comprise term deposits with a maturity notice period of more than one day.

23. Analysis of Net Funds

	At beginning of year €'000	Cash flows €'000	At end of year €'000
Cash at bank and in hand	275,643	(6,733)	268,910
Amounts held in trust	(324,472)	13,886	(310,586)
		7,153
Term deposits	402,036	(9,897)	392,139
Total	353,207	(2,744)	350,463

24. Subsidiary and associated undertakings

Name	Nature of Business	% Holding	Registered Office
Subsidiary undertakings held directly by the Company
An Post National Lottery Company (note 27)	Operation of the National Lottery	80%	General Post Office O'Connell Street Dublin 1
Arcade Property Company Limited	Property development and Letting	100%	General Post Office O'Connell Street Dublin 1
Post Consult International Limited	Computer software Services	100%	General Post Office O'Connell Street Dublin 1
Precision Marketing Information Limited	Provision of marketing data, database services and business directories	100%	General Post Office O'Connell Street Dublin 1
Prince's Street Property Company Limited	Property development and letting	100%	General Post Office O'Connell Street Dublin 1
Printpost Limited	High volume printing	100%	General Post Office O'Connell Street Dublin 1
Post.Trust Limited	Digital certification and security services	100%	General Post Office O'Connell Street Dublin 1
Transpost Limited	Courier and distribution	100%	General Post Office O'Connell Street Dublin 1
Kompass Ireland Publishers Limited	Dormant	100%	General Post Office O'Connell Street Dublin 1
An Post Billpost Processing Services Limited	Bill payment processing	100%	General Post Office O'Connell Street Dublin 1
An Post GeoDirectory Limited	Database services	100%	General Post Office O'Connell Street Dublin 1
An Post (NI) Limited	Holding company	100%	Stokes House College Square East Belfast

24. Subsidiary and associated undertakings (continued)

Name	Nature of Business	% Holding	Registered Office
Subsidiary undertakings held indirectly through a subsidiary undertaking
Air Business Limited	Distribution	100%	4 The Merlin Centre Acrewood Way St. Albans Herts U.K.
Associated undertaking held directly by the Company
The Prize Bond Company Limited	Administration of the Prize Bond Scheme	50%	General Post Office O'Connell Street Dublin 1
Joint Venture
Postbank Ireland Limited	Banking	50%	Block One West Pier Business Campus Dun Laoghaire Co Dublin

Air Business Limited is incorporated in and operates in England & Wales. An Post (NI) Limited is incorporated in and operates in Northern Ireland.

All other undertakings are incorporated in and operate in the Republic of Ireland. All shareholdings consist of ordinary share capital.

An Post National Lottery Company carries on the business of operating the National Lottery under licence from the Minister for Finance in accordance with the provisions of the National Lottery Act, 1986. 20% of the issued share capital is held by the Minister for Finance.

The Prize Bond Company Limited carries on the business of administering the Prize Bond Scheme under contract from the National Treasury Management Agency.

The following subsidiaries will avail of the filing exemption available under Section 17 of the Companies (Amendment) Act, 1986, whereby they will annex the financial statements of An Post to their annual returns: Post Consult International Limited; Printpost Limited; Post.Trust Limited; Transpost Limited; Precision Marketing Information Limited; Arcade Property Company Limited; Prince’s Street Property Company Limited; An Post Billpost Processing Services Limited; An Post GeoDirectory Limited and Kompass Ireland Publishers Limited.

25. Lease Commitments

	Land & Buildings €'000	2008 Other €'000	Total €'000	Land & Buildings €'000	2007 Other €'000	Total €'000
Annual commitments under non-cancellable operating leases were as follows:
Group
Expiring within one year	903	1,542	2,445	796	388	1,184
Expiring after one year and before five years	1,110	9,801	10,911	829	10,196	11,025
Expiring after five years	5,874	-	5,874	4,724	128	4,852
	7,887	11,343	19,230	6,349	10,712	17,061
Company
Expiring within one year	630	1,412	2,042	670	380	1,050
Expiring after one year and before five years	772	9,705	10,477	269	9,880	10,149
Expiring after five years	5,305	-	5,305	5,300	128	5,428
	6,707	11,117	17,824	6,239	10,388	16,627

Other lease commitments relate to equipment and motor vehicles. Lease commitments of the Company include commitments to subsidiary undertakings. There were no material finance lease commitments either at 31 December, 2008 or 2007 or which were due to commence after that date.

26. Capital Commitments

	Group 2008 €'000	Group 2007 €'000	Company 2008 €'000	Company 2007 €'000
Contracted for	25,122	5,074	25,122	5,074
Authorised but not contracted for	14,416	13,347	14,416	13,347
	39,538	18,421	39,538	18,421

27. Related Party Disclosures And Controlling Party Controlling party

The Group was controlled throughout the year by the Minister for Communications, Energy and Natural Resources who holds the entire issued share capital of An Post except for one ordinary share which is held by the Minister for Finance.

Transactions with related undertakings

An Post National Lottery Company

The Group provides An Post National Lottery Company, an undertaking not consolidated, with management and delivery services. Such services are carried out on an arm’s length basis or, where required, in accordance with the terms of the licence granted by the Minister for Finance to operate the National Lottery. The Company also provides agency services to An Post National Lottery Company whereby the Company makes sales and pays prizes on behalf of An Post National Lottery Company in accordance with the standard terms and conditions and remuneration structure common to all of An Post National Lottery Company’s agents. Group turnover for the year includes €6,128,000 (2007: €5,586,000) in respect of services provided to An Post National Lottery Company. These amounts are inclusive of a management fee of €2,993,000 (2007: €2,993,000) payable to the Company in accordance with the terms of the licence to operate the National Lottery.

The costs of staff working in An Post National Lottery Company are recharged from An Post at cost and amounted to €7,442,000 for the year ended 31 December, 2008 (2007: €6,513,000).

The amount owed by An Post National Lottery Company to the Company was €979,000 at 31 December, 2008 (2007: €1,167,000).

An Post has agreed to guarantee the performance by An Post National Lottery Company of its obligations under the licence for the holding of the National Lottery granted by the Minister for Finance. An Post has provided the guarantee, the maximum liability of which amounts to €10 million, for the duration of the licence to 31 December, 2011.

The Prize Bond Company Limited

Under the terms of a contract with The Prize Bond Company Limited, the Company carries out certain aspects of the administration of the Prize Bond Scheme. Fees earned by the Company in respect of such services amounted to €3,104,000 for the year ended 31 December, 2008 (2007: €1,761,000). The amount owed by The Prize Bond Company Limited to the Company was €895,000 at 31 December, 2008 (2007: €370,000).

Postbank Ireland Limited

The Company provides Postbank Ireland Limited (Postbank), with delivery services and agency services whereby the Company makes sales and accepts deposits and withdrawals on behalf of Postbank. At 31 December, 2008, the amount owed to Postbank in relation to these services was €4,117,000 (2007: €1,028,000). The Company also earns commissions from Postbank on the sale of mobile phone top ups. Other group companies supply Postbank with computer related services. Such services are carried out on an arm’s length basis. Group turnover for the year includes €7,131,000 (2007: €3,175,000) in respect of services provided to Postbank and commissions earned. The Company has also seconded certain staff to Postbank and the related costs which amounted to €1,865,000 (2007: €1,472,000) are recharged to Postbank. Postbank also provides certain management services to the Company, the value of which amounted to €507,000 (2007: €391,000). The amounts owed by and to Postbank at 31 December, 2008 and 2007 were as follows:

	Group 2008 €'000	Group 2007 €'000	Company 2008 €'000	Company 2007 €'000
Owed to Postbank	1,754	-	1,754	-
Owed to Postbank	403	2,496	-	2,220

Transactions with Government departments and other State bodies

The Group provides, in the ordinary course of business, postage, agency, remittance and courier services to various Government departments and other State bodies.

28. Contingencies

Group and Company

There were no contingent liabilities or guarantees at 31 December, 2008 or 2007 in respect of which material losses are expected other than as disclosed elsewhere in the financial statements.

29. Board Approval

The financial statements were approved by the Board of Directors on 19 March, 2009.

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