The directors have pleasure in submitting their twenty sixth Annual Report together with the audited financial statements of the Group for the year ended 31 December, 2009, in fulfilment of their obligations under the Companies Acts, 1963 to 2009. 

1.The Group And Its Principal Activities

The Company operates the national postal service and money transmission services and provides agency services for Government Departments, the National Treasury Management Agency, An Post National Lottery Company, Postbank Ireland Limited and other bodies.

One ordinary share is held by the Minister for Finance and the remainder of the issued share capital is held by the Minister for Communications, Energy and Natural Resources.

Details of the activities carried on by subsidiary, associated and joint venture undertakings, together with the information required by Section 158 of the Companies Act, 1963, are given in note 24 to the financial statements.

2. Results

Details of the results for the year are set out in the consolidated profit and loss account on page 54 and in the related notes to the financial statements. The directors do not propose the payment of a dividend for the year.

3. Business Review

The operating profit for the year is e5.7m reflecting an operating margin of 0.7%. In view of the impact of the economic downturn in 2009, it is a satisfactory result. The effect of the downturn is evident in the decrease in turnover which fell from €850m in 2008 to €804m for the current year. This reflects core mails revenue falling by 10% in 2009. This was offset by the increase in post offices income which benefited from continued growth in transaction volumes throughout the retail network. The Company moved swiftly to address this decline in revenues by reducing operating costs which fell from €819m in 2008 to €798m in 2009 and by generating new income streams through the acquisition of a 53.6% shareholding in the Gift Voucher Shop and a 100% shareholding in Jordan & Co International in the UK. The result after tax was a loss of €29m.

The decline in the value of pension assets experienced in 2008 has resulted in net interest cost of €21m. The value of the pension scheme assets recovered somewhat during 2009 and this has resulted in actuarial profits on post employment plans of €188m. As a result, the pension deficit has reduced from €582m at 31 December, 2008 to €403m at 31 December, 2009. This has also resulted in a reduction in the net liabilities position in the balance sheet for the Group to €48m at 31 December, 2009 compared to net liabilities of €199m at 31 December, 2008.

The shareholders in Postbank Ireland Limited, BGL BNP Paribas Fortis and An Post have decided not to continue the joint venture beyond the calendar year 2010. The Group’s share of the operating loss of the joint venture was €10.7m (2008: €9.7m).

The information required by Regulation 37 of the European Communities (Companies: Group Accounts) Regulations, 1992, is included in the information given in the Chairman's Statement.

In monitoring performance, the directors and management have regard to a range of key performance indicators (KPIs), including the following:

KPI

* Increase due to subsidiaries acquired during the year
** Full year figures as per ComReg Monitor.

In accordance with the requirement to analyse the key risks and uncertainties facing the future development of the Group and Company, the following have been identified:

• the general economic climate;
• the need to fully implement agreed change programmes;
• competitive threats to mails revenue;
• impact of liberalisation;
• achieving adequate prices for services;
• the need to achieve and maintain quality of service targets;
• potential loss of significant agency services;
• the arrangements for downstream access to mails services; and
• failure to resolve industrial relations issues through agreed processes.

The directors have analysed these and other risks and appropriate programmes are in place to manage and control these risks. The Corporate Governance Statement sets out the policies and approach to risks and the related internal control procedures and responsibilities.

4. Directors, Secretary And Their Interests

The following changes have taken place in the composition of the Board since the date of the previous report of the directors:

Mr. Alan Sloane retired 31 December, 2009, reappointed 1 January, 2010.
Mr. Patrick Davoren resigned 21 February, 2010.

The directors and secretary who held office at 31 December, 2009 had no interests in the shares in, or debentures of, the Company or any Group company at the beginning of the year (or date of appointment if later) or at the end of the year (2008 : Nil).

5. Employees

The Group is an equal opportunities employer. All applications for employment are given full and fair consideration, due regard being given to the aptitude and ability of the individual and the requirements of the position concerned. All employees are treated on equal terms as regards training, career development and promotion. An Post confirms that its employment of people with disabilities exceeds the target of 3% set under the Disabilities Act, 2005.

An Post is committed to ensuring the highest safety standards and safe practices for its employees, contractors and members of the public in accordance with the Safety, Health and Welfare at Work Act, 2005. In 2009, there were 35 lost time accidents per 1,000 employees. This represents an improvement of 13% on 2008. Regrettably, an employee was fatally injured during 2009 in a road traffic accident.

An Post has a target of zero lost time accidents. To help with the achievement of this target, An Post is undertaking a safety improvement programme which includes updating its Safety Management System policies and procedures in order to obtain accreditation to the OHSAS 18001:2007 standard. In addition, 1,848 employees attended specific safety training courses in 2009, with many more attending other courses where safety was included in the content. Conscious of the fact that its legal obligations are the minimum acceptable standard, An Post is striving for excellence in this area and is continuing to increase awareness among its employees and contractors of the necessity for the highest safety standards.

6. Prompt Payment Of Accounts

The policy of An Post is to comply with the requirements of relevant prompt payment of accounts legislation. The Group’s standard terms of credit taken, unless otherwise specified in specific contractual arrangements, are 30 days. Appropriate internal financial controls are in place, including clearly defined roles and responsibilities and monthly reporting and review of payment practices. These procedures provide reasonable but not absolute assurance against material non-compliance with the regulations.

7. Accounting Records

The directors believe that they have complied with the requirements of Section 202 of the Companies Act, 1990 with regard to books of account by engaging accounting personnel with appropriate expertise and by providing adequate resources to the finance function. The books of account of the Company are maintained at the Company’s premises at the General Post Office, O’Connell Street, Dublin 1.

8. Auditors

In accordance with Section 160(2) of the Companies Act, 1963, the auditor, KPMG, Chartered Accountants, will continue in office.

On behalf of the Board

John Fitzgerald  Chairman
Donal Connell Director
25 March, 2010