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 and other bodies.

One ordinary share is held by the Minister for Public Expenditure and Reform 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 25 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 51 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 of €2.2m is a satisfactory result in view of the continued impact of the economic downturn in 2011. While overall turnover from continuing operations is marginally up on 2010, the effect of the downturn is evident in the decrease in turnover in the mails business which fell from €552m to €535m. There was an increase of €18m in other services which reflects the continued success and expansion of subsidiary companies during 2011. Labour costs in the core An Post Company reduced by €15.4m, non pay by €10m and postmaster costs by €0.3m. The pension charge increased by €4.9m, and there were one-off costs of servicing the election mailings of €8.2m. The decrease in operating costs was primarily driven by reductions in the number of FTEs and control of non pay costs. The Group Profit after taxation and minority interest was €0.3m.

The pension deficit has increased from €368m at 31 December 2010 to €484m at 31 December 2011 reflecting the continued uncertainty in financial markets and the consequent reduction in the value of the scheme’s assets. There is an increase in the net liabilities position in the balance sheet for the Group to €165m at 31 December 2011 compared to net liabilities of €45m at 31 December 2010.

The information required by Regulation 37 of the European Communities (Companies: Group Accounts) Regulations, 1992, is included in the information given on pages 6 to 18. In monitoring performance, the directors and management have regard to a range of key performance indicators (KPIs), including the following:

KPI

* 2011 was exceptional with a General and Presidential election. Core FTEs in the year were 300 lower than 2010 having excluded the election requirements
** Full year figure 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:

• • impact of the general economic climate;
• • the need to fully implement agreed change programmes;
• • impact of electronic substitution;
• • inability to fund the Universal Service Obligation;
• • achieving adequate prices for services;
• • the need to achieve and maintain quality of service targets;
• • potential loss of significant agency services;
• • 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 on pages 35 to 41, which forms part of the Directors' Report, sets out thepolicies 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:

Ms Ciara Hurley retired on 31 March 2011.
Mr Brian McConnell retired on 31 March 2011.
Mr Paul Henry was appointed on 15 September 2011.
Mr James Wrynn was appointed on 15 September 2011.
Mr James Hyland retired on 10 December 2011.

The directors and secretary who held office at 31 December 2011 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 (2010: 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 itse mployment 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 2011, there were 36.6 lost time accidents per 1,000 employees. This represents a decrease of 12% on 2010.

An Post is committed to reducing lost time accidents and in this regard is undertaking a safety improvement programme which included obtaining accreditation to the OHSAS 18001:2007 standard in 2011. In addition, 4,732 employees attended specific safety training courses in 2011, with many more attending other courses where safety was included in the content. This includes completion of year two of a three year programme to provide advanced driver training to a further 1,025 drivers who use our Company fleet. Conscious of the fact that legal obligations are the minimum acceptable standard, An Post is striving for excellence in this area and is continuing to increase awareness among 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
22 March, 2012